4050 Esplanade Way Tallahassee, Florida 32399-0950 Tel: 850.488.2786 Fax: 850. 922.6149 Rick Scott, Governor Chad Poppell, Secretary ATTACHMENT A STATEMENT OF WORK FOR PRINTING AND MAILING IRS FORMS 1099-R AND DMS 16-17-020 THE STATE OF FLORIDA DEPARTMENT OF MANAGEMENT SERVICES TABLE OF CONTENTS SECTION 1. STATEMENT OF WORK... 2 SECTION 2. CONTRACTOR REQUIREMENTS... 2 SECTION 3. CONTRACTOR DELIVERABLES AND REPORTING... 5 SECTION 4. FINANCIAL CONSEQUENCES FOR NONPERFORMANCE... 6 SECTION 5. SUBCONTRACTORS ENVELOPES ONLY... 7 SECTION 6. COST SAVINGS AND ADDED VALUE... 7 APPENDICES: APPENDIX 1. SAMPLE FORM 1099 APPENDIX 2. SAMPLE FORM 1099 ENVELOPE APPENDIX 3. COST SAVINGS AND ADDED VALUE WORKSHEET PRINTING AND MAILING IRS FORMS 1099-R AND Page 1 of 8
SECTION 1. STATEMENT OF WORK The Contractor will provide labor, skills, software, materials and services necessary to print documents with confidential, variable member data and static text for the Form 1099-R with instructions, Florida Retirement System (FRS) Retiree Annual Statement (RAS), and cover letter for approximately 392,000 recipients in 2016 and a specified number of recipients in subsequent years of the contract. The Contractor will provide custom envelopes and have the capability to insert printed 1099-R and retiree newsletter into the custom envelopes. The Contractor must mail the time-sensitive 1099-R documents in accordance with the annual schedule. The Contractor shall have the capability to perform and complete the services in all respects in accordance with the solicitation documents. The Contractor shall provide the services identified in SECTION 2, and Contractor Deliverables for each contracted year, as included in SECTION 3. A sample Form 1099-R is provided with this Statement of Work as APPENDIX 1. The projected 1099-R print volumes for each year of the resultant contract are based on projected FRS payroll growth adjusted for the projected increase in the 1099-R electronic delivery elections by payees. See SECTION 2.2.9 for the projected number of annual recipients. 1.1 Terms and Definitions Form 1099R: Form 1099-R is an Internal Revenue Service (IRS) form with which an individual reports his or her distributions from annuities, profit-sharing plans, retirement plans, individual retirement accounts (IRAs), insurance contracts and/or pensions. Florida Retirement System (FRS): System of pension plans and other statewide retirement systems administered by the Division of Retirement. Level II Background Screening: A fingerprint check of state and federal criminal history information conducted through the Florida Department of law Enforcement (FDLE) and Federal Bureau of Investigation (FBI). Retiree Annual Statement (RAS): A year-end summary of your Florida Retirement System (FRS) pension income and deductions. Value Added: Service options provided in conjunction with the services included in the Statement of Work that complement core service offerings without additional cost to the customer. Value Engineering (Cost Savings): Value engineering (VE) is systematic method to improve the "value" of goods or products and services. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost SECTION 2. CONTRACTOR REQUIREMENTS 2.1 Security The Contractor must have secure physical facilities and data security processes in place to handle processing and storing these documents containing confidential information. Specific requirements include: PRINTING AND MAILING IRS FORMS 1099-R AND Page 2 of 8
2.1.1 Limit access to FRS data to employees that have passed, at a minimum, a level II background screening (including criminal history check) or equivalent if approved by the Department of Management Services, Office of the Inspector General. 2.1.2 Use an encrypted transfer method currently supported by the Division of Retirement s Information Technology group to send and receive print proofs and files. 2.1.3 Use secure shell file transfer protocol (SFTP) as an encrypted connection between the Contractor s network and the Division s for unencrypted data, or 2.1.4 PGP file encryption (filename.pgp) using regular FTP to transfer encrypted files to Division. 2.2 FORM AND PRINTING INFORMATION: The finished Form 1099-R consists of one 11 x 17 sheet printed front and back with a perforation along the center of the sheet, yielding a 4-page document that includes a front page cover letter with member-specific variable data addressed to each payee, a page with 1099-R data (with perforation separating the individual forms), the Retiree Annual Statement, and a 1099-R instructions page. See the Paper Size and Folding section below. The document will contain both variable payee information and static text. 2.2.1 PAPER CONTENT: The form will be printed on 24-lb. bond or 60-lb. offset white paper with a recycled content not to exceed 10% and minimum of 95 bright. The Contractor is responsible for providing the paper for all form printing. 2.2.2 PAPER SIZE AND FOLDING: One 11 x 17 landscape document folded vertically in half to 8 1/2 x 11 letter size. The letter size document is then bifolded to 8 ½ x 3 2/3 to be inserted into custom window envelope. The payee s name and complete address must be displayed in the envelope window. 2.2.3 NUMBER OF PAGES PER FORM 1099-R: One 11 x 17 page with perforations is printed front and back, incorporating four (4) 8 1/2 x 11 page documents. 2.2.4 INK: Black 2.2.5 PRINTING SPECIFICATIONS: Printing of the Forms 1099-R must comply with each year s IRS specifications, including the perforating of the paper. 2.2.6 OVERRUNS/UNDERRUNS: No overrun or underrun allowed. The print count must equal the exact count on print file provided by the Division. 2.2.7 ENVELOPES: The envelopes used for mailing will be tan-colored, custom window envelopes preprinted with the following information: the Division's return PRINTING AND MAILING IRS FORMS 1099-R AND Page 3 of 8
address in the upper left-hand corner, "IMPORTANT TAX DOCUMENT ENCLOSED" above the address window, and the Division s first class bulk mail permit number in the upper right-hand corner. Envelopes will be of sufficient quality to ensure proper adhesive closure for mailing. Each envelope must display a payee s complete mailing address in the window. The envelope design will be finalized upon contract award for the 2016 1099-R project and finalized at the beginning of each succeeding year s project. Refer to APPENDIX 2 Sample 1099-R Envelope. 2.2.8 UNUSED ENVELOPES: Any unused Form 1099-R envelopes shall be returned by the Contractor to the Division of Retirement at normal shipping costs plus $25 handling costs. The Contractor will provide documentation of all shipping costs. 2.2.9 QUANTITY: Approximate quantities for forms and envelopes are shown below for each project year. Each year s actual print count will be determined by the final 1099-R print file is created by the Division and transmitted to the Contractor. 1099R Project Year Estimated Print Volume 1099R Project Year Estimated Print Volume 2016 392,000 2019 416,000 2017 400,000 2020 424,000 2018 408,000 2021 433,000 2.2.10 FORM DATA: The Division will provide variable payee information in a delimited file format using secure shell file transfer protocol (SFTP) upload. The data file provided by the Division will include payee addresses that have been cleansed and formatted according to the United States Postal Service (USPS) requirements. See SECTION 2.3.6. The Contractor will work with Division staff to have the Form 1099-R developed, tested, and approved prior to printing. 2.3 Packing and Mailing 2.3.1 The Division will provide the Retiree Newsletters to be inserted one copy to each Form 1099-R envelope to be mailed. The newsletters will be printed and folded by another printer under contract with the Department of Management Services. Each newsletter is one 11 X 17 45-pd matte sheet, folded to accommodate the mailing envelope and is to be confirmed before each mailing each year. The newsletters will be banded into lots of 25 and boxed. For each 1099-R project year the newsletters will be delivered to the 1099-R printer to be inserted before mailing Forms 1099-R. Any unused Retiree Newsletters shall be returned by the 1099-R printer to the Division of Retirement at normal shipping costs plus $25 handling costs. The Contractor will provide documentation of all shipping costs. The Contractor shall ensure each envelope is properly sealed to maintain the privacy of payees confidential information. See INSPECTIONS SECTION below. PRINTING AND MAILING IRS FORMS 1099-R AND Page 4 of 8
2.3.2 The Contractor shall ensure each envelope is properly sealed to maintain the privacy of payees confidential information. See INSPECTIONS SECTION below. 2.3.3 The Contractor shall start mailing the Form 1099-R s by the date determined by the Division and the Contractor. 2.3.4 The Contractor shall notify the Department's Contract Manager immediately of any printing issues or mailing delays within 24 hours of the incident. 2.3.5 All envelopes will be printed using the USPS Bulk Mail Permit number assigned to the Division of Retirement and must be sent First Class Mail. 2.3.6 The Division uses the National Change of Address (NCOA) software. The Contractor will use payees mailing address provided by the Division. The Division will provide the Coding Accuracy Support System (CASS) certification document to the Contractor. 2.3.7 The Contractor will use current U.S. Postal Service bar coding standards for the addresses provided to obtain maximum discounts for consistently-sized first class mail (zip code presorting, etc.). Appropriate postal discount bar coding must be printed above each payee s address to be visible in the envelope window. 2.3.8 All documents must be mailed taking full advantage of all available discounts, including sorting, to obtain the most cost economical postal rates for consistentlysized first class mail. 2.3.9 The Contractor shall have all Forms 1099-R completed and inserted with a Retiree Newsletter inside a properly-sealed envelope and delivered to a U.S. Post Office no later than the date determined by the Division and the Contractor. The date will be confirmed in writing at the start of each year s project. SECTION 3. CONTRACTOR DELIVERABLES AND REPORTING 3.1 Deliverable Packing and Mailing Services: The Contractor shall provide packing and mailing services as specified in SECTION 2 of this Attachment A. and the following Evidence of Completion. 3.1.1 Contractor must provide USPS dated receipts to document mailing of each year s Form 1099-R. The number of pieces mailed must match exactly to the number of payees on the print file provided by the Division. At a minimum, the receipts must specify the mailing date, number mailed for each presort category, type of mail (domestic/international), and the USPS bulk mail permit number assigned to the Division of Retirement. Due Date: TBD 3.1.2 Contractor must provide documentation of the Division s postal permit registration for the USPS s Mail Anywhere program Due Date: December 1 st, of each year of the contract. PRINTING AND MAILING IRS FORMS 1099-R AND Page 5 of 8
3.2 Deliverable Printing Services: The Contractor shall provide printing services as specified in SECTION 2 of this Attachment A. and the following Evidence of Completion. 3.2.1 Final Proofs Documents: The Contractor must provide proofs of completed Form 1099-R documents during the testing process and after any change. The Contractor must also provide final form document to the Division for evaluation and written approval prior to final production printing. Proofs will be reviewed for data accuracy, formatting, page alignment, and general correctness according to document specifications. Complete proofs will consist of the Form 1099-R, Retiree Annual Statement, cover letter, and IRS instructions. Specific dates for proofs will be determined by the Division and the Contractor and confirmed in writing after each year s project. Due Date: TBD Envelopes: The Contractor must provide proofs of completed envelops during the testing process and after any change. The Contractor must also provide final form document to the Division for evaluation and written approval prior to final production printing. Proofs will be reviewed for formatting, page alignment, and general correctness according to document specifications. Specific dates for envelope proofs will be determined by the Division and the Contractor and confirmed in writing after each year s project. Due Date: TBD 3.2.2 Final Proofs: The Division will provide the final 1099-R data file, by SFTP, by a specific date to be determined by the Division and the Contractor and confirmed in writing after each year s project starts. After receipt, the Contractor will provide final proofs to the Division by the scheduled date determined by the Division and the Contractor and confirmed in writing. Final written approval is required to proceed with production printing each year. Due Date: TBD 3.3 Reporting 3.3.1 Daily Printing and Mailing: The Contractor shall begin printing on the date determined by the Division and the Contractor and confirmed in writing at the start of each year s project. All printing must be completed to ensure mailing of the Form 1099-R and Retiree Newsletter inserts by the mailing deadline established at the beginning of each year s project and confirmed in writing. Upon receiving the confirmation to begin printing the Form 1099-R, the Contractor shall, on a daily basis, email the Division of the number of 1099-R s that are printed and mailed daily. SECTION 4. FINANCIAL CONSEQUENCES FOR NONPERFORMANCE In addition to the specific consequences explained in this Statement of Work, the state reserves the right to withhold payment or implement other appropriate remedies, such as contract termination or non-renewal, when the Contractor has failed to perform and comply with provisions of this Contract. These consequences for non-performance shall not be considered penalties. Accurate and timely delivery of the services and deliverable for this Purchase Order is imperative and, as a result, the Division reserves the right to impose financial consequences PRINTING AND MAILING IRS FORMS 1099-R AND Page 6 of 8
upon the Contractor for failure to comply with the performance standard requirements set forth below. The Contract Manager shall periodically review the progress made on the services and deliverable listed in the Purchase Order. If the Contractor fails to meet the deliverables and comply with the service requirements established in the Purchase Order or to make appropriate progress on the deliverables, the Contract Manager may apply the financial consequences included below. 1. Payment for services will be withheld until all required services and the deliverable are complete, 2. Time is of the essence in performing the Contract; this is true generally, and particularly with respect to mailing all Forms 1099R with inserts by a date to be determined and confirmed in writing at the start of each year s project. If the Contractor fails to meet the agreed upon printing and mailing deadlines, it shall pay $1,500.00 per calendar day for each day late, plus the amount of any fines or penalties imposed by the IRS for late delivery of the 1099R Forms. The Department will be entitled to an invoice credit for the total damages and fees. 3. The reduction shall apply even if the deliverable(s) is only one day late. The Division reserves the right to waive the reduction in cases where the Contractor s failure to submit the deliverable(s) by the specified due date(s) are due to circumstances beyond the Contractor s control and when the Division has provided written approval to the Contractor to extend the due date(s). 4. The Contract Manager may request the Contractor redo work related to deliverables. Payment will be withheld until the work that must be redone is completed and approved by the Contract Manager; 5. All of the above; or 6. Terminate the Purchase Order for non-performance. The Contractor will be notified in writing concerning Division action(s), including specifics of the work not provided, the services, work and/or deliverable(s) considered to be incomplete and the financial consequences that will be applied. SECTION 5. SUBCONTRACTORS ENVELOPES ONLY The Contractor shall use only those subcontractors as contained in the Subcontracting form of the Contractor s response to the solicitation. Should the Contractor need to subcontract any services to subcontractor not identified in the Contractor s Response to the solicitation, the Contractor shall submit a written request to the DMS Contract Manager as identified in the Contract. SECTION 6. COST SAVINGS AND ADDED VALUE 6.1 Cost Savings The Division is interested in information from Vendors related to potential cost savings that the Contractor will provide in the initial year and/or generate each subsequent year of the contract. These savings may be generated by Value Engineering such as utilization of volume pricing, volume resource acquisitions or other measures to increase product value and reduce costs. The Contractor will submit the attached form PRINTING AND MAILING IRS FORMS 1099-R AND Page 7 of 8
(APPENDIX 3) and list and provide an explanation of any Cost Savings which will be passed on to the Division, the estimated dollar value of the savings and method the Contractor will use to generate the savings. 6.2 Value Added The Division is interested in any Value Added services or product that the Contractor plans to include. For the purposes of this solicitation, Value added will be defined as follows; options provided in conjunction with the services included in the Statement of Work that complement core service offerings without additional cost. These services are not vital, to the completion of the core services but are added service or something extra that is provided to a customer at no additional charge. These services provide the opportunity for the Division to receive something above and beyond the basic services required and potentially significantly enhance the quality of the services and products provided. The Contractor will submit the attached form (APPENDIX 3) and list and provide an explanation of any Value Added Services the Contractor plans to provide to the Division at no additional cost. THIS SPACE INTENTIONALLY LEFT BLANK PRINTING AND MAILING IRS FORMS 1099-R AND Page 8 of 8