Section 200. Lottery Contracting Rules

01. Classification of Lottery Contracts. (3-25-22) a. Lottery contracts for the acquisition of materials, supplies, services and personal and professiona l services are classified according to relative sensitivity, which in turn determines the level of review, procuremen t method and the extent of disclosure required by Lottery vendors or if no disclosure is required as in the case o f Lottery contractors. The three (3) levels of procurement are as follows: (3-25-22) i. General procurements: These procurements are the least sensitive and are for materials, supplies, equipment, services and personal and professional services required to satisfy the day-to-day administrative , ministerial and operating needs of the Lottery. Disclosure filings by Lottery vendors are not normally required for this class of procurements. Lottery contractors may supply general procurement items. The Lottery may use forma l invitations to bid, informal competitive quotes and requests for proposals to solicit contracts for these acquisitions, a s may be determined by the Director to be the most appropriate process for a specific acquisition. (3-25-22) ii. Sensitive procurements: These procurements are of intermediate sensitivity and are for materials , supplies, equipment, services and personal and professional services which may have direct or indirect impact upo n the security, credibility and integrity of the Lottery. Also included are special studies and services required by statut e (demographic, communications and performance studies). The normal procedure for acquiring the materials an d services is by request for proposal; however, the Director may authorize the use of competitive quotes when the cost of the acquisition is less than fifteen thousand dollars ($15,000). The Director may prescribe special disclosur e requirements governing Lottery contractors or vendors for this class of contracts. (3-25-22) iii. Major procurements: This class is the most sensitive of Lottery contracts

vices is by request for proposal; however, the Director may authorize the use of competitive quotes when the cost of the acquisition is less than fifteen thousand dollars ($15,000). The Director may prescribe special disclosur e requirements governing Lottery contractors or vendors for this class of contracts. (3-25-22) iii. Major procurements: This class is the most sensitive of Lottery contracts. The Lottery Act require s these procurements to be let by the Commission and the filing of comprehensive disclosure statements by Lotter y vendors. (3-25-22) b. The procedures for announcing or soliciting various classes of Lottery contracts outlined i n Paragraph 200.01.a. of this rule are intended to be advisory only and do not limit the Commission or the Director i n the selection of the most appropriate process to acquire a given product or service. (3-25-22) 02. General Policy. (3-25-22) a. In all decisions affecting the Lottery, the Commission and Director are specifically directed b y statute to take into consideration the particularly sensitive nature of the Lottery and to act in a manner to promote an d insure the integrity, security, honesty and fairness of the Lottery. Additionally, the Director, in awarding contracts i n response to solicitations for proposals, must award the contracts to the responsible contractor or vendor submittin g the lowest and best proposal that provides maximum benefits to the state in relation to cost in the areas of security, competence, experience, timely performance, and maximization of net revenues to benefit the public purpose of th e Lottery. Consistent with these statutory directives, it is the policy of the Lottery, to the extent possible, to conduct it s contracting affairs in an open, competitive manner. However, the security and integrity of the Lottery are fundamenta l and overriding considerations in all decisions. (3-25-22) b

ce, timely performance, and maximization of net revenues to benefit the public purpose of th e Lottery. Consistent with these statutory directives, it is the policy of the Lottery, to the extent possible, to conduct it s contracting affairs in an open, competitive manner. However, the security and integrity of the Lottery are fundamenta l and overriding considerations in all decisions. (3-25-22) b. Although the Lottery is exempt from the provisions of Section 67-5715, Idaho Code, it is the polic y of the Lottery to conduct its contracting affairs generally in accordance with the state’s competitive bidding principle s contained in Section 67-5715 et seq., Idaho Code, and consistent with the specific directives contained in Paragraph 200.02.a. of this rule. In implementing this policy, the Lottery reserves the right to use the procedures developed b y the Department of Administration as guidelines to govern its procurement actions. Notwithstanding this reservation , the Lottery also reserves the right to use alternate contracting and purchasing practices that take account of marke t realities and modern or innovative contracting and purchasing methods that are also consistent with the public polic y of encouraging competition. These methods may include, but are not limited to, specialized vendor prequalifications , competitive negotiations, performance incentives and disincentives, life cycle costing and solicitations emphasizin g the request for proposal process. (3-25-22) c. When the Lottery uses a Request for Proposal (RFP) for a planned acquisition, the majo r considerations in determining the contract award will be the quality of the product or service, the likelihood of timel y performance, and price. Qualitative factors normally address issues like the Vendor’s demonstrated experience i n performing comparable projects, performance credibility, availability of qualified personnel and equipment, and othe r special factors as may apply to a particular contract

ations in determining the contract award will be the quality of the product or service, the likelihood of timel y performance, and price. Qualitative factors normally address issues like the Vendor’s demonstrated experience i n performing comparable projects, performance credibility, availability of qualified personnel and equipment, and othe r special factors as may apply to a particular contract. The RFP will normally specify the criteria that will be used in th e evaluation of offers and the award of the contract. (3-25-22) d. Because of the specialized character of Lottery contracts, the Lottery will not normally advertis e bid proposals. Rather, the Lottery will circulate bid and proposal requests for materials, equipment and services to vendors known to specialize in the required procurement or to vendors that the Lottery may reasonably expect to hav e an interest in providing such services. The Lottery will develop its mailing lists as the service need arises. (3-25-22) e. The Director may prepare standard terms and conditions to govern the acquisition of materials, supplies and services by the State Lottery. To the extent possible, the standard terms and conditions should be a s uniform as possible with the standard terms and conditions governing contracts entered into by other state agencies. (3-25-22) f. All major departures from the state contracting guidelines referred to in Paragraph 200.02.b. of thi s rule will be approved by the Commission. If there is a conflict between the state guidelines and the Lottery’s adopte d rules, the Lottery’s rules take precedence. (3-25-22) 03. Delegation of Purchasing Authority. (3-25-22) a. Authority is granted to the Director to initiate all purchase actions and enter into and execut e contracts for materials, supplies and services, on behalf of the Commission and the Lottery, except as follows: (3-25-22) i. General contracts having an estimated one-time or annual cost in excess of fifty thousand dollar s ($50,000); (3-25-22) ii

) 03. Delegation of Purchasing Authority. (3-25-22) a. Authority is granted to the Director to initiate all purchase actions and enter into and execut e contracts for materials, supplies and services, on behalf of the Commission and the Lottery, except as follows: (3-25-22) i. General contracts having an estimated one-time or annual cost in excess of fifty thousand dollar s ($50,000); (3-25-22) ii. Contracts defined as Sensitive Procurements having a one-time or annual cost of more than fift y thousand dollars ($50,000); (3-25-22) iii. Contracts defined as Major Procurements; (3-25-22) iv. All personal service contracts other than major or sensitive procurements having a one-time o r annual cost in excess of fifteen thousand dollars ($15,000); and (3-25-22) v. Procurement actions which are executed in a manner other than as provided in the contract exemption guidelines. (3-25-22) b. Notwithstanding the provisions of Subparagraph 200.03.a.i. of this rule, the Commission, havin g once approved a planned procurement action involving a general contract acquisition, grants authority to the Directo r to execute a contract or contracts for the purchase or service without further action by the Commission. (3-25-22) c. The Commission, having once approved a particular contract, delegates authority to the Director t o make all disbursements and payments as provided in the contract, without further, specific approval action by th e Commission. (3-25-22) d. The Commission grants authority to the Director to enter into emergency contracts when immediate and decisive action is required to protect the security, credibility or integrity of the Lottery or a Lotter y game. All emergency contracts let by the Director in which the cost exceeds the delegated authority contained i n Paragraph 200.03.a. of this rule, must be reported to the Commission within five (5) days of the contract award date , or at the next scheduled Commission meeting, whichever is sooner. Such procurement actions may be taken withou t competitive bid

integrity of the Lottery or a Lotter y game. All emergency contracts let by the Director in which the cost exceeds the delegated authority contained i n Paragraph 200.03.a. of this rule, must be reported to the Commission within five (5) days of the contract award date , or at the next scheduled Commission meeting, whichever is sooner. Such procurement actions may be taken withou t competitive bid. The dollar value of a contract awarded by the Director under the provisions of this section may no t exceed fifty thousand dollars ($50,000). Any emergency contract for a major procurement in which the cost exceeds fifty thousand dollars ($50,000), if not acted upon at a regularly scheduled Commission meeting, is subject t o Commission approval by telephonic or electronic vote. (3-25-22) 04. State Central Services Agenda. As provided in Section 67-7408, Idaho Code, the Lottery ma y contract with other state agencies for the performance of contracting responsibilities that may be required by th e Lottery. Those services may include, but are not limited to, the acquisition of Fidelity and Faithful Performanc e Bonds covering the Commissioners, officers, and employees of the Lottery; bonding of retailers, annuity contracts ; general equipment and supplies; equipment financing agreements; and disposal of surplus Lottery property. Th e Lottery is bound by all statutes and rules governing the actions of the state agency when the Lottery uses suc h services. (3-25-22) 05. Idaho Preference. (3-25-22) a. In all contracts, the Lottery will prefer goods or services that have been manufactured or produce d in this state if price, fitness, availability and quality are otherwise equal. (3-25-22) b

sposal of surplus Lottery property. Th e Lottery is bound by all statutes and rules governing the actions of the state agency when the Lottery uses suc h services. (3-25-22) 05. Idaho Preference. (3-25-22) a. In all contracts, the Lottery will prefer goods or services that have been manufactured or produce d in this state if price, fitness, availability and quality are otherwise equal. (3-25-22) b. Where a Lottery contract is awarded to a foreign contractor and the contract price exceeds te n thousand dollars ($10,000), the contractor must promptly report to the Idaho Tax Commission (ITC) on forms to b e provided by ITC the total contract price, terms of payment, length of contract and such other information as the ITC may require before final payment can be received on the Lottery contract. The Lottery must satisfy itself that th e requirements of this Paragraph have been complied with before it issues a final payment on a Lottery contract. For th e purposes of this Paragraph, a foreign contractor is one who is not domiciled in or registered to do business in Idaho. (3-25-22) 06. Equal Opportunity/Affirmative Action Contracts. The Lottery is an equal opportunity employe r and also participates in any on-going state affirmative action programs. (3-25-22) 07. Personal Services Contract. (3-25-22) a. Contracts between the Lottery and persons or firms such as advertising agencies, security consultants, auditors, other consultants required to conduct or prepare special studies and reports and other persona l services contracts that may be required to fulfill the Lottery’s responsibilities, will be awarded as outlined in thi s Subsection. The award of contracts will be either direct, informal or formal depending upon the sensitivity an d estimated dollar value of the contract

security consultants, auditors, other consultants required to conduct or prepare special studies and reports and other persona l services contracts that may be required to fulfill the Lottery’s responsibilities, will be awarded as outlined in thi s Subsection. The award of contracts will be either direct, informal or formal depending upon the sensitivity an d estimated dollar value of the contract. In awarding personal services contracts, the Lottery will consider th e contractor’s qualifications in similar areas of demonstrated competency, availability, experience in successfully performing comparable projects, availability of qualified personnel, likelihood of timely performance, history of cos t containment, compensation requirements and other special factors that may apply to a particular contract. (3-25-22) b. Direct Award Procedures. (3-25-22) i. Any personal services contract having an estimated one-time or annual value of ten thousan d dollars ($10,000) or less may be awarded directly by the Director if the Director believes reasonable steps have bee n taken to obtain competitive quotes, if feasible, and the award will not negatively affect the security, credibility o r integrity of the Lottery. (3-25-22) ii. The Director, with the approval of the Commission, may directly award personal services contract s in any appropriate or reasonable amount, without competitive solicitations, when the project consists of work that ha s been substantially described, planned or otherwise studied in an earlier Lottery contract and the new contract woul d be a continuation of the earlier project, provided that the earlier contract was awarded by a formal selectio n procedure

ectly award personal services contract s in any appropriate or reasonable amount, without competitive solicitations, when the project consists of work that ha s been substantially described, planned or otherwise studied in an earlier Lottery contract and the new contract woul d be a continuation of the earlier project, provided that the earlier contract was awarded by a formal selectio n procedure. In awarding contracts under this provision the Commission and Director will take into account the effect s of that action on the security, credibility and integrity of the Lottery and further ensure that the contract awards wil l not encourage favoritism or substantially diminish competition and will result in substantial cost savings to the Lottery. (3-25-22) iii. The Director, with the approval of the Commission, may directly award personal service contracts without competitive solicitation when an emergency or other condition exists that requires prompt and decisiv e action. The Commission and Director may exercise the provisions of this Paragraph only when immediate action i s required to correct a situation that would threaten integrity, security, honesty, and fairness in the operation an d administration of the Lottery or the objective of raising net revenues for the benefit of the public purpose described i n the Act. (3-25-22) c. Informal Award Procedure: The Director may award any personal services contract having a n estimated one-time annual value of more than ten thousand dollars ($10,000), but not more than twenty-five thousan d dollars ($25,000), if the following informal award procedure is followed: (3-25-22) i. An attempt is made to obtain a minimum of three (3) competitive quotes. If three (3) quotes are no t available, fewer will suffice provided a written record is made of the effort to obtain three (3) quotes. (3-25-22) ii. A written record must be maintained of the source and amount of quotes received. (3-25-22) iii

llars ($25,000), if the following informal award procedure is followed: (3-25-22) i. An attempt is made to obtain a minimum of three (3) competitive quotes. If three (3) quotes are no t available, fewer will suffice provided a written record is made of the effort to obtain three (3) quotes. (3-25-22) ii. A written record must be maintained of the source and amount of quotes received. (3-25-22) iii. The contract award will be made to the lowest priced vendor who best meets the contract awar d criteria of Paragraph 200.07.a. of this rule. (3-25-22) iv. The Director maintains work papers documenting the basis of the award to ensure that the award will not negatively affect the security, credibility and integrity of the Lottery. (3-25-22) d. Formal Award Procedures: Unless otherwise awarded under the provisions of Subparagraph s 200.07.b.ii. or 200.07.b.iii. of this rule, all personal services contracts having an estimated one-time or annual cost o f more than twenty-five thousand dollars ($25,000) must be awarded according to the formal award procedure, a s follows: (3-25-22) i. The Lottery will distribute copies of the proposal (usually a Request for Proposal) to Lotter y vendors or to appropriate contractors who have indicated an interest, or are anticipated to have an interest, i n providing the required service to the Lottery. Every Request for Proposal will include a response deadline date. Al l responses received by the Lottery after the deadline may be rejected. (3-25-22) ii. The Director will appoint an evaluation panel consisting of at least four (4) persons, at least two (2) of whom are members of the Lottery’s staff. The Director of Lottery Security will be one of the appointees to evaluat e the responses for any project involving the security of the Lottery. (3-25-22) iii. The evaluation panel must develop a system to evaluate the vendor responses and score eac h vendor’s response

appoint an evaluation panel consisting of at least four (4) persons, at least two (2) of whom are members of the Lottery’s staff. The Director of Lottery Security will be one of the appointees to evaluat e the responses for any project involving the security of the Lottery. (3-25-22) iii. The evaluation panel must develop a system to evaluate the vendor responses and score eac h vendor’s response. Based upon this evaluation, the evaluation panel must rank the three (3) best responses and develop an award recommendation. (3-25-22) iv. The contract will be awarded to the vendor who best meets the award criteria. (3-25-22) e. No contract or other agreement for the purpose of providing services to the Lottery may be entere d into, renewed, or extended with any person, unless the person certifies in writing, under penalty of perjury, that th e person is not in violation of any Idaho tax laws on a form prescribed by the Idaho Tax Commission (ITC). A copy o f the certification form may be obtained from the Lottery or the ITC. The original certification must be retained in th e Lottery’s contract file as required by the state’s records retention guidelines. (3-25-22) 08. Major Procurements. (3-25-22) a. All bid announcements, invitations, or proposals covering major procurements will identify that th e planned acquisition is classified as a major procurement. (3-25-22) b. All contracts or procurement actions classified as major procurements will be subject to th e disclosure requirements specified in Section 67-7421, Idaho Code. Subsection 010.05 of these rules defines the ter m “control person” for purposes of disclosure requirements. The Lottery will enclose a copy of the disclosur e requirements with each bid announcement or proposed request for such procurement. All disclosure filings ar e subject to the review and approval of the Director of the Lottery Security Division

ents specified in Section 67-7421, Idaho Code. Subsection 010.05 of these rules defines the ter m “control person” for purposes of disclosure requirements. The Lottery will enclose a copy of the disclosur e requirements with each bid announcement or proposed request for such procurement. All disclosure filings ar e subject to the review and approval of the Director of the Lottery Security Division. Failure of any Lottery vendor t o properly execute or timely submit the disclosure requirement may be grounds for rejection of the bid or proposal. (3-25-22) c. No contract for a major procurement with any Lottery vendor may be entered into if any contro l person of that Lottery vendor has been convicted of a crime, other than traffic infractions. Background checks mus t be made by the Director of Lottery Security to rigorously enforce this requirement. (3-25-22) d. The Lottery may prequalify Lottery vendors as having met the disclosure filing requirements fo r major procurements. The disclosure prequalifications may be renewed by July 1 of each year. The prequalification s will satisfy the disclosure requirements of the Act, providing a certification is received from the Lottery vendor at th e time of submitting any subsequent bid, proposal or offer and that no changes have occurred in the vendor’s status, o r that of its control persons, since the last filing of the complete disclosure statement. (3-25-22) e. Each Lottery vendor for a major procurement must maintain its disclosure filing in a current statu s during the tenure of the contract. Unless otherwise provided in the contract document, any changes in the status of th e vendor, any of its listed control persons or additional control persons, must be reported to the Director within fourteen (14) days of the known change, and will require written submission of the same disclosure information to th e Commission. (3-25-22) f

ng in a current statu s during the tenure of the contract. Unless otherwise provided in the contract document, any changes in the status of th e vendor, any of its listed control persons or additional control persons, must be reported to the Director within fourteen (14) days of the known change, and will require written submission of the same disclosure information to th e Commission. (3-25-22) f. Each Lottery vendor for a major procurement is required to post a performance bond with th e Commission as provided in Section 67-7427, Idaho Code. The performance bond must be issued by a surety licensed to do business in this state and be for the duration specified in the procurement announcement. (3-25-22) 09. Sensitive Procurements. (3-25-22) a. All bid announcements, invitations, or Requests for Proposal covering sensitive procurements a s defined in Subparagraph 200.01.a.ii. of this rule will identify that the planned acquisition is a sensitive procurement and will be subject to the provisions of this rule. (3-25-22) b. The Director may establish special disclosure requirements governing State Lottery contracts fo r sensitive procurements that will be included in the procurement announcement. Failure of any Lottery vendor o r contractor to properly execute or timely submit the disclosure requirement may be grounds for rejection of the bid o r proposal. All disclosure filings are subject to the review and approval of the Director of Lottery Security. (3-25-22) c. No contract for a major procurement with any Lottery vendor may be entered into if any contro l person of that Lottery vendor has been convicted of a crime, other than traffic infractions. Background checks mus t be made by the Director of Lottery Security to rigorously enforce this requirement. (3-25-22) d. The Lottery may prequalify Lottery vendors as having met the disclosure requirements of this rule

act for a major procurement with any Lottery vendor may be entered into if any contro l person of that Lottery vendor has been convicted of a crime, other than traffic infractions. Background checks mus t be made by the Director of Lottery Security to rigorously enforce this requirement. (3-25-22) d. The Lottery may prequalify Lottery vendors as having met the disclosure requirements of this rule . The prequalification will satisfy the disclosure filing requirement providing a certification is received from th e Lottery vendor, at the time of submitting any subsequent bid, proposal or offer, that no changes have occurred in th e vendor’s status or any of its principals since the last filing of the full disclosure statement. (3-25-22) e. Each Lottery vendor for a sensitive procurement must maintain its disclosure filing in a curren t status during the tenure of the contract. Unless otherwise provided in the contract document, any changes in th e vendor’s status or any of its principals, must be reported to the Director within fourteen (14) days of the know n change, and will require written submission of the same disclosure information to the Commission. (3-25-22) f. Each Lottery contractor for a sensitive procurement may be required to post a performance bon d with the Lottery. The performance bond must be issued by a surety licensed to do business in this state and be for th e amount and duration specified in the procurement announcement. (3-25-22) 10. Advertising and Promotional Contract. Because advertising and promotional contracts involv e unique marketing strategies for Lottery games, the acquisition of these services and purchases may be made directly without using competitive procurement procedures. The prudent person rule will apply in the award of these contract s or the acquisition of these services. This exemption applies to all advertising and promotional contracts, whethe r placed through the Lottery’s advertising agency or directly by the Commission or the Director

es, the acquisition of these services and purchases may be made directly without using competitive procurement procedures. The prudent person rule will apply in the award of these contract s or the acquisition of these services. This exemption applies to all advertising and promotional contracts, whethe r placed through the Lottery’s advertising agency or directly by the Commission or the Director. For the purpose of thi s rule, advertising and promotional contracts include but are not limited to: agreements with radio and televisio n stations, acquisition of prizes, media selection, placement of advertising contracts, promotional printing, art work an d development and placement of all forms of commercials and display presentations. (3-25-22) 11. Investment Contracts. The Lottery may enter into contracts for the acquisition of structure d settlements, place investments or acquire annuities related to the pay-off of major prize winners without followin g competitive bidding procedures. The Lottery will follow the prudent person rule in the placement of suc h investments. (3-25-22) 12. Prequalification of Annuity Vendors. (3-25-22) a. For the purpose of acquiring annuities related to the pay-off of major prize winners, the Lottery wil l maintain an ongoing prequalification list of annuity vendors. A vendor must first be prequalified by the Lotter y before submitting a bid to the Lottery for the award of an annuity contract. Vendors may submit their qualifications t o the Lottery for evaluation any time in the year. (3-25-22) b. The following criteria must be met by each vendor before being placed on the prequalification list: (3-25-22) i. Each bidder must be an insurance company licensed to do business in Idaho and have been i n business for a period of two (2) years immediately before submitting its bid. (3-25-22) ii. An insurance company must be a Best’s “A+” rated company and have at least a Best’s Class VII financial size classification. (3-25-22) iii

by each vendor before being placed on the prequalification list: (3-25-22) i. Each bidder must be an insurance company licensed to do business in Idaho and have been i n business for a period of two (2) years immediately before submitting its bid. (3-25-22) ii. An insurance company must be a Best’s “A+” rated company and have at least a Best’s Class VII financial size classification. (3-25-22) iii. Each bidder’s request for qualification must contain: (3-25-22) (1) The name, address, telephone number and contact person for the bidder. (3-25-22) (2) The current financial statement of the bidder certified by an independent certified publi c accountant. (3-25-22) (3) The names, addresses and telephone numbers of three (3) current or past annuity client reference s whom the Lottery may contact. (3-25-22) c. After a vendor has been prequalified, the vendor may submit bids to the Lottery in accordance wit h the procedures established by the Director. Furthermore, a vendor must keep its qualifications current by promptl y reporting any changes in their status to the Lottery. (3-25-22) d. The total amount of annuities awarded to an insurance company cannot exceed five percent (5%) of its stated surplus. (3-25-22) e. Nothing contained in this rule will preclude a brokerage company from representing or submittin g a bid on behalf of a qualified bidder. (3-25-22)