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State Procurement Manual Homepage
State Procurement Manual

Length of Contracts

Number Section
PRO-E-10 Contracting, Ordering, Receiving and Payment
Effective Replaces Agencies Affected
4-1-02 11-1-88 All


Authority: Wis. Stats. 16.75(2)(b); 16.75(3); 16.91(2)

Scope:
  • to establish policy on the duration of contracts for state procurement of materials and services
Content:

  1. Contracts may be for any term deemed to be in the best interests of the state, but the terms and provisions for renewal or extension, if any, will be incorporated in the original bid or proposal specifications and the contract document. Renewal action is subject to the availability of funds.
 Revision Code
  1. The following guidelines should be used to determine the length of terms for purchasing contracts. Contracts may run for the period indicated subject to two consecutive one-year extensions. Extension option, if agreeable to both the state and the contractor, should be exercised within 60 days prior to the contract expiration date.

    1. Contracts for standard services and supplies

      Term: one year

      These contracts are for standard service and supply requirements that are bid and awarded by the State Bureau of Procurement or a state agency and that involve the issue of multiple purchase orders, over the term of one year, by the agency purchasing offices. They involve performance on the part of the contractor that is normal and usual in the contractor's line of business. There is little benefit to the state in contracting for more than one year. Investment or inventory requirements on the part of the contractor are minimal, and usual.

      Examples:

      Shoulder patches and emblems, parts, hardware, paper and paper products, vehicles, office supplies, cleaning chemicals, tools, lumber, can liners, food, feeds, fertilizer and seeds, typewriter repairs, photo and blueprint processing, vehicle repairs. (Inventory, systems or personnel increases at the contractor's option resulting from the award of this type of contract do not warrant extended terms.)
    2. Contracts requiring major investments by the state

      Term: two - three years

      These contracts involve a significant investment on the part of the state as a condition to entering into, or terminating, the contracts. These contracts generally involve significant start-up, or conversion, costs. Benefits are derived by the state by limiting, as much as practical, the frequency of incurring the start-up or conversion costs by contracting for longer periods of time than one year. When these contracts pass from one contractor to another, the state faces such costs as those involved in transporting state-owned inventories from one contractor to another, or paying for new fixtures or dies. The state may have to carry duplicates of, or dispose of, incompatible product inventories. The cost of testing/inspection/approval of new contractors' products or facilities may be involved.

      Examples:

      Warehousing services, uniforms, carbonless papers, law enforcement testing and monitoring equipment, highway marking paint, medical or scientific systems or products.
    3. Contracts for extended performance

      Term: three - five years

      These contracts are for vendor performance over an extended period of time where this is determined to be in the best interests of the state, rather than contracts for one year. Generally, these contracts are for maintenance of capital equipment or major operating systems where continuous performance by the contractor is most likely to be beneficial to the contractor, therefore to the state. This type of contract is used to prevent short-term "fix" maintenance when this can result in deterioration to capital equipment or major operating systems.

      Examples:

      Elevator maintenance, data processing system maintenance, heating and cooling system maintenance.
    4. Contracts requiring major investments by the contractor

      Term: three - five years

      These contracts involve a significant investment on the part of the contractor, generally in the form of requiring the contractor to acquire capital equipment as a condition to a specific contract. The investment most probably will be amortized by the contractor over the life of the contract. The longer the term of the contract, the lower the annual burden of amortization will be as the contractor writes off the investment, and the less often the state has to begin again the amortization write-off with a new contract. These contracts are limited to those that require investment as a condition to the specific contract, i.e., these include contracts that require a contractor to install trash containers in multiple state facility locations, these do not include providing cars for car rental services from companies already in the business of renting cars.

      Examples:

      Trash removal involving containers and compactors, laundry services involving hampers and carts, food services involving the supplying of coolers or thermal containers, bulk gas and chemical supply services involving the installation of tanks or hoppers, security services involving the installation of detection or communication equipment, vending machine and automatic teller services, operating contracts requiring the hiring of management or operationally-responsible personnel.
    5. Contracts for lease/lease-purchase

      Term: one - eight years

      These contracts involve the lease or lease-purchase of equipment by the state. Contracts that are matched to the contractor's amortization schedule reduce the contractor's cost and, in a competitive bidding situation, reduce costs to the state.

      Examples:

      Lease, or lease-purchase, agreements for data processing equipment, word processing systems, copiers and presses and printing equipment, aircraft, offices and housing in foreign countries, major medical and scientific equipment and systems.
    6. Contracts for specific or indefinite services

      Term: as required

      These contracts run for a term required by their conditions and contents. Some contracts are for a specific term, in excess of one year, as in the case of the Department of Commerce contracting with a manager for a foreign office for five years. Other contracts are for an indefinite term, as in the case of the Department of Justice contracting with an investigator to develop testimony that will be used in a trial at some indefinite time in the future.

      Examples:

      Foreign office management, research services for a specific long term; investigation and testimony, expert witnesses.
  1. The following guidelines should be used to determine the length of terms for printing contracts.

    1. Statewide Bureau of Procurement or UW Local Service contracts for printing of classes 3, 4, 7 and 8

      Term: one year with possible two consecutive one-year extension periods

      These contracts are for transactions initiated by several state agency offices that involve the issue of multiple printing orders for similar types of printing.


    2. Contracts for legislative printing, Class 1

      Term: two years (legislative term)

      These contracts are for transactions initiated by legislative offices of multiple printing orders for similar types of printing that are bid and awarded for a period of time, in this case the two-year term of the legislature.


    3. Contracts for a single product that requires exact reprints or repetitive production.

      Term: as required, not to exceed three years total

      These contracts are for products for which one or more printings of an original are required and are used when the specifications or terms do not fit an existing State Procurement statewide contract. Some publications may call for a second or third printing one or more years after the original production run. When provided for in the original bid and award document, repetitive printing is permitted. This does not include reprints with changes, or quantity or price changes that were not included in the original bid.


    4. Contracts for a specific product with variations between orders

      Term: as required, not to exceed three years total

      These contracts are for multiple transactions for the production of a specific product or products with variations between orders, and are used when the specifications or terms do not fit an existing State Procurement statewide contract. These contracts involve single-agency use and may run for a short term of weeks or months to one year or more. In all cases, however, the contract is bid and awarded as a specific product for the period of time required.

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