FINANCIAL AUDIT SERVICES _part3 pptx

22 4.11 NOTICES All required Subcontractor Notices shall be in written form and made by email or by certified (or registered) mail return receipt requested to Northstar at the address below unless Northstar notifies Subcontractor in writing of any change: Northstar Lottery Group, LLC 180 North LaSalle Street- Suite 1810 Chicago, Illinois 60601 Attn: Sharla Roberts Phone: 312-368-5810 Email: procurements@northstarlottery.net Copy to: Northstar Lottery Group, LLC 180 North LaSalle Street- Suite 1810 Chicago, Illinois 60601 Attn: Kim Barker Lee, Office of the General Counsel Phone: 312-368-5804 Email:legal@northstarlottery.net 4.12 PROJECT SCHEDULE Subcontractor and Northstar shall mutually agree on a Project Schedule prior to Subcontractor‘s commencement of work, including agreed project milestones, for completing the Subcontract Services. These agreed milestones will be considered part of the Project Schedule in judging Subcontractor‘s compliance with the Subcontract. Subcontractor shall adhere to the approved Project Schedule, submitting regular progress reports and any proposed schedule changes in the form and manner directed by Northstar. Northstar may require Subcontractor from time-to-time to provide Northstar for review and approval an updated schedule, showing all activities and sequence of operations remaining for the orderly performance and completion of the Subcontract Services. 4.13 RISK OF LOSS Subcontractor shall bear the risk of loss and shall be responsible for any damage to each item of Northstar-provided equipment under this Subcontract beginning at the point at which Subcontractor takes delivery of each such item of equipment at, as applicable, a Northstar warehouse or a lottery retailer location, and continuing until the point at which Subcontractor successfully completes the installation of such equipment. Except as otherwise provided herein, Northstar shall bear the risk of loss or damage to Northstar-provided equipment. 4.14 SEVERABILITY A declaration that any section or portion of the RFP or the Subcontract is invalid or otherwise of no effect, for whatever reason, shall not affect the validity of any other section of the RFP or the Subcontract. This is trial version www.adultpdf.com 23 4.15 STAFFING During the term of the Subcontract, Subcontractor is required to maintain the minimum number of personnel necessary to perform the Subcontract Services per the RFP and Subcontract requirements, as can be forecast from daily performance metrics through the end of the performance period. Additional provisions concerning Subcontractor personnel are set forth in the Form of Subcontract. 4.16 SUBCONTRACTING Subcontractor may not subcontract, delegate, convey or otherwise dispose of any portion of the Subcontract Services without the previous written approval of Northstar. In the event Northstar approves of the use of any lower tier subcontractor, Subcontractor is not relieved of its responsibility and obligation to meet all the requirements of the Subcontract. Any such lower tier subcontractor must comply with all applicable requirements of the Subcontract. Northstar reserves the right to require Subcontractor to terminate any lower tier subcontractor with or without cause. As a condition of Northstar‘s approval, Subcontractor agrees to indemnify and hold Northstar harmless from any claims or actions of its subcontractors. Northstar will withhold indemnified losses from payments to Subcontractor or, if no payments are due, Northstar will make demand of payment of indemnified losses. Subcontractor must make payment within thirty (30) days of Northstar‘s demand. 4.17 SUBCONTRACTOR DEFAULT If Subcontractor fails to perform as specified herein during the Subcontract, Northstar may issue a written notice of default specifying the period in which Subcontractor will have an opportunity to remedy, provided that it is possible to do so. If, after an opportunity to remedy, the default remains, Northstar may do one or more of the following: a. Exercise any remedy under the Subcontract or otherwise provided in law or in equity. b. Terminate Subcontractor's services in accordance with the Subcontract‘s Termination Section. 4.18 SUBCONTRACTOR INITIATED CHANGES Subcontractor shall not institute any modifications to its procedures, operations or organization with respect to or having a material effect on Subcontractor's performance under the Subcontract without first submitting a written change request and receiving prior approval in writing from Northstar. 4.19 SUBCONTRACTOR INSURANCE REQUIREMENTS Commencing not later than the date of Subcontract Award, Subcontractor shall provide and, throughout its performance of Subcontract services, shall maintain the following insurance coverage: Workers Compensation and Employers Liability Workers Compensation Insurance as required by statute and, if applicable, employers liability coverage under the Federal Longshoremen and Harbor Workers Act, in an amount of not less than $1,000,000. Subcontractor shall provide to or require like coverage of any and all This is trial version www.adultpdf.com 24 subcontractors who perform any work for Northstar under the Subcontract. Public Liability Policies with a minimum of $1,000,000 per occurrence for bodily injury and property damage, endorsed at a minimum with the following coverage: a. Products and completed operations to policy limits; b. Fire Legal Liability to policy limits; c. Blanket Contractual Liability to policy limits; d. Independent contractors inclusion to policy limits; e. Personal Injury or the equivalent as provided by a Broad Form Comprehensive General Liability policy. Automobile Liability Policies with a minimum combined single limit of $1,000,000 for each occurrence of bodily injury and property damage. Umbrella Policy An Umbrella Policy with limits of not less than $5,000,000; such Policy to include all of the above-listed primary policies. Crime Insurance A Crime Insurance (Fidelity Bond) Policy in the amount of $2,000,000 that will pay on behalf of Subcontractor to Northstar or the Lottery for losses caused by the dishonest acts of Subcontractor or its employees, agents or designee. Errors and Omissions (Professional Liability) If Subcontractor, his employees, agents or designees are involved with the design, installation, modification, operation or maintenance of any hardware or software, Subcontractor will be required to provide Errors and Omissions Professional Liability Insurance with limits of not less than $3,000,000. Other Terms Coverage will be in effect with insurance carriers licensed to do business in any state that Subcontractor will perform its services and will be rated no less than "A" by the AM Best Company. Subcontractor shall cause Northstar to be an additional insured under all coverage except Workers Compensation. Appropriate endorsements will be attached to state that each of Subcontractor‘s required insurance policies will be primary to any other policies that may be in effect. Evidence of all required insurance will be in the form of certificates of insurance. Subcontractor must provide the necessary certificates of insurance to Northstar within ten (10) days of Subcontract Award. Any failure of Subcontractor to supply the necessary certificates of insurance will be cause for Subcontract termination unless such insurance is commercially unavailable. Each required insurance policy shall contain a covenant requiring thirty (30) days written notice to Northstar before cancellation, reduction or other modifications of coverage. In the event Subcontractor fails to furnish timely notice of the cancellation of or material change to such insurance, without prejudice to any other remedy Northstar may have, Northstar may terminate the Subcontract, or at its option, charge the cost of required insurance to Subcontractor. If Subcontractor fails to maintain and keep in force the required insurance coverage at all times This is trial version www.adultpdf.com 25 during the Subcontract period, Northstar shall have the right to cancel and terminate the Subcontract without notice. Subcontractor shall advise each insuring agency to automatically renew all policies and coverage in force at the start of and resulting from the Subcontract until specified coverage requirements are completed. Subcontractor must require each subordinate subcontractor, agent and/or assignee of Subcontractor performing any work required under the Subcontract to carry insurance as specified herein. Subcontractor is responsible for the collection of any amounts due the state or for payment in the event Subcontractor fails to collect payment from the insurer. No modification of or deviation from the Insurance requirements described in this Section will be allowed without the written authorization of Northstar‘s Corporate Risk Management Department. 4.20 TAXES Except as otherwise specified, Subcontractor shall pay all taxes, levies, duties and assessments of every nature due in connection with the Subcontract services and shall make any and all payroll deductions and withholdings required by law. 4.21 TERM OF SUBCONTRACT Any Subcontract resulting from this RFP will be effective upon execution and will continue until Subcontractor completes its performance of the Subcontract Services. Termination rights are set forth in the form of Subcontract. The services pursuant to the contract shall commence one week of the contract execution until December 01, 2011. Northstar Lottery Group, LLC has the option of renewing the contract ―as-is‖ in one year or partial year terms for three consecutive years provided that Northstar Lottery Group submits written notice of their intent to extend the contact 90 days prior to the end of the initial term. 4.22 TITLE AND OWNERSHIP Northstar is and at all times shall remain the owner of and retain all rights, title and interest in all equipment and supplies provided to Subcontractor or its subcontractor(s). 4.23 WAIVER The failure of Northstar to object to or take affirmative action with respect to any conduct of Subcontractor which is in violation or breach of the terms of any Subcontract resulting from this RFP shall not be construed as a waiver of the violation or breach, or of any future violation or breach. 4.24 WARRANTY Subcontractor represents and warrants that properly trained and licensed individuals in accordance with the highest standards of Subcontractor‘s industry shall perform all Subcontract services in a timely, competent and professional manner. Subcontractor represents and warrants that all services performed and any products, materials This is trial version www.adultpdf.com 26 or equipment supplied will be free from all defects and that quality assurance will be provided by Subcontractor. Subcontractor represents that all work performed and products supplied under this Subcontract will be warranted for a minimum period of one (1) year from the date performed or supplied or such longer warranty period provided by manufacturer or as agreed to by Subcontractor This is trial version www.adultpdf.com 27 SCHEDULE I  COST PROPOSAL FORMAT FINANCIAL AUDIT SERVICES RFP #11-S-0005 Bidder: Name and Title of Contact Person: E-mail: Phone: Address: In accordance with the provisions of Section 1.7 of the RFP named above, each Bidder must submit its fixed and final proposed prices in the following format. Services Requested Cost A. Lump Sum Fee to provide Financial Audit Services as described in SCHEDULE 1 – Scope of Service $_________________ B. Provide Fee Escalation for two (2) subsequent years $__________________ (subsequent year 1) $__________________ (subsequent year 2) Note: The proposed Lump Sum Fee shall include payment for all direct and indirect professional, technical and clerical salaries, overhead and profit, and all out-of-pocket expenses including, but not limited to, mileage, printing, photocopying, materials, etc. This is trial version www.adultpdf.com 28 ATTACHMENT A  FORM OF SUBCONTRACT This Subcontract Agreement (this ―Agreement‖) for Services, dated as of __________, 201__ (the ―Execution Date‖) between Northstar Lottery Group, LLC a ___ limited liability company, having a principal address of 180 North LaSalle Street, Suite 1810 Chicago, Illinois 60601 and__________________________, having a principal address of ______________________________________ (the ―Subcontractor‖). Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Private Management Agreement (the ―PMA‖) between the Illinois Department of Revenue, Lottery Division (the ―State‖ or ―Lottery‖) and Northstar a subsidiary of GTECH dated January 18, 2011 and/or the Operating Standards (as such term is defined in the PMA), and in the event that the same term is defined in both the PMA and the Operating Standards, then the defined term as defined in the PMA shall control. In connection with the PMA, Northstar issued a Request for Proposals dated __________________ (the ―RFP‖), soliciting competitive proposals from a number of responsible, responsive qualified bidders to perform those Services described in the RFP. Subcontractor responded to the RFP with a Proposal (the ―Proposal‖), and on ___________________, 201_, Northstar selected Subcontractor following a competitive bidding process. Subject to the successful completion of any probity investigations by the State pursuant to Section 7.7 of the PMA, as well as State Approval of such Subcontractor in accordance with Section 7.6 of the PMA, Northstar and the Subcontractor agree that the Subcontractor shall provide Northstar with those Services set forth in the RFP, subject to the terms and conditions herein. In the event of any inconsistency between this Agreement, the RFP and/or the Proposal, the terms and conditions of this Agreement shall control, and any variation from the scope of services set forth in Attachment A to the RFP shall be expressly included in this Agreement NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Subcontractor and Northstar hereby agree as follows: 1. SERVICES A. The Subcontractor shall provide those services (collectively, the ―Services‖) pursuant to and in accordance with the RFP, which shall be incorporated by reference into this Agreement, as modified by any additional or different terms set forth in the Proposal which are ultimately agreed to by the Parties. B. The Subcontractor shall perform all of the Services with care, skill and diligence, in accordance with applicable professional standards currently recognized by its profession, and to the satisfaction of Northstar. C. All Services provided by Subcontractor hereunder are for the benefit of the State of Illinois. This is trial version www.adultpdf.com 29 2. COMPENSATION AND EXPENSES Northstar shall pay the Subcontractor for the Services provided to Northstar in accordance with and subject to the provisions of Schedule C to this Agreement. 3. CONFIDENTIALITY Contemporaneously with the execution of this Agreement, Northstar and Subcontractor shall execute a non-disclosure agreement in the form attached to this Agreement as Exhibit A. 4. RECORD KEEPING; AUDITS; DATA PROTECTION A. Record Keeping. 1. Contract Records. As reasonably needed to validate Subcontractor‘s compliance with this Agreement and to assist Northstar to validate to the State, Northstar‘s compliance with the PMA, Subcontractor shall maintain complete and accurate records constituting Contract Records as defined in the PMA, to the extent Subcontractor is involved in creating, processing, maintaining and/or storing same as part of its Services. Subcontractor shall maintain such Contract Records in accordance with applicable State Policies and Rules in accordance with applicable State Policies and Rules in accordance with the State‘s record retention policy set forth in the Operating Standards as modified from time to time in accordance with the PMA and for the Record Retention Period. 2. Audits. (a) Subcontractor acknowledges the right of Permitted Auditors to conduct audits of Subcontractor as contemplated by Section 11.3 of the PMA, and shall comply with all obligations thereunder, mutatis mutandis (e.g., where references to Manager and Manager Personnel shall be deemed to refer to Subcontractor and Subcontractor Personnel). Subcontractor shall conduct the investigations, and shall cooperate with Northstar‘s investigations as described in and in accordance with Section 11.3.4 of the PMA. In each case, such cooperation shall include providing information, access to facilities and personnel and active cooperation to enable Northstar to be able to fulfill its obligations under such Sections of the PMA. (b) Audit Results. If an operational audit under Section 11.3.2 of the PMA reveals that Northstar is not in compliance with any Regulatory Requirement, State Policy or Rule or any other term of the PMA due to an act or omission of Subcontractor, Subcontractor Personnel, Subcontractor‘s Affiliates and/or Subcontractor Personnel under this Agreement, Subcontractor shall, at its sole cost and expense, promptly take any and all actions necessary to comply (and render Northstar in compliance with) with such Regulatory Requirement, State Policy (ies), Rules or term applicable to Subcontractor. In addition, Subcontractor shall promptly reimburse Northstar for the actual cost of such audit and any damages, fees, fines or penalties assessed against or incurred by the State as a result thereof. If a financial audit under Section 11.3.3 of the PMA reveals an overcharge by Northstar due to an act or omission of Subcontractor, Subcontractor Personnel, Subcontractor‘s Affiliates and/or Subcontractor Personnel, Subcontractor shall promptly pay to Northstar the amount of such overcharge, together with interest from the date of Subcontractor‘s receipt of such overcharge at the same rate of interest then applicable to late payments by the Department prescribed by State Prompt Payment Act (30 ILCS 540) and rules (74 Ill. Adm. Code 900). In addition, if any such audit reveals an overcharge This is trial version www.adultpdf.com 30 of more than three percent (3%) of the audited payments hereunder in any payment category, Subcontractor shall promptly reimburse Northstar for the actual cost of such audit (including all fees of any Permitted Auditors) and any damages, fees, fines or penalties assessed against or incurred by the State as a result thereof. (c) Audit Follow-Up. To the extent relating to the Subcontractor Services or non-compliance with the applicable Regulatory Requirement, State Policies and Rules or term of this Agreement due to an act or omission of Subcontractor, Subcontractor Personnel, Subcontractor‘s Affiliates and/or Subcontractor Personnel, Subcontractor shall assist Northstar in complying with the Section 11.4.3 of the PMA, including developing for Northstar approval an action plan for Subcontractor to take (within the timeframes contemplated by Section 11.4.3 of the PMA) any and all actions necessary for Subcontractor to rectify, at its own cost and expense, such non- compliance with the applicable Regulatory Requirement, State Policy and Rules or term of this Agreement, or otherwise resolve any deficiencies, problems, concerns and/or recommendations identified by the Department in connection with any audit. (d) Audit Costs. Subcontractor shall provide the audit-related assistance and compliance described in this Section 4 at no additional cost to Northstar 3. Data Ownership; Data Security (a) Ownership of State Data. Subcontractor acknowledges that the State Data is the property of the State. To the extent Subcontractor‘s Services involve State Data, Subcontractor shall take all reasonable actions to enable Northstar to comply with Section 9.1 of the PMA, on the terms and subject to the conditions of said Section 9.1 of the PMA. (b) Security. To the extent Subcontractor‗s Services involve State Data, Subcontractor shall take all reasonable actions to enable Northstar to comply with Section 9.2 of the PMA, on the terms and subject to the conditions of said Section 9.2, including establishing and maintaining the physical, environmental, safety and facility procedures, data security procedures and other safeguards as contemplated by Section 9.2 of the PMA and otherwise complying with the other provisions thereof (mutatis mutandis). Without limitation, to the extent Subcontractor maintains computer or other files containing State Data, Subcontractor shall provide the State with access to such files upon reasonable notice and the State‘s written request and otherwise on the terms and subject the conditions of Section 9.2.4 of the PMA. 5. INTELLECTUAL PROPERTY RIGHTS A. Subcontractor acknowledges and agrees that Northstar shall be the sole owner of all creations, products, inventions or discoveries, which are conceived, created, developed and paid for by Northstar under or in connection with this Agreement together with all Intellectual Property rights related to the foregoing. The Subcontractor warrants that it is entitled to acknowledge and agree to such transfer of rights to Northstar, and has obtained all the rights and necessary authorizations from all parties concerned, including from any of its subcontractor(s) in order to do so. B. The Subcontractor shall cooperate in good faith to facilitate the full exercise and/or exploitation by Northstar of any of its Intellectual Property rights, and, where necessary, do all acts and procedures required to obtain and perfect all intellectual property rights in the name of Northstar. The Subcontractor shall also in all circumstances refrain from any actions or from This is trial version www.adultpdf.com 31 any abuse of their rights including moral rights, which would prejudice such ownership, exercise or exploitation by Northstar. C. All materials, including (without limitation) documents in written or pictorial forms, on magnetic or non-magnetic media, drawings, designs, computer programs, source codes, apparatus or models, developed by the Subcontractor for Northstar in pursuance of this Agreement shall be and shall remain the property of Northstar and are specifically works made for hire. D. All materials supplied by Northstar to the Subcontractor shall remain the property of Northstar, and shall be returned to Northstar, with all copies thereof, when this Agreement is terminated, for whatever reason; or immediately upon request by Northstar. E. Subcontractor hereby grants to Northstar a non-exclusive, non-transferable, irrevocable during the Term, fully paid-up license to access and use and to permit a Third Party, including the State, to access, use, modify and create derivative works of Subcontractor's Intellectual Property for the benefit or use of Northstar or the State until the expiration or termination of this Agreement, to the extent that such access and use is reasonably required for Northstar to receive the Services contemplated hereunder; provided, however, that (a) to the extent any of such licensed Intellectual Property constitutes Software, only the object code version of such Software shall be licensed; and (b) the rights of any Third Party shall be conditioned upon Subcontractor's right to protect such Intellectual Property. F. Subcontractor shall not use any Intellectual Property for which it is unable to offer a license or other rights to Northstar. G. Each party agrees to reproduce copyright legends which appear on any portion of Intellectual Property and/or copies or materials embodying the Intellectual Property which may be owned by the other party or third parties. H. Each party agrees to reasonably cooperate with and reasonably assist the other party in connection with the investigation or pursuit of a party in enforcing and/or investigating violations of the Intellectual Property rights of such party with regard to the Intellectual Property that is owned by such party. In addition, each party agrees to execute any documents or take any other actions as may reasonably be necessary, or as the other party may reasonably request, to perfect such other party's ownership of, as applicable, of any Intellectual Property contemplated hereunder. I. Nothing in this Agreement shall restrict a party from using the generic data processing or business process ideas, concepts, or know-how developed by or disclosed to a party in connection with this Agreement and inadvertently retained in the unaided memory of the receiving party's employees and representatives (and not intentionally memorized for the purpose of later recording or use) who have rightful access to such information under the terms of this Agreement, provided that such use does not infringe or misappropriate the Intellectual Property rights of a party or breach any confidentiality obligations or other obligations under this Agreement. J. All newly developed Intellectual Property jointly developed by Subcontractor and Northstar in furtherance of this Agreement shall be owned jointly by the parties, and each party shall have the right to hold such Intellectual Property in its own name. This is trial version www.adultpdf.com [...]... functions assigned to him or her, all as set forth in said Schedule All Subcontractor Key Personnel shall be assigned to perform the Subcontractor Services on such basis (e.g., full time assignment or otherwise) as needed to ensure that the Subcontractor Services contemplated hereunder are provided in an efficient and timely manner and in accordance with this Agreement Such Schedule designating Subcontractor... disability that cannot be reasonably accommodated, takes a long-term leave of absence, voluntarily terminates his/her employment with Subcontractor, is terminated or removed from providing Subcontractor Services For Cause by Subcontractor, or is transferred, reassigned or redeployed with State and Northstar Approval, within a reasonable time under the circumstances but as soon as practical, Subcontractor . fixed and final proposed prices in the following format. Services Requested Cost A. Lump Sum Fee to provide Financial Audit Services as described in SCHEDULE 1 – Scope of Service $_________________. This is trial version www.adultpdf.com 27 SCHEDULE I  COST PROPOSAL FORMAT FINANCIAL AUDIT SERVICES RFP #11-S-0005 Bidder: Name and Title of Contact Person: E-mail:. Subcontractor and Northstar hereby agree as follows: 1. SERVICES A. The Subcontractor shall provide those services (collectively, the Services ) pursuant to and in accordance with the RFP,