In accordance with the authority granted under Section 7-7-27 Mississippi Code Annotated, the Department of Finance and Administration (DFA), by letter dated June 18, 2010, attached below, granted ITS the authorization to approve contracts for multi-year prepayment of information technology services and software licensing for ITS customer agencies. You may view this letter on page 74.
This authorization is specifically applicable to projects requiring ITS approval and does NOT apply to projects made under ITS' purchasing delegations to agencies.
Prior to granting any approval for a multi-year prepayment, ITS must carefully review the licensing or services to be provided to ensure prepayment is both a standard business model for the licenses or services being purchased and is advantageous to the State. If approved, ITS will ensure that contracts for these purchases contain appropriate protective language to reduce the risk of prepayment.
Once the prepayment has been approved, ITS will issue a project-specific approval letter to the customer agency, in addition to the usual CP-1 Acquisition Approval Document. The approval letter will cite the authorization granted to ITS by DFA.
Agencies must attach a copy of the ITS approval letter to the payment voucher (PV).
ITS Process for Approval of Prepayment for Technology Under a Blanket Waiver from DFA
1. ITS receives a request from a customer for technology services or software licensing that could potentially include a multi-year prepayment. The most common situations for consideration of prepayment are warranty extensions, prepaid hardware support or software licensing, and prepaid hosting when the vendor must make a significant up-front investment in infrastructure. 2. ITS includes language in the Request for Proposals (RFP), Letter of Configuration (LOC), Request for Quotations (RFQ), or Invitation to Bid (ITB) specifying that vendors must: a) provide pricing for one year as well as multi-year prepayment options that provide significant savings for the State so that the risks and benefits of prepayment can be evaluated; and/or b) define and justify any prepayment requirements in vendor's business model for these services or software 3. ITS evaluates proposals, including assessment of any significant cost benefits or vendor requirements for prepayment. If prepayment is required, ITS evaluates vendor's justification to ensure this is a standard business model supported by the industry and by the vendor's up-front investments. If prepayment is an option, ITS evaluates the cost savings to ensure the benefit of prepayment outweighs the risks. 4. ITS discusses the evaluation of prepayment options with the customer. If customer requests acceptance of a prepayment proposal, customer documents that decision in writing to ITS. 5. If a prepayment proposal is accepted, ITS includes language in the resulting project contract concerning the state's ability to terminate based on non-appropriation of funds and a requirement for a pro-rated refund of prepayment to the state upon any allowable termination of the contract. 6. ITS issues and uploads to MAGIC a CP-1 Acquisition Approval Document for the acquisition, documenting the services or licenses, amount and timeframe covered by the prepayment. 7. ITS sends a letter to the customer documenting the specifics of the prepayment authority, citing DFA's authorization for ITS to approve such contracts. 8. ITS sends a copy of the executed contract to the customer for upload to the Merlin Award/Contract Interface. 9. Customer proceeds with the purchase, using the information uploaded to MAGIC by the ITS CP-1 process to encumber funds and make payment. Customer will attach a copy of the project-specific prepayment approval letter from ITS to the payment voucher. Click Here To View Image
36 Miss. Code. R. 2-5-205.3