south dakota lottery 711 e. wells ave pierre, south … online and video rfp_2018.pdf · sd lottery...

SOUTH DAKOTA LOTTERY

711 E. WELLS AVE PIERRE, SOUTH DAKOTA 57501-3398

Online Central System, Video Lottery Central System, and Related Services

PROPOSALS ARE DUE NO LATER THAN 4:00 CTZ, APRIL 20, 2018

RFP #:1160 BUYER: Norm Lingle EMAIL: [email protected]

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SD LotteryOn -Line Central System and Video Lottery Central System 2018 of 229

1. RFP GENERAL INFORMATION

1.1. Introduction and Objectives

The South Dakota Lottery, (hereinafter “Lottery”) is issuing this Request for Proposals

(RFP) to solicit proposals from responsible, responsive and experienced lottery gaming

vendors for an on-line gaming system, a video lottery central system, and related

services. The systems will replace the systems provided under contract with the Lottery’s

current on-line and video lottery vendors.

The current on-line contract expires on August 2, 2019. The initial period of contract

performance will be from approximately August 3, 2019, through August 2, 2026, with

extension options for additional periods for a total contract term not to exceed 15 years.

The current video lottery contract expires on November 16, 2019. The initial period of

contract performance will be from approximately November 17, 2019, through

November 16, 2026, with extension options for additional periods for a total contract

term not to exceed 15 years.

The successful vendor(s) will provide fully-functioning systems, including hardware,

software, communications, system installation, data conversion and system operation

through the life of any subsequent contract that may result from this solicitation. The

Lottery’s goal is to obtain systems that will provide the best value in technology available

today that also will provide the greatest flexibility to adapt to changes in the future. This

includes the ability to seamlessly connect with third party software and hardware.

The successful vendor(s) must ensure that the On-line Central System is fully operational

no later than August 3, 2019, that the Video Lottery Central System is fully operational

no later than November 17, 2019, and that there are no interruptions of existing Lottery

games during conversion.

1.2. Governing Law

Establishment for any and all legal action regarding or arising out of the transaction

covered herein shall be solely in the State of South Dakota. The laws of South Dakota

shall govern this transaction.

SDCL § 42-7A-5, Competitive bidding required before entering into contracts. If entering

into any contract pursuant to subdivision 42-7A-4(3), the executive director shall utilize

an open and competitive bid process which reflects the best interest of the State of South

Dakota. Any such contract is exempt from the provisions of chapters 5-18A and 5-18D.

The executive director shall consider all relevant factors including security, competence,

experience, timely performance, and maximization of net revenues to the state. Any

contract entered into pursuant to subdivision 42-7A-4(3) for major procurements are

subject to the approval of the commission and are subject to the provisions of chapters 5-

18A and 5-18D.

SD Lottery On-Line Central System and Video Lottery Central System 2018 of 229

1.3. Non-Discrimination Statement

The State of South Dakota requires that all contractors, vendors, and suppliers doing

business with any State agency, department, or institution, provide a statement of non-

discrimination. By signing and submitting their proposal, the Vendor certifies they do not

discriminate in their employment practices with regard to race, color, creed, religion, age,

sex, ancestry, national origin, or disability.

1.4. Issuing Office and RFP Reference Number

This RFP and all subsequent addenda relating to it are issued through the South Dakota

Lottery on behalf of the State of South Dakota. The reference number for the transaction

is RFP# 1160. This number must be referred to on all proposals, correspondence, and

documentation relating to the RFP. The RFP Coordinator is the sole point of contact for

this procurement. Any other communication that isn’t directed to the RFP Coordinator

will be considered unofficial and non-binding on the Lottery. The RFP Coordinator shall

be solely responsible for the clarification, amendment, modification or withdrawal of

specifications, requirements, terms and conditions of the RFP. There shall be no

communication with any other State employee regarding this RFP except with designated

state participants in attendance ONLY DURING:

• Negotiations

• Contract Signing

• as otherwise specified in this RFP

Violations of this provision by vendor or state agency personnel may result in the

rejection of the proposal.

1.5. RFP & Contract Coordinators

The RFP Coordinator is:

Clark Hepper

Lottery Deputy Executive Director

711 E. Wells Ave.

Pierre, SD 57501

Phone: (605) 773-5770

Fax: (605) 773-5786

Email: [email protected].

1.6. Term of Contracts

The initial period of contract performance for the On-line Central System will be from

approximately August 3, 2019, through August 2, 2026, with extension options for

additional periods for a total contract term not to exceed fifteen (15) years. The Lottery

will notify the Vendor in writing of its intent to extend the contract not later than ninety

(90) days before the beginning of any extension period.

The initial period of contract performance for the Video Lottery Central System will be

from approximately November 17, 2019 through November 16, 2026, with extension

mailto:[email protected]


options for additional periods for a total contract term not to exceed fifteen (15) years. If

the Lottery exercises the extensions available to it with its current contractor, the initial

period of contract performance may be delayed as determined by negotiations. The

Lottery will notify the Vendor in writing of its intent to extend the contract not later than

ninety (90) days before the beginning of any extension period.

For any related services that may be acquired independent of the central systems as a

result of this RFP, the term length of the contract(s) shall be determined through

negotiations.

1.7. Submission of Proposals

All proposals must be completed and received by the Lottery by the date and time

indicated in the Procurement Schedules.

Proposals received after the deadline will be late and ineligible for consideration. When

submitting, Vendors must include one (1) original and eight (8) hard copies of both the

Technical Proposal and the Cost Proposal. Electronic versions of the proposals in

Microsoft® Word, Excel, or searchable PDF® should be included on USB flash drives

as follows: two (2) copies of the complete proposals as well as ten (10) copies of

redacted versions. Technical and cost proposals shall be submitted on separate media.

The cost proposal must be in a separate sealed envelope and labeled “Cost Proposal”.

The Bid Bond and Litigation Bond shall be included in the same envelope as the Cost

Proposal.

All proposals must be signed, in ink, by an officer of the responder, legally authorized to

bind the responder to the proposal, and sealed in the form intended by the respondent.

Proposals that are not properly signed may be rejected. The sealed envelope or container

must be marked with the appropriate RFP Number and Title. The words “Sealed

Proposal Enclosed” must be prominently denoted on the outside of the shipping

container.

No proposal shall be accepted from, and no contract or purchase order shall be awarded

to, any person, firm, or corporation that is in arrears upon any obligations to the State of

South Dakota, or that otherwise may be deemed irresponsible or unreliable by the State

of South Dakota.

1.8. Incurred Costs Associated with Proposals

It is recommended that each Proposal be prepared simply and economically, thus

providing a straightforward, concise description of the vendor's ability to meet the

requirements of the RFP. Emphasis should be on completeness and clarity of content.

The vendor must not hold the Lottery liable for any of the costs incurred by a vendor in

preparing or submitting a Proposal including preparation, copying, postage and delivery

fees, and expenses associated with any demonstrations and/or presentations, which may

be required by the RFP.


1.9. Preparation and Content of Proposal

Vendors should provide the Lottery with information, evidence, and demonstrations in a

manner that best serves the interests of the Lottery. Vendors will be given wide latitude in

the degree of detail they offer or the extent to which they reveal plans, designs, systems,

processes, and procedures, but at a minimum, Proposals must be fully responsive to the

specific requirements stated in the RFP.

Vendors may submit a proposal to either the online central system, the video lottery

central system or related services or a combination thereof. Vendor proposal for only the

online central system, video lottery central system or related services may not exceed 600

pages. If a vendor is submitting a proposal for a combination of the online central

system, video lottery central system and/or related services the page limit is 900 pages.

All proposed hardware, software, and services must be included in the final delivered

system upon conversion unless otherwise specified (with the exception of options not

selected by the Lottery). Each Proposal must identify any requirement of the published

RFP that the vendor cannot satisfy.

In case of error in price computations or totals, the unit price shall govern. The Lottery

has the right to rely on any prices provided by vendors. The vendor shall be responsible

for any mathematical errors. The Lottery reserves the right to reject proposals which

contain errors.

A proposal shall not be considered for award if the price in the proposal was not arrived

at independently and without collusion, consultation, communication or agreement as to

any matter related to price with any other vendor, competitor or public officer/employee.

1.10. Response to Technical and Non-Price Requirements

The Technical Proposal must contain and respond to all of the information required in

Parts 4 and/or 5 (Technical Specifications) of the RFP. Cost information must not appear

in any portion of the Technical Proposal. The inclusion of cost information in the

Technical Proposal may result in disqualification of the Vendor.

All pages of the Technical Proposal must be numbered. Conciseness and clarity of

content are essential. The Technical Proposal must be complete. A Technical Proposal

not providing all of the information requested may be rejected. The Technical Proposal

should provide all of the information concerning the particular subject area that the

vendor believes would be helpful to the Lottery in determining its ability to meet the

specifications or perform the requirements in the Vendor's description of its system or

related services.

The Vendor must state whether any of the critical deliverables and/or services will be

provided by a sub-Vendor or consultant. If any of the critical deliverables and/or services

will be provided by a sub-Vendor or consultant, the Vendor must state the name of the

sub-Vendor or consultant and state the function or service that will be performed by that

sub-Vendor or consultant.


1.11. Public Records and Requests for Confidentiality

All Proposals received shall remain confidential until any contract resulting from this

RFP has been approved by the South Dakota Lottery Commission and signed by the

South Dakota Secretary of Revenue and the Vendor. Thereafter, the proposals shall be

deemed public records as defined in South Dakota law.

Any information in a Proposal that the Vendor desires to claim as proprietary and exempt

from disclosure under the provisions of South Dakota law must be clearly designated as

such. Each affected page or portion of the Proposal must be identified as such, and the

particular disclosure exemption upon which the Vendor bases its claim must be clearly

stated on each such page or portion. Each page or portion claimed to be exempt from

disclosure must be clearly identified by the word “Confidential” printed on the lower

right hand corner. The Lottery will consider a Vendor’s request for exemption from

disclosure. However, the Lottery will base its disclosure decision on South Dakota law.

The Vendor must be reasonable in designating information as confidential. The Lottery

will not honor a Vendor’s decision to mark its entire proposal, or large undifferentiated

Proposal components, as exempt from disclosure. An entire page or paragraph in which

such information appears should not be marked “Confidential” unless the entire page or

paragraph consists of such confidential information. Only the confidential portion(s)

should be so identified and marked. The vendor must be able to defend the confidentiality

of its trade secrets through the judicial process. If any information is marked as

proprietary in the Proposal, that information will not be made available until the affected

Vendor has been given an opportunity to seek a court injunction against the requested

disclosure.

1.12. Disclosure Prohibition

Information provided in a Proposal must be held in confidence by the Vendor and not be

revealed or discussed with competitors except as required by jurisdictional law.

Disclosure by a Vendor of the contents of a Proposal, prior to the execution of the

Contract with the Successful Vendor, may result in the Vendor's disqualification.

The Proposals must remain confidential while the Evaluation Committee reviews all of

the Proposals submitted in response to the RFP.

The Proposals will be available for inspection according to Lottery policy and

jurisdictional law after the Notice of Intent to award a Contract is announced by the

Lottery Director. All matters set forth in a Vendor's Proposal may be subject to disclosure

after Contract. Once again, the Lottery will base its disclosure decision on existing South

Dakota law.

1.13. Specified and Invited Options

Any options included in the base price should be so noted in the Technical and Price

Proposals. The definition and policy associated with each of the option classes should be

included as follows:


A. Specified Options must be identified in the published RFP as “Specified”.

i. Specified Options must be proposed by the Vendor – a Proposal may be rejected

if a Specified Option is not included.

ii. The Lottery does not commit to any quantity or timing for acquisition of a

Specified Option.

B. Invited Options are identified in the published RFP as “Invited Option.”

i. Invited Options are items of specific interest to the Lottery.

ii. Vendors are not obligated to include Invited Options in their Proposals; however,

if specifications are presented, corresponding pricing must also be presented.

iii. “To be determined” or an equivalent non-response must not be used.

iv. The Proposal may be evaluated more favorably in general if at least some Invited

Options are available.

v. The Lottery makes no commitment to any quantity or timing for acquisition of

Invited Options.

1.14. Mandatory Feature Requirements

A Mandatory feature is a feature that shall be included in any Proposal, the absence of

which may result in rejection of the Proposal as non-responsive and/or inadequate to the

Lottery’s needs. If a Vendor is unable to provide the item or service required, Vendor

may propose an alternative, which may or may not be accepted by Lottery. Likewise, a

Vendor may propose both a Mandatory Feature and one or more alternatives to the same

requirement, which alternative(s) may be considered by Lottery but again may or may not

be accepted.

1.15. Vendor Corporate Information

Vendors must provide the following general information in the Proposal:

A. The name and address of the Vendor submitting the Proposal.

B. Type of business entity (e.g., corporation, partnership, etc.).

C. Place of incorporation, or other form of organization, if applicable.

D. The name, address, telephone number, and email address of the Vendor's contact

regarding its corporate information.

E. The name, address, telephone number, and email address of the Vendor's contact

regarding its Technical Proposal.

F. The name, address, telephone number, and email address of the Vendor's contact

regarding its Price Proposal.

G. The name, address, telephone number, and email address of the Vendor's contact

regarding any Contract resulting from the RFP.

H. The locations of the major offices and other facilities that relate to the Vendor's

performance as proposed in its Proposal.


I. The names, addresses, and functions of any and all Vendors, associated companies,

or consultants that will be involved in any phase of the project.

J. The name, address, telephone number, and email address (if available) of the

Vendor's accounting or auditing firm.

K. The name(s) of any and all law firms and/or individuals representing the Vendor

within the Lottery’s jurisdiction.

L. The names and addresses of all persons or entities who own over five percent (5%)

of the shares of the Vendor, and the names and addresses of all officers and

directors. If the Vendor is a subsidiary, the Vendor must disclose the information

required above on its parent and/or holding company.

M. Any substantial change of ownership in the Vendor or the parent and/or holding

company of the Vendor that occurred within the last year should be noted.

N. Any pending changes should be disclosed to the extent permitted by law and by

regulatory agencies.

1.16. Price Proposal

The Price Proposal shall contain all of the information required in pricing portion of the

RFP. A Price Proposal shall be complete. A Price Proposal that does not provide all

information requested may be rejected.

A. Base Price: The base price stated by the Vendor shall be for new, unused equipment.

Where proposed equipment is not new (although this is not preferred), the proposal

shall so indicate. The base price shall include all items and/or features required by

the RFP and proposed by the Vendor unless the Vendor specifically states that an

item or feature will be provided as a separately priced option.

B. Specified Options: The Vendor shall submit a price for providing Specified Options

as required by the RFP. The Lottery may select Specified Options at its sole

discretion.

C. Invited Options: The Vendor must submit prices for Invited Options included in the

Vendor’s proposal. The Vendor may propose a price for any other option not

specified in the RFP including, but not limited to, any other feature/function available

with its gaming system products and related services. The Lottery may select an

option at its sole discretion, which may be implemented at the discretion of the

Lottery over the Term of the Contract.

D. Offered Options: The Vendor may propose additional services, products, product

components, or features not required in Sections 4 and 5 (Technical Requirements);

i.e., Offered Options. If an additional service, product, product component, or feature

is proposed, it should be clearly marked as an OFFERED OPTION.

If the Vendor includes Offered Options in the Technical Proposal, then the Vendor

must also submit clear and distinct prices for Offered Options. Any item for which


there is no additional fee (i.e., it is included in the base price) must be shown as No

Charge (N/C); see Pricing Information.

The Lottery reserves the right to waive the Vendor’s right to request additional

compensation for an Offered Option (if it is selected as the Successful Vendor and the

Lottery desires the Offered Option) for failure to specifically exclude an Offered

Option from the base price.

1.17. Modification/Withdrawal of a Proposal

A Vendor may modify or withdraw a Proposal by written notice prior to the closing date

and time for receipt of Proposals. The Lottery will not consider fax, email, or verbal

telephone requests to withdraw or modify a Proposal.

After the Proposal Submission date and time, a Proposal must not be modified, except to

the extent of a Vendor’s response to a request for clarification.

1.18. Evaluation of Proposals

After determining that a proposal satisfies the mandatory requirements stated in the

Request for Proposal, the evaluator(s) shall use subjective judgement in conducting a

comparative assessment of the proposal by considering each of the following criteria:

1. Specialized expertise, capabilities, and technical competence as demonstrated by the

proposed approach and methodology to meet the project requirements

2. Resources available to perform the work, including any specialized services, within

the specified time limits for the project

3. Record of past performance, including price and cost data from previous projects,

quality of work, ability to meet schedules, cost control, and contract administration

4. Availability to the project locale

5. Familiarity with the project locale

6. Proposed project management techniques

7. Ability and proven history in handling special project constraints

Each section of the RFP will be scored using the criteria above. Cost will be scored only

after all sections of the technical proposal have been scored. The weighting of each

section is as follows:

Online Central System

Section(s) Weight

4.2 Central Systems for Games Support 20

4.3 Retailer Terminal 15

4.4 Communications Network-Network Design 15

4.14 Software Control & Testing 7

4.6 Gaming Software Security & Control Features 7

4.10 Data Security Plan 5

4.15 Implementation 5


4.8 Games and Marketing Support 5

4.9 Facilities 5

4.11 Support Staffing & Services; 4.12 Supply Warehousing

& Deliver; 4.13 Training

4

4.7 Internal Control System (ICS) 4

4.5 Software Applications and Files 3

Cost 5

Total On-line Score 100

Video Lottery Central System

Section(s) Weight

5.1 System Design 18

5.4 Operations 18

5.3 Overall Network & Communications 12

5.6 Reporting 12

5.2 Site Controllers 10

5.7 Conversion 8

5.8 Training 7

5.5 Interfaces 5

5.9 Acceptance Testing 5

Cost 5

Total Video Lottery Score 100

1.19. Rejection/Selection of Proposals

The Lottery may reject any or all Proposals or any portion thereof, advertise for new

Proposals, arrange to receive or itself perform and obtain the services and goods

requested in the RFP, abandon the need for such requested goods and services or award

in whole or in part a Contract deemed to be in the best interests of the Lottery.

Vendors will be held to the terms submitted in their Proposals but may be required to

reduce costs depending upon aspects of the proposed program that may be determined by

the Lottery to be unnecessary.

The Lottery will notify in writing those Vendors who submit a Proposal in response to

the RFP, but who are not awarded the Contract. The acceptance of a Proposal will not

diminish the Lottery's right to negotiate specific contract terms, including price, with the

apparent successful Vendor.

1.20. Acceptance Period

Proposals will remain valid and subject to acceptance by the Lottery for a period of 240

days from the Proposal due date of April 20, 2018. Failure to adhere to this requirement

may result in Proposal disqualification. Vendors will be strictly held to the terms in their

Proposals. The contents of the RFP and the Proposal will become contractual obligations

in the event of Contract Award.


1.21. Multiple Proposals from a Single Vendor

Each Vendor may submit more than one (1) Proposal.

1.22. Late Proposals

Any proposals received after 4:00 p.m. CTZ on April 20, 2018, will be automatically

disqualified from further consideration.

1.23. Proposal Clarification Process

The Lottery reserves the right to request clarification or resolving ambiguities on

statements made by a Vendor in its Proposal at any point during the Proposal Evaluation.

All clarification will be requested in writing and will be sent to the contact person

representing the Vendor. Any such communication may be made by e-mail, fax, mail,

overnight courier or hand-delivered. Vendor will be given a specific deadline to submit a

response. The Vendor will make every effort to respond within the time frame indicated.

If it proves unfeasible, the Lottery and the Vendor may discuss modification of the

deadline.

The Vendor’s response must address only the information requested. It must be

submitted in writing, as directed by the Lottery. Any response should not address any

cost information unless it specifically addresses the clarification the Lottery is seeking.

The clarification process will not allow revision or supplementation of the Vendor’s

offering. Clarification is not a negotiating process.

1.24. RFP Clarification Questions

Written questions relevant to the RFP must be submitted to the Lottery by e-mail. The

first round of questions will be due no later than 4:00 p.m. CTZ on February 23, 2018.

The second round of questions will be due no later than 4:00 p.m. Central Time on March

16, 2018. All inquiries should be written in generic terms and contain no pricing

information. A copy of all written questions and the Lottery’s responses to these

questions will be provided to each Vendor. The Lottery will not identify the Vendor

posing the question. Answers to questions that materially impact the requirements of the

RFP will be formalized as amendments to the RFP and posted on the web site.

1.25. Amendments to RFP

If it becomes necessary to revise any part of this RFP for any reason, amendments will be

posted on the South Dakota Lottery's RFP webpage:

http://lottery.sd.gov/about/rfp/1160.aspx.

A copy of all amendments will also be provided either by fax, email, or by mail to all

interested Vendors. All Vendors must then verify in writing that they have received the

amendments. Amendments may result in postponing of deadline dates. The Lottery

reserves the right to cancel or to reissue the RFP, in whole or in part.

1.26. Bid Bond

The Vendor shall provide a Bid Bond guaranteeing the availability of the products and

services offered by the Vendor for a period of two-hundred-forty (240) days following

http://lottery.sd.gov/about/rfp/1160.aspx


the submission date of the vendor’s proposal. The Bid Bond in the amount of one million

dollars ($1,000,000) shall be made payable to the South Dakota Lottery. The Bid Bonds

for all vendors shall be returned two-hundred-forty (240) days after the submission of the

proposal or upon execution of a Contract with the successful Vendor, whichever occurs

first.

1.27. Litigation Bond

The purpose of the litigation bond is to discourage frivolous legal actions by permitting

the Lottery to recover damages resulting from a vendor initiating a frivolous lawsuit. A

claim upon the Litigation Bond may be made if all of the following are met:

A. The Vendor brings any legal action against The State of South Dakota, the Lottery,

any employee of the Lottery, or any consultant or employee of a consultant under

contract with the Lottery over the issuance of the RFP, the selection of the successful

Vendor, or execution of a Contract with the successful Vendor;

B. The State of South Dakota, the Lottery, or such other party is the prevailing party at

the conclusion of the legal action;

C. A court determines that the action or any portion thereof was frivolous or was brought

in bad faith, or was not brought upon reasonable grounds.

A litigation bond in the amount of Five Million Dollars ($5,000,000) shall be made

payable to the South Dakota Lottery and contain the conditions set out above. The

litigation bond shall be returned to the Vendor within 365 days of the signing of a

Contract with the successful Vendor, in return for a written statement from the Vendor

not to bring any legal action against the State of South Dakota, the Lottery, any employee

of the Lottery, or any consultant or employee of a consultant under contract with the

Lottery over the issuance of the RFP, the selection of the successful Vendor, or execution

of a Contract with the successful Vendor.

In lieu of a litigation bond, a Vendor may submit a written statement from the Vendor not

to bring any legal action against the State of South Dakota, the Lottery, any employee of

the Lottery, or any consultant or employee of a consultant under contract with the Lottery

over the issuance of the RFP, the selection of the successful Vendor, or execution of a

Contract with the successful Vendor.

1.28. Litigation and Investigations

Vendors must list and summarize, as part of their Technical Proposal, all pending

litigation, administrative or regulatory proceedings, or similar matters that may affect the

ability to produce and/or deliver the desired product or services. Vendors must also state

whether owners, officers, employees, primary partners or Vendors working on their

account have ever been convicted of a felony. Failure to disclose such matters may result

in rejection of the Proposal or in termination of any subsequent Contract.


This is a continuing disclosure requirement; any such matter commencing after

submission of a Proposal and, with respect to the Successful Vendor after the execution

of a Contract, must be disclosed.

1.29. Release of Claims

With the submission of one or more proposals, each Vendor agrees that it shall not bring

any claim or have any cause of action against the Lottery or the State of South Dakota,

and all Lottery and State of South Dakota officers or employees, based on any

misunderstanding concerning the information provided herein or concerning the Lottery’s

failure, negligent or otherwise, to provide the Vendor with pertinent information as

intended by the RFP. Additionally, each Vendor releases each source of information of

all claims, whether known or unknown, consulted by the Lottery to obtain information

regarding the Vendor’s criminal history, credit data, the Vendor, the Vendor’s product,

services, personnel or subcontractors which the Lottery deems pertinent to this RFP.

1.30. Material and Non-Material Deviations

The Lottery reserves the right, at its sole discretion and subject to no penalty, to waive

minor administrative irregularities in Proposals, and to permit Vendors to correct non-

material errors or omissions in their Proposals.

The materiality of a deviation is at the sole discretion of the Lottery. A Proposal may be

rejected for a material deviation.

1.31. Certification Regarding Debarment, Suspension, Ineligibility and Voluntary

Exclusion- Lower Tier Covered Transactions

By signing and submitting this proposal, the Vendor certifies that neither it nor its

principals is presently debarred, suspended, proposed for debarment, declared ineligible,

or voluntarily excluded from participation, by any Federal department or agency, from

transactions involving the use of Federal funds. Where the Vendor is unable to certify to

any of the statements in this certification, the vendor shall attach an explanation to their

offer.

1.32. Disqualification for Business Incapability

Financial and business stability of the Vendor and wherewithal to perform and support

the Lottery are required.

If, at any time prior to the signing of a written Contract, the Lottery reasonably

determines that a Vendor does not possess adequate financial ability or requisite stability

to carry out the obligations of the Contract, that Vendor may be disqualified from further

consideration.

If, at any time after Contract execution, the Lottery reasonably determines that the

successful Vendor does not possess adequate financial ability or business stability to

continue to carry out the obligations of the Contract, the Contract may be terminated.


1.33. Tested and Certified Equipment

The Vendor must submit proof with the Proposal that the proposed equipment has been

inspected for safety and approved by a reputable testing laboratory; for example,

Underwriter's Laboratories.

The Vendor must document that all proposed equipment is in compliance with FCC

regulations suitable for devices of the class proposed.

Certification under Canadian, European, or other International Standards that correspond

to the above is acceptable.

Alternatively, if the devices proposed are new, and not yet certified, the Vendor must

commit in the Proposal that it will submit a document showing certification as of the

Contract signing.

1.34. Independent Price Determination

By submission of a Proposal, the Vendor must certify – and in the case of a joint

Proposal, each party thereto must certify as to its own organization – that in connection

with the Proposal the prices in the Proposal have been arrived at independently, without

consultation, communication, or contract for the purpose of restricting competition as to

any matter relating to such prices with any other Vendor or with any competitor.

Unless otherwise required by law, the prices, which have been quoted in the Proposal

have not been knowingly disclosed by the Vendor and will not knowingly be disclosed by

the Vendor prior to Contract Award directly or indirectly to any other Vendor or to any

competitor. No attempt has been made or will be made by the Vendor to induce any other

person or entity to submit or not submit a Proposal for the purpose of restricting

competition.

1.35. Change of Ownership/Financial Condition

If a Vendor (including the parent or holding company of the Vendor) experiences a

substantial change in its ownership or financial condition after its Proposal has been

submitted and prior to the execution of the Contract with the successful Vendor, the

Vendor must notify the Issuing Office in writing at the time the change occurs or is

identified.

A “substantial change” in ownership or financial condition is defined as an event which

following generally accepted accounting principles, would require a notation in the

Annual Report of a publicly traded United States or Canadian corporation, or equivalent

standard.

Failure to notify the Issuing Office of such a substantial change may result in the

disqualification of the Vendor.

1.36. News Releases


News releases pertaining to the RFP or the services, study, data, or project to which it

relates must not be made without prior written Lottery approval, and then only in

accordance with explicit written instructions from the Lottery.

The results of the RFP process must not be released without prior approval of the Lottery,

and then only to designated persons and/or media organizations.

1.37. Hiring of Lottery Staff

During the period from RFP Publication until Contract Award, Vendors must not make

any employment offer (officially or unofficially) or propose any business arrangement

whatsoever to any Lottery employee.

A Vendor making such an offer or proposition may be disqualified from further

consideration, or the Contract signed pursuant to the RFP may be terminated.

These conditions should continue for the successful Vendor for a period of one (1) year

following the Contract Award.

1.38. Information from Other Sources

The Lottery reserves the right to obtain information from outsides sources concerning a

Vendor.

1.39. Demonstrability and Field Experience of Proposed System

The Lottery requires that all equipment, software, and manufacturing capabilities

proposed by the Vendor, at a minimum, be capable of a demonstration that indicates the

Vendor's ability to meet the Lottery's requirements.

While functions and features demonstrated or benchmarked at the request of the Lottery

need not be identical to those of the RFP, common functionality and operations are

expected.

A Vendor submitting a Proposal must be able to provide a site(s) to demonstrate its

proposed system and its ability to meet the requirements of the RFP.

Failure to propose demonstrable products may subject the Vendor's Proposal to rejection.

If requested, demonstrations may consist of any or all of the following: a simulation at

Lottery headquarters or the Vendor's facilities; the observation of operations at another

lottery; or a presentation at some other appropriate venue.

The Lottery may require field experience. Field experience means that a version of the

lottery gaming system software forming the core of the proposed system has been placed

into production and is being deployed at other lottery site(s) at the time of the Proposal.

It is not required that every software and hardware item in the proposed configuration

already be operational in some lottery setting; however, the Lottery does not intend to

acquire configuration items which are at the specifications or concept stage only, early in

development, or announced but not ready for delivery.


1.40. Transmittal Letter

All vendors shall respond to the following statements:

(a) the vendor is the prime contractor and identifying all subcontractors;

(b) the vendor is a corporation or other legal entity;

(c) no attempt has been made or will be made to induce any other person or firm to

submit or not to submit a proposal;

(d) the vendor does not discriminate in employment practices with regard to race, color,

religion, age (except as provided by law), sex, marital status, political affiliation, national

origin or disability;

(e) no cost or pricing information has been included in the transmittal letter or the

Technical Proposal;

(f) the vendor presently has no interest, direct or indirect, which would conflict with the

performance of services under the Contract and shall not employ, in the performance of

the Contract, any person having a conflict;

(g) the person signing the proposal is authorized to make decisions as to pricing quoted

and has not participated, and will not participate, in any action contrary to the above

statements;

(h) whether there is a reasonable probability that the vendor is or will be associated with

any parent, affiliate or subsidiary organization, either formally or informally, in supplying

any service or furnishing any supplies or equipment to the vendor which would relate to

the performance of the Contract. If the statement is in the affirmative, the vendor is

required to submit with the proposal, written certification and authorization from the

parent, affiliate or subsidiary organization granting the State and/or the federal

government the right to examine any directly pertinent books, documents, papers and

records involving such transactions related to the contract. Further, if at any time after a

proposal is submitted, such an association arises, the vendor will obtain a similar

certification and authorization and failure to do so will constitute grounds for termination

for cause of the contract at the option of the Lottery;

(i) vendor agrees that any lost or reduced federal matching money resulting from

unacceptable performance in a contractor task or responsibility defined in the RFP,

contract or modification shall be accompanied by reductions in state payments to Vendor;

(j) the vendor has not been retained, nor has it retained a person to solicit or secure a state

contract on an agreement or understanding for a commission, percentage, brokerage or

contingent fee, except for retention of bona fide employees or bona fide established

commercial selling agencies maintained by the vendor for the purpose of securing

business; and

(k) vendor has or will obtain a South Dakota sales tax license prior to any contract award.

For breach of this provision, the Lottery shall have the right to reject the proposal,

terminate the contract for cause and/or deduct from the contract price or otherwise

recover the full amount of such commission, percentage, brokerage or contingent fee or

other benefit.


1.41. Vendor Information

The vendor must include a narrative of the vendor's corporation and each subcontractor if

any. The narrative shall include the following:

(a) date established;

(b) ownership (public, partnership, subsidiary, etc.);

(c) number of personnel, full and part time, assigned to this project by function and job

title;

(d) resources assigned to this project and the extent they are dedicated to other matters;

(e) organizational chart;

(f) financial statement may be required; and

(g) company history.

1.42. Qualifications

A description of the vendor's qualifications and experience providing the requested or

similar service shall be submitted with the Technical Proposal. All previous services

rendered that are submitted as qualifications must have been successfully implemented

and not been simply limited to design or proposal stages. The vendor must be an

established firm recognized for its capacity to perform. The vendor must have sufficient

personnel to meet the deadlines specified in the bid event.

1.43. Experience

All vendors are preferred to have a minimum of five years continuous active participation

in the applicable industry, providing equipment/services comparable in size and

complexity to those specified herein. Vendors may be required to furnish information

supporting the capability to comply with conditions for bidding and fulfill the contract if

receiving an award of contract. Such information may include, but not be limited to, a

list of similar size and type projects the Vendor has completed within the United States

and outside the United States.

1.44. Timeline

A timeline for implementing services must be submitted with the bid.

1.45. Methodology

Vendors shall submit with the bid, a detailed explanation of the methodology for

implementing services.

1.46. References

Provide three (3) references who have purchased similar items or services from the

vendor in the last two (2) year(s). References shall show firm name, contact person,

address, e-mail address and phone number. Vendor's employees and the buying agency

shall not be shown as references.

1.47. Alternate Proposals/Equivalent Items

Bids on goods and services comparable to those specified herein are invited. Whenever a

material, article or piece of equipment is identified in the specifications by reference to a

manufacturer's or Vendor's name, trade name, catalog number, etc., it is intended to


establish a standard, unless otherwise specifically stated. Any material, article or

equipment of other manufacturers or Vendors shall perform to the standard of the item

specified. Equivalent bids must be accompanied by sufficient descriptive literature

and/or specifications to provide for detailed comparison. Samples of items, if required,

shall be furnished at no expense to the Lottery and if not destroyed in the evaluation

process, shall be returned at vendor's expense, if requested.

1.48. Technical Literature

All Technical Proposals shall include specifications and technical literature sufficient to

allow the Lottery to determine that the equipment/services meet(s) all requirements. If a

requirement is not addressed in the technical literature, it must be supported by additional

documentation and included with the bid. Proposals without sufficient technical

documentation may be rejected.

1.49. Upgrades

Vendors shall indicate the upgrade price and policy for any software, firmware, or

hardware upgrades anticipated for the equipment bid. If the upgrades are provided

without cost, this should be indicated.

1.50. Equipment

All proposed equipment, equipment options, and hardware expansions must be identified

by manufacturer and model number and descriptive literature of such equipment must be

submitted with the bid.

1.51. Site Visit

If site visits are conducted, they will be scheduled following the submission of the

proposal. Site visits will be made at the Vendor’s expense.

1.52. Presentation/Demonstrations

Any presentation or demonstration by a Vendor to clarify a proposal may be required at

the sole discretion of the Lottery. However, the Lottery may award a contract based on

the initial proposals received without a presentation or demonstration by the Vendor. If

presentations and or demonstrations are required, they will be scheduled after the

submission of proposals. Presentations and demonstrations will be made at the Vendor’s

expense.

1.53. Negotiations

This process is a Request for Proposal/Competitive Negotiation process. Each proposal

shall be evaluated, and each respondent shall be available for negotiation meetings at the

Lottery’s request. The Lottery reserves the right to negotiate on any and/or all

components of every proposal submitted. From the time the proposals are submitted until

the formal award of a contract, each proposal is considered a working document and as

such, will be kept confidential. The negotiation discussions will also be held as

confidential until such time as the award is completed.


1.54. Procurement Schedules

The estimated procurement schedules are as listed below. Dates are subject to changes.

These schedules pertain to the central systems only. Any related services contracted

independent of a central system shall be subject to a negotiated schedule.

Online Central System Procurement Schedule

EVENT DATE YEAR

Publish RFP January 31 2018

Vendors Submit Questions February 23 2018

Lottery Responds to Questions March 9 2018

Vendors Submit 2nd Round of Questions March 16 2018

Lottery Responds to 2nd Round of Questions March 30 2018

Proposals Submission Deadline April 20 2018

Evaluate Proposals-including demonstrations and site visits May-August 2018

South Dakota Lottery Commission Approval-notification to

vendors

September 1 2018

Complete Retailer Transition-End of Current Contract August 2 2019

Complete Transition-Go Live-New System On Line August 3 2019

Video Lottery Central System Procurement Schedule

EVENT DATE YEAR

Publish RFP January 31 2018

Vendors Submit Questions February 23 2018

Lottery Responds to Questions March 9 2018

Vendors Submit 2nd Round of Questions March 16 2018

Lottery Responds to 2nd Round of Questions March 30 2018

Proposals Submission Deadline April 20 2018

Evaluate Proposals-including demonstrations and site visits May-August 2018

South Dakota Lottery Commission Approval-notification to

vendors

September 1 2018

Complete Establishment Transition-End of Current Contract November 16 2019

Complete Transition-Go Live-New System On Line November 17 2019

The Lottery reserves the right to amend this schedule as necessary.

2. Lottery Background

2.1. Glossary

Glossary of some key terms used within this Request for Proposals (RFP). This list

is not exhaustive of all terms used within this RFP:

Ad Hoc Reports – Reports generated, as needed, as opposed to on a production

schedule.


Backup Data Center (BDC) – The secondary centralized storage facility used by an

application service provider, which manages and distributes software-based services

and solutions to customers across a wide area network from a central data center. For

purposes of the Lottery’s Gaming System, the BDC is the real-time functional

duplicate of the Primary Data Center (PDC). It shall be geographically separate from

the PDC to prevent a disaster from affecting both centers at the same time.

Backup System – The Backup/redundant environment that comprises the components of

the System, taken as a single physical and/or logical group, that are designated as

being redundant to the Primary System. The Backup System is primarily responsible

for the accurate processing of a transaction in a secure manner if the Primary System

is not functional.

Bar Code – The symbol on a Instant Ticket, On-Line Ticket, Video Lottery ticket, coupon,

or other item which is used to uniquely identify each ticket or item. A code consisting of

a group of printed and variously patterned bars and spaces and sometimes numerals that

are designed to be scanned and read into computer memory as identification for the

object it labels. The most common symbologies used in the retail environment are UPC-

A for merchandise marking and Code 128 for shipping containers. Other symbologies

include Plessey Code 39, Interleaved 2 of 5 and EAN/JAN, PDF 417.

Central Site – The location of the Vendor’s central computer that, together with

associated support equipment, will be used to support the Draw Game operations and

Instant Ticket Management or Instant pass-through.

Claim Number – The unique serial number assigned by the System to a transaction,

receipt or ticket.

Commission – The South Dakota Lottery Commission.

Communications Network – A statewide data transport facility and Retailer premise

wiring required to connect equipment in the Retailer locations to the Primary, Backup

and ICS Sites. May include any data transport to allow proper communication for the

Video Lottery System.

Connectivity – A system’s or device’s ability to link with other systems or devices,

including third party systems or devices.

Consumables – Play slips, play slip holders, ticket stock, printer paper, and any other

operational supplies. The term "Consumables" does not include point of sale

promotional items or Scratch-Off

Contract – The Contract entered into between the Lottery and the selected Vendor

responding to this RFP. The Contract shall incorporate by reference the following: all

State mandatory contractual provisions; the entire RFP, including any


addenda/amendments; all or indicated portions of the selected Vendor’s Proposal;

and, any other provisions as indicated in the Contract.

Customer Display – Hardware attachment to a Retailer Terminal for the display of

Jackpot amounts and other information as designated by the Lottery.

DES – Data Encryption Standard of the United States Department of Defense which is a

widely used method of data encryption using a private (secret) key.

Director – The Executive Director of the South Dakota Lottery, or his or her designee.

Draw Game – A Lottery game sold and redeemed through a computer network at

Retailer locations; and whose Tickets are generated by a Terminal and are a record of

a transaction for a Draw Game.

Draw Game Ticket – A hard-copy bearer instrument that is a player’s record of a wager

transaction for a Draw Game.

Drawing – The selection of winning numbers, to include live Drawings as well as

Drawings conducted via random number generation.

Encryption – The process of transforming information to make it unreadable to anyone

except those possessing special knowledge that meets or exceeds the requirements of

encryption and encryption key management used by the United States government as

certified by the National Institute of Standards and Technology (NIST), and that has

not yet been broken or compromised. For the purpose of this RFP encryption shall

meet the South Dakota Bureau of Information and Telecommunications encryption

standards.

Equipment – All of the machines and devices used to transport, process and display

Lottery information (see also Hardware).

Establishment – A licensed location for Video Lottery Terminals. A maximum of 10

VLTs are permitted to be in a single establishment.

Facilities – The locations required to provide and support the Retailer network, including

data centers, warehouses, repair depots, and any others designated by the Lottery.

File – A related collection of records containing a consistent set of data fields that

describe an entity. A file can be processed by software representing an authorized

user to add, modify or delete records, or to generate a report or display of useful

information. A file can be operated on as an object itself, for example to move it

from one location to another, or to delete it.


Gross Gaming Revenue (GGR) – defined as the amount wagered less the amount paid

out to players as winnings, will be trued up on an annual basis to the ‘net game

revenues’ and ‘game prizes expense’ from the Lottery’s audited financial statements.

Hardware – All State-of-the-Art computer equipment to be provided by the Vendor,

including all associated central computers, terminals, control channels, monitoring

equipment, communications equipment and peripheral equipment.

Information Technology Infrastructure Library – ITIL, formerly an acronym for

Information Technology Infrastructure Library, is a set of practices for IT service

management (ITSM) that focuses on aligning IT services with the needs of business.

Instant Game – A game in which tickets have a concealed prize structure and playing

area. The player removes the material concealing the playing area on the game ticket

(e.g. latex coating or flap) in accordance with the game instructions. Includes Scratch

or Scratch-Off Games, Electronic Games, or any game wherein the player receives an

immediate result without waiting for a Drawing.

Instant Ticket – The ticket purchased for participation in an Instant Game, which

includes Scratch or Scratch-Off Ticket, and Electronic Games.

Internal Control System (ICS) – A system of accounting and data processing controls

that allows the Lottery to balance Terminal transactions to Vendor data and trace

problems as necessary.

Issuing Office – South Dakota Lottery.

Lottery – The South Dakota Lottery, including (as applicable) the South Dakota Lottery

Commissioners, and all South Dakota Lottery employees.

Lottery Games – This includes all of the Draw Game and Instant Game operations

which enables the Lottery to sell, validate and redeem Draw Game and Instant

Tickets.

Management Terminal – An On-Line Terminal located at a Lottery office that is used to

validate winning tickets not redeemed at Retailer locations and to produce Terminal

reports for all Retailer or chain accounts.

Multi-State Lottery Association (MUSL) – A non-profit, government-benefit

association owned and operated by its member lotteries. Each MUSL member offers

one or more of the games administered by MUSL. All profits are retained by the

individual lotteries and are used to fund projects approved by the legislature

authorizing each lottery.

NASPL – The North American Association of State and Provincial Lotteries.


Net Income – Net Sales less expenses (both gaming and operational) incurred by the

Lottery.

Net Machine Income – Money put into a Video Lottery Machine less credits paid out in

cash.

Net Sales – Equal to all On-Line Tickets sold during the period. (Free replays as prizes,

promotional free tickets or cancelled transactions are not considered a ticket sold).

On-Line Central System (On-Line System) – The computer system, both hardware and

software, office, terminals, Equipment, parts, supplies, commodities, personnel and services

necessary to implement, conduct and provide the Vendor-provided On-Line Related

Products and Services for State Lottery Games. This includes all of the On-Line and Instant

Game operations which enables the Lottery to sell and redeem On-Line Tickets, and

validates Instant Tickets.

On-Line Terminal (or Retailer Terminal) – Terminal installed at a Retailer’s location: a)

for the purpose of selling and redeeming On-Line Tickets, validating Instant Tickets and

performing Pack Management and accounting functions; b) that allows connection to the

System either directly or indirectly; and c) that prints reports.

Operational Sales Period – The specific daily hours designated by the Lottery during

which Retailers can sell, cancel, validate, deliver, activate, settle, return, transfer, and

perform other operations on Retailer Terminals.

Operator – An individual or organization that owns and operates Video Lottery

Terminals. They contract with, or are themselves, establishment owners.

Pack – A pack of instant game tickets, with individual tickets uniquely numbered by

virtue of game/pack/ticket identifiers. Packs contain varying numbers of tickets,

depending on the game.

Pari-mutuel – A prize payout method in which an available prize pool is split equally

between the number of winning entries entitled to claim it. For example, in a Lotto

game, if three players hold the winning combination for a specific drawing, the grand

prize would be split in three equal portions, one portion going to each player.

Personally Identifiable Information (PII) – Any data that could potentially identify a

specific individual. Any information that can be used to distinguish one person from

another and can be used for de-anonymizing anonymous data can be considered PII

Play – A single set of numbers for a Lottery Drawing. A ticket may contain multiple

plays, depending on the game.

Player or Customer Transaction Display – Player-oriented visual display that

communicates to the player the amount of the current sale and Lottery-designated


messages regarding the winning or non-winning status of a ticket scanned on the

terminal. One or more Lottery-designated advertising messages shall be displayed

when not displaying player transaction information.

Player Activated Terminal (PAT)/ Instant Ticket Vending Maching (ITVM) – A

customer-operated On-Line Terminal that sells On-Line and/or Instant Tickets. PATs are

for placement in high-traffic Retailer locations; designed for use by the player directly;

contain a currency acceptor for payment; dispense tickets of variable lengths; and provide

connectivity to the System to record the sale of tickets at the time of purchase and to

track paper inventory in the machine.

Point of Sale (POS) – Depending on context: (a) the location where a product is

purchased; (b) the device with which a Retailer records a sale and collects money; (c)

promotional, advertising or display pieces (e.g., stickers and signs) or updateable

wireless message signs that are placed where a product is sold used to increase public

awareness of Lottery products and services in order to increase sales.

Primary Business Site (PBS) – The PBS is a business office location where the primary

functions are the “day-to-day” business activities, marketing and sales offices, and

customer training.

Primary System or Primary Data Center (PDC) – The components of the System,

taken as a single physical and/or logical group, that are designated as being primarily

responsible for the accurate processing of a transaction in a secure manner.

Privileged Terminal – A terminal similar to a retailer sales terminal, with specified

functions disabled such as ability to create "new wager" transactions disabled.

Proposal – The response by a Vendor to a Request for Proposals (RFP) issued by a

procurement agency to obtain goods or labor. The response may include but is not

limited to a Vendor’s price and terms for the proposed contract, a description of

technical expertise, work experience, and other information as requested in the

solicitation.

Quick Pick – A function that allows the System to automatically and randomly select

player's wager numbers or symbols.

Random – To have no discernible pattern under any type of testing. No characteristic or

set of characteristics or prior elements or a set of values or sequence of values shall

allow prediction of the next value.

Report – Information produced by the System that is viewed via display, printed, or

saved to a file depending on the needs of the Lottery.


Retailer – A business entity or retailer that is authorized by the Lottery to sell Lottery

products.

RFP – This Request for Proposals for a Lottery Gaming System, including any

addenda/amendments thereto.

Scheduled or “Scheduled” Reports – Routine daily, weekly, or other periodic reports

prepared by the Vendor per Lottery specifications regarding any aspect or function of

the lottery gaming system or communications systems.

Settlement – The act of billing the Retailer, in the System, for Instant Tickets for which

it is liable but has not yet paid.

Software – Means System, Retailer Terminal, Management Terminal and Player

Activated Terminal machine software, firmware, programs, subroutines, source code

instructions, all documentation relating to these items and any other descriptive

materials or related items that may be required to enable the gaming system to

perform their functions.

South Dakota Office of Procurement – the division in charge of purchases located

within the South Dakota Bureau of Administration.

Start-up – The date and time that live gaming operations commence under the Contract

resulting from this solicitation.

State – The State of South Dakota.

State-of-the-Art – The most current technology. The Lottery shall have the sole right to

determine if the Equipment and System proposed in response to this RFP are state-of-

the-art at the time the Proposal is received.

Sub-Vendor – any person or firm having an agreement with a Vendor to perform all or

some of the Vendor’s work under a contract with a procurement agency. Sub-Vendor

does not include an employee with an employment contract, or an employee

organization with a collective bargaining agreement.

TCP/IP – Transmission Control Protocol/Internet Protocol, according to MIL-STD-1777

and MIL-STD-1778.

Terminal – A computerized unit specifically designed for issuing and processing tickets

and for printing of special reports. Includes the following types of Terminals:

Management – A Terminal located at a Lottery office that is used to validate

winning tickets not redeemed at Retailer locations and to produce Terminal

reports for all Retailer or chain accounts.


Retailer Terminal – Any device installed at the retailer location that

communicates with the Lottery Gaming System for the purpose of selling

Lottery Games, validating Lottery Games or communicating winning, non-

winning and prize amount data, including references to Retailer Terminal.

Other – Any other Terminal used for retail sales that performs some but not all

of the functions of a Retailer Terminal. (For example, a hand-held portable

Terminal capable of selling only Quick Picks for Draw Games, countertop

self-service Terminals that read vouchers and Play Slips or small footprint

self-service Terminals that sell Draw and Monitor Games and Instant Ticket

Games).

Transaction – All game activity that shall be processed by the Central Site System(s).

Transactions include but are not limited to wagers, cancels, validations, rejections,

deliveries, activations, settlements, returns, transfers, reports, sign-ons and sign-offs.

Validation – Process by which winning tickets, both Draw Games and Instant, are

checked against computer files to ensure that the ticket presented is valid and that it

has not been redeemed previously.

Video Lottery Central System (Video Lottery System) – The computer system, both

hardware and software, office, equipment, parts, supplies, commodities, personnel and

services necessary to implement, monitor, and manage the State Video Lottery program.

VLT– Any type of Video Lottery Terminal.

2.2. General Information for On-line Central System

2.2.1. Current System

The Lottery’s current On-line Central System is operated by International Game

Technology (IGT), the current ICS is developed by Elsym, and the Lottery

maintained ACCLAIMS System provides Instant ticket management, Instant ticket

auto-order processing, financial management, accounts receivable, retailer

management, and claims processing.

2.2.2. Current Draw Games

The Lottery currently conducts five (5) draw games, as follows:

A. Powerball- A multi-state game, played in 43 states, the District of Columbia,

Puerto Rico, and the Virgin Islands. Drawings occur on Wednesdays and

Saturdays.

B. Mega Millions- A multi-state game, played in 44 states, the District of

Columbia, and the Virgin Islands. Drawings occur on Tuesdays and Fridays.


C. Lucky for Life- A multi-state game, played in 22 states. Drawings occur on

Mondays and Thursdays.

D. Lotto America- A multi-state game, played in 13 states. Drawings occur on

Wednesdays and Saturdays.

E. Dakota Cash- A game played only in South Dakota. Drawings occur on

Wednesday and Saturdays.

2.2.3. Instant/Scratch Games

The South Dakota Lottery launches, on average, around 30 scratch games a year.

Current scratch price point offerings are $1, $2, $3, $5, $10, and $20.

2.2.4. Retailers

There are approximately 620 retailers. Of these, 12 are instant ticket-only retailers.

All retailers, including instant-only retailers, currently all use the same retailer

terminal.

2.2.5. Back-Office Systems

The South Dakota Lottery's Back Office System is located at two different BIT data

centers in Pierre, SD. The system consists of two IBM i-Series servers using

Anderson Consulting's Acclaims software, using a DB2 database, and user

applications written in RPG III and IV. This system is used for Instant (scratch)

tickets live transaction interface, sales, auto reorders processing, inventory control,

marketing and accounting, and other daily scratch ticket business functions. Daily

and weekly Accounting information is transferred to the State Accounting system

and to the State’s primary Bank. It provides a connection to an in house mobile app

for ticket verification and provides real time data to an in house Lottery Retailer

website. The system runs on an AS/400 platform with one server as the primary and

a second server as the Secondary/ test/development server. A dual transaction

software is used to write a copy of the Primary system transactions to the Secondary

system. In addition to Instant activity, the Acclaims software provides On Line

ticket pay authorizations, creates On-Line warrants, and processes daily sales totals

from the Vendor Online Gaming system. The Lottery users connect to the State of

South Dakota LAN/WAN using Windows 7 (Note: the Lottery intends to switch to

Windows 10 for all office desktop computers prior to projected contract start date.).

The Lottery's current gaming Internal Control System (ICS) and database are at the

Lottery headquarters building in Pierre, South Dakota. ICS applications run on a

Windows Server 2003 platform on a IBM 7977 server. The Lottery currently

operates three servers, a primary, a secondary, and a test server.

The ICS is used for on line sales verification and prize verification control.

2.2.6. Jurisdictional Game Groups


The South Dakota Lottery is a member of the Multi-State Lottery Association

(MUSL).

2.2.7. Marketing and Related Services

The South Dakota Lottery currently contracts with Lawrence & Schiller of Sioux

Falls, South Dakota for a wide variety of marketing services, including advertising,

media buying and some public relations assistance. The Lottery currently contracts

with Scientific Games International and Pollard Bank Note Ltd. for instant ticket

printing and related marketing and assistance.

The Lottery currently participates in, and sells at two special events each year, the

Black Hills Stock Show in Rapid City, South Dakota and the South Dakota State

Fair in Huron, South Dakota.

2.3. General Information for Video Lottery Central System

2.3.1. Current System

The Lottery’s current Video Lottery Central System is developed and maintained by

Scientific Games. The Primary Data Center is located in the Becker-Hansen

Building in Pierre, SD. The Backup Data Center is located in Alpharetta, Georgia.

2.3.2. Operations

South Dakota’s Video Lottery program is a joint venture between the State and

private Operators. The Operators own and maintain the Video Lottery Terminals

(VLTs) while the State operates the Central System for control and monitoring.

There are currently just over 9,000 active VLTs in approximately 1,345

establishments. Each establishment is allowed to have up to 10 VLTs. All VLTs are

linked to the Central System in Pierre, SD that collects and accounts for all play

transactions via dial-up modem on a daily basis. With the approval of the Lottery

Commission, video lottery machines offer various combinations of games, including

poker, black jack, keno, bingo, and line games. Players may wager from 1 cent up to

a maximum of $2.00 per game. The maximum amount that can be won per game is

$1,000. VLTs currently use VLCS- Version D and SAS protocols, and they are

monitored through the use of DX Site Controllers and Multi-drop Connectivity

Devices. There are currently four Video Lottery license types: Establishment,

Operator, Distributor, and Manufacturer. The Operator license is the only one that is

billed through the Central System. The Lottery operates on a twice monthly billing

cycle for Video Lottery Operators.

3. Terms and Conditions

3.1. Contract Terms and Priority of Contract Documents

3.1.1. Terms and Conditions and Priority of Documents


The terms and conditions of the contract between the Lottery and the Vendor consist

of and precedence is established by the order of the following documents:

1) Contract as executed by the parties, including negotiated modifications and

clarifications to the RFP and the Vendor’s Proposal submitted in response to the

RFP as set forth herein;

2) Vendor’s Proposal; and

3) the RFP, as amended by all addenda thereto and all written answers provided by

the Lottery on March 9, 2018 and March 30, 2018 respectively.

The above numbered documents are, collectively, the “Contract”. These documents

are complementary and what is required by one shall be binding as if required by

all. In the case of any conflict or inconsistency arising under the Contract

documents, a document identified with a lower number in this section shall

supersede a higher numbered document to the extent necessary to resolve any such

conflict or inconsistency. No conflict or inconsistency shall be deemed to occur in

the event an issue is addressed in one of the above mentioned Contract documents

but is not addressed in another of such documents. No conflict or inconsistency

shall be deemed to occur in the event an issue addressed in one of the above-

mentioned Contract documents is an additional or supplemental requirement to an

issue addressed in another of such documents.

3.1.2. Right to Memorialize Final Agreement

The Lottery reserves the right to determine the form of the final contract. At its

option, the Lottery may memorialize the agreement between the Lottery and the

Vendor in one or more final contract documents.

3.2. Governing Law

The Contract shall be governed by the laws of the State of South Dakota and shall be

deemed executed in Pierre, Hughes County, South Dakota.

3.3. Jurisdiction

The parties shall bring any and all legal proceedings arising hereunder in the State of

South Dakota Circuit Court of Hughes County, unless otherwise specified and agreed

upon by the State of South Dakota. Vendor waives personal service of process, all

defenses of lack of personal jurisdiction and forum non conveniens. The Eleventh

Amendment of the United States Constitution is an inherent and incumbent protection

with the State of South Dakota and need not be reserved, but prudence requires the State

to reiterate that nothing related to this Agreement shall be deemed a waiver of the

Eleventh Amendment.

3.4. Term

The On-line Central System Contract will be for an initial term beginning approximately

August 3, 2019 and run through August 2, 2026. The Contract may be extended at the

option of the Lottery for additional periods not to exceed a total Contract term of fifteen

(15) years. The Lottery will notify Vendor in writing of its intent to extend the Contract

not later than ninety (90) days before the end of the current Contract period.


The Video Lottery Central System Contract will be for an initial term beginning

approximately November 16, 2019 and run through November 17, 2026. The Contract

may be extended at the option of the Lottery for additional periods not to exceed a total

Contract term of fifteen (15) years. The Lottery will notify Vendor in writing of its intent

to extend the Contract not later than ninety (90) days before the end of the current

Contract period.

3.5. Terms of Payment

3.5.1. Fixed Pricing and Payment

As full and complete compensation for all work performed for the Lottery under the

Contract, the Lottery shall pay the Vendor the expenses, charges and costs, as

ultimately determined in accordance with Part 7, Pricing, the successful Vendor’s

proposal and any negotiations thereafter memorialized. The Vendor’s Price

Proposal may be modified from time to time pursuant to the provisions of section

3.61, Amendment. The Lottery shall not be liable for any expenses the Vendor

pays or incurs or any charges or costs billed to the Lottery under the Contract unless

set forth in the Contract. Except as set forth in the Contract, the Vendor shall

supply, at its sole expense, all staff, equipment, tools, materials or supplies to

accomplish the work to be performed pursuant to the Contract.

3.5.2. Payment Remedies

The Lottery’s payment of expenses, charges and costs is subject to all remedies

afforded to the Lottery under law and pursuant to the provisions of section 3.25,

Remedies.

3.6. BIT Standard Contract Terms and Conditions

Any contract or agreement resulting from this RFP will include the State’s standard I/T

contract terms listed in Appendix A, along with any additional contract terms as

negotiated by the parties. As part of the negotiation process the contract terms listed in

Appendix A may be altered or deleted. The Vendor should indicate in their response any

issues they have with specific contract terms if the Vendor does not indicate that there are

any issues with any contract terms then the State will assume those terms are acceptable

to the Vendor. There is also a list of technical questions, Security and Vendor Questions

which is attached as Appendix B. These questions must be answered and may be used in

the proposal evaluation.

3.7. Warranties

3.7.1. Vendor Warranties

For the term of the Contract, all extensions, and for a period of one (1) year following the

termination or expiration of the Contract, the Vendor warrants that:

A. The design, development, quality and execution of all deliverables to be

provided under the terms of this contract are fully and fairly consistent with the

representations stated in the Vendor’s Proposal, as that Proposal may be


supplemented or amended in compliance with all applicable procurement or

contract requirements;

B. The games provided under this Contract, must in all respects conform to, and

function in accordance with, the approved game specifications and designs.

Without limiting the generality of the foregoing, the Vendor specifically

warrants that the on-line gaming system will permit the generation of tickets only

pursuant to, and in accordance with, legitimate plays from authorized terminals,

that the on-line gaming system will authorize payment only on legitimate

winning tickets, if a game design so provides, that the on-line gaming system

will correctly and consistently limit plays on any given number or numbers and

that prize payments on tickets that are printed as winning tickets on their face

must be uniformly consistent with the approved prize structure.

C. The on-line game tickets and all information technology equipment and

hardware associated with the on-line gaming system to be delivered pursuant to

this Contract are required for the particular purpose of issuance, distribution and

sale to the public in a Lottery program supervised by the Lottery. The Vendor

acknowledges that the Lottery is relying on the Vendor’s skill and judgment to

furnish on-line gaming system equipment and hardware that is fit, in all respects,

for that purpose. The Vendor warrants that the on-line game tickets and on-line

gaming system equipment and hardware will be fit for such purpose.

D. Any Software used pursuant to this Contract that is created to meet the

requirements of the Lottery for the on-line gaming system or to perform the

Contract and all modifications to Software to meet the requirements of the

Lottery or to perform the Contract (collectively, “Customized Software”) is fit

for the particular purpose for which the Customized Software is created or

modified and the Customized Software will operate and perform in accordance

with the functions and Specifications set forth in the Contract. The Lottery

hereby notifies the Vendor that the Lottery is relying upon the Vendor’s skill and

judgment to create and modify suitable Customized Software for the Lottery’s

particular purpose.

E. Any Software developed by or owned by the Vendor prior to the award of the

Contract and used to perform the Contract (“Proprietary Software”) and any

Software developed or owned by the Vendor’s Subcontractors and used to

perform the Contract (“Subcontractor Proprietary Software”) is fit for the

particular purpose for which it is used under the Contract (operation and

maintenance of on-line gaming system) and the Proprietary Software and

Subcontractor Proprietary Software will operate and perform in accordance with

the functions and Specifications set forth in the Contract. The Lottery hereby

notifies the Vendor that the Lottery is relying upon the Vendor’s skill and

judgment to select and furnish suitable Proprietary Software and Subcontractor

Proprietary Software for the Lottery’s particular purpose.

F. Any commercial off-the-shelf Software acquired from a third party and used

without modification to perform the Contract (“Commercial Software”) is

merchantable.


G. All Software used to perform the Contract is not incompatible with the Software

and hardware currently used by the Lottery and more particularly described in

the RFP or with any Software or hardware used or required by the Vendor or its

Subcontractors to perform the Contract. “Incompatibility” shall include, but is

not limited to: the creation of errors in data; the loss of data; the inability to

access data or to perform work under the Contract; and delays and stoppages in

the performance of work under the Contract.

3.7.2. Warranty Work

Vendor shall repair or replace, within a commercially reasonable time and at its sole cost

and expense, all equipment, hardware and software failing to comply with the warranties

granted in this section. If the Vendor fails to repair or replace such equipment, hardware or

software within a commercially reasonable time, the Lottery may, in its sole discretion, act

to repair or replace the faulty equipment, hardware or Software and the Vendor shall

reimburse the Lottery for all costs incurred by the Lottery to repair or replace the same.

3.7.3. Manufacturer’s Warranties

The Vendor shall ensure that the manufacturer’s warranty for Commercial Software is

given directly to the Lottery by the manufacturer or is assigned to the Lottery in accordance

with the requirements of the manufacturer.

3.8. Software Licensing and Ownership

3.8.1. Customized Software

The Lottery shall have all ownership rights in all Customized Software and associated

documentation.

3.8.2. Proprietary Software

Vendor grants the Lottery a perpetual, nontransferable, and non-exclusive license to use,

maintain and enhance all Proprietary Software and related documentation. The Lottery's

license includes the right to all updates, upgrades, or other enhancements produced by or

for the Vendor. The payments paid by the Lottery, as ultimately determined in accordance

with Part 7, Pricing, the successful Vendor’s proposal and any negotiations thereafter

memorialized shall be the sole source of payment for the cost of such updates, upgrades, or

other enhancements during the term of the Contract. The Vendor may charge a

commercially reasonable additional license fee for updates, upgrades, or other

enhancements following the expiration or termination of the Contract.

3.8.3. Subcontractor Proprietary Software

The Vendor shall obtain, at no additional cost to the Lottery, a perpetual, non-transferable,

and non-exclusive license to use, maintain and enhance all Subcontractor Proprietary

Software and related documentation. The Lottery's license shall include the right to

updates, upgrades, or other enhancements produced by or for the Subcontractor. The

payments paid by the Lottery, as ultimately determined in accordance with Part 7, Pricing,

the successful Vendor’s proposal and any negotiations thereafter memorialized, shall be the


sole source of payment for the cost of such updates, upgrades, or other enhancements

during the term of the Contract.

3.8.4. Commercial Software

Vendor shall procure all Commercial Software and related documentation in the

Lottery’s name. All licensing, rights or remedies granted by the Commercial Software

manufacturer to consumers of its Software shall be granted directly to the Lottery. The

Vendor shall obtain all maintenance and all updates, upgrades, or other enhancements to

Commercial Software during the term of the Contract. The payments paid by the Lottery,

as ultimately determined in accordance with Part 7, RFP-compliant Price Proposal, the

successful Vendor’s proposal and any negotiations thereafter memorialized, shall be the

sole source of payment for the cost of such updates, upgrades, or other enhancements

during the term of the Contract.

3.8.5. Delivery of Software to the Lottery

The Vendor shall promptly provide all software and associated documentation to the

Lottery upon request or upon termination or expiration of the Contract.

3.8.6. Inventory of Software

The Vendor shall provide an inventory of all software and related documentation used or

required to perform the RFP within thirty (30) days of the Effective Date of the Contract

and no less than every six (6) months thereafter.

3.8.7. Equipment and Software Corrections and Upgrades

The Vendor's services shall include software fixes to all software errors, design defects,

and improved versions of the software to sustain performance or correct performance

problems, to otherwise meet or continue to meet defined requirements. Included also will

be field maintenance and engineering changes for terminals and equipment which fail to

continue to meet requirements. Equipment and software changes necessary simply to

support increased volumes of transactions from an existing retailer base must be included

in the Vendor's base price for the system.

Changes and enhancements to the equipment and software which exceed contract

specified and current requirements (and which are not otherwise accommodated by the

pricing matrixes and Lottery specified options) (collectively, “Enhancements”) such as

additional terminal peripherals, new terminal types, administrative reporting changes,

new retailer user interface features, or a new gaming format, will be handled as follows:

A. Software Enhancements are included in the base price, even if additional

development is required to create or adapt software for the Lottery’s needs.

B. Capital equipment, facilities, or substantive service Enhancements will be

negotiated.


Notwithstanding the above, it is agreed that the Vendor shall not be required to

commence programming under this Section with respect to any proposed

software Enhancement unless and until: (a) the Vendor shall have received a

final written request for such proposed Enhancement based upon final written

specifications signed by the Executive Director or Deputy Executive Director,

and (b) the implementation of each other software Enhancement, additional

game, game enhancement or modification, or new written report or modification

previously requested by the Lottery shall have been successfully accomplished,

unless otherwise agreed.

3.9. Source Code Escrow

3.9.1. Escrow

Upon the written request of the Lottery, Vendor shall escrow the following with an escrow

agent acceptable to the Lottery: one (1) copy of all source code for Proprietary Software

used in performance under the Contract; one (1) copy of all documentation related to the

development and maintenance of the Proprietary Software; one (1) copy of all source code

for Subcontractor Proprietary Software; and, one (1) copy of all documentation related to

the development and maintenance of the Subcontractor Proprietary Software.

Escrowed documentation shall include, but is not limited to, build instructions,

programming documentation, configuration information, Software development tools,

compilers, linkers, libraries and any other documentation or resources used by the Vendor

or Subcontractor’s programmers to understand the source code or to develop, compile,

maintain, or update the escrowed Software. If any such documentation is reasonably

available from a commercial source other than the Software owner, the Software owner

may substitute in escrow a written identification of that particular documentation and its

commercial source.

Escrowed documentation shall further include a list of the primary programmers involved

in the development and maintenance of the Software and their home addresses and

telephone numbers. Vendor and Subcontractors shall update the source code and

documentation every three (3) months or when a new version of the escrowed source code

is used under this Contract.

3.9.2. Non-Encryption

Vendor and Subcontractors shall warrant in the escrow agreement that the escrowed source

code and documentation is not encrypted and is accessible to the Lottery if released under

the terms of the escrow agreement.

3.9.3. Verification

The Lottery may, in its discretion, require the verification of the escrow of source code and

documentation by the escrow agent, a third party verification service or by other parties

acceptable to the Lottery and the Software owner.

3.9.4. Transfer to Escrow Agent, Destruction of Escrowed Items and Termination


Vendor and all Subcontractors shall transfer all right, title and ownership to the escrowed

source code and documentation, including updates, to the escrow agent, subject to the

terms of the escrow instructions. The escrow instructions shall provide that the escrow

agent will destroy the escrowed Software and documentation upon the termination of the

escrow or return it to the Software owner in a specified manner. The escrow instructions

shall authorize termination of the escrow by a mutual, written agreement of the parties or

upon written notice from the Lottery.

3.9.5. Release from Escrow

The escrow instructions shall authorize the escrow agent to release the escrowed source

code and documentation to the Lottery upon the Lottery’s provision of evidence

satisfactory to the escrow agent of the following:

A. The Software owner is no longer maintaining the Software and no successor is

maintaining the Software. The parties stipulate that the Software owner’s written

refusal to maintain the escrowed Software and the failure of the Software owner to

respond within two (2) weeks to a written request to maintain the escrowed

Software with an affirmative, written promise to maintain the Software shall be

satisfactory evidence that the Software owner is not maintaining the Software. The

parties further stipulate that the failure of the promising party to maintain the

Software within two (2) weeks of such affirmative, written promise shall be

satisfactory evidence that the Software owner is not maintaining the Software.

B. The Vendor or Subcontractor owning the Software is the subject of a petition or

proceeding under the U.S. Bankruptcy Code, either voluntary or involuntary, and

such petition or proceeding is not dismissed within sixty (60) days after its

initiation.

C. The Vendor or Subcontractor owning the Software becomes insolvent or admits

either insolvency or a general inability to pay its debts as they become due.

3.9.6. Lottery’s Rights Upon Release

Upon release of the source code and documentation, the Lottery shall have all rights to use,

maintain and enhance the Software as provided in the license granted pursuant to section

3.8, Software Licensing and Ownership. The Lottery may engage non-employees to

assist in the exercise of such rights, including former employees or contractors of the

Software owner.

3.9.7. Escrow Costs

The payments paid by the Lottery, as ultimately determined in accordance with Part 7,

Pricing the successful Vendor’s proposal and any negotiations thereafter memorialized,

shall be the sole source of payment for the cost of the escrow during the term of the

Contract. The Lottery shall pay the costs of the escrow following termination or expiration

of the Contract and all provisions of this section 3.9, Source Code Escrow shall continue to

apply to the escrow. If the Lottery requires third party verification of the escrowed

Software and documentation, the Lottery shall pay the costs of such verification.

3.9.8. Bankruptcy Provisions


This escrow agreement is an agreement supplementary to the licensing of the Proprietary

Software and Subcontractor Proprietary Software as provided by 11 U.S.C. section 365(n).

If this Contract, the escrow agreement or the license of the Proprietary Software or

Subcontractor Proprietary Software is rejected by the Vendor or Subcontractor as a debtor

in possession or a trustee or by any other person or entity under the U.S. Bankruptcy Code,

the Lottery may elect to retain its rights as provided in 11 U.S.C. section 365(n). The

source code and documentation deposited under this escrow agreement are an

“embodiment” of “intellectual property” as those terms are used in 11 U.S.C. section

365(n).

3.10. Ownership of Materials and Information

Except as specifically provided otherwise in the Contract, the Lottery shall own and retain

all rights to hardware and other goods delivered by the Vendor in performing under the

Contract, and to information, materials, procedures, processes and data developed, derived,

documented, stored, or furnished by the Vendor under this Contract. Information,

materials, procedures, processes and data includes reports, documents, pamphlets,

advertisements, books, magazines, surveys, studies, computer programs, films, tapes,

sound reproductions and all information originating from Vendor’s performance and

delivery under this Contract.

3.11. Patent and Copyright Infringement

3.11.1. Warranty and Indemnification

The Vendor warrants that it has all rights and permissions, including intellectual property

rights and rights of publicity necessary to grant copyright, patent, trademark or

intellectual property rights, including licenses, to the Lottery in performance under this

Contract. The Vendor shall indemnify and hold the Lottery harmless and shall defend at

its own expense any action brought against the Lottery based upon a claim of

infringement of a United States patent, copyright, trade secret, or trademark for

information technology hardware or software, materials, information products, and

services used and performed under this Contract. Vendor will pay all damages and costs

finally awarded and attributable to such claim, but such defense and payments are

conditioned on the following: (i) that the Vendor shall be notified promptly in writing by

the Lottery of any notice of such claim; (ii) that the Vendor shall have the sole control of

the defense of any action on such claim and all negotiations for its settlement or

compromise, and the Lottery may select, at its own expense, advisory counsel; and (iii)

that the Lottery shall cooperate with the Vendor in a reasonable way to facilitate

settlement or defense of any claim or suit. Vendor shall have no liability to the Lottery

under this section for any claim of infringement that is based upon the Lottery’s

modification of Software without the knowledge of the Vendor or the Lottery’s

combination or utilization of Software without the knowledge of the Vendor.

3.11.2. Continued Right to Use or Replacement

Should information technology hardware or software, materials, information, products or

services provided under this Contract become, or in Vendor's opinion be likely to

become, the subject of a claim of infringement of a United States patent copyright, trade


secret, or trademark, the Lottery shall permit the Vendor, at its option and expense, either

to procure for the Lottery the right to continue using the information technology

hardware and software, materials, information, products or services provided under the

Contract or to replace or modify the same provided under the Contract so that it becomes

non-infringing. In the event that the Vendor is unable or unwilling to secure a continued

right to use the hardware or software, information, materials, products or services

provided under the Contract within a reasonable time, the Lottery may, in its sole

discretion, secure hardware, software, information, materials, products or services

conforming to the requirements of the RFP and deduct the costs of such hardware,

software, information, materials, products or services from payments to the Vendor or

terminate the Contract upon written notice to the Vendor.

3.12. Contract Relationship

It is distinctly and particularly understood and agreed between the parties that the Lottery is

in no way associated or otherwise connected with the performance of any service under this

Contract on the part of the Vendor or with the employment of labor or the incurring of

expenses by the Vendor. The Vendor is an independent contractor in the performance of

each and every part of this Contract, and solely and personally liable for all labor, taxes,

insurance, required bonding and other expenses, except as specifically stated herein, and

for any and all damages in connection with the operation of this Contract, whether it may

be for personal injuries or damages of any other kind. The Vendor shall exonerate,

indemnify, defend, and hold the Lottery harmless from and against and assume full

responsibility for payment of all federal, state, and local taxes or contributions imposed or

required under unemployment insurance, social security, worker’s compensation, and

income tax laws with respect to the Vendor or Vendor’s employees engaged in

performance under this Contract. The Lottery does not assume liability as an employer.

3.13. Hold Harmless

The Vendor shall indemnify the State against any and all loss or damage to the extent

arising out of the Vendor's negligence in the performance of services under the Contract

and for infringement of, or claim of any infringement of, any copyright, intellectual

property, or patent occurring in connection with or in any way incidental to or arising out

of the occupancy, use, service, operations or performance of work under the Contract.

The State shall not be precluded from receiving the benefits of any insurance the Vendor

may carry which provides for indemnification for any loss or damage to property in the

Vendor's custody and control, where such loss or destruction is to state property. The

Vendor shall do nothing to prejudice the State's right to recover against third parties for

any loss, destruction or damage to State property.

3.14. Insurance and Bonding

3.14.1. Insurance

A. The Vendor shall, for the duration of the Contract, maintain in effect all

insurance as required herein and comply with all limits, terms and conditions

stipulated therein. Policies shall provide, or be endorsed to provide, all required


coverage. Prior to beginning any work, or within two (2) weeks after

notification of award, whichever is earlier, the Vendor must provide

certificate(s) or certified endorsement(s), as applicable, of the insurance

required. Failure to provide the proof of insurance as required may, at the

Lottery's option, result in termination of the Contract. The Vendor shall not

commence work under this Contract until evidence of all required insurance is

provided to the Lottery.

B. Insurance, except for Workers Compensation, Technology Errors and

Omissions, and Cyber Risk, required by this section shall, as applicable, name

the Lottery as an additional named insured, to the extent of the liabilities

assumed by the Vendor, or loss payee, as the Lottery’s interests may apply;

provided, however, that the Lottery shall be named a loss payee as set forth in

subsection d. All insurance shall be with insurers rated A-VII or better in the

latest Bests Rating Guide and in good standing and authorized to transact

business in South Dakota. The coverage provided by such policies shall be

primary to any coverage of the Lottery on or related to the Contract and shall

provide that the insurance afforded applies separately to each insured against

whom a claim is made, except with respect to the limitation of liability. All

required policies shall require thirty (30) days’ notice to the Lottery, by certified

or registered mail, return receipt requested, prior to any cancellation, refusal to

renew or any material change in the nature or extent of the coverage provided.

If any of the liability insurance required under this Contract is arranged on a

“claims made” basis, “tail coverage” will be required at the completion of this

Contract for a duration of twenty-four (24) months thereafter. Vendor shall be

responsible for furnishing certification of “tail coverage” or continuous “claims

made” liability coverage for twenty-four (24) months following contract

completion. Continuous “claims made” coverage will be acceptable in lieu of

“tail coverage” provided the retroactive date is on or before the effective date of

this Contract or twenty-four (24) months “prior acts” coverage is provided.

Vendor waives all rights against the Lottery and its agents, officers, directors

and employees for recovery of damages to the extent these damages are covered

by the required policies. Policies may contain deductibles but such deductibles

shall not be deducted from any damages due to the Lottery.

C. By requiring insurance herein, the Lottery does not represent that coverage and

limits will necessarily be adequate to protect the Vendor and such coverage and

limits shall not be deemed as a limitation on the Vendor’s liabilities under the

indemnities granted to the Lottery.

D. Vendor shall maintain the following insurance in amounts not less than the

following:

a. Worker's Compensation Insurance in amounts as required by statute.

Employer’s liability with a liability limit of $500,000 per Accident,

$1,000,000 Disease, Policy Limit.


b. Automobile Liability including non-owned and hired with a liability

limit of $5,000,000 per occurrence.

c. Commercial General Liability (CGL) and, if necessary, commercial

umbrella or excess liability with a limit of not less than $5,000,000 each

occurrence/$5,000,000 annual aggregate. The Schedule of Underlying

Insurance in the Umbrella Policy shall include the CGL, the auto policy

and the Employer’s Liability Policy.

d. Comprehensive Crime with a liability limit of $10,000,000 per

occurrence having at least the following coverages: dishonesty (blanket

coverage), forgery, credit card forgery, theft (inside and outside),

embezzlement, wire transfer fraud, computer fraud or theft and other

dishonest acts of any employee or agent whose duties are to provide

services under the Contract. The Lottery shall be named a loss payee on

all Comprehensive Crime policies.

e. Property Insurance for all direct physical loss to computer hardware and

software, including mechanical breakdown and extra expense. Limits

should be consistent with valuation of hardware, software and time

required to restore operations.

f. Technology Errors and Omissions coverage with a liability limit of

$10,000,000 per Claim/Annual Aggregate. Coverage shall indemnify

the Vendor and pay on behalf of Vendor to the Lottery for loss which

may be incurred due to computer error, machine error, any

communication line problems caused by Vendor, its officers, employees,

agents, subcontractors or assigns, regardless of negligence.

g. Cyber Risk having the following coverages: information or identity

theft, liability for misuse or disclosure of third party data, liability for

loss of data, outages or spread of viruses, attacks, destruction or

disclosure of data or electronic information with a liability limit of

$10,000,000 per Event/Annual Aggregate.

h. Professional Liability Insurance or Miscellaneous Professional Liability

Insurance: The Vendor agrees to procure and maintain professional

liability insurance or miscellaneous professional liability insurance with

a limit not less than $1,000,000.00.

3.14.2. Bonding

A. Within thirty (30) calendar days of the effective date of the Contract, the Vendor shall

procure, at its own cost, and submit to the Lottery a performance bond payable to the

Lottery in the amount of five million dollars ($5,000,000) for the initial period of

performance and conditioned on Vendor’s faithful performance. The Vendor shall


pay the premiums on the performance bond. In the event that the Vendor or any

officer, director, employee or agent of the Vendor or any subcontractor or any parent

or subsidiary corporation of the Vendor or subcontractor fails to fully and faithfully

perform each material requirement of this Contract, including without limitation the

Vendor’s obligation to indemnify the Lottery and pay damages to the Lottery, the

performance bond shall be forfeited to the Lottery. The bond shall be in a form

customarily used in the lottery industry, and be acceptable to the Lottery, and shall be

written by a surety authorized to do business in South Dakota and that is acceptable to

the Lottery. The bond shall be in effect at all times during the term of the Contract

and any extensions or renewals thereof and for ninety (90) days following the

conclusion of the Contract. The Vendor warrants that it will maintain the required

performance bond coverage as described herein without any lapse in coverage. Based

upon Vendor’s performance during the initial contract term, the Lottery reserves the

right to discontinue performance bond requirements for any contract extensions.

B. Failure on the part of the Vendor to furnish such bond, or other proof of bond

coverage acceptable to the Lottery within thirty (30) days of contract execution, or to

maintain the bond in full force and effect during the term of the Contract and any

extension or renewal thereof, unless Lottery discontinues performance bond

requirements at its sole discretion, shall be a material breach of the Contract and shall

be considered cause for the Lottery to declare the Vendor in default under this

Contract. The Lottery’s receipt of such bond or other proof of coverage does not

constitute approval of the bond’s coverage nor do the bonds relieve the Vendor from

the faithful and honest performance of this Contract.

C. The bond must specifically refer to the Contract and shall bind the surety to all of the

terms and conditions of the Contract. The performance bond shall be forfeited if the

Contract is terminated due to the Vendor’s default, breach of the Contract by the

Vendor, or the Vendor’s bankruptcy, whether voluntary or involuntary.

3.15. Subcontracting and Assignment

Vendor shall not subcontract or assign its duties under the Contract without the prior

written approval of the Lottery. The Lottery may, in its sole discretion, impose

reasonable requirements upon the Vendor prior to the approval of any subcontract or

assignment. Acceptance of the Vendor’s proposal specifying subcontracts shall

constitute the Lottery’s acceptance of the specified Subcontractors. Notwithstanding the

Lottery’s approval of any subcontract, the Vendor shall be solely responsible for the

satisfactory performance of all Subcontractors and subcontracted services and for the

compensation of all Subcontractors. The Vendor shall be and shall remain liable for all

costs and damages to the Lottery caused by negligent performance or non-performance of

the subcontracted services. The Vendor shall ensure that each Subcontractor agrees to

comply with the terms of the Contract applicable to its scope of performance.

3.16. Independent Vendor

Both parties, in the performance of the Contract, shall be acting in their individual

capacity and not as agents, employees, partners, joint ventures or associates of one

another. The employees or agents of one party shall not be construed to be the

employees or agents of the other party for any purpose whatsoever.


3.17. Public Records

Pursuant to South Dakota Law, information or documents received from the Vendor may

be open to public inspection and copying unless exempt from disclosure. The Vendor

shall clearly designate individual documents as “Confidential” on each page of such

documents and shall indicate the basis for such exemption. The Vendor shall indemnify

and defend the Lottery against all liability, claims, damages, losses, expenses, actions,

attorney fees and suits whatsoever for honoring such a designation or for the Vendor’s

failure to designate individual documents as exempt. The Vendor’s failure to designate

as Confidential any document that is released by the Lottery shall constitute a complete

waiver of any and all claims for damages caused by any such release. If the Lottery

receives a request for materials claimed Confidential by the Vendor, the Vendor shall

provide the legal defense for such claim. The Lottery will not accept a legend or

statement on one (1) page that all, or substantially all, of a document is Confidential from

disclosure.

3.18. Vendor Records and Audit Requirements

3.18.1. Maintenance of Records

The Vendor shall maintain all electronic and hardcopy books, records, documents and

other evidence pertaining to the administrative costs and expenses of the Contract to the

extent and in such detail as shall properly reflect all revenues, all net costs, direct and

apportioned, and other costs and expenses of whatever nature for which reimbursement is

claimed under provisions of the Contract. Vendor shall maintain all records and

documents relevant to the Contract for three (3) years from the date of final payment to

Vendor. If an audit, litigation or other action involving records is initiated before the

three (3) year period has expired, Vendor shall maintain records until all issues arising

out of such actions are resolved, or until an additional three (3) year period has passed,

whichever is later. If the existence of Vendor is terminated by bankruptcy or any other

cause, all records related to the Contract in Vendor’s possession shall become the

property of the Lottery and Vendor shall immediately deliver such records to the Lottery.

3.18.2. Availability of Records

All records and documents relevant to the Contract shall be available for and subject to

inspection, review or audit, and copying by the Lottery and other personnel duly

authorized by the State, such as the Department of Revenue, Office of the State Auditor,

Department of Legislative Audit, and by federal inspectors or auditors. The Vendor shall

make its records available to such parties at all reasonable times, at either the Vendor’s

principal place of business or upon premises designated by the Lottery. The Vendor shall

include a provision granting the Lottery access to each Subcontractor’s records to the

same extent as if the records were the Vendor’s in every subcontract relating to this

Contract.

3.18.3. Audit

The Vendor shall engage and pay for an independent certified public accounting firm to

perform an audit of Vendor’s services in accordance with the American Institute of


Certified Public Accountants Report on Controls at a Service Organization SOC 1 Type 2

Audit. The audit shall be performed annually and apply to both the Online Central

System, Video Lottery Central System and related services such as a back office system

as an example. The Vendor shall submit a copy of the audit report to the Lottery upon

the completion of each audit. The Lottery reserves the right: (a) to specify the type of

report and the control objectives to be examined; (b) to approve the accounting firm

chosen to perform the internal control audit; (c) to designate the period to be covered by

the report and the date by which the report is due; and (d) to require that the first such

internal control audit be conducted with in ninety (90) days of installing the on-line

gaming system.

3.18.4. Audit of Electronic Data Processing Applications

Subject to the approval of the Lottery, the Vendor will contract with an Independent

Certified Public Accounting (CPA) firm with experience in conducting audits of

electronic data processing systems in accordance with standards established by the

American Institute of Certified Public Accountants and the General Accounting Office

for applications comparable to on-line Lottery games application. The Vendor will

require the accounting firm to perform an electronic data processing audit of general and

application controls on the on-line Lottery games and on the Vendor’s quality control

efforts. It is anticipated the audit will include a number of processing functions to be

determined by the Lottery. The cost of these audits will be borne by the Vendor and

there shall be no additional charges billed to the Lottery for these audits.

An audit shall be conducted within the first 9 months of contract execution (before start-

up) and annually within the contract period. The accounting firm will deliver to the

Vendor and to the Lottery a report of findings and recommendations within 3 months of

the close of each review period, except in the case of the review before start-up, which

will be delivered before system start-up.

Each audit shall be conducted in accordance with generally accepted auditing standards

for electronic data processing application reviews. The Vendor will require the

accounting firm to make recommendations based upon such industry standards or any

proprietary system of standards potentially utilized by said firm. The Lottery will use the

findings and recommendations of such report(s) as part of its on-going on-line Lottery

games monitoring process. As required by the Lottery, the Vendor shall implement the

audit recommendations. On a schedule determined by the Lottery, the Vendor shall

submit periodic progress reports on the status of recommendation implementation.

3.19. Audit Exceptions

If a federal or state audit indicates that payments to the Vendor fail to comply with

applicable federal or state laws, rules or regulations, or this Contract, the Vendor shall

refund and pay to the Lottery any compensation paid to Vendor arising from such

noncompliance, plus costs, including audit costs. In the event that any audit discloses

evidence of the Vendor’s non-compliance with any contract term, the Lottery expressly

reserves the right to pursue any remedies available to it under law or contract, including

the assessment of liquidated damages and termination of the Contract.


3.20. Compliance with Law

3.20.1. Compliance with Law, Licensing, and Certifications

Vendor shall comply with all requirements of federal and state statutes, rules, and

regulations applicable to Vendor or to the services performed by Vendor pursuant to this

Agreement. For the duration of the Contract, the Vendor shall maintain in effect, and

have in its possession, all licenses and certifications required by federal, state and local

laws, rules and regulations, including business and professional licenses.

Vendor shall comply with SDCL 42-7A and ARSD 48:01, 48:02 and 48:03.

3.20.2. Non-discrimination

The Vendor shall provide all services funded through or affected by the Contract without

discrimination on the basis of race, color, national origin, religion, sex, age, or

physical/mental impairment, and shall comply with all relevant sections of the following:

Title VI of the Civil Rights Act of 1964; Section 504 of the Rehabilitation Act of 1973;

The Age Discrimination in Employment Act of 1967; Title IX of the Education

Amendments of 1972; The Age Discrimination Act of 1975; The American's With

Disabilities Act of 1990; Executive Order 11246, as amended by Executive Order 11375;

Department of Labor Regulations, codified at 41 CFR Part 60; Section 402 of the

Vietnam Era Veterans Readjustment Assistance Act of 1974; and, United States

Department of the Interior Regulations, codified at 43 CFR Part 17. The Vendor shall

comply with pertinent amendments to such laws made during the term of the Contract

and with all federal and state rules and regulations implementing such laws. The Vendor

must include this provision in every subcontract relating to this Contract.

3.20.3. Covenant Against Contingent Fees

The Vendor warrants that no person or selling agent has been employed or retained to

solicit or secure this contract upon an agreement or understanding for a commission,

percentage, brokerage or contingent fee, except bona fide employees or bona fide

established agents maintained by the Vendor for the purpose of securing business. The

Lottery has the right, in the event of breach of this clause by the Vendor, to annul this

contract without liability or, in its discretion, to deduct from the contract price or

consideration or recover by other means the full amount of such commission, percentage,

brokerage or contingent fee.

3.20.4. Ticket Purchase and Prize Payment Restrictions

Throughout its period of contract performance, the Vendor must not purchase a Lottery

game ticket, receive any portion of any Lottery prize payment or share any portion of any

prize claimed by a holder of a winning Lottery ticket. Throughout the period of contract

performance, the Vendor must make its best, ongoing efforts to monitor and enforce

compliance with this provision. For the specific purposes of this provision, the term

“Vendor” will be understood to mean the Vendor as a business entity, any and all agents,

employees or subcontractors of the Vendor, and any person residing as a member of the

same household in the principal place of residence of any agent, employee or

subcontractor of the Vendor.


SDCL §42-7A-33. Purchase of ticket or payment of prize to certain persons prohibited--

Exceptions. No lottery ticket may be purchased by, and no prize may be paid to, any of

the following persons or to any person related by blood or marriage and who is a member

of the same household in the principal place of abode of any such person:

(1) Any member of the commission or employee of the South Dakota Lottery, unless

authorized in writing by the executive director; or

(2) Any officer or employee of a company or business which is currently engaged in

supplying equipment, supplies, or services being used directly in the operation of any

lottery conducted pursuant to this chapter, unless authorized in writing by the executive

director for research purposes. However, no prize may be paid on any ticket purchased

for research purposes.

Nothing in this section prohibits any lottery retailer or his employee from purchasing

lottery tickets or from being paid a prize of a winning ticket. Any person who knowingly

violates this section is guilty of a Class 1 misdemeanor on the first offense and a Class 6

felony on the second or subsequent offense.

3.20.5. Lobbying

A. The Vendor certifies that none of the compensation under the Contract has been paid

or will be paid by or on behalf of the Vendor to any person for influencing or

attempting to influence an officer or employee of any governmental agency, a

member, officer or employee of the South Dakota Legislature in connection with the

awarding, continuation, renewal, amendment, or modification of any contract, grant,

loan, or cooperative agreement.

B. If any funds, other than funds provided by the Contract, have been paid or will be

paid to any person for influencing or attempting to influence an officer or employee

of any governmental agency, a member, officer or employee of the State Legislature

in connection with the Contract, contractor must comply with state lobbying laws. For

further information concerning lobbying, contact the office of the Secretary of State.

C. SDCL §42-7A-28. Persons contracting to supply materials, tickets or consulting

services not to give gifts or loans to commission members or lottery employees--

Violation as misdemeanor. Any person contracting or seeking to contract with the

state to supply materials, tickets, or consulting services for use in the lottery or from a

lottery retailer, person licensed, or an applicant for a contract or license under this

chapter may not offer, pay, give, or make any economic opportunity, gift, loan,

gratuity, special discount, favor, hospitality, or service having an aggregate value of

one hundred dollars or more in any calendar year to a member of the commission or

employee of the South Dakota Lottery, or to any person residing in the same

household of either of the aforementioned. A knowing violation of this section is a

Class 1 misdemeanor.

D. The Vendor shall require that the language of this certification be included in any

subcontract, at all tiers, (including grants, sub-grants, loans, and cooperative

agreements) entered into as a result of the Contract, and that all sub-recipients shall

certify and disclose as provided herein.


E. The Vendor acknowledges that a false certification may be cause for rejection or

termination of the Contract, and that Vendor’s execution of the Contract is a material

representation of fact upon which the Lottery relied in entering the Contract.

3.20.6. No Conflict

The Vendor certifies and warrants that it presently has no interest and shall not acquire

any interest, direct or indirect, that would conflict in any manner or degree with the

performance of its services under the Contract. The Vendor shall not employ during the

term of this Contract any person known to the Vendor to have any such conflicting

interests.

No member of the Lottery Commission, Executive Director, employee of the Lottery, or

any person residing in the same household of any of the aforementioned, shall directly or

indirectly, individually, as a member of a partnership or other association, or as a

stockholder, director or officer of a corporation have an interest in a business which

contracts under this RFP.

During the period from the RFP release until the award of the contract, Vendors are

prohibited from officially or unofficially making any employment offer or proposing any

business arrangement whatsoever to any Lottery employee involved in the preparation of

the RFP, evaluation of the proposals, the contract award, or contract negotiations. A

Vendor making such an offer or proposition may be disqualified from further

consideration, or the contract signed pursuant to this RFP may be terminated. These

conditions continue for the contractor for a period of one year following the award.

3.21. Personal and Confidential Information

3.21.1. Personal and Confidential Information

The contractor may have access to private or confidential data maintained by the Lottery

to the extent necessary to carry out its responsibilities under the contract. The contractor

must comply with all the requirements of the South Dakota Sunshine Law (Open

Records) in providing services under the contract. The contractor shall accept full

responsibility for providing adequate supervision and training to its agents and employees

to ensure compliance with said Act. No private or confidential data collected, maintained

or used in the course of performance of the contract shall be disseminated by either party

except as authorized by statute either during the period of the contract or thereafter. The

contractor must agree to return any and all data furnished by the Lottery promptly at the

request of the Lottery in whatever form it is maintained by the contractor. On the

termination or such expiration of the contract, the contractor shall not use any of such

data or any material derived from the data for any purpose, and where so instructed by

the Lottery, shall destroy or render it unreadable.

“Private data” includes but is not necessarily limited to names, addresses, Social Security

numbers, e-mail addresses, telephone numbers, financial profiles, credit card information,

driver’s license numbers, medical data, law enforcement records, agency source code or

object code, agency security data or information identifiable to an individual that relates


to any of these types of information. The Vendor also acknowledges that during the

performance of the Contract it will come into possession of material and information,

financial, personnel, operations-related or otherwise that the Lottery regards as

proprietary or confidential (“confidential data”).

3.21.2. Strictest Confidence

The Vendor agrees to use and hold such Personal and Confidential Information in the

strictest confidence and shall not make use of it for any purpose other than the

performance of this Contract. The Vendor shall only release Personal or Confidential

Information to authorized employees or approved subcontractors requiring such

information for purposes related to contract performance, and shall not release, divulge,

publish, transfer, sell, disclose or otherwise make Personal and Confidential Information

known to any other party without the Lottery’s express written consent or as provided by

law.

3.21.3. Nondisclosure Agreement and Procedural Safeguards

The Vendor agrees to release Personal and Confidential Information required for

purposes related to contract performance only to employees or approved subcontractors

who have executed a nondisclosure agreement, the terms of which have been previously

approved by the Lottery. The Vendor shall maintain a log documenting the Personal and

Confidential Information received in performance of the Contract, the purposes for which

the information was received, who received, maintained and used the information, and

the final disposition of the information. The Vendor’s records shall be subject to

inspection, review and/or audit in accordance with Section 3.18, herein. The Vendor

agrees to implement physical, electronic and managerial policies, procedures and

safeguards to prevent unauthorized access, use or disclosure of Personal and Confidential

Information in any form.

3.21.4. Action upon Termination of the Contract

Upon termination of this Contract, for any reason, Vendor shall return or destroy all

Personal and Confidential Information received from Lottery, or created or received by

Vendor on behalf of Lottery. In the event that Vendor determines that returning or

destroying the Personal and Confidential Information is infeasible, Vendor shall notify

the Lottery of the conditions that make return or destruction infeasible. If the Lottery

agrees that return or destruction of Personal and Confidential Information is infeasible,

Vendor shall extend the protections of this Contract to such Personal and Confidential

Information and limit further uses and disclosures of such Personal and Confidential

Information to those purposes that make the return or destruction infeasible, for so long

as Vendor maintains such Personal and Confidential Information.

3.21.5. Indemnification

The Vendor agrees to indemnify and hold harmless the Lottery for any damages arising

out of, or related to, unauthorized use or disclosure by the Vendor, its officers, directors,

employees, subcontractors or agents. Any breach of this clause may result in termination

of the Contract and the demand for return of all Personal and Confidential Information.


3.22. Employment of Lottery Personnel

The Vendor shall not, without the prior written consent of the Lottery, knowingly engage

on any basis during the period of the Contract for work related to the Contract any

Lottery personnel who are, or have been at any time during the period of the Contract,

under the employment of the Lottery and engaged in the performance of work directly

related to the Contract.

3.23. Removal of Vendor Personnel

The Lottery may, in its sole discretion, require that Vendor reassign or otherwise remove

from performing services under the Contract, any staff member, Subcontractor, or

Subcontractor staff member reasonably found unacceptable to the Lottery.

3.23.1. Background Investigations During Contract Term

Before a contract for a major procurement is awarded, the Executive Director shall

conduct a thorough background investigation of the Vendor, any parent or subsidiary of

the Vendor, all shareholders of five percent or more interest in the Vendor or parent or

subsidiary of the Vendor, and all officers and directors of the Vendor or parent or

subsidiary of the Vendor to whom the contract is to be awarded. The Vendor shall submit

appropriate investigation authorizations to facilitate this investigation. The Executive

Director may require any additional information from the vendor that is considered

appropriate to preserve the integrity and security of the lottery.

The Lottery will provide the Individual History, Family Members, Investigation

Authorization forms and fingerprint cards. These fingerprints will be used to check the

criminal history records of the State as well as the Federal Bureau of Investigation’s

criminal history records.

The Vendor agrees to make its best efforts to cooperate with any such background

investigation. In the event that any investigation discloses evidence of the Vendor’s non-

compliance with any Contract term, the Lottery expressly reserves the right to pursue any

remedies available to it under law or contract, including the assessment of liquidated

damages and termination of the Contract.

3.24. Resolution of Disputes

The dispute resolution process provided in this section shall apply to all circumstances

where a Specification or deliverable requires the Lottery and the Vendor to collaborate or

cooperate to produce a plan, process, policy or procedure and where there is any dispute

regarding Contract performance and terms. If the Lottery Director and the Vendor are

unable to reach a mutually agreeable plan, process, policy or procedure, either party may

reduce the disputed issue to writing and deliver the notice of dispute to the other party

with a request for resolution. The request for resolution shall be accompanied by

supporting information including, but not limited to, a description of the issue with

citations to the Contract requirements applicable to the issue, and a clear statement by the

requesting party of the party’s interpretation of the issue and the basis for its suggested

resolution of the issue. If the Lottery Director and the Vendor are unable to resolve the

matter, the issue shall be referred to the Lottery Commission. The Lottery Director and


the Vendor may provide additional information to the Lottery Commission in the time

period and in the manner established by the Lottery Commission. After reviewing the

request for resolution, supporting information, and additional information provided by the

Lottery Director and the Vendor, the Lottery Commission may or may not hold a hearing,

at its sole discretion, and shall reduce its decision to writing and provide a copy thereof to

the Vendor. The decision of the Lottery Commission shall be final and binding upon the

parties; provided, however, that the remedies available to the parties in section 3.24

“Remedies” shall not be limited by this dispute resolution process.

3.25. Remedies

3.25.1. Remedial Action

In addition to any remedies available to the Lottery under law or equity, the Lottery may

at its sole discretion require one or more of the following remedial actions, taking into

account the nature of the deficiency, if any of the services or products do not conform to

Contract requirements: (1) require the Vendor to take corrective action to ensure that

performance conforms to Contract requirements; (2) reduce payment to reflect the

reduced value of services received; (3) require the Vendor to subcontract all or part of the

service at no additional cost to the Lottery; (4) withhold payment or require payment of

actual damages caused by the deficiency; (5) withhold payment or require payment of

liquidated damages; (7) secure products or services and deduct the costs of products or

services from payments to the contractor pursuant to section 3.11, Patent and Copyright

Infringement; or (8) terminate the Contract pursuant to this section 3.25, Remedies, and

sections 3.11, Patent and Copyright Infringement and 3.14, Insurance and Bonding.

3.25.2. Liquidate Damages

3.25.2.1. Liquidated Damages General

The parties to this contract understand and agree that:

A. The equipment and services provided under this contract must be extremely

reliable as described in sections 3, 4, 5, and 6 of this RFP;

B. Any contract breach by the Vendor will disrupt the Lottery's operations and will

lead to damages;

C. Proving those damages will be costly, difficult, time consuming and impractical;

D. The parties will use established liquidated damages formulae to resolve issues that

arise under certain specified damages categories; and

E. The liquidated damages established by this section are fair and reasonable.

3.25.2.2. Rights Reserved to the Lottery

The Lottery reserves the right, at its sole discretion:

A. To assess liquidated damages for non-specific damages;

B. To determine the existence of any factors relevant to the assessment of liquidated

damages (such as the fact or length of downtime or degraded performance);


C. To waive any or all liquidated damages, without explanation;

D. To assess liquidated damages under each section applicable to any given incident,

and to calculate any liquidated damages assessment based on the cumulative

effect of two or more damages categories

3.25.2.3. Waivers of Liquidated Damages

The waiver of any liquidated damages due the Lottery shall constitute a waiver only

as to such specific liquidated damages and not a waiver of any future liquidated

damages. Failure to assess liquidated damages or to demand payment of liquidated

damages within any period of time shall not constitute a waiver of such claim by the

Lottery.

3.25.2.4. Assessment Procedure

The assessment of liquidated damages will be in addition to, and not in lieu of, such

other remedies as may be available to the Lottery. All liquidated damages

assessments will be made by and at the discretion of the Lottery Director, or by the

Contract Manager under authority delegated by the Director, within one year of the

conclusion of the event upon which the assessment is based. Liquidated damages not

assessed within this period will be waived.

Upon determining that liquidated damages will (or may) be assessed, the Lottery

must notify the Vendor of that fact. Within 15 days of receiving the Lottery’s notice,

the Vendor may submit to the Director (or Contract Manager) a statement of any

factors it believes the Lottery should take into consideration regarding the relevant

facts and circumstances. The Lottery will fully and fairly consider those facts and

circumstances in making any decision regarding the assessment of liquidated

damages.

3.25.2.5. Payment of Liquidated Damages

Assessed liquidated damages will first be deducted from any fees due from the

Lottery to the Vendor, then, if necessary, from any Performance Bond(s) or Security

Bond(s). In the event the amount due the Vendor is not sufficient to satisfy the

amount of the liquidated damages, the Lottery will continue to deduct monies until

the amount due is paid in full. The parties may agree to modify the payment schedule

at the Lottery’s discretion.

3.25.2.6. Conditions for Termination of Liquidated Damages

As determined appropriate by the Lottery, the following are the conditions under

which the Vendor may obtain relief from the continued assessment of liquidated

damages:

A. Unless waived in writing by the Lottery, no liquidated damages imposed shall be

terminated or suspended until the Vendor issues a written notice verifying the

correction of the condition(s) for which liquidated damages were imposed and all

corrections have been subjected to System testing or other verification at the

discretion of the Lottery.


B. As appropriate, the Vendor shall conduct System testing of any correction as the

Lottery deems necessary. Such testing shall be developed jointly by the Lottery

and the Vendor and must be approved by the Lottery, including the test script, test

environment, and test results. A notice of correction will not be accepted until

verified by the Lottery.

3.25.2.7. Severability of Liquidated Damages Clauses

If any portion of the liquidated damages provisions is determined to be unenforceable

in one or more applications, that portion remains in effect in all applications not

determined to be invalid and is severable from the invalid applications. If any portion

of the liquidated damages provisions is determined to be unenforceable, the other

provision(s) shall remain in full force and effect.

3.25.2.8. Applicability of Liquidated Damages and Pro-Rated Liquidated

Damages

The Vendor shall not be required to pay liquidated damages for delays solely due to

matters affected by force majeure or for time delays specifically caused by or

approved by the Lottery. In all the below liquidated damages sections, the damages

shall be pro-rated for partial periods.

3.25.2.9. Liquidated Damages Stipulations

Stipulations that apply to only the On-line System or only the Video Lottery System

are indicated in the stipulation’s title.

1. Conversion and Startup

i. Condition: Vendor shall complete, except as otherwise approved by

the Lottery in writing, all agreed upon implementation tasks and

deliverables required pursuant to the Contract.

ii. Damages: the Lottery may impose liquidated damages for each

calendar day of delay as follows:

(1) Unresolved errors or failures preventing the successful completion of

User Acceptance Testing (UAT) as specified in the conversion plan –

up to ten thousand dollars ($10,000) per day.

(2) Startup delays beginning with the Contract-agreed production

conversion date - Up to two hundred thousand dollars ($200,000) per

day.

2. Timely and Accurate Deliverables

i. Condition: Each and every deliverable must be accurate, available,

and on schedule as agreed upon by the parties. Deliverables include,

but are not limited to, such things as reports, files, data and the like.

ii. Damages: Up to two thousand five hundred dollars ($2,500) per day

per deliverable.


3. System Down

i. Condition: The System shall be defined to be "down" if there is a

total Network outage, terminal application failure, or any other

condition for any reason that prevents:

(1) the execution of critical gaming functions such as those related to a

game draw; and/or,

(2) the occurrence of key transactions, such as activations, sales, cancels

and validations by a retailer terminal or any other device provided by

the Vendor and supported by the System.

The Vendor has a cumulative grace period of three (3) minutes per day

to resolve any and all issues causing the System “down” condition.

The cumulative time during which the System is down during the day

shall be the sum of all time during such daily operational sales period

when the System is "down." To address chronic problems, in the

event that two (2) downtime events of any length, for any reason, have

already occurred in any seven (7) calendar day period, the grace period

of three (3) minutes shall be rescinded.

ii. Damages: Up to one thousand two hundred fifty dollars ($1,250)

for each one (1) minute of System downtime, or fraction thereof.

4. System Degraded Performance

i. Condition: The System shall evidence "degraded performance", for

any reason, no more than one (1) hour during the operational sales

period on any day. The total cumulative time during which the System

performance is degraded during a day shall be the sum of all time

during such daily operational sales period when the System

performance is degraded. To address chronic problems, in the event

that two (2) degraded time events of any length have already occurred

in a seven-calendar day (7) period, the grace period of one (1) hour

shall be rescinded. The System shall be considered as having degraded

performance when:

(1) Retailer terminals fail to meet the response time as stated in the

Vendor’s Proposal or as agreed to otherwise, or the System is

incapable of meeting the throughput specifications provided in the

Contract;

(2) The System processes transactions from less than 95% of the installed

and operational retailer terminals;

(3) The System processes transactions from all terminals, but not for all

gaming products, gaming functions (e.g., pay, cancel, etc.), or retailer-

related activities;

(4) Transactions are not logged to the System as required in the Contract

or to the Lottery’s ICS units;


(5) Critical functions of System management and/or administration cannot

be conducted by the management workstations. These include but are

not limited to file transfers to the Lottery, and billing statements to

retailers;

(6) Instant ticket inventory management is compromised, including the

ability to receive, order, pack, ship, activate and/or settle instant

tickets, etc. in a manner concordant with production schedules;

(7) During a defined promotion period the System cannot issue tickets

and/or conduct transactions to support the promotion; or

(8) The number of active servers in the Gaming System falls below the

standard established in the Vendor’s Proposal. A Gaming System

server is considered active if it is networked with the System,

processing transactions real time, contains the correct software

version, and is capable of taking over primary functions (e.g.,

failover). Those instances where a server contains a different software

version as part of a staggered software update previously approved by

the Lottery are not included in this sub-item.

ii. Damages:

(1) For conditions identified in 2, 3, 6 and 7 above, up to thirty thousand

dollars ($30,000) per hour may be assessed for each hour of degraded

performance, or fraction thereof.

(2) For conditions identified in 1, 4, 5 and 8 above, up to five thousand

dollars ($5,000) per hour may be assessed for each hour of degraded

performance, or fraction thereof.

5. Terminal Field Service (On-line System only)

The Vendor shall ensure the timely repair or replacement of inoperable

terminals. The Lottery will determine whether a terminal is inoperable.

Terminals will be considered inoperable if:

There is no ticket stock available at the retailer location;

The terminal cannot perform any or all of the following functions: sell

tickets; validate tickets, cancel and process claims (including instant

ticket validations); and/or

The terminal cannot print tickets that are legible to the machine and to

the human eye.

Repair/replace terminals: For the purposes of this section, the following

definitions shall apply:

“Hard Down" means a terminal is not able to produce a draw ticket or

validate draw or instant tickets upon request as a direct result of

Vendor error.


“Critical Up" means a terminal is able to produce draw tickets and validate

draw or instant tickets; however, one or more other functions of the

terminal do not work or do not work properly;

“Signage Down" means a customer-oriented monitor does not work properly.

“Hours of Operation" means the business day of the Lottery during which

time the Vendor is required to receive and process wagers, validations

and other transactions on behalf of the Lottery, exclusive of time that

the specific retailer requesting service is closed, or such time that the

Lottery data network is shut down for daily processing, if any such

time exists. The Vendor shall maintain services, but will not be subject

to Liquidated Damages on the following days: July 4th, Thanksgiving

Day, Christmas Day and a fourth discretionary day. The Lottery shall

have a minimum of 14 working days prior written notice of

discretionary day and may deny consent up to 72 hours prior to the day

requested. This clause may be modified by the Lottery in the event of

high jackpots as set forth below.

"Terminal Classes." For purposes of calculating liquidated damages for this

section, each retail location shall be assigned to one of three classes

based upon its average weekly draw game sales. The Vendor will

provide to the Executive Director, upon request, an updated report of

all retailers and their classes. This report will be in an agreed upon

format and written to a disk or such other media as the Lottery may

designate.

Class A. Top selling terminals which account in aggregate for 50 percent of

gross sales based on the preceding two weekly billing periods.

Class B. Terminals not in Class A with average gross sales greater than $500

per week based on the preceding two weekly billing periods.

Class C. All terminals not included in Class A or B.

"Back in Service" or "Returned to Service" means that after replacement or

repair of a hard down terminal has been performed, the terminal

remaining at the retail location following replacement or repair is

capable of performing all terminal functions.

“Promotional Event Locations” means any event at which the Lottery

conducts any promotions remote from Lottery headquarters, including,

but not necessarily limited to, fairs, festivals, music concerts, races and

trade shows.


Terminal Repair Request – Hard Down. For the purposes of this section,

the following geographical areas are defined for determining response

times to calls for service to the Vendor's service personnel:

Two-Hour Response Area. Any retail location with a "Class A"

terminal, and all promotional event locations selling lottery games

shall have a two (2) hour response time by Vendor field service

personnel to all "Hard Down" terminal repair requests.

Three-Hour Response Area. All retailer locations with a “Class B”

terminal shall have a three (3) hour response time to all "Hard Down"

terminal repair requests.

Eight-Hour Response Area. All terminals not included in class A or

B shall have an eight (8) hour response time by Vendor field service

personnel to all “Hard Down” terminal repair requests.

Response Time Provisions. The Vendor will have a total of one-half (1/2)

hour to repair or replace any hard down terminal from the time the

service personnel arrives on scene to the time that the terminal is

placed back in service. The total repair time, including travel time,

shall not exceed two and one-half (2 1/2) retailer business hours to any

"Hard Down" repair request from the time that the retailer or Lottery

notifies the Vendor until the terminal is returned to service, for any

terminal at a retailer in one of the "Two-Hour Response Areas" listed.

The total repair time, including travel time, shall not exceed three and

one-half (3 1/2) retailer business hours, from the time the retailer or

Lottery notifies the Vendor until the terminal is returned to service, for

any retailer located in a "Three-Hour Response Area." The total repair

time, including travel time, shall not exceed eight and one-half (8 ½)

retailer business hours, from the time the retailer or Lottery notifies the

Vendor until the terminal is returned to service, for any retailer located

in an “Eight-Hour Response Area”.

Terminal Repair Request - Critical Up. Terminals which are in an “A or B

Critical Up” status when reported by the retailer or Lottery to the

Vendor shall be repaired and returned to service within eight (8) hours

and twelve (12) hours for Class C terminals, including travel time and

repair time, regardless of the retailer's location within the state. Refer

to “Terminal Classes,” above.

Terminal Repair Request - Signage. Terminals which have a monitor, LED

sign, or any other form of signage maintained by the Vendor which is

down must be responded to and repaired within eight (8) hours from

the time the retailer or Lottery notifies the Vendor for Class A or B

terminals and twelve (12) hours for Class C terminals, including travel


time, regardless of the retailer's location. Refer to “Terminal Classes,”

above.

Liquidated Damages for Terminal Repair. The liquidated damages which

may be assessed for the failure to respond to a service call within the

time frames are set forth in this section. “Penalty down time” means

the number of minutes in excess of the maximum number of minutes

allowed for resolution of any event, as set forth above. Liquidated

damages shall be assessed at the rates listed below:

Average Weekly Previous 52 week’s sales, divided by the normal weekly total

minutes of operation during said previous 52 weeks, multiplied by the

number of minutes of penalty down time

Note: Penalty for any retailer with less than a 52 week sales history will be

calculated using the average of the total number of sales weeks

available.

6. Escalation of Damages for High Sales Volumes (On-line System only). On

the day of any failure where the jackpot for any draw game exceeds the

amounts listed below, damages assessed for failure to repair or install any

terminal or for failure to deliver supplies will be increased by the factors in the

table below:

Note: In cases where this section applies to more than one draw

Lottery game, the higher percentage factor shall be used to determine

escalation charges.

Multi-State Games:

Jackpot Factor

$70 Million up to $100 Million ........150%

Over $100 Million up to $200 Million……175%

Over $200 Million ...…………………………… 200%

In-State Games:

Jackpot Factor

$20,000 up to $75,000…….......… 150%

Over $75,000 up to $150,000 ………... 175%

Over $150,000 ………………………………….200%

7. Terminal Preventive Maintenance (On-line System only)

i. Condition: The Vendor and the Lottery shall agree on a preventative

maintenance cycle for retailer terminals. Preventative maintenance will

occur at least quarterly


ii. Damages: If there is delay for any retailer terminal scheduled

preventive maintenance that exceeds the planned maintenance day by

thirty (30) days or more, then the Lottery may impose liquidated

damages of up to one hundred ($100) dollars per day until the

condition is rectified.

8. Terminal Installation and Moves (On-line System only)

i. Condition: The Vendor shall install or move all retailer terminals

within five (5) working days of notification from the Lottery. The

Vendor may not pass fault to a Subcontractor.

ii. Damages: $200 per day per each effected terminal.

9. Failure to Modify Existing Games or to Install Additional Games (On-

line System only)

i. Condition: The Vendor shall accurately modify and convert existing

games or accurately install additional games (and their supporting

controls) in accordance with the agreed upon release schedule. The

Vendor’s change must complete UAT and receive the Lottery's written

approval, within the time frame specified.

ii. Damages: Up to one hundred thousand dollars ($100,000) per day

that the upgrades, modifications or installations are not completed.

The Vendor is not obligated to pay liquidated damages if the Lottery

opts to release the change at a later time than the agreed-upon

schedule.

10. Failure to Produce an Administrative Software Change

i. Condition: The Vendor shall modify or add software to produce

reports, screen displays, inquiries, and other administrative

applications in accordance with an agreed upon release schedule. The

Vendor’s change must complete UAT and receive the Lottery's written

approval, within the time frame specified therein.

ii. Damages: Up to five hundred dollars ($500) per day that the modified

or additional software is not installed.

11. Failure to Support an Instant Ticket Game (On-line System only)

i. Condition: The Vendor must ensure that instant ticket games are

properly converted and supported. The System must handle instant

ticket transactions and produce reports for all games ordered by the

Lottery from its instant ticket supplier(s).

ii. Damages: Up to ten thousand dollars ($10,000) per day per game for

any instant game(s) for which the Vendor does not provide timely

and/or correct instant ticket transaction handling and reporting.


12. Unauthorized Software/Hardware Modifications

i. Condition: The Vendor shall not modify any software or hardware

without the prior, authorized written consent of the Lottery.

ii. Damages: Up to ten thousand dollars ($10,000) per violation in

addition to any other damages that may occur as a result of such

unauthorized modification.

13. Unauthorized Access or Compromise

i. Condition: The Vendor shall preclude any persons, not authorized by

the Lottery, from accessing, modifying, or otherwise interfering with

the System, Test System, and any data or software. Each person and

every act that permits access, modification, or interference by an

unauthorized person is an incident.

ii. Damages: Up to fifty thousand dollars ($50,000) per person, for each

incident.

14. Supply Shortage (On-line System only)

i. Condition: The Vendor shall furnish the retailers, or cause the same

to be done, any essential supplies, and consumables for all games for

which Vendor is responsible for supplying (not including instant

tickets or point-of-sale advertising materials).

ii. Damages: Up to five hundred dollars ($500) per retailer per day or on

a prorated basis for any portion of a day for failure to deliver essential

supplies and consumables in 14(i) above.

15. Failure to Report Incidents

i. Condition: It will be the responsibility of the Vendor to immediately

report all significant incidents related to the operation of the System.

The immediate reporting shall be delivered personally or by telephone

within one (1) hour of the discovery of the incident, followed by a

written communication to the Lottery’s Executive Director and the

Director of Information Technology within twenty-four (24) hours of

the incident. At a minimum, each of the following types of events

shall require a written report:

(1) System takeovers/failovers;

(2) Major communications failures;

(3) Significant operator errors;

(4) Failure to collect and accurately record data;

(5) Out-of-balance conditions (On-line System only);

(6) Emergency software or hardware changes;

(7) Security violations;


(8) Other conditions as defined by any applicable memoranda of

understanding that might be developed between the Lottery and

Vendor at any time during the Term; and

(9) Any situation which the Vendor believes may cause the general public

to become alarmed and/or which may damage the integrity or public

image of the Lottery.

ii. Damages: Up to ten thousand dollars ($10,000) per day or prorated

fraction thereof, until an incident is correctly reported from the time of

the incident.

16. Failure to Provide Software Testing and Quality Software Turnovers

i. Condition: The Vendor must provide a quality assurance test plan, a

report on the quality assurance test, and quality-tested software in

accordance with the agreed upon release schedule.

ii. Damages: Up to five thousand dollars ($5,000) per day for each

violation (return or retraction of the software).

17. UAT environment

i. Condition: All integral parts of the UAT environment must be made

available by the Vendor for the use of the Lottery at the beginning of,

and during normal business hours. This includes the UAT server(s),

all communication types, terminals, and requested data as agreed by

the Vendor and the Lottery.

ii. Damages: Up to two thousand dollars ($2,000) may be assessed per

day that any element of the UAT environment is unavailable.

18. Failure to Comply with Proper System Procedures

i. Condition: If, without prior authorization, the Vendor deviates from

specific instructions or usual, customary, or established operating

procedures, and that deviation causes an out of balance condition for

any on-line game (extending for more than twenty-four (24) hours

following close of that draw), or disruption to the retailer community

or the player base, the Lottery may assess liquidated damages.

ii. Damages: Up to fifty thousand dollars ($50,000) per occurrence.

19. Audit Compliance

i. Condition: The Vendor and the Lottery will agree to a Condition: The

Vendor shall comply with any audit recommendations, according to

the schedule established by the Lottery. The Vendor and the Lottery

may discuss audit recommendations and the Lottery may, after


evaluating the associated risks and costs, elect to waive some or all

recommendations.

ii. Damages: Up to two thousand five-hundred dollars ($2500) per week

for each recommendation with which the Vendor fails to demonstrate

timely compliance.

20. System Restoration

i. Condition: The Vendor shall restore the system for retrieval of the

previous 18 months of wagering transactions and instant ticket

accounting system transactions within 12 hours of the Lottery’s

written request

ii. Damages: Up to five hundred dollars ($500) per hour beyond an

initial 12-hour grace period.

21. Network Conversion:

i. Condition: During the new contract conversion/phase-in period,

before July 1, 2019, the Vendor shall not perform any network-related

activity that results in interruption of the normal operation of the

Lottery’s terminals. Furthermore, it is contemplated that the Lottery,

approximately one year prior to the expiration of any contract resulting

from this RFP, will award a new contract. The parties understand and

agree that the Lottery may utilize part of the last year of the contract

resulting from this RFP for conversion of the lottery gaming system to

the subsequent system, and the Vendor shall fully cooperate in the

conversion process.

ii. Damages: Up to five hundred dollars ($500) per hour for each retailer

terminal that is unable to sell draw tickets due to the Vendor’s

conversion related activity, until the terminal is returned to normal

operational status.

22. Insufficient Vendor Resources for Ongoing Operations:

i. Condition: Lottery and Vendor shall agree on set of criteria for the

staffing of hotline, conversion, field service, marketing support, and

training services based on performance measures and values. The

Lottery will notify the Vendor of its failure to meet performance

standards. The Vendor will have 14 calendar days from its receipt of

such notice to cure the failure.

ii. Damages: Up to five hundred dollars ($500) per day after 14 days

from notification of failure to meet performance standards.

23. Unapproved Claimed Tickets:


i. Condition: The lottery gaming system shall neither produce nor

validate a ticket that the Lottery does not determine to be a valid

winning game ticket according to its game rules and prize claim

procedures.

ii. Damages: The Vendor shall be liable for the amount of the ticket as

well as any associated damages the Lottery incurs in investigating or

curing the situation.

24. Defective or Non-Conforming Ticket:

i. Condition: The lottery gaming system shall not produce defective or

non-conforming tickets due to any terminal equipment or printer

malfunction or failure that causes loss of revenue or the inability to

pay appropriate prizes.

ii. Damages: Up to twenty-five thousand dollars ($5,000) per incident

plus any liability for the ticket.

25. Non-represented tickets:

i. Condition: The Vendor shall be liable for all non-altered winning

tickets issued by the Vendor system and presented for redemption

which are not identified as valid, winning, saleable tickets on the

transaction master log files and validation files furnished to the Lottery

by the Vendor.

ii. Damages: The Vendor shall pay all prize costs for any such ticket and

shall pay any additional costs incurred by the Lottery.

26. Failure to Comply with Security Requirements:

i. Condition: The Vendor shall provide, install and maintain all security

requirements as set forth in the Contract and as approved by the

Lottery Director of Security and Lottery Executive Director or

designee.

Upon receipt of written notification from the Lottery Director of

Security of new security requirements and/or modifications to existing

security requirements, the Vendor shall have a maximum of 30 (thirty)

days to be in full compliance with the new or modified security

requirements.

ii. Damages: Should the Vendor fail to be in compliance within the 30

(thirty) days, the Lottery may assess, as liquidated damages, one

thousand dollars ($1000) per day per violation. In the event of a

system breach, damages shall be assessed to cover the costs to repair

the breach and any lost revenue.

27. Compliance with MUSL Minimum Security Standards:


i. Condition: All services, products, systems, and procedures to be

employed by the Vendor must comply with MUSL Minimum Game

Security Standards and MUSL Rule 2 at the time of Contract

performance and as may be changed during the term of the Contract.

ii. Damages: Up to two thousand dollars ($2,000) per day, per violation.

28. Instant Ticket Validation System:

i. Condition: The terminal network is unable to accept and/or transmit

instant ticket transactions during normal draw operation sales hours, as

specified by the Lottery, and the malfunction is due to Vendor failure.

ii. Damages: Up to two thousand five hundred dollars ($2,500) per hour

of cumulative network down time. Cumulative network down time

shall mean the sum of all network down time (whether or not

consecutive) during the day's operational sales period in excess of 15

(fifteen) minutes per day.

iii. Condition: The instant ticket system communications link between

the Vendor system and the Lottery system malfunctions or otherwise is

unable to accept and/or transmit transactions during normal draw

operational sales hours, as specified by the Lottery and the

malfunction is due to Vendor failure.

iv. Damages: Up to one thousand dollars ($1,000) per hour of cumulative

communications link down time during the sales day. Cumulative

communications link down time shall mean the sum of all

communications link down time (whether or not consecutive) during

an entire day's operational sales period, in excess of 15 (fifteen)

minutes per day.

29. Failure to connect Establishments (Video Lottery System only)

i. Condition: Establishments are not connected according to the

mutually agreed upon timeline for phased implantation.

ii. Damages: Up to one thousand dollars ($1,000) per establishment per

day.

30. Non-Represented events (Video Lottery System only)

i. Condition: The Video Lottery Central System fails to accurately

record and store data with the ability to accurately retrieve and

transmit in the time and format specified in the Software Requirements

Specifications for all VLT events in the master log files and such other

files specified by the Lottery.

ii. Damages: Up to two thousand five hundred dollars ($2,500) per

failure.

31. Failure to provide required staffing


i Condition: Vendor does not provide required staffing as specified in

section 4.11 or as determined in contract negotiations. The Lottery

will provide notice that liquidated damages will be assessed, allowing

the Vendor a period of time not to exceed two weeks to provide

replacement staffing.

ii. Damages: Up to two thousand dollars ($2,000) per day after the two

week period has lapsed.

32. Failure to maintain required software licenses

i. Condition: Vendor must provide a software license inventory and

ensure that all software is under license at all times during the term of

the Contract. Failure to maintain a license on installed software will

result in damages being assessed.

ii. Damages: Up to one thousand dollars ($1,000) per day for each

unlicensed software installation.

33. Failure to keep Systems synchronized

i. Condition: Vendor must ensure that the software and hardware

configuration used at the testing laboratories remains synchronized,

or compatible, with the production System.

ii. Damages: Up to five hundred dollars ($500) per day for each

location that is not synchronized with the production System.

34. Other Losses

Notwithstanding damages defined above, the Lottery will plan to

assess liquidated damages to recover losses in full due to negligence,

willful errors, and omissions by the Vendor.

3.25.3. Termination by Lottery

The Lottery may cancel the Contract at any time, with or without cause, upon no less than

thirty (30) calendar days' prior written notice to the Vendor specifying the date of

termination.

3.25.4. Termination for Cause

Either party may terminate the Contract immediately upon written notice, or upon such

notice as such party, in its sole discretion, deems appropriate, if at any time: (a) the other

party is in material breach of any warranty, term, condition, covenant or obligation under

the Contract; (b) judicial interpretation of federal or state laws, regulations, or rules

renders fulfillment of the Contract infeasible or impossible; (c) Vendor’s license or

certification required by law is suspended, not renewed, or is otherwise not in effect at

the time service is provided; or (d) Vendor fails to comply with any applicable law,

regulation, or rule.

3.25.5. Effect of Termination

Upon termination by the Lottery, Vendor shall: (a) promptly discontinue all work, unless

the termination notice directs otherwise; (b) place no further orders or requests of


Subcontractors, if any, for materials, services, or facilities; (c) terminate all orders and

subcontracts to the extent that they relate to the performance of work terminated by the

termination notice; (d) assign to the Lottery, in the manner and to the extent directed by

the Lottery, all right, title, and interest of the Vendor under the orders or subcontracts so

terminated, in which case the Lottery shall have the right, in its discretion, to settle or pay

any or all claims arising out of the termination of such orders and subcontracts; (e) with

the advance approval of the Lottery, settle all outstanding liabilities and all claims arising

out of such termination of orders and subcontracts the cost of which would be

reimbursable, in whole or in part, in accordance with the provisions of the Contract; (f)

promptly return to the Lottery any property provided by the Lottery pursuant to the

Contract; (g) deliver or otherwise make available to the Lottery all data, reports,

estimates, summaries and such other information and materials, including Personal and

Confidential Information, as may have been accumulated by the Vendor in performing

the Contract, whether completed or in process; and, (h) complete all requirements and

comply with all provisions of the transition plan, in accordance with Section 3.28, herein.

Upon termination by the Lottery, the Lottery may take over the services and may award

another party a contract to complete the services contemplated by the Contract. Upon

termination for cause, the Lottery shall be entitled to reimbursement from Vendor for

losses incurred as a result of the Vendor’s breach.

3.26. Force Majeure

The Vendor shall not be held liable if the failure to perform under the Contract arises out

of causes beyond the control of the Vendor. Causes may include, but are not limited to,

acts of nature, fires, tornadoes, quarantine, strikes other than by Vendor's employees, and

freight embargoes.

If the Vendor or Lottery is delayed, hindered, or prevented from performing any act

required under the Contract by reason of delay beyond the reasonable control of the

asserting party due to theft, fire, Act of God or public enemy, severe and unusual weather

conditions, injunction, riot, strikes, lockouts, insurrection, war, or court order, then

performance of the act shall be excused for the period of the delay. In that event, the

period for the performance of the act shall be extended for a period equivalent to the

period of the delay. Matters of the Vendor’s finances shall not be considered a Force

Majeure.

3.27. Waiver

Waiver of any breach of any provision in the Contract shall not be a waiver of any prior

or subsequent breach. Any waiver shall be in writing and any forbearance or indulgence

in any other form or manner by State shall not constitute a waiver.

3.28. End of Contract Conversion and Transition

3.28.1. Best Efforts and Cooperation

In anticipation of the termination date of this contract, consistent with any established

end-of-contract phase-out schedule and consistent with the new system conversion

schedule established between the Lottery and any successor Vendor, the Vendor must


exercise its best efforts and cooperation to effect an orderly and efficient transition to any

successor Vendor.

3.28.2. Transition and Phase-Out Services

Upon the Lottery Director’s written notification the Vendor shall furnish transition and

phase-out services for up to six months before the expiration date of this Contract and

negotiate in good faith with the Lottery and with any successor Vendor for a

transition/phase-out plan that clearly defines the nature and extent of the transition and

phase-out services required, including the disposition of any pre-existing equipment.

3.28.3. Written Strategy for End of Contract Conversion and Transition

The Vendor will provide, for the Lottery Director’s approval, a written strategy detailing

the end-of contract conversion and transition/phase-out plan; and provide sufficient

experienced personnel during the end-of-contract phase-out period to ensure that all

contract services continue to be provided at the required level of proficiency and

professionalism, up to the date on which any subsequent successor Vendor assumes

Contract responsibilities.

3.28.4. Extension of Contract by the Lottery

In the interest of an effective end of contract transition to any successor Vendor, the

Lottery reserves the right to extend this Contract for up to 180 days.

3.29. Transition Assistance

In the event of contract termination or expiration, Vendor shall provide all reasonable and

necessary assistance to State to allow for a functional transition to another Vendor.

3.30. Care of State Property

The Vendor shall be responsible for the proper care and custody of any state owned

personal tangible property, intellectual property, and any real property furnished for

Vendor's use in connection with the performance of the Contract. The Vendor shall

reimburse the State for such property's loss or damage caused by the Vendor, except for

normal wear and tear.

3.31. Retention of Records

Unless the State specifies in writing a different period of time, the Vendor agrees to

preserve and make available at reasonable times all of its books, documents, papers,

records and other evidence involving transactions related to the Contract for a period of

five (5) years from the date of the expiration or termination of the Contract.

Matters involving litigation shall be kept for one (1) year following the termination of

litigation, including all appeals, if the litigation exceeds five (5) years.

3.32. On-Site Inspection

The Lottery has the right to inspect, approve, monitor, plan or evaluate any phase of any

game or system development at the Vendor's offices or elsewhere. The Lottery vendor

shall be responsible for the transportation, lodging and meals for up to four Lottery


personnel required to approve, plan, monitor or observe any market research, game

modifications or development up to four (4) times a year or as may be mutually agreed

upon by the parties pursuant to the State of South Dakota travel and subsistence

regulations. Such expenses shall be accounted for and submitted to the Vendor and shall

operate as an offset against the amounts payable under the Contract by the Lottery to the

Vendor.

Failure to adequately inspect the premises shall not relieve the Vendor from furnishing

without additional cost to the State any materials, equipment, supplies or labor that may

be required to carry out the intent of the Contract.

3.33. Indefinite Quantity Contract

This is an open-ended contract between the Vendor and the State to furnish an

undetermined quantity of a good or service in a given period of time. The quantities

ordered will be those actually required during the contract period, and the Vendor will

deliver only such quantities as may be ordered. No guarantee of volume is made. An

estimated quantity based on past history or other means may be used as a guide.

3.34. Technology Refresh

At any time during the contract, the Vendor and the Lottery may negotiate for any type of

system refresh the Lottery decides is in its interest. The refresh factor shall be

determined by mutual agreement and added to or revising the payment terms originally

established.

3.35. Prices

Prices shall remain firm for the entire contract except as otherwise provided herein.

Prices shall be net delivered, including all trade, quantity and cash discounts. Any price

reductions available during the contract period shall be offered to the State of South

Dakota. Failure to provide available price reductions may result in termination of the

Contract for cause.

3.36. Federal, State, and Local Taxes

Unless otherwise specified, the contracted price shall include all applicable federal, state

and local taxes. The Vendor shall pay all taxes lawfully imposed on it with respect to any

product or service delivered in accordance with the Contract. The State of South Dakota

is exempt from state sales or use taxes and federal excise taxes for direct purchases.

These taxes shall not be included in the contracted price. Upon request, the State shall

provide to the Vendor a certificate of tax exemption.

The State makes no representation as to the exemption from liability of any tax imposed

by any governmental entity on the Vendor.

3.37. Debarment of State Vendors

Any Vendor who defaults on delivery or does not perform in a satisfactory manner as

defined in this Agreement may be barred for up to a period of three (3) years, pursuant to

SDCL 5-18D-12, or have its work evaluated for pre-qualification purposes. Vendor shall


disclose any conviction or judgment for a criminal or civil offense of any employee,

individual or entity which controls a company or organization or will perform work under

this Agreement that indicates a lack of business integrity or business honesty. This

includes (1) conviction of a criminal offense as an incident to obtaining or attempting to

obtain a public or private contract or subcontract or in the performance of such contract

or subcontract; (2) conviction under state or federal statutes of embezzlement, theft,

forgery, bribery, falsification or destruction of records, receiving stolen property; (3)

conviction under state or federal antitrust statutes; and (4) any other offense to be so

serious and compelling as to affect responsibility as a state contractor including any

gambling related crimes . For the purpose of this section, an individual or entity shall be

presumed to have control of a company or organization if the individual or entity directly

or indirectly, or acting in concert with one or more individuals or entities, owns or

controls 5 percent or more interest, or otherwise controls its management or policies.

Failure to disclose an offense may result in the termination of the contract.

The Vendor certifies that neither it, its principals, or any subcontractor which the Vendor

will utilize in furtherance of this agreement are presently debarred, suspended, proposed

for debarment, declared ineligible or voluntarily excluded from participation in this

Agreement by any federal department or agency.

3.38. Materials and Workmanship

The Vendor shall perform all work and furnish all supplies and materials, machinery,

equipment, facilities, and means, necessary to complete all the work required by the

Contract, within the time specified, in accordance with the provisions as specified.

The Vendor shall be responsible for all work put in under these specifications and shall

make good, repair and/or replace, at the Vendor's own expense, as may be necessary, any

defective work, material, etc., if in the opinion of agency and/or Procurement and

Contracts said issue is due to imperfection in material, design, workmanship or Vendor

fault.

3.39. Industry Standards

If not otherwise provided, materials or work called for in the Contract shall be furnished

and performed in accordance with best established practice and standards recognized by

the contracted industry and comply with all codes and regulations which shall apply.

3.40. Implied Requirements

All products and services not specifically mentioned in the Contract, but which are

necessary to provide the functional capabilities described by the specifications, shall be

included.

3.41. Submission of the Proposal

Submission of the proposal will be considered presumptive evidence that the vendor is

conversant with local facilities and difficulties, the requirements of the documents and of

pertinent State and/or local codes, state of labor and material markets, and has made due

allowances in the proposal for all contingencies. Later claims for labor, work, materials,


equipment, and tax liability required for any difficulties encountered which could have

been foreseen will not be recognized and all such difficulties shall be properly taken care

of by Vendor at no additional cost to the State of South Dakota.

3.42. Acceptance

No contract provision or use of items by the State shall constitute acceptance or relieve

the Vendor of liability in respect to any expressed or implied warranties.

3.43. Third Party Beneficiaries

The Contract shall not be construed as providing an enforceable right to any third party.

3.44. Injunctions

Should South Dakota be prevented or enjoined from proceeding with the acquisition

before or after contract execution by reason of any litigation or other reason beyond the

control of the State, Vendor shall not be entitled to make or assert claim for damage by

reason of said delay.

3.45. Staff Qualifications

The Vendor shall warrant that all persons assigned by it to the performance of the

Contract shall be employees of the Vendor (or specified Subcontractor) and shall be fully

qualified to perform the work required and promised. The Vendor shall include a similar

provision in any contract with any Subcontractor selected to perform work under the

Contract.

Failure of the Vendor to provide qualified staffing at the level required by the contract

specifications may result in termination of the Contract and/or damages.

3.46. Ownership

All data, forms, procedures, software, manuals, system descriptions and work flows

developed or accumulated by the Vendor under the Contract shall be owned by the

Lottery. The Vendor may not release any materials without the written approval of the

Lottery.

3.47. Information/Data

Any and all information/data required to be provided at any time during the contract term

shall be made available in a format as requested and/or approved by the State.

3.48. Certification of Materials Submitted

The Proposal, together with the specifications set forth herein and all data submitted by

the Vendor to support their response including brochures, manuals, and descriptions

covering the operating characteristics of the item(s) proposed, shall become a part of the

contract between the Vendor and the State of South Dakota. Any written representation

covering such matters as reliability of the item(s), the experience of other users, or

warranties of performance shall be incorporated by reference into the contract.

3.49. Integration


The Contract, in its final composite form, shall represent the entire agreement between

the parties and shall supersede all prior negotiations, representations or agreements, either

written or oral, between the parties relating to the subject matter hereof. This Agreement

between the parties shall be independent of and have no effect on any other contracts of

either party.

3.50. Modification

The Contract shall be modified only by the written agreement and approval of the parties.

No alteration or variation of the terms and conditions of the contract shall be valid unless

made in writing and signed by the parties. Every amendment shall specify the date on

which its provisions shall be effective.

3.51. Severability

If any provision of the Contract is determined by a court of competent jurisdiction to be

invalid or unenforceable to any extent, the remainder of the Contract shall not be affected

and each provision of the Contract shall be enforced to the fullest extent permitted by

law.

3.52. ADA Compliance and Accessibility

The Vendor agrees that the products or services to be provided under the Contract shall

comply with applicable state and federal law.

3.53. Software Code and Intellectual Property Rights

As applicable, all original software and software code and related intellectual property

developed or created by the Vendor in the performance of its obligations under the

Contract or any Task Order issued under the Contract, shall become the sole property of

the State of South Dakota. The Vendor will surrender all original written materials,

including any reports, studies, designs, drawings, specifications, notes, documents,

software and documentation, computer-based training modules, electronically or

magnetically recorded material, used to develop this software and/or software code and

related intellectual property to the state entity for which it was developed.

3.54. Inspection

The State reserves the right to reject, on arrival at destination, any items which do not

conform to specifications of this Request.

3.55. Inspection of all Vendors

All Vendors shall be required to submit in their response to this RFP the name, address,

telephone number, and type of legal entity with whom the contract will be written. Each

Vendor shall also disclose all trade names and assumed names and states wherein these

trade and assumed names are used, along with appropriate authorization(s) for

investigation to facilitate an investigation. A copy of Vendor’s latest financial statement

shall also be attached. All Vendors shall also provide the following information:


A. A list of all Vendors’ contracts with lotteries in the past ten (10) years, along

with a contact person from each lottery who is familiar with the performance

pursuant to such contract(s).

B. A list of all past and pending criminal and civil proceedings that resulted from

contractual relationships with lotteries in the past ten (10) years. The list shall

include the type of proceeding, the parties involved, the date of the proceeding,

the custodian of the records, and the outcome of the proceeding.

C. A list of all past and pending liquidated damages and related or similar damages

in excess of ten thousand dollars ($10,000) assessed against Vendor by any

lottery jurisdiction over the past ten (10) years. The list shall include the name

of each lottery jurisdiction, the nature of and reason for liquidated damages, the

date of assessment, the amount assessed, and the final result of any appeal or

other action to reconsider or challenge the assessment.

3.56. Information Provided by Apparent Successful Vendor

Vendors are advised that the apparent successful vendor will also be required to provide

the following information and costs:

A. Federal Employer Identification Number and identification and certification of

compliance with all South Dakota tax and business registration requirements.

B. Identification of any officer(s) of the Vendor or persons participating in the

preparation of the proposal who were State of South Dakota employees within the 24-

months preceding Vendor’s offer, including the name, agency of employment, job

title, social security number, and date of termination of employment with the State of

South Dakota.

C. The three (3) most recent federal income tax returns, including schedules and

attachments thereto, for the legal entity associated with the Federal Employer

Identification Number identified in section (A).

D. If background investigations are not already complete, the background information

provided by the Vendor may be used by any of the following South Dakota entities in

order to complete the background investigation of the apparent successful Vendor(s),

and persons referred to in Section 3.56 herein: Executive Director of the Lottery,

Secretary of Revenue, and Attorney General. Any information discovered as a result

of such investigation may be used in the evaluation of the Vendor’s fitness to perform

the requested services. The Lottery may, in its sole discretion, disqualify the apparent

successful Vendor if it is discovered that the moral character of one or more of the

individuals identified in Section 3.56 herein is not beyond reproach. Persons upon

whom background investigations are required shall be fingerprinted and shall not

have (1) been convicted of a felony in this or any other jurisdiction, unless at least ten

(10) years have passed since satisfactory completion of the sentence or probation

imposed by the court for each such felony; or (2) have ever been convicted of any

illegal gambling activity in this or any other jurisdiction.

E. The successful Vendor shall be responsible for all costs associated with the

completion of required background investigations on it as set forth in this section,

along with all post-award investigations required because of any changes in the

persons listed and/or changes in the ownership or structure of Vendor’s business.


F. The successful Vendor shall be required to complete such documents as requested by

the Lottery to complete the background check process.

3.57. State Tax Requirements

Lottery may reject the bid of any vendor that is in arrears on taxes due to the State of

South Dakota.

3.58. Non-appropriation

It is understood and agreed that the Lottery is a governmental agency and this Contract

shall in no way be construed so as to bind or obligate the Lottery or the State of South

Dakota beyond the term of any particular appropriation of funds by the State Legislature

as may exist from time to time. The Lottery reserves the right to terminate this Contract

if, in its sole judgment, the legislature of the State of South Dakota fails, neglects or

refuses to appropriate sufficient funds, or requires any return or “give-back” of funds

required for the Lottery to perform under the Contract, or if the executive branch of the

State of South Dakota mandates any cuts or holdback in Lottery’s spending. Any such

termination shall take effect on ten (10) days notice.

3.59. Attorney Fees

In the event of a legal proceeding of any kind instituted under the Contract or instituted to

obtain performance or to remedy a default under the Contract, the prevailing party shall

be awarded such additional sums as the court may adjudge for reasonable attorney fees

and to pay all costs and disbursements incurred in connection therewith.

3.60. Advertising

The Vendor agrees to submit to the Lottery all advertising and publicity matters relating

to this contract in which the Lottery’s name is mentioned or in which language is used

from which the connection of the Lottery may, in the Lottery’s judgment, be inferred or

implied. The Vendor agrees not to publish or use such advertising and publicity matters

without the prior written consent of the Lottery.

3.61. Amendment

The Contract may not be released, discharged, changed, extended, modified,

subcontracted or assigned in whole or in part (collectively, an “Amendment”) except to

the extent provided by a written instrument signed by the Vendor and the party

authorized to bind the Lottery as more particularly described in this section. The Lottery

Director is authorized to execute Amendments consisting solely of any plans required by

the RFP and working documents that further define the day-to-day responsibilities of the

Vendor and the Lottery. The Lottery Director is not authorized to execute Amendments

increasing monetary obligations of the Lottery or extending the Contract term without

Lottery Commission approval. An Amendment not executed in compliance with this

section shall be void.

3.62. Consent and Approvals

3.62.1. Not to Be Unreasonably Withheld or Delayed


Any consent or approval required to be given by the Vendor or the Lottery under the

provisions of the Contract shall not be unreasonably withheld or delayed.

3.62.2. Extension of Vendor’s Time to Perform

If the Vendor is delayed, hindered, or prevented from performing any act required under

the Contract by reason of the unreasonable withholding of a consent or approval by the

Lottery, the Vendor may request a revision to the Contract extending the Vendor’s

performance deadlines. The Vendor shall request a revision to the Contract within

twenty-one (21) days of the Lottery’s failure to provide consent or approval if a date for

the consent or approval is provided in the Contract within a reasonable period if no such

date is provided. The provisions of section 3.24, Resolution of Disputes and section 3.61,

Amendment shall apply to the Vendor’s request for a revision under this subsection. This

subsection shall not apply to the Lottery’s withholding of payment to the Vendor.

3.63. Indemnification- Third Party Claims- General

Notwithstanding any limitation in this Contract, and to the fullest extent permitted by

law, Vendor shall defend and hold harmless Indemnitees for and against any and all suits

or claims of any character (and all related damages, settlement payments, attorneys' fees,

costs, expenses, losses or liabilities) by a third party which are attributable to bodily

injury, sickness, disease or death, or to injury to or destruction of tangible property

arising out of or in connection with the goods or services acquired hereunder or caused in

whole or in part by any act or omission of the Vendor, its subcontractors, their

employees, workmen, servants, agents, or anyone directly or indirectly employed by

them or anyone for whose acts any of them may be liable, regardless of whether or not

caused in part by an Indemnitee, and whether or not such claims are made by a third party

or an Indemnitee; however, if an Indemnitee's negligent act or omission is subsequently

determined to be the sole proximate cause of a suit or claim, the Indemnitee shall not be

entitled to indemnification hereunder. The Vendor shall be given timely written notice of

any suit or claim. Vendor's obligations hereunder are in no way limited by any protection

afforded under workers' compensation acts, disability benefits acts, or other employee

benefit acts. This Section shall not negate, abridge, or reduce any other rights or

obligations of indemnity which would otherwise exist. The obligations of this Section

shall survive termination, cancelation, or expiration of this Contract. This Section shall

be construed fairly and reasonably, neither strongly for nor against either party, and

without regard to any clause regarding insurance. As used in this Section, "Indemnitees"

means the State of South Dakota, the Lottery, its Commissioners and all their respective

officers, agents and employees.

The Vendor, as part of its duty of indemnification, is required to defend and hold

harmless the State from any costs arising out of the prosecution or defense of any action

arising out of the Vendor’s performance under this Contract, including any action

affecting the payment or denial of the payment of lottery winnings in whole or in part.

The Vendor shall notify the Lottery of the filing of any such litigation, and the Lottery

shall give the Vendor written notice of any such claim, in the event such claim comes to

the attention of the Lottery first. The Lottery shall have the right, but not the obligation,

to participate in the litigation and, subject to prior review and discussion, shall also have


the right to ultimately decide matters concerning any litigation arising out of the action

affecting the payment or nonpayment of lottery winnings.

Vendor also agrees to advise the Lottery of any claims asserted or brought against

Vendor arising from this Contract and which may potentially expose the Lottery to

liability and to coordinate with the Lottery on any issues of governmental or public

interest or concern relating to the Lottery and/or this Contract. In the event of

participation by the Lottery in the defense of any claim, which shall be solely at the

discretion of the Lottery, the Lottery shall be responsible for its own costs and expenses.

If the Lottery, in its sole discretion, determines that the action may expose the Lottery to

liability, the Vendor will not settle any such claims arising hereunder without the express

prior written permission of the Lottery. The Vendor will, in all instances, bear its own

attorneys’ fees and expenses, and failure to comply herewith will entitle the Lottery to

make appropriate deductions from the monthly fixed fee due to the Vendor or to draw

upon the security pursuant to this Contract.

The Vendor further agrees that in the event it is requested to produce in any litigation any

document or information referring or relating to the State or the Lottery, it shall not

produce the requested material before it has notified the Lottery and provided it a

reasonable opportunity to appear and object to the production or revelation of the

Lottery's material or information. The Lottery will inform the Vendor when a request is

made for it to produce a document or information in litigation that refers to or relates to

the Vendor.

3.64. Indemnification- Intellectual Property

(a) Without limitation and notwithstanding any provision in this Contract, Vendor

shall, upon receipt of notification, defend and indemnify the Lottery and its respective

Commissioners, officers, agents and employees against all actions, proceedings or

claims of any nature (and all damages, settlement payments, attorneys' fees (including

inside counsel), costs, expenses, losses or liabilities attributable thereto) by any third

party asserting or involving an IP right related to an acquired item. The State shall

allow the Vendor to defend such claim so long as the defense is diligently and capably

prosecuted. The State shall allow Vendor to settle such claim so long as all settlement

payments are made by Vendor and the settlement does not impose a non-monetary

obligation upon the State. State shall reasonably cooperate with Vendor's defense

of such claim.

(b) In the event an injunction or order shall be obtained against State's use of any

acquired item, or if in Vendor's opinion, the acquired item is likely to become the

subject of a claim of infringement or violation of an IP right, Vendor shall, without in

any way limiting the foregoing, and at its expense, either:

(1) procure for State the right to continue to use, or have used, the acquired

item, or

(2) replace or modify the acquired item so that it becomes non-infringing

but only if the modification or replacement does not adversely affect the

specifications for the acquired item or its use by State.


If neither (1) nor (2), above, is practical, State may require that Vendor remove the

acquired item from State, refund to State any charges paid by State therefor, and take

all steps necessary to have State released from any further liability.

(c) The Vendors obligations under this paragraph do not apply to a claim to the

extent that the claim is caused by the Vendor’s compliance with specifications

furnished by the State:

(1) unless Vendor knew its compliance with the State's specifications would

infringe an IP right, or

(2) if the State knowingly relied on a third party's IP right to develop the

specifications provided to Vendor and failed to identify such product to Vendor.

(d) As used in this Section, these terms are defined as follows: "IP right(s)" means a

patent, copyright, trademark, trade secret, or any other proprietary right. "Acquired

item(s)" means the rights, goods, or services furnished under this Contract.

"Specification(s)" means a detailed, exact statement of particulars such as a statement

prescribing materials, dimensions, and quality of work.

(e) Vendor's obligations under this clause shall survive the termination,

cancellation, rejection, or expiration of this Contract.

3.65. Acceptance Test Prior to Implementation

The Lottery will conduct a series of acceptance tests to fully determine the passing or

failing of the Vendor's installation in accordance with the specifications of the contract.

Failure of the Vendor to pass these tests may result in the Vendor having to make

corrections, delaying conversion, or forfeiting up to the full amount of the performance

bond.

The system will be tested for each and every requirement in the Contract and for

performance as stipulated in the accepted proposal. The Vendor's assistance in arranging

tests will be necessary. The Lottery, at its sole discretion, will determine whether

performance against the acceptance tests is adequate, and conversion can proceed as

scheduled.

Passing an acceptance test in no way removes the obligation of the Vendor to meet, and

to continue to meet, all requirements of the Contract.

3.66. Non-Exclusive Rights

Except as otherwise provided in this RFP, it is understood and agreed by the Vendor that

the Lottery does not grant the Vendor exclusive rights to provide all equipment, materials

and services required by the Lottery during the period covered by the contract. In the

event the Lottery decides that the development, manufacture, and delivery of equipment,

materials and services required by the Lottery by another contractor (each, a “Third

Party”) is in the Lottery’s best interest, the Lottery reserves the right during the period of

the Contract, subject to the provisions below, to contract for, purchase, or use additional


equipment, materials and services from such Third Party and said action does not infringe

upon nor terminate the contractual agreements resulting from the Contract. The Lottery

shall provide not less than ninety (90) days written notice to the Vendor of its intention to

contract for, purchase, or use additional equipment, materials and services from a Third

Party in connection with the Lottery Gaming System, the communications system, or the

sale of lottery products thereunder (which notice shall include a detailed description of

such equipment, materials or services). The Vendor shall provide a written report to the

Lottery as soon as reasonably practicable but in no event later than sixty (60) days after

receiving such notice based upon information provided by the Lottery, which report shall

analyze the potential areas of incompatibility, if any, between the Lottery Gaming

System, and the Third Party provided equipment, materials or services, and the potential

adverse effects, if any, upon the Lottery Gaming System and its functioning of the

proposed introduction of such Third Party provided equipment, materials or services.

The Vendor shall not be liable under the Contract for damages caused by Third Party

provided equipment, materials or services.

4. Technical Specification: On-line System

4.1. Introduction and Current Environment

The South Dakota Lottery is looking for the Vendor to propose a comprehensive,

robust, technologically current, future oriented, and secure On-line Central System and

Related Services that will enable the Lottery to maximize transfers to the state. The

Vendor will then agree to enhance the system to satisfy the Lottery’s current and

future business needs and complete a timely and smooth conversion. The Lottery’s

ultimate goal is to increase net revenues generated for the State of South Dakota and

enhance the efficiency and effectiveness of the Lottery.

The On-line Central System and Related Services must be flexible and have the ability

to expand and adapt to changing technologies and the ways in which lottery tickets are

sold and purchased. The On-line System and Related Services must also meet or

exceed existing and future data security requirements, operate in or virtualize different

environments, and support various existing and evolving ways to play. Additionally,

the On-line System and Related Services must maintain current service functionality,

provide for value-added enhancements, business intelligence and management

reporting, require low overhead on maintenance and be operationally reliable for the

lottery and its retailer and player network.

The On-line System and Related Services provided by the winning Vendor will

replace and/or upgrade the current gaming system, the Lottery’s Internal Controls

System (ICS), and the communications network between the Lottery and its gaming

Vendor and retailers that interfaces with draw and instant games/systems. The Lottery

may also seek to have a Vendor replace its in-house accounting and instant ticket

management system, and/or provide a sales force automation system.

The Gaming System and Related Services shall provide a fully-functioning draw sales

and integrated instant ticket (or instant ticket pass-through) system including

hardware, software, communications, system installation, data conversion and system


operation, as well as systems that interface with existing or new accounting and

internal controls systems (currently ACCLAIMS and Elsym ICS). The Lottery’s goal

is to obtain a system that will provide the best value in technology and operations that

are available today and the greatest flexibility to adapt to technological and

operational changes in the future. This includes, but is not limited to, the ability to

integrate and interface with downstream systems, seamless connections with third

party software and hardware, the use of web services, interactive gaming applications

and devices, and the ability to realize two-way communications between and amongst

all component parts.

4.2. Central Systems for Games Support

4.2.1 Host System: Mandatory Feature(s):

4.2.1.1 Central System Features - Mandatory Feature(s):

The Vendor shall describe in detail the proposed Central System that

will provide comprehensive functionality. This includes but is not

limited to all gaming and Instant ticket activities, sales, jackpots,

validations, inventory management, retailer management, claims

processing, marketing support, invoicing to terminal, information

management reporting, Instant Ticket validation, and retailer billing.

4.2.1.1A Central System Optional Features- Specified Option(s)

The Vendor is invited to propose an alternative to the Lottery’s

current ACCLAIMS system functionalities. These optional features

include, but are not limited to, Instant Ticket inventory

management, Instant Ticket ordering, Instant Ticket distribution,

tracking and combined accounting, and Retailer billing for Instant

Tickets integrated with Draw Game billing.

4.2.1.2 Games - Mandatory Feature(s):

At a minimum the proposed Gaming System shall be able to

support multiple types of Instant and Draw Games. In the proposal

the Vendor shall provide details of the games in the games library

that are included in the base price. The system shall accommodate

the current 620 retailers and any anticipated expansion of the retailer

base. The System must have the capacity to accommodate the pass

through of 100 concurrent Instant Games if the Lottery does not

utilize the Vendor’s System for Instant Ticket management. It shall,

as delivered, be able to process up to 150,000 sales transactions per

minute, be able to process up to 5,000 combined wagers, and cash

(validations) per minute and be able to process all gaming

transactions for at minimum 17 hours per day (currently 6:00 AM-

11:00 PM CT), with the option of 24 hours per day processing, 7

days a week, including all holidays.

4.2.1.3 System Architecture Redundancy - Mandatory Feature(s):


The System architecture shall be fully redundant, without a single

point of failure and shall be failover capable and must operate in an

active/active configuration with auto-failover features.

4.2.1.4 System Architecture Compliancy - Mandatory Feature(s):

The System architecture shall, at all times, remain compliant with

all requirements of any multi-jurisdictional game group(s) relating

to the sale of, or the security for, any game sold by the Lottery.

4.2.1.5 System Field Lengths - Mandatory Feature(s):

All fields shall have variable field lengths and be expandable as

needed to accommodate growth. The system shall have the initial

capacity for a sales day of at least one billion dollars

($1,000,000,000) with the capacity to expand as required, and a

multi-billion dollar ($999,999,999,999) jackpot.

4.2.1.6 System Fault Tolerance - Mandatory Feature(s):

The system shall have fault-tolerant software and hardware

providing for fail-safe operation. This provides for minimal service

disruption, with no loss or corruption of data in the event of

hardware or software problems or failures.

4.2.1.7 System Design - Mandatory Feature(s):

Both a primary and a backup system are required and both shall be

active/active which will ensure both sides of the pair are updated

simultaneously and to ensure that both systems have all transaction

data. All transactional data shall be electronically transferred to the

Lottery’s Internal Control System (ICS) at intervals as near real time

as possible as specified by the Lottery.

4.2.1.8 Third Party Compatibility - Mandatory Feature(s):

The Vendor shall describe how the system shall be compatible with

third-party gaming hardware, software, games and widely adopted

open APIs and standards. Additionally, the Lottery would expect

that the Vendor will make available/expose software services and

publish documentation for those software services that would enable

third party developers to create apps for public access to disclosable

Lottery data such as winning numbers, number frequency, and other

published and publicly available lottery data. A detailed description

of system capability shall be included in the Proposal.

4.2.1.9 ITIL Best Practices - Mandatory Feature(s):

The Vendor must follow ITIL Release, Validation, Control and

Change Management best practices and the Lottery agreed upon

defined Change Management Policies and Procedures.


4.2.1.10 Host System Security Patch Management - Mandatory

Feature(s):

The Vendor shall explain how it will test and apply security patches

to the host operating system in a timely manner.

4.2.1.11 Host System Version Control - Mandatory Feature(s):

The Vendor shall explain how the host operating system software

version control will be administered.

4.2.1.12 Host System Upgrades - Mandatory Feature(s):

Gaming software and hardware shall be available and upgradeable

throughout the term of the contract, and throughout all possible

contract extensions. The Vendor shall provide the System upgrades

and updates necessary to remain compliant with the requirements of

the Contract over the term of the Contract at no additional charge.

Best practices for equipment updates and upgrades should be

respected, as opposed to updating critical infrastructure equipment

only contingent upon extensions or other variations within the

Contract. At no time should the primary/secondary or disaster

recovery Systems be unsupported by the original equipment

manufacturer.

4.2.1.13 Host System Retailer Functions - Mandatory Feature(s):

The Lottery shall be able to activate, de-activate and re-activate a

retailer’s ability to perform gaming functions (that is, to sell draw

games, validate draw games, perform Instant Ticket processes, etc.).

The system must have the ability to limit product lines, product line

features, and promotions to certain retailers based on specific

criteria (such as, for example only, region, chain, or business type).

If the proposed system can support other non-traditional gaming

formats or environments, the Vendor is encouraged to describe that

process. Instant and On-line processes shall operate independently

of one another, allowing for continued function of one if the other is

down.

4.2.1.14 Host System Ad Hoc Reports - Mandatory Feature(s):

All data entry and system-calculated fields shall be ad hoc

reportable for user report creation.

4.2.1.15 Host System Secure Connections - Mandatory Feature(s):

The Vendor shall describe how there will be no capacity to connect

to any gaming system from a remote device without Lottery

approval.

4.2.1.16 Host System Balancing - Mandatory Feature(s):


The Vendor shall describe the means of electronically balancing all

Vendor-determined draw game drawing results with the Lottery ICS.

4.2.1.17 Instant Ticket Financials - Mandatory Feature(s):

The Vendor shall explain how they will provide a flexible and

adaptive method of instant ticket settlement and billing that is

responsive to the needs of the Lottery and its Retail Partners.

4.2.1.18 Host System Non-traditional Gaming Formats or Environments

- Mandatory Feature(s):

The Vendor shall describe how the proposed system will support

other non-traditional gaming formats or environments for sales of

Lottery games.

4.2.2 Data Center Operations - Mandatory Feature(s):

The Vendor, at a minimum, shall provide:

4.2.2.1 Staffing plan, security (physical and network), and plan for

maintaining a fully configured and operational primary and backup

site (geographically separated) that ensures instantaneous failover and

recovery without loss of transactions.

4.2.2.2 The primary and backup site shall be located within the United

States.

4.2.2.3 The System configuration, documentation, functional

capability, and capacity at the backup site shall be equivalent to that at

the primary site. The backup site shall be fully capable of supporting

Lottery operations independent of the primary site.

4.2.2.4 The backup Gaming System shall be monitored in real-time by

the primary Gaming System staff and recorded in accordance with

industry standards.

4.2.2.5 The Vendor shall describe the software, security aspects, and

operational procedures for executing the terminal-generated game

draws, and the specific features and benefits that offer more secure

control of its games.

4.2.3 Failovers – Mandatory Feature(s):

In order to be MUSL Rule 2 compliant, the Vendor shall describe how

failovers to backup host systems will be performed, how often test failovers

will be conducted and how those test results will be reported to the Lottery. In

the event of any portion of failover fails, an immediate notification will be

made to the Lottery detailing what failed along with root cause of the failure

and remediation plans. Remediation plan results will be provided to Lottery

and subsequent failover testing shall be conducted. This cycle shall continue

until the failover test is deemed successful by mutual agreement between


Lottery and Vendor. Failover processes must also comply with MUSL

security failover processes.

4.2.4 Secure Connections – Mandatory Feature(s):

All data communications external to secured facilities, including but not

limited to those between the Primary Data Center (PDC), Backup Data Center

(BDC) and the Lottery, shall be encrypted at an encryption level generally

accepted in the lottery industry at that time. The Lottery’s Security Director

shall approve the proposed encryption mechanism that shall meet the South

Dakota Bureau of Information and Telecommunication’s standards.

The Vendor shall describe how it will meet, maintain and keep up to date with

current encryption standards and provide an example of where it has the

proposed encryption level currently deployed. All applications and servers

requiring authentication shall support the ability to enforce complex

passwords, minimum life of password, maximum life of password and

minimum iterations of passwords as per MUSL Rule 2 Requirements and

State of South Dakota Security Policies.

4.2.5 Terminal Network – Mandatory Feature(s):

The Vendor shall describe in detail its proposed Terminal Network. The

Lottery expects the Vendor to be creative in its communications network

design, in order to allow for maximum flexibility, growth, traffic throughput,

cost effectiveness and security.

The proposed communication network shall support (link) all computer sites

(PDC, BDC and Lottery Headquarters) and retailer locations.

4.2.6 Terminal Network Cost – Mandatory Feature(s):

The Vendor shall be solely responsible for the cost of the communications

network.

4.2.7 Host System Capacity – Mandatory Feature(s):

The Vendor shall explain how the capacity of its host system will be flexible

and expandable. The Vendor shall describe the proposed system’s ability to

adapt to upgrades in operating systems and system architecture and strategy

for implementing upgrades in operating systems and system architecture.

4.2.8 Operating Hours – Mandatory Feature(s):

The proposed system shall be capable of supporting all Lottery gaming

activities up to 24 hours a day, 7 days a week, every day of the year. Planned


Maintenance must fall within Lottery agreed to window for work. All

maintenance and upgrades shall occur with zero downtime to the system.

This is achieved by the active/active configuration and the ability of both the

Primary and Secondary Systems ability to act as the Primary at any given

time.

4.2.9 Equipment Safety Standards– Mandatory Feature(s):

The Vendor shall certify that the computing equipment, terminals, monitors

and PCs all meet Underwriters Laboratories or equivalent certification.

4.2.10 Equipment Upgrades– Mandatory Feature(s):

The proposed Host System, and support for such, must have a projected end-

of-life beyond the initial contract and all extensions. The Vendor must certify

that the computing equipment, terminals, monitors and PCs are new, or used

and meet Underwriters Laboratories or equivalent certification. The Vendor

shall describe its approach to equipment upgrades (e.g., under what

circumstances it will upgrade equipment). Best practices for Equipment

updates and upgrades should be respected, as opposed to updating critical

infrastructure Equipment only contingent upon extensions or other variations

within the Contract. At no time should the primary/secondary or disaster

recovery Systems be unsupported by the original Equipment manufacturer.

4.2.11 Business Continuity Planning – Mandatory Feature(s):

The Vendor shall define plans for Business Continuity. The plan shall

identify the impact of potential disruptions and loss of data, and provide steps

to mitigate risk and ensure business continuity.

4.2.12 Disaster Recovery Plan – Mandatory Feature(s):

The Vendor shall submit a detailed Disaster Recovery Plan to the Lottery for

approval no later than July 1, 2019, which will be reviewed annually and

updated as needed. The Lottery Executive Director and Security Director shall

approve the Plan. At a minimum, the Disaster Recovery Plan must include

annual testing provisions, an outline of business resumption critical functions

and non-critical functions, a Business Impact Analysis, a Risk, Threat, and

Vulnerability Analysis, a Recovery Strategy, an Emergency Response

Strategy, a Problem Escalation Strategy, a Plan Activation Protocol, a

description of Recovery Operations; and a description of Plan Validation,

Testing and Maintenance.

4.2.13 User Acceptance Test Systems – Mandatory Features(s):


The Vendor shall describe in detail its Quality Assurance (QA) and User

Acceptance Test (UAT) processes. The Vendor is required to maintain a

UAT environment and provide the necessary support to the Lottery

throughout the software testing process.

The Vendor shall provide a dedicated system for User Acceptance testing. The

Vendor shall provide a lab environment that duplicates the production system

including the ability to test load and failover. The Vendor shall describe their

test and development system configuration.

All UAT testing shall be conducted at the Lottery's test lab which is located in

Pierre, South Dakota and shall be established and maintained in accordance

with MUSL requirements and Lottery IT and Security standards. If requested,

the Vendor shall provide onsite personnel to assist the Lottery with UAT. The

vendor shall be responsible for all expenses associated with providing the

onsite personnel.

A play generator/simulator shall be available during acceptance testing for

testing large transaction volumes. Vendor shall use a play generator to

simulate large transaction volumes.

The ability to test failover before system acceptance shall be available during

acceptance testing. The ability to perform failover shall be maintained during

acceptance testing.

4.2.14 Instant Single Ticket Accounting – Specified Option(s):

The Vendor shall propose technologies and/or methods that would provide

accounting for instant ticket sales as they happen. The Lottery is looking for a

solution to the retailer problem of shrinkage and the cumbersome process of

reconciling Instant ticket sales/inventory with the added benefit of more

precise knowledge of inventory levels at the retailers and more precision in

measuring ticket-by-ticket sales.

4.2.15 Lottery Information Technology (IT) Allowance – Mandatory

Feature(s):

The Vendor will financially support the Lottery’s Information Technology

efforts to support the gaming efforts of the Lottery. As a minimum the

Vendor’s support will consist of $25,000 per contract year. The allowance

will be cumulative and spent at the direction of the Lottery. All portions of

said monies not used in any contract year may be used in any subsequent

contract year as the Lottery may determine at its sole discretion.

4.3 Retailer Terminal


4.3.1 Terminal – Mandatory Feature(s):

The lottery is looking for the Vendor to propose as many terminal types,

including the use of used terminals, that would fit the various retail style

establishments and explain why that terminal type would satisfy the retailers’

needs. The terminal (including associated peripherals and consumables) shall

be designed to gain acceptance from retailers. The proposed terminals shall be

subject to Lottery approval.

The Vendor shall propose terminal models based on retailer type, retailer

counter space, retailer sales, etc. The retailer terminal shall meet retailers’

requirements for limited available counter space and sales levels. Preference is

for a compact size that will ensure Retailer acceptance. The Proposal shall

describe the physical size and weight of the terminal(s) proposed and how the

proposed terminal(s) will meet the needs of diverse lottery retailers with

proposed conceptualizations for flexibility and growth based on retailer

expansion and/or improvements in available technologies.

The Vendor shall provide terminals as needed throughout the contract to

maximize Lottery revenue.

The terminal and all of its peripherals shall continue to look and operate like

new or be replaced at the Vendor’s expense.

4.3.2 Terminal Ticket Production – Mandatory Feature(s):

The Vendor shall explain the terminal boot-up time. The Vendor shall fully

explain the speed of sales transactions from the presentment of a play slip or a

manual request, number of screens to navigate, and number of retailer inputs

required to make a transaction. The Vendor shall fully explain the speed of

sales transactions from the transmission of the player’s play slip or a manual

request until the printed ticket is cut. For ease of comparison, Vendors shall

explain the time for a single terminal-generated play (such as a Powerball

play) to the time the printed ticket is cut (“send to cut speed”). The Vendor

shall explain whether its send to cut speed meets or exceeds industry standards

4.3.3 Terminal Messaging – Mandatory Feature(s):

The Vendor shall describe its plan to communicate with the retailers via the

terminal including Amber alerts.

4.3.4 Terminal Printer – Mandatory Feature(s):


Terminal Printers shall meet the Retailers’ needs regarding limited counter

space. Vendor should describe how their printer meets the needs of lottery

Retailers.

4.3.5 Reader/Scanner Functions – Mandatory Feature(s):

The Vendor shall describe how the terminal shall read and process multiple

existing bar codes and UPC codes from paper and mobile devices and give

examples of those uses. The Vendor shall also describe how it will

accommodate new Reader/Scanning technologies that the Lottery may wish to

use in the future.

4.3.6 Terminal Safeguards – Mandatory Feature(s):

The Vendor shall describe in detail how security measures, safeguards, audit

logs, or other features are incorporated to ensure all facets of retail operations are

designed, to the extent possible, to protect the integrity of all transactions (sales,

invoicing, detection of employee or owner misconduct, theft, and/or fraud). The

Vendor shall explain the capability of the equipment proposed to assist the

retailer to manage Lottery inventory, promote Lottery products, ensure the

integrity of sales and claims, and provide the players with the information

through printouts from the terminal or other means (such as a customer display).

4.3.7 Bar Code Reader – Mandatory Feature(s):

The Vendor shall propose a bar code reader that allows retailers the most

flexibility and efficiency such as providing a detachable bar code reader

giving it the ability to read different size and shape items (such as POS items,

bar coded instant ticket packs, ticket stock boxes), and in addition, instant

tickets in racks.

4.3.9 Player Self-Service Ticket Checkers – Mandatory Feature(s):

Commonly referred to by the Lottery as “Check-A-Tickets” or “CATS” shall

provide players with a method of checking their own draw game and Instant

tickets to see if they are winners. Player Self-Service Ticket Checkers shall

read all draw game and Instant tickets, including tickets from the current

Vendors.

4.3.10 Jackpot Sign Integration – Mandatory Feature(s):

The Lottery plans to keep and use approximately 620 jackpot signs. Vendor

shall describe how it will integrate and support the current jackpot signs.

4.3.11 Peripheral Interfaces – Mandatory Features(s):

Terminal shall interface with multiple peripheral units, including third party

units. Vendor shall describe how their terminal meets these requirements.


Terminal shall interface with player self-service ticket checkers (“check-a-

ticket” units), customer displays, number display boards, Lottery owned

jackpot signs, and player advertising displays with room for growth.

4.3.12 Retailer Productivity and Accountability -- Specified Options(s):

Vendors are encouraged to describe their solutions to address improved

productivity and accountability of retail clerks such as the use of clerk IDs.

4.3.13 Diagnostics – Mandatory Feature(s):

Vendors shall demonstrate the capability of terminal diagnostics and

automatic recovery.

4.3.14 Environmental Fitness – Mandatory Feature(s):

Terminal shall meet safety standards such as Underwriter Laboratory (UL).

Terminals shall operate without degraded performance, in environments

where other electrical devices will share electrical circuits and wireless signals

with the terminal. Terminals shall be protected from electrical surges that

would damage the terminal.

4.3.15 Terminal Random Number Generator (Quick Pick) – Mandatory

Feature(s):

All terminals shall be capable of generating “quick pick” and partial “quick

pick” numbers for any game as requested by Lottery. Randomness shall be

certified by an independent company selected by the Lottery. The company

conducting the certification shall provide the Director of Security and Video

Lottery with the results of said certification and with an outline of the testing.

The Vendor shall be responsible for any expenses incurred for the certification

of the random number generators.

Should the software fail to produce random numbers as determined by the

independent certification company, or if any changes are required by the

Lottery, the Vendor shall be responsible for the necessary changes and any

additional cost involved with re-certification. All re-certifications shall be

subject to the same terms and conditions as the certification described above.

4.3.16 Audio Capabilities – Mandatory Feature(s):

Terminals shall be able to emit software-controlled, audible tones and alarms

with an adjustable volume. Terminals shall be able to emit musical sounds

with adjustable volume. Musical sounds, tones, alarms and volume levels

shall be determined by Lottery.


4.3.17 Player Transaction Display – Mandatory Feature(s):

The Player Transaction Display is a player-oriented visual display that

communicates to the player the amount of the current sale. An advertising

message shall be displayed when not displaying player Transaction

information or have the ability to display simultaneously both an advertising

message and player transaction information. The Player Transaction display

shall have the ability to support animation.

4.3.18 Player Advertising and Game Board Displays – Mandatory Feature(s):

The Vendor will describe the size of the Advertising Display recommended

for each location. The Lottery's intent is to employ such devices to display

graphics and messages, which will change constantly, daily or weekly and

shall be downloadable to the Terminal (or a media box if offered as part of the

solution). The purpose of these displays is to gain the attention of the players

and to inform potential players of the jackpot value, promotions, etc. Content

for the units shall be managed through the Lottery management Terminals or a

Content Management solution. The Vendor may also propose additional

methods for creating and promoting content to take full advantage of this

medium. The Lottery requires the ability to cross promote on this medium and

follow with tracking for number of impressions. The Lottery shall be able to

traffic content by region, city, zip, chain and any other addressable

demographic. The Lottery would also schedule program content by

demographic, parts of day or time and Retailer type.

The display shall be suitable for displaying Keno and other similar type draw

games, advertising, jackpot information, alerts, promotions, and game

information to players within the store. Characteristics should include: flat

panel, flexibility of placement within the retail establishment, wireless

capabilities, sufficient cord lengths (e.g. 15 ft.), good visibility and sound

available through auxiliary speakers or through the Terminal. The display and

Terminal at a minimum should be capable of playing sound, static image files,

animations, and full motion high resolution video and dynamic slides. Vendor

shall fully describe the capabilities of all types of displays proposed. All

installations are subject to the Lottery’s acceptance and approval. Due to the

wide diversity of available space in Retailer locations, the advertising and

jackpot display unit shall be capable of mounting in multiple configurations

(pole, saddle, wall, window, etc.). Vendor shall describe the methods available

for mounting the display.

4.3.19 In-Lane Selling Solutions – Specified Option(s):

Some larger retailers generally require players to go through a second line

when they want to purchase Lottery tickets. The Vendor shall propose


solutions that would allow the Lottery to sell its products in checkout lanes. At

a minimum, the Vendor shall propose solutions for support and integration of

the NASPL (North American Association of State and Provincial Lotteries)

API in the possible event of the API going live during the term of the contract.

4.3.20 Retailer POS Integration Solutions (Bring Your Own Device) – Specified

Option(s):

Retailers have their own POS or other retail system and would like to

integrate the purchase of Lottery tickets. The Vendor shall propose solutions

that would allow the Lottery to sell its products within a retailer’s POS or

other retail system.

4.3.21 Player POS Solutions (Bring Your Own Device) – Specified Option(s):

The Vendor shall propose solutions such as tethering that would engage

players to purchase and play Lottery games while at the retailer location.

Transactions shall go through the retailer terminal or connection to the gaming

system. Internet gaming is not yet allowed in the State of South Dakota.

4.3.22 Player Solutions (Beacon) – Specified Option(s):

The Vendor shall propose a secure beacon solution to engage the player by

using the player’s mobile device to display special offers or additional

information for specific products, promotions or services that the Lottery is

currently offering.

4.3.23 Spare, Training and Special Events Terminals and Staffing of Special

Events – Mandatory Feature(s):

The Vendor shall supply all spare terminals, peripherals and parts needed to

maintain an efficient, complete gaming system at no cost to the Lottery. The

Vendor shall supply all terminals, peripherals and communications to conduct

retailer training around the state.

The Vendor shall also supply terminals, peripherals and communications to

support special event locations around the state, such as fairs, sidewalk sales,

tradeshows, and so forth as requested by Lottery. NOTE: There may be

occasions when the Lottery may simultaneously participate in multiple special

events. Upon request of the Lottery, the Vendor shall provide at least one

qualified staff person (for each event if the Lottery is simultaneously multiple

special events) who will work at all promotional events assisting selling

Lottery tickets and maintaining and servicing terminals.


Vendor shall supply wireless router solution with diverse wireless provider

capability for use at all above events as the terminal connection to the primary

and secondary wireless network.

SPECIAL NOTE: Vendors are also specifically advised that some of said

events are conducted indoors wherein radio and/or satellite service is not

viable. Vendor should describe its ability and methodology to service those

events, or explain why it is unable to service those events.

4.3.24 Reports – Mandatory Feature(s):

Terminals shall provide a robust series of reports for retailers that meet all

their needs. The Vendor shall describe the reports and how it will meet this

requirement.

4.3.25 Other Equipment –Mandatory Feature(s):

The Lottery may be authorized to own, operate, or manage new games,

facilities or types of games. If this occurs, the Lottery reserves the right to

negotiate with the Vendor for additional equipment and/or software.

4.3.26 Consumables – Mandatory Feature(s):

The Vendor shall supply adequate consumables at no additional cost to the

Lottery. The Vendor shall provide a copy of the most recent and applicable

laboratory or other test reports and other certifications (if certifications are

available) addressing the security, and durability of terminal paper and ink

against practical compromise by reasonably comprehensive technical efforts.

Submit samples of the terminal ticket paper stock and play slips of the quality

being proposed.

4.3.27 Jackpot Signs – Invited Option(s):

The Vendor shall propose an electronic jackpot sign that would be most

appropriate for the Lottery for retailer locations that currently do not have one.

The Vendor shall maintain and install in-store wireless signs capable of

displaying information regarding jackpot amounts, to be automatically

updated as jackpot amounts are updated. Wireless signals shall be designed so

as not to interrupt or interfere with any electronic devices otherwise operated

in the store or carried by store customers or employees in the store.

4.3.28 Installation, Relocation and Disconnection – Mandatory Feature(s):

Vendor shall be responsible for planning, handling and actual placement of an

appropriate system at each Retailer location. There shall be no charge for


installation, relocation, disconnection, or removal of any equipment or

service. Installation of new Retailers shall take no more than five (5) calendar

days from the date requested by Lottery; however, in the event of an

emergency or other exigent circumstances as may be determined by Lottery,

the Vendor shall make its best effort to install the necessary equipment and

activate new Retailers within one (1) calendar day from the date requested by

Lottery. Equipment removed may be re-used.

4.3.29 Terminal Type Mobile Terminal – Specified Option:

Mobile Terminal support capabilities shall be available for a wireless

Terminal with the same functionality as a Retailer Terminal to be used by the

Lottery.

4.3.30 Terminal Type Portable Hand Held Terminal – Specified Option(s):

Vendor shall describe Portable Hand Held Terminal and printing technology

that may be carried around or other options in keeping with current and

evolving technologies that the Lottery may desire at current or future times.

4.3.31 Player Activated Terminals/Vending Machines – Specified Option(s):

The Vendor shall propose player self-service device that utilizes state-of-the-

art technologies to provide attractive, easy to use, efficient, scalable, and

reliable delivery of games for all players. The device shall support all current

and future Lottery Instant and draw games. Also the system shall provide

content and additional games that attract players and ultimately generate sales.

The responding Vendor shall describe in detail the functionality of the

proposed device.

4.4 Communications Network – Network Design – Mandatory Feature(s):

The Vendor shall provide and operate the communications network required to

connect all components of the On-line Central System, with appropriate redundancies

to assure network survival in the event of a major outage. The Vendor shall provide

the interface of the On-line Central System with the Lottery LAN/WAN.

Certain Lottery-operated processes, e.g. ICS and SD Lottery Acclaims System rely on

high-speed TCP-IP communications with the On-line Central System. To avoid

delays from routing the traffic through the Lottery’s LAN/WAN, the Lottery will

require secure connections between the central computer and the equipment used in

these processes. Vendor shall provide the interfaces to all Lottery downstream

systems and applications as specified by the Lottery.


South Dakota Bureau of Information and Telecommunications standards and any

amendments or replacements thereto shall be met or exceeded for these

communications, subject to Lottery approval.

4.4.1 Network Design – Mandatory Feature(s):

The Vendor shall accurately and comprehensively describe the design of its

proposed communications network. The proposed communications network

shall include all technologies required to connect equipment to all retailer

sites. The network shall deliver all retailer traffic to the PDC and BDC

simultaneously and in real-time. The Vendor shall be responsible for

connecting the PDC/BDC to the Lottery Headquarters facility for interface

with the Lottery’s real time feeds. The Vendor shall provide the necessary

communications service between its data centers for coordination and

recovery purposes.

4.4.2 Vendor Networks – Mandatory Feature(s):

The Vendor’s production, test systems, and administrative LAN/WAN shall

be independent of each other.

4.4.3 Retailer Connectivity Installation – Mandatory Feature(s):

The Vendor shall describe its proposed solution to retailer connectivity and

installation. Each Vendor is encouraged to propose a creative solution that

meets the Lottery’s objectives of efficiency and cost effectiveness. Each

proposal shall include a description of all proposed security measures. The

Vendor shall provide one or more examples of where it has this solution

currently deployed.

4.4.4 Fault Tolerance – Mandatory Feature(s):

The Vendor shall describe its Fault Tolerance and System Redundancies

Action Plan. The proposal shall describe how the Vendor will conduct

problem resolution on all issues identified by any retailer or Lottery employee.

It shall describe the process for monitoring network components and terminals

and supplying information about failures within the network. The Vendor

shall provide one or more examples of where it has this solution currently

deployed.

4.4.5 Communication Encryption Requirements – Mandatory Feature(s):

The Vendor shall describe its proposed solution to communications

encryption. All data communications that are external to secured facilities

shall be encrypted with an encryption methodology at a level approved by the

Lottery. This includes, but is not limited to, the communications between the


PDC, the BDC, and the Lottery. The Lottery shall approve the Vendor’s

encryption mechanism that shall meet WLA, MUSL, ISO /IEC 27001,

ISO/IEC 27002, and NIST standards. The Vendor shall describe how it will

meet the proposed encryption standard, and provide an example of where it

has this level of encryption currently deployed.

All applications and servers requiring authentication must support the ability to

enforce complex passwords, minimum life of password, maximum life of

password, and minimum iterations of passwords.

4.4.6 Communication Outage Handling – Mandatory Feature(s):

The Vendor shall describe its solutions to communications outages. The

Proposal shall describe notification processes.

4.4.7 Protocol Requirements – Mandatory Feature(s):

The Vendor shall describe its proposed solution to provide secure

communication protocols.

4.4.8 Non-responding or Failing Terminals – Mandatory Feature(s):

The Vendor shall monitor terminals and its components and describe its

proposed solution to non-responding or failing terminals or components. The

Proposal shall include, at a minimum, a description of triage and escalation

processes and timeline.

4.4.9 Diverse Terminal Communications– Mandatory Feature(s):

The Vendor shall ensure that an agreed upon number of terminals are

communicating on a separate means of communication, whether it be by

different mediums (VSAT and IP Cell, for example), or simply by different

networks of the same medium (utilizing different satellites, for example).

4.4.10 Performance Management – Mandatory Feature(s):

Ongoing monitoring of the network components and terminals give the Vendor

information about performance and service outages with the network. The Lottery

expects the Vendor to propose a proactive solution that initiates corrective action

as soon as the Vendor detects an outage (rather than waiting to respond to a

retailer-initiated trouble ticket).

The proposed network performance management protocol must anticipate and

provide solutions to communications network performance management issues

including, activities to restore services, elimination of chronic failures, correction

of network latency issues, second- and third-Level service solutions for


networking issues, diagnostic tools needed for complex problems; and detection,

isolation, prevention and correction of performance issues.

The Vendor must provide an example of where it has this protocol, or a

comparable protocol, currently deployed. The Lottery requires a solution for

monitoring the status of the Vendor’s gaming system and communications

network in real time via a remote monitor that will be located at Lottery

Headquarters.

During the daily operational sales period, the Vendor’s system must not be

inoperable for more than five (5) minutes per day. Illustrations of this downtime

are identified as, but not limited to, inability of tickets to be sold through a

terminal supported by the system, the on-line cashing function not being operable,

the on-line claim processing function not being operable; and/or the drawing

process not being operational.

4.4.11 Degraded Performance – Mandatory Issues

During the daily operational sales period, the system shall be degraded for no

more than five (5) minutes per day. Under this contract, degraded performance

occurs when five percent or more of retailer terminal-based requests are not

processed within ten (10) seconds from request input, the system can perform

some, but not all, on-line and instant functions (for example, the production of

retailer reports or the broadcast of terminal messages), data is not recording on 2

media and remote logging before ticket issuance or any system component (for

example a front end processor) is down or operating below required response

times, even though the rest of the system is working.

4.5 Software Applications and Files

4.5.1 Drawing Information and Controls – Mandatory Feature(s):

At the time of contract implementation, the Lottery anticipates that it will be

conducting or participating in scheduled drawings Monday through Saturday

between approximately 8:30 p.m. and 10:00 p.m. CTZ as follows:

Monday .....................Lucky For Life

Tuesday .....................Mega Millions

Wednesday ................Powerball, Dakota Cash, Lotto America

Thursday ...................Lucky For Life

Friday ........................Mega Millions

Saturday ....................Powerball, Dakota Cash, Lotto America

The Vendor shall conform to this drawing schedule, and to any future drawing

schedule determined by the Lottery. Vendors shall describe their ability to

satisfy the following mandatory requirements:


4.5.1.1 Wager Suppression – Mandatory Feature(s):

The system shall be able to shut off and resume all wagering or wagering on

each game independently. The system shall be able to vary the number of

drawings per game, per day, per week and/or the days the drawings are

conducted. It shall be able to determine the number of winners for each prize

level for pari-mutuel games within 15 minutes after a drawing.

4.5.1.2 Game Draw Process – Mandatory Feature(s):

The Proposal shall describe the process of closing games, conducting game

drawings, entry of winning numbers, and readiness to pay winning tickets.

The Proposal shall describe the process to enter drawing information and

verification in terms of modification of game status (game open, game close,

game in drawing status etc.), winning number entry, winning number

confirmation, entry of game/drawing payout status, entry of jackpot amount,

entry of carryover amount and entry of prize amounts for pari-mutuel games.

The proposal shall also describe the process to change from cash prizes to

annuity prizes after a game has been placed in "pay status" based upon a

winner selection.

4.5.1.3 New On-line Games – Mandatory Feature(s):

The Vendor shall support new On-line games, such as traditional draw games or

fast-play games. The Proposal shall describe the process of introducing new

games to the Lottery’s portfolio, and it shall describe the library of games which

the Vendor is licensed to provide.

4.5.1.3 Monitor Games – Invited Option(s):

The Vendor is invited to propose new monitor games, such as keno, that they

believe would provide the best value and return-on-investment for the Lottery.

The Vendor shall describe all additional equipment or software changes that may

be required to implement the proposed games.

4.5.2 Random Number Generators for Future Draw Games – Invited

Option(s):

4.5.2.1 RNG Equipment – Invited Option(s):

The Vendor in invited to propose all equipment, software, security, access and

activity logging and communications necessary to produce computer

generated random draw numbers for all future draw games (including monitor

games), for which the Lottery draws (would draw) its own numbers. Subject

to Lottery approval, six (6) processors and associated monitors (3 at PDC, 3 at

BDC) would be supplied for the sole purpose of generating and displaying

random numbers unless the Vendor has another proposal acceptable to

Lottery. The screen display format of the monitor shall be subject to Lottery

approval.


4.5.2.2 RNG Software Certification – Invited Option(s):

Software utilized by the processors shall be certified at the Vendor’s expense

by an independent testing laboratory selected by the Lottery. The company

conducting the certification shall provide the Director of Security with the

results of said certification and with an outline of the testing. Source code and

object code for the random number generators shall be retained by the

Vendor’s corporate office in a secure place. At the request of the Lottery, the

Vendor shall provide the source code directly to the independent testing

laboratory for certification. The Vendor’s corporate office shall not release

the source code or the object code for the random number generators to the

Vendor site or any other person or entity without the express written approval

of the Executive Director of the South Dakota Lottery.

RNGs shall be recertified as requested by the Lottery.

The random number generators shall not redirect or reanalyze a random

number chosen based on a previous outcome of a game.

4.5.2.3 Continuous RNG – Invited Option(s):

The random number generators shall run continuously even while not being

accessed by the Vendor’s gaming system.

4.5.2.4 RNG Seeding Process – Invited Option(s):

The seeding process for generating random numbers shall be sufficiently

complex to prevent identical seeds being produced if multiple processors are

powered on at the same time.

4.5.2.5 RNG Failure – Invited Option(s):

Should the software fail to produce random numbers as determined by the

independent certification company, or if any changes are required by the

Lottery including new and changed games, the Vendor shall be responsible for

the necessary changes and any additional cost involved with re-certification.

All re-certifications shall be subject to the same terms and conditions as the

certification described above.

4.5.2.6 RNG Check Sums Testing – Invited Option(s):

Software used for routine testing of the check sums for the RNG’s shall be

provided to Lottery Security.

4.5.2.7 RNG Logs - Invited Option(s):

The RNG should produce indelible logging to be accessed by Lottery

Security.

4.5.2.8 RNG Logging - Invited Option(s):


Random numbers drawn shall be communicated to both the Online Central

System and the ICS simultaneously with a real-time verification that both

systems have logged identical numbers. Should those numbers not match, an

alert shall be sent to Lottery Security.

4.5.3 Transaction and Ticket Protections – Mandatory Feature(s):

The Vendor shall describe the controls built into its system and operation that

assure transaction and data integrity.

4.5.4 Transaction Storage Redundancy – Mandatory Feature(s):

The Vendor lottery gaming system shall simultaneously record all draw

gaming transactions to the primary system, the backup system(s), and a

remote logging file that will be input to the Lottery’s ICS. It shall verify that

the transaction was recorded in all of the above stated files prior to transaction

completion. Vendor shall describe their verification method.

Backup media shall be retained for each current Lottery fiscal year to date,

and for five previous Lottery fiscal years. Backup media shall be reliably

recoverable.

4.5.5 Console Records – Mandatory Feature(s):

All commands executed by the system or operator, and any system warnings or

problem messages, must be immediately printed on a console log and copied to an

unalterable electronic file that is immediately updated or to two separate

unalterable electronic files with one file being recorded on a system other than the

host systems hard drive. A copy of this printout or electronic file must be

provided to the Lottery upon request. The console log shall contain all activity

entered or received through the operator's console and shall include such items as

system operation, time of inquiry, access code of inquiries, reason for inquiry, etc.

The Vendor must provide an alert method, which is not strictly dependent on an

operator watching a screen (such as a pager or other electronic device that is

routed to at least one person on site and up to two additional people off site) as

problems occur. The Vendor must describe how it will satisfy this requirement.

The Vendor is responsible for retaining all records and logs in an unalterable

state, for audit purposes, for the current Lottery fiscal year to date and the prior

Lottery fiscal year.

4.5.6 Game Monitoring – Mandatory Feature(s):


The system shall include real-time monitoring of gaming transaction traffic

and system utilization. Outputs shall include a graphical form.

4.5.7 Back Office System – Specified Option(s):

4.5.7.1 Back Office Replacement – Specified Option(s):

The Vendor shall replace the Lottery’s current back office system with a

robust full functioning back office system required to run a successful lottery.

The Vendor shall describe in detail all components and work flow of the back

office system. The Vendor shall perform a business analysis on current

processes and enhance the system to accommodate Lottery needs.

4.5.7.2 Back Office Instructions – Specified Option(s):

The Vendor shall provide detailed step-by-step instructions, for both users and

managers, on how its products perform data entry, customizable searches, data

mining, and reports (standard, customized, management, and ad hoc) with

emphasis on how its products facilitate efficient operations.

The “how to” should be explained and the material should be presented in a

manner that clearly and concisely explains the security considerations,

capabilities, and the functionality of the product(s) from the perspective of the

users and managers.

Emphasis should be placed on the logical connectivity within the functional

categories and/or departments listed that will enhance the Lottery’s overall

business operations and productivity. The Vendor shall show the overarching

architecture for each of the back office functional areas and demonstrate how

the different departments/organizations are interconnected. The intuitive

nature of the work-flow, the flexibility of the work steps, the look, and

number of screens needed to accomplish critical tasks, and the user-friendly

aspects of the applications shall be explained to demonstrate that the Vendor

is proposing a first-class solution for the Lottery’s business needs.

4.5.7.3 Back Office Reports – Specified Option(s):

The Vendor shall include outputs e.g., generated reports, spreadsheets,

databases, or other outputs based on the needs, cross-referenced to the

business operations being performed in association with the report(s) that it

believes demonstrates how the Vendor’s product(s) will satisfy the business

needs of the Lottery in an efficient and timely manner. The Vendor should

highlight any initiatives or tools that it feels would better the Lottery’s

business needs e.g., intuitive fraud detection systems, exportability of reports,

etc.

4.5.7.4 Required Business Functions – Specified Option(s):


The Vendor shall support business functions that are currently managed

through the Lottery’s Back Office System including but not limited to:

4.5.7.4.1 Claims and Payments – Specified Option(s):

The Vendor shall describe the operations for the accurate processing and

the recording of all activities necessary to issue a paper check or other

payment methods, or execute an electronic funds transfer as well as

process non-cash, merchandize prizes. The software shall ensure that

every transaction’s details are maintained regardless of disposition (e.g.

voided; replaced; reprinted; etc.) or changes to a claimant’s citizenship

status or Tax Payer Identification Number. Dual approval and/or other

security procedures shall be inherent in the software design to allow for

manual claims processing (including merchandise prizes) or alterations

during the processing of a claim, or after a check has been issued. The

software shall send a warrant file to the State Accounting System.

The software shall allow Claims Center staff to print checks individually

or in batches, using the Lottery’s check stock specifications. The software

shall also produce tax withholding information and print the claimant’s

name and address on the checks, as required by Lottery. Every check

shall be accounted for, in sequence, on the check register and check

information shall be maintained if a claim is destroyed or reprocessed.

The software shall accurately record the income tax withholding as

required by applicable law. It must have the ability to print an IRS Form

W2-G immediately following the printing of the claimant’s check. The

claims staff shall have the ability to issue a separate W2-G after the claim

has been processed, as requested. The software shall also have the ability

to produce W2-Gs for multiple claimants for a single claim, if an IRS

Form 5754 is presented.

The Vendor’s System shall have the ability to manage debt set-off from

prize payments for certain identified debts owed to government agencies.

The system shall have the ability to check the South Dakota debt set-off

file during the claim process and deduct the amount plus any fees found

from the payment amount. Debt set-off should be checked for all prizes on

a single claim of $100 or greater (as determined by the Lottery) including

merchandise prizes. The Vendor’s System shall provide the ability to

perform this function for all types of prizes and prize payments. The debt

set-off information will be provided to the Successful Vendor in a format

determined by the Lottery.

All claims processed shall be checked against the database of ineligible

players, which is updated and maintained by Lottery Security.


The Vendor shall be available on an on-going basis to advise the Lottery

on how to fully utilize the available software features or controls to ensure

the integrity of Lottery claims processing operations. The software shall

contain internal controls, security features, auditing tools, and/or other

measures to prevent and detect fraudulent or improper claim payments.

Software security or other design features shall limit the opportunity for

identity theft or other improper use of a claimant’s PII (Personal

Identification Information).

Terminals, scanners, and other equipment needed, including back-up

inventory, at the Claims Center(s) are in addition to those allocated for use

in retail outlets and shall be provided, repaired and/or replaced by the

Vendor at no additional charge to the monthly fee.

4.5.7.4.2 Retailer Management – Specified Option(s):

1. Retailer Life Cycle

a. The Gaming System will include all functionality to maintain

the system of record of all retailer information that will be

jointly managed by the Vendor and the Lottery appropriate to

the business function. Certain fields will require encryption at

Lottery’s direction. The Vendor will provide and maintain a

workflow management system which supports the Lottery’s

business process through the entire lifecycle of retailer

management. The workflow management system shall include

an electronic document management capability to support the

exchange and tracking of forms and other documents used in

the Retailer Management and other business processes. This

system will include, but not be limited to; Retailer Application

work flow and Status; Retailer Background Review; ADA

compliance; Retailer Banking Settlement; Terminal

Provisioning; Retailer Training Status; Suspensions;

Reinstatements; Change of ownerships; Terminations; and

Reactivations.

b. The back office system will be the system of record. The

sources of information entry will be determined by the

Lottery. This system may be used, without limitation, by the

Lottery for any of its business processes.

2. Retailer Accounting.

a. Retailer EFT transactions and IRS filings. The Vendor shall

support combined Instant and terminal game product

accounting and Retailer accounting activity with all sales and

validation activity detailed by game.


b. The Vendor shall provide a real-time feed to the Lottery’s

Retailer Portal which will send and receive data to the gaming

system.

c. The System shall have the capability for multiple recurring

and one-time fees and credits configurable by the Lottery for

an individual or retailer group. These fees and credits shall be

able to be temporarily or permanently set differently from the

default.

d. Alternative Sales Commission. The System shall have the

ability to calculate and pay commissions based on sales tier

and period as defined by the Lottery.

e. Ability to transfer retailer accounting information to retailers

in agreed upon formats (flat file, csv, etc.).

3. Retailer Portal Alternative The vendor may support interfacing with the current South Dakota

Bureau of Information and Telecommunications hosted retailer

portal as an alternative to hosting a new retailer portal. If this

option is chosen, the vendor shall provide the API’s.

4.5.7.4.3 System Interfaces – Specified Option(s):

Interfaces shall be automated, encrypted and formatted by the

Vendor according to interface specifications. The Vendor shall

be responsible for the successful and verified transfer and

integration of the files/data to the following systems:

a. Sales Force Automation

b. Retailer Portal

c. RMI (Retailer Market Initiative)

d. State of South Dakota

e. Bank(s)

f. ICS

g. Lottery.com

h. Players Club sites

i. Third Party Delivery Vendor (e.g. FedEx, UPS)

j. Others as determined by the Lottery

4.5.8 Instant Game Support – Specified Option(s):

The Instant Ticket accounting system shall consist of all functions required to

manage the Life Cycle of Instant Games, including but not limited to,

inventory management, game management, Ticket validation, order entry,

ticket distribution and ticket and game accounting. The Vendor shall describe

in detail the Instant Ticket Management process.

4.5.9 Instant Ticket Validation Requirements – Specified Option(s):


The gaming system shall provide a secure, real-time ticket validation

capability via an authorized ticket validation entry point as determined by the

Lottery. e.g., ticket information scanned or entered via a Retailer Terminal is

immediately evaluated by the gaming system, the ticket status is updated, and

the result returned to the Terminal. If the ticket is a winner, the result shall

include the prize amount or other messages as determined by the Lottery.

4.5.10 Database Management – Specified Option(s):

The Vendor shall provide a stable, redundant, robust application and database.

The Vendor shall monitor, react to and resolve application and database alerts

and alarms. The Vendor shall ensure database integrity, manage and maintain

database structure and user access. Lottery access to databases shall be

limited to Web, Menu or GUI driven interfaces. Lottery staff shall not have

the ability to change database structure or change application level code. All

routine and ad hoc analyses conducted by the lottery shall be conducted

through canned reports or exportable data and shall not impact, transform,

append, or in any other way alter the underlying database, its tables or views,

or its data structure.

4.5.11 Database Reporting Capabilities – Specified Option(s):

The Vendor shall enact real-time reporting. All data shall be extractable and

shall be in a form and format facilitating export to analytic tools or reporting

tools such as, but not limited to, Excel, Access, PDF, HTML, text format

(.txt), Comma Separated Values (.csv), Tab Separated Values (.tab) or other

similar formats.

The system’s reportable data shall be available to Lottery to schedule,

generate and print reports. This may be in the form of actual data or it may be

in the form of views of the data. The Lottery will determine the format of the

input and report data (e.g. to include commas or not).

The Vendor is responsible for the custody, maintenance, daily updates and full

documentation via data dictionary (dictionaries) of such database(s) and views

which shall contain names of tables / views and elements as well as meta-data

related to the system and its files/views. The Vendor shall provide and

maintain a mapping of all database elements and their relationships. Such

documentation shall be provided to the Lottery at inception and updates of

same shall be integrated into change management processes.

4.5.12 Database Reporting Tools – Specified Option(s):

The Vendor shall supply a robust reporting system and provide all standard

reports. The Vendor shall provide additional reports as required by the

Lottery. The Lottery requires types of reporting for: Scheduled Reports, Ad

Hoc Reports, Analytics and Business Intelligence. The Vendor shall ensure


the data is sufficient for the Lottery’s business needs. The Vendor shall also

allow access to the data for Lottery employees to create and run custom

reports through the Vendor supplied Business Intelligence or through a third-

party or Lottery operated Business Intelligence program.

4.5.13 Sales Force Automation- Invited Option(s):

The Vendor shall propose a Sales Force Automation tool that allows the

Lottery to have access to sales data, and Instant Ticket inventory information

for Retailers. This information should be displayed in both data and graphical

formats, making it easy for the Lottery to utilize the information when talking

to Retailers regarding sales trends. In addition, the Vendor shall supply and

host all resources needed to run the production and test environments.

4.5.14 System Backups – Mandatory Feature(s):

Data shall be retained by the Vendor to provide the ability to completely

restore the Central System. The Vendor shall describe its Backup and

Recovery processes and procedures, including testing and verification.

Backups shall consist of daily incremental backups of the database and ability

to perform partial and full back up procedures on the system while system is

live and managing transactions. In other words, all backup procedures shall be

executed while system is live and no downtime incurred as a result of backup

procedures.

4.5.15 Software and Configuration Management – Mandatory Feature(s):

4.5.15.1 The Proposal shall describe the Vendor’s capability for

maintaining and modifying software once it becomes operational and for the

development and support of future software needs. The Proposal shall include

an appropriate discussion of system development methodologies, data

administration and documentation methodologies, development tools and

configuration management methodologies. Descriptions of the methods

employed (i.e. forms, procedures, tools, etc.) for incorporating these

methodologies into the development life cycle are requested for evaluation.

4.5.15.2 The Game Load file shall be delivered encrypted and the Game

load file stay in an encrypted form during the Game Load Process and remain

encrypted after the Game load completes. The Vendor shall provide and

support a Game Load “Debug” tool for Lottery to use in the event the

encrypted Game Load has errors or failures in the load process. This Debug

tool will allow the Lottery to troubleshoot Game Load issues without the need

to decrypt the encrypted Game Load File.

4.5.15.3 The Vendor shall provide a CMDB (Configuration

Management Data Base) tracking tool.


4.5.16 Remote Access Security Requirements – Mandatory Feature(s):

The Vendor shall describe its method for secure remote access. The system

shall provide tools to administer access control. The Vendor shall describe in

detail system access control tools providing security measures and practices

that include, but are not limited to, passwords and user access levels based on

individual employee’s job duties and ‘need to know’ requirements. The user

access levels shall be configured and controlled by the Lottery to allow for the

division of responsibilities to prevent inappropriate access to sensitive data

including, but not limited to, PII. If the Vendor’s back office application

provides inadequate levels of access control and/or segregation of duties, the

Vendor agrees to modify its back office interface as required by the Lottery.

4.5.17 Instant Ticket Order Telemarketing System – Specified Option(s):

The Vendor shall propose a System to support Telemarketing, predictive

ordering and retailer account service functions and services. The system for

the telemarketing staff shall employ mechanisms to promote efficiency and

accuracy.

4.5.18 Instant Ticket Order Telemarketing System Staff - Specified Option(s):

The Vendor shall propose staff to order Instant Tickets using the proposed

Instant Ticket Order Telemarketing System. Costing shall be broken out by

staff function.

4.5.19 Instant Ticket Order Fulfillment, Packaging and Warehouse System –

Specified Option(s):

The Vendor will propose a system to equip and perform the warehousing and

order distribution function as well as full and partial pack return processing,

the storage and distribution and return of Terminal Paper stock, play slips and

promotional items. Packing and distribution functions include filling orders,

ticket packaging, documentation, tracking, and security and destruction of

unsold, returned or unused tickets, and Terminal Paper stock. The Vendor will

pay all shipping charges for Instant Tickets, including returns and

replacements. The Vendor will provide an application to support warehousing,

physical inventory control, packaging, distribution and real- time shipment

tracking. The System shall protect information regarding the retailer location

of specific packs. The system shall employ mechanisms to promote efficiency

and accuracy.

4.5.20 Instant Ticket Order Fulfillment, Packaging and Warehouse System Staff

- Specified Option(s):


The Vendor shall propose staff to fulfill Instant Ticket orders using the Instant

Ticket Order Fulfillment, Packaging and Warehouse System. Costing shall be

broken out by staff function. In the proposal, include the role that current

Lottery sales representatives might play in this system, or what duties the

system may relieve the representatives of.

4.5.22 Retailer Portal – Specified Option(s):

The Lottery is currently using a Retailer Portal maintain by the South Dakota

Bureau of Information and Telecommunications. The Vendor shall propose a

Retailer Portal that provides retailers with on-demand and scheduled reporting

of metrics related to their Lottery product category. This includes both Draw

Game and Instant ticket sales, inventory tracking, financial statements and

other reporting in flexible formats that facilitate import to retailer’s back

office accounting and reporting systems.

4.5.23 Alternative Prize Payment from Claims Process – Specified Option(s):

The Lottery is interested in keeping up with Player conveniences and would

like the Vendor to propose alternative ways Players can receive their

winnings such as EFT and other electronic payments.

4.6 Gaming Software Security and Control Features – Mandatory Feature(s):

4.6.1 The hardware, software, and communications shall be operated so that:

4.6.1.1 The Vendor shall describe internal access control for all back office

applications, providing security measures and practices that include,

but are not limited to, passwords and Vendor and Lottery user

access levels based on individual employee’s job duties and ‘need to

know’ requirements. The Vendor and Lottery user access levels

shall be configured and controlled by the Lottery to allow for the

division of responsibilities to prevent inappropriate access to

sensitive data including, but not limited to, PII. If the Vendor’s

back office application provides inadequate levels of access control

and/or segregation of duties, the Vendor agrees to modify its back

office interface as required by the Lottery.

To facilitate The Lottery’s internal access control

audits/investigations, the software shall create the necessary audit

trail logs for all additions, deletions or modifications to all records.

In essence, designated Lottery personnel shall be able to research

the “who, when and what” of any of the above mentioned data

alterations. The Vendor agrees to follow Lottery guidelines for

record retention of the aforementioned audit trail logs.


4.6.1.2 Transactions shall not be tampered with or appear multiple times on

system files. The Vendor shall employ methods and procedures

which prevent unauthorized access or tampering with any part of the

system to insure overall integrity of the system and games. Security

procedures shall include, but should not be limited to, internal

control procedures applicable to system and terminal operation,

computer virus detection and prevention, draw game ticket

preparation, distribution and accountability. The Vendor shall

employ computer system file security procedures and password

control and encryption keys. The Lottery reserves the right to

review any and/or all system narratives, source program listings and

operational procedures to assure valid system integrity

4.6.1.3 Wager tickets, exchange tickets, and validation receipts shall not be

duplicated on retailer terminal equipment.

4.6.1.4 The Vendor shall immediately alert the Lottery when a Lottery-

specified liability level has been reached by any number

combination in any set payout game.

4.6.1.5 The system shall be capable of suspending play on specific numbers

as required by the Lottery in any set payout game.

4.6.1.6 The Vendor shall describe its ability to restrict the entry of system

commands to the system console. The Vendor shall provide

definitions of all system codes and messages that could appear on

the log file. The Vendor shall assist the Lottery in reviewing and

auditing the log file as requested.

For audit purposes the Vendor shall be responsible for retaining all

records and logs in an unalterable state for the current Lottery fiscal

year to date, as well as the immediately preceding Lottery fiscal

year.

4.6.1.7 The Vendor shall describe how it shall not be possible to manipulate

the system so that unauthorized transactions can be entered on the

system. This includes, but is not limited to invalid claims on

unclaimed winning tickets.

4.6.1.8 Source code compilers and software development tools shall not be

loaded or otherwise reside on the production gaming system.

4.6.1.9 All access shall be logged with a jump box or similar solution and

all unauthorized attempts shall alert and alarm to appropriate

monitoring organizations.


4.6.1.10 A winning ticket shall not be validated or cashed more than once.

4.6.1.11 The Vendor shall describe how it shall protect and verify executable

programs on all production gaming systems.

4.6.1.12 Records of sold transaction data on the gaming system environment

shall exist in not fewer than two distinct physical locations in

separate geographic areas of the country to process (i.e. minimally

log) transactions. Each location shall receive and acknowledge

transaction board data prior to a ticket being allowed to print.

4.6.1.13 The Vendor shall describe how it will provide real-time monitoring

of gaming transaction traffic and system utilization (e.g., CPU, disk

usage).

4.6.1.14 The Vendor shall describe how it will simulate and load test all

types of transactions (terminal and system) for use in testing

software quality and performance.

4.6.1.15 The Vendor shall describe how Security measures will ensure the

integrity of winner files, unclaimed prize files, tickets redeemed by

retailers, and necessary supporting documentation.

4.6.1.16 For draw games, the Vendor shall also maintain dynamic pools for

the current draw and future draws for the draw games. The total

dollars played by game by play type shall be maintained for all

future draws. The current day's pools shall include all current day's

wagers as well as advance day wagers for that draw.

4.6.1.17 Lock Down Procedures - The Vendor shall describe in detail the

process and procedure to meet all MUSL approved alternative lock

down procedures.

4.6.1.18 The system shall maintain control of terminal software distribution

such that terminals are not able to run different versions of the

software simultaneously.

4.6.1.19 Only authorized retailer terminals, Lottery privileged terminals, and

games management terminals will be connected to the active

gaming system or its backup.

4.6.1.20 Retailer terminals located at the Vendor site or Lottery sites that are

not authorized by the Lottery to produce live game tickets for sale

shall be modified so that tickets produced by such terminals can be

easily identified by a method approved by Lottery security.


Terminals located in the Vendor’s repair depots shall be secured and

not accessible to the operations staff at the Vendor site.

4.6.1.21 The Vendor shall comply with all multi-jurisdictional game group

(e.g. MUSL) rules, regulations, requirements, and game changes at

no additional cost to the Lottery.

4.6.1.22 The Successful Vendor shall provide the following process guides

for Lottery review and approval:

1. Change management;

2. Release management;

3. Performance management;

4. Service Level Monitoring and Reporting; and

5. Lottery security requirements as defined in this RFP and the

contract.

6. Policies, procedures and staff roles and responsibilities

associated with ITIL Continual Improvement concepts

associated with but not limited to Change Management,

Release, Validation and Control Management and Service

Delivery

4.6.1.23 The Lottery reserves the right to require at any time such further and

additional security measures as it may, in its sole discretion, deem

necessary or appropriate to ensure the integrity of the system or the

games.

4.6.1.24 The Vendor shall describe what features will be available that will

allow the Director of Security and Video Lottery to monitor retailer

sales activity and detect unusual increases in sales.

4.6.1.25 The Vendor shall develop, follow and maintain a written policy

regarding installing new or modified software on any production

system.

4.7 Internal Control System (ICS) - Mandatory Feature(s):

The Lottery currently runs an Internal Control System (ICS) system developed by

Elsym. The ICS independently processes all daily sales, validations, and coupons for

the purpose of auditing, balancing and reporting all game sales, and promotions. The

current Lottery ICS will be decommissioned as a part of system conversion process.

The Gaming System Vendor will act as the full integrator of a new ICS product and

service, through the use of a sub-contractor if necessary. The Lottery reserves the

right to select the ICS vendor for this contract period. The Gaming System Vendor

will ensure a seamless migration of current ICS features and functions as well as

enhanced features and functions of the new ICS product. ICS project plans for design

engineering, migration strategy and deployment execution will be developed jointly


between Vendor, any ICS Vendor or sub-contractor and the Lottery. The ICS

administration of hardware, software and application is intended to be a function of

the Lottery, subject to MUSL rules and security concerns. ICS system, software and

application development will be a function of the ICS Vendor.

The ICS systems (primary, backup, and development/test) shall be located at secure

data centers in South Dakota. The ICS shall be designed as an active/active solution

where both primary and secondary ICS systems receive simultaneous real-time

transactions. The ICS solution shall be designed with automatic failover capabilities

and the test ICS shall be ready to take over as the ICS in the event the primary and

secondary are unavailable. The ICS shall be fully redundant with dashboard features,

reporting features, hardware/software/application fault management alarms and alert

features, user and system security access monitoring, RNG monitoring with indelible

logging and immediate alerts if winning numbers logged in the ICS differ from those

logged in the CGS and alerting features, along with all standard ICS Draw and Instant

Ticket functions.

4.7.1 Internal Control System (ICS) Application – Mandatory Feature(s):

The Vendor shall provide a trustworthy, secure ICS application providing

visibility and assurance that lottery operations are secure and comply with

Lottery and MUSL regulations, including but not necessarily limited to the

following requirements:

1. The ICS product shall ensure the Lottery has integrity ICS

controls, rapid audit capabilities, and accounting auditing features

and functions within the ICS application.

2. The ICS Vendor application shall support all Draw (online), and

Instant gaming transactions.

3. The ICS application shall independently track and record all online

wagers, perform verification and validation checks real-time,

ensure only valid wagers are being processed, verify winning

numbers, balance winner counts and shares, automatically generate

reports and automatically alert operators in real-time of potential

failures or threats.

4. Although the ICS Vendor is a sub-Vendor of the Gaming System

Vendor, the ICS Vendor shall advise the Lottery whenever there is

any matter affecting the functionality and/or the integrity of the

System or when there is a need for modification(s) to the ICS

system. Service level agreements, Vendor access, release

management, change management, incident and problem

management processes will be defined, agreed to and implemented

based on Lottery, Vendor, and ICS Vendor support policies,

methods and procedures. Software and hardware upgrades to the

ICS, as well as planned, emergency, break-fix changes, updates

and new features and services during the term of the Contract shall

be approved in writing by the Lottery prior to implementation and

in compliance with established change management processes.


5. The ICS Vendor shall perform all necessary software

modifications to correspond with the Vendor’s software changes

due to adjustments to a game matrix or design at no cost to the

Lottery. The ICS Vendor at no cost to the Lottery shall maintain

stable and secure ICS software/application keeping current with

software upgrades, patches and security vulnerability updates. The

Lottery intends to be responsible for ensuring the hardware

platform the ICS resides on is likewise current in operating system

levels, hardware code levels and security related patches specific to

hardware components unless an alternative workable plan is

offered by Vendor and adopted by the Lottery.

6. Installation, all equipment, software, upgrades, “fixes”, and

maintenance relating to the ICS system and any features are

included in the fee paid by the Lottery to the Vendor. Nothing in

this section is intended to nor shall it establish a contractual

relationship between the ICS Vendor and the Lottery. At all times,

the ICS Vendor is, and shall remain, a sub-Vendor (or sub-

contractor) of Vendor.

7. The ICS shall meet regulatory requirements assuring that data

protection and privacy obligations are maintained for the Lottery

and gaming operator. The ICS must be approved and in use for

MUSL auditing and meet current as well as future MUSL Rule 2

(or its equivalent) requirements pertaining to ICS.

8. The ICS shall meet all Lottery and State of South Dakota Security

requirements and current as well as future encryption technologies

and requirements at no cost to the lottery.

4.7.2 ICS Start-Up - Mandatory Feature(s):

It is required that the ICS features be the first available during the conversion

process. Data that is “in use” during the conversion process shall be the first

secured and cleared for implementation into the new system. The ICS Vendor

shall assist the Lottery in converting and cleansing data from the current ICS

so that data will be accurate and correct on the new Gaming System and ICS.

4.7.3 Lock Down – Mandatory Feature(s):

The Vendor shall describe in detail the process and procedure to meet all

MUSL approved alternative lock down procedures.

4.8 Games and Marketing Support

4.8.1 Game and Product Support - Specified Option(s):

The Vendor shall describe marketing and/or product development services

relating to terminal-generated games (either in conjunction with or


independent from instant games). The general scope of these services may

include, but are not limited to:

1. Strategic planning, product design, market research, and market

development and acquisition;

2. Game development;

3. Support for Lottery sales and promotional activities; and

4. Player loyalty programs, mobile device apps, merchandizing,

promotional items, and second-chance games for terminal-generated

games.

4.8.2 Third Party Integration – Mandatory Feature(s):

Vendors shall describe how they would integrate and support third party

systems such as loyalty program, ticketless transactions, draw games, etc.

Vendor will act as the single point of contact for all Third Party Vendor

issues, engagement and SLA agreements.

4.8.3 Additional Gaming and Non-Gaming – Invited Option(s):

Vendor is invited to propose Lottery-to-Player Capabilities, such as Database-

driven features (VIP, Loyalty, stored value, tracking capabilities, etc.).

4.8.4 Marketing Plan Development and Support – Specified Option(s):

The Vendor shall take an active role in sales and marketing in order to

increase long-term sales for the Lottery. The Vendor shall describe in detail

how they will support the Lottery in its on-going Marketing efforts.

4.8.5 Promotion Capabilities Explanations – Mandatory Feature(s):

The Vendor shall describe the Vendor’s promotion support capabilities and

provide details of the promotions included in the base price.

List and fully describe the types and results of promotions the Vendor has

fully implemented in other lottery jurisdictions. If any of these promotions

were designed with an unusually large scope or were fully implemented with

multiple components, then the Proposal shall include an explanation of the

Vendor’s abilities in these areas.

4.8.6 Additional Gaming Capabilities – Invited Option(s):

Although the Lottery does not currently offer non-traditional games, the

System shall be able, through hardware and software upgrades, as needed, to

support additional games not currently offered. Specific non-traditional


capabilities offered by the Vendor may be described and/or may appear as

Invited Options.

4.8.7 Marketing Allowance – Mandatory Feature(s):

In addition to the technical commodities and services required above, the

Vendor will financially support the Lottery’s product development and

marketing efforts. As a minimum the Vendor’s support will consist of $25,000

per contract year. The allowance will be cumulative and spent at the direction

of the Lottery. All portions of said monies not used in any contract year may

be used in any subsequent contract year as the Lottery may determine in its

sole discretion. Furthermore, all amounts not utilized by Lottery for product

development and marketing efforts may at any time be utilized as the Lottery

may determine in its sole discretion.

4.8.8 Research and Development Program – Mandatory Feature(s):

The success of the Lottery depends on the availability of new products,

gaming features, and services. The Vendor shall support the Lottery in this

mission. The Vendor shall describe its resources, capability, capacity and

plans for maintaining a research and development effort in such areas as

gaming concept design/development, segmentation studies, retailer terminal

design, telecommunications, retailer network planning, and sales data mining.

4.8.9 Research and Development Allowance – Mandatory Feature(s):

In addition to the technical commodities and services required above, the

Vendor will financially support the Lottery’s research and development

efforts. As a minimum the Vendor’s support shall consist of $25,000 per

contract year. The allowance will be cumulative and spent at the direction of

the Lottery. All portions of said monies not used in any contract year may be

used in any subsequent contract year as the Lottery may determine in its sole

discretion. Furthermore, all amounts not utilized by Lottery for market

research, sales research, product research, or other related research and

development efforts may at any time be utilized as the Lottery may determine

in its sole discretion.

4.8.10 Retailer recruitment and retention – Specified Option(s):

The Vendor shall propose a plan to assist the Lottery in recruiting new

retailers and retaining existing retailers.

4.8.11 Sales Operations and Retailer Support Management– Specified

Option(s):


The Vendor shall propose sales operations and retailer support management

services which include oversight and management of a sales team as well as

activities dealing with sales support to Retailers and the promotion and sale of

Lottery Products. Sales team functions can be generally categorized as

Retailer setup and training, supply and inventory management, and sales and

marketing support. Retailers are provided a variety of goods and materials to

support and sell South Dakota Lottery Products. These include point of sale

materials, supplies (e.g., play slips, Draw Game Ticket stock) and promotional

goods.

4.8.12 Electronic Play Stations – Specified Option(s):

The Lottery is interested in new and innovative electronic Play Stations to

catch customers’ attention, provide an entertaining area for players to easily

learn about and prepare to play Lottery games and to display Lottery

promotional materials and messages.

4.9 Facilities: Mandatory Feature(s):

The Vendor shall provide and operate at Vendor’s expense a Primary Business Site

(PBS) located in Pierre, South Dakota as well as a Primary Data Center (PDC) and a

Backup Data Center (BDC). The PDC and BDC may be located in-state or out-of-

state (but within the continental United States), or a combination thereof, as the

Lottery may determine is in its best interest. Vendors may submit alternative

proposals for location of the PDC. Regardless of the location selected for its data

centers, the Vendor shall provide a transport path between its primary and backup

Gaming Data Centers and the following: the Lottery Headquarters facility in Pierre,

South Dakota; the lottery offsite disaster recovery center (located in or near Pierre,

South Dakota, as determined by Lottery); and, each retailer site. The intent of this

requirement is to assure survival of the System in the event of a major outage. Each

of these transport paths shall support all of the gaming traffic needed between the

Gaming Data Centers, and between the Gaming Data Centers and the Lottery

facilities.

Lottery reserves the right to perform hardware acceptance of Lottery infrastructure

and facility and perform scheduled and unannounced visits to the data centers and

Network Operations Centers at any given time.

4.9.1 Physical Security Requirements at PDC, BDC and PBS – Mandatory

Feature(s):

The Lottery Director of Security and Video Lottery must approve the Physical

Security Plan, as well as the Information Security Plan. This includes approval of

the Security control system and door locks. Only persons authorized by the

Lottery may access sensitive or confidential data, software programs and system


documentation, computer rooms, media storage, and any other area deemed by the

Lottery to warrant such authorization.

The Vendor’s facilities must be secured. Only authorized persons may be

permitted to gain entry into the facility, and authorized persons must be restricted

to authorized areas. If the facility is located in a State of South Dakota facility, the

Lottery will designate access authorization.

The Proposal must include, at a minimum, the following access control

requirements:

A. Facility entry and control points must be guarded by human or mechanical

means.

B. All key access doors must be self-closing and self-locking.

C. Physical access shall require 2 factor authentication.

D. Access logs must be provided to Lottery Security upon request and retained

for a Lottery defined length of time.

E. Recording-type closed circuit television must monitor all vulnerable and

sensitive areas. The Lottery Director of Security and Video Lottery shall have

access to recordings as well as the ability view the vendor camera's in real

time.

F. Sensitive areas must include, at a minimum, Host systems and the

communications equipment/workstations used to access Host systems.

G. All Vendor employees must receive, use and be easily recognized by a photo

identification badge.

H. All visitors and messengers must be logged in and out of the facility, and all

visitors must be escorted at all times while inside.

I. Access authority must be removed immediately upon any individual’s change

of assignment or termination.

J. The Vendor must give the Lottery a security system generated list of access

level(s) for all individuals with access to the facility. The Vendor must

promptly update this information when any changes occur.

K. The Vendor must maintain a current list and/or memorandum authorizing

access to those Lottery employees or other State employees who are

authorized to access the facility, along with each individual’s facility access

level(s).

L. At any time, personnel authorized by the Lottery may inspect any and all of

the Vendor or Vendors’ premises, to determine the degree of security and

operational compliance with the requirements of this contract. In addition,

authorized Lottery personnel may also have access to interview any Vendor or

sub Vendor employee or agent in conjunction with any audit, review or

investigation deemed necessary by the Lottery.


4.9.2 Primary Business Site (PBS) Specifications and Location – Mandatory

Feature(s):

The Vendor shall maintain and operate a business office in Pierre, South

Dakota. The Vendor shall be solely responsible for any costs associated with

that facility (this includes costs related to procurement, utilities, building

services, design and construction). The physical facility shall comply with all

state and local building codes, laws, rules and regulations for facilities of its

type. The Vendor shall obtain proper facility permits and inspections.

4.9.3 PDC Site Specifications and Location: Mandatory Feature(s):

The PDC shall be located at an approved site within the continental United

States which shall be approved by the Lottery. The Vendor shall be required

to submit the following information to the Lottery: site design and layout

specifications; site location address, owner(s) name, facility exterior

photographs/drawings and a proposed floor plan.

The PDC may be in a consolidated data center if adequate security is

provided, access controls are in place and the computer systems are dedicated

to the Lottery. The Proposal shall include a detailed plan describing how the

Vendor plans to meet this requirement.

The vendor shall cover all expenses for up to four lottery staff to conduct an

onsite review of the PDC on a yearly basis.

4.9.4 Backup Data Center (BDC) Site Specifications & Location – Mandatory

Feature(s):

The BDC is a real-time functional duplicate of the PDC. It is geographically

separate from the PDC, to prevent a disaster from affecting both centers at the

same time. The BDC shall be located at a Lottery approved site within the

continental United States, subject to the same approvals as the PDC above.

The Vendor shall be required to submit the following information to the

Lottery: site design and layout specifications; site location address, owner(s)

name, facility exterior photographs/drawings and a proposed floor plan.

The BDC may be in a consolidated data center if adequate security is





onsite review of the BDC on a yearly basis.


4.9.5 Maintenance and Repair Center(s) – Mandatory Feature(s):

Vendor shall describe the maintenance centers and depots to be used to fully

support the terminal maintenance and repair program throughout the state.

4.9.6 Testing Facility – Mandatory Feature(s):

The Vendor shall describe in detail the QA Testing Facility to be used for

Acceptance Testing by the Vendor.

The Vendor shall be solely responsible for the procurement of the Testing

Facility. The Vendor shall be solely responsible for the costs of Testing

Facility design and construction. The Vendor shall be solely responsible for

Testing Facility equipment, utilities and building services expenses.

4.9.7 Compliance with MUSL Lockdown Alternative Standards – Mandatory

Feature(s):

Vendor shall describe how it will comply with all applicable MUSL lockdown

alternative standards.

4.10 Data Security Plan

4.10.1 Physical Security Plan – Mandatory Feature(s):

The Vendor shall describe the plan to ensure that adequate protective

measures are implemented for all IT computing resources. The purpose of

the physical security component of the IT security program is to reduce the

risk of data compromise due to physical break-ins or unauthorized access to

server resources. Proposals shall include descriptions of the following

physical security plan components:

4.10.1.1 The proposed physical security attributes for computer or

communications rooms;

4.10.1.2 The proposed facility access control;

4.10.1.3 The proposed data storage and communications controls;

4.10.1.4 The proposed off-site media storage;

4.10.1.5 The proposed data storage devices.

4.10.2 Data Security Plan – Post-Award Vendor Requirements – Mandatory

Feature(s):


The Vendor shall submit a detailed Data Security Plan to the Lottery for

approval no later than May 1, 2019. The Vendor shall also describe how it

will keep the security plan up-to-date and in conformance with future

versions of these documents. The Data Security Plan shall be available in

hard copy and data format. At any time, personnel authorized by the Lottery

may inspect any and all of the Vendor’s or Vendors’ premises to determine

the degree of security and operational compliance with the requirements of

this contract. In addition, authorized Lottery personnel may also have

access to interview any Vendor or sub-Vendor employee or authorized

agent in conjunction with any audit, review or investigation deemed

necessary by the Lottery.

4.10.3 Additional Data Security Plan Requirements – Mandatory Feature(s):

Shared user accounts shall not be permitted. The Vendor shall describe how

it proposes to meet this requirement. All applications and servers requiring

authentication shall support the ability to enforce complex passwords,

minimum life of password, maximum life of password, and minimum

iterations of passwords. When an employee is terminated the Vendor shall

immediately cancel that employee’s access rights.

Data must be encrypted in all transaction delivery protocols and remain

encrypted at all times. Game Loads shall be delivered in an agreed to and

approved method as encrypted, remain encrypted throughout the game load

process and after Game load is completed. Vendor shall provide a Game

Load debug tool on the Gaming System allowing Game Load Operators

and Security to troubleshoot and resolve Game Load related issues while

data is maintained in an encrypted state.

The Vendor shall develop, document and implement a security program

component that is appropriate for the level of sensitivity/confidentiality of

the information being processed. The purpose of the data security

component of the IT security program is to reduce the risk associated with

the compromise or destruction of Vendor-controlled data. Content should

include rules for the storage and dissemination of data shared with other

organizations. The proposed data security program component shall include

Vendor Security Policy Statements, software version control and its

currency, access control techniques, data entry processes, processing

accuracy, distribution of output reports and introduction or release of data,

data and program backup, controls to prevent unauthorized use or removal

of tape files, diskettes, and other media, data encryption standards for

storage and secure management, processing audit trails, application testing,

system access violations, intrusion detection notification and response

procedures, virus prevention, detection and removal; and appropriate

disposal of hardcopy data which may contain sensitive information or

information which may allow compromise of information systems security.


4.10.4 Problem Incident Management and Notification – Mandatory

Feature(s):

The Vendor shall describe in detail its Incident Management and

Notification Plan. This process shall map to ITIL (Information Technology

Infrastructure Library) Best Practice and Lottery shall be involved in all

service impacting events, problem determination, after action review and

lesson learned processes. At a minimum, the Vendor must notify Lottery

security personnel, both verbally and in writing, of any security incidents or

breaches within one hour of the incident.

4.11 Support Staffing and Services

4.11.1 Implementation/Conversion Support – Mandatory Feature(s):

The Vendor shall provide one Project Manager to coordinate conversion

implementation. This individual shall be the primary point of contact

between the Vendor and the Lottery on conversion matters and shall remain

on-site for the entire conversion and implementation unless otherwise

determined by the Lottery.

The Vendor shall describe the title and responsibilities for all positions it

proposes to fill to ensure that conversion requirements are timely met. The

Proposal shall include an organizational chart showing these positions.

The Vendor shall provide resumes for the personnel who it anticipates will

fill the key contract management positions. The Vendor shall bring in extra

staff, if needed, to meet the timelines identified in the Final Implementation

Plan.

4.11.2 Ongoing Operations Staff – Mandatory Feature(s):

The Vendor shall provide one Account Manager to be the primary point of

contact between the Vendor and the Lottery on contract and operational

matters.

The Vendor shall describe the title and responsibilities for all positions it

plans to fill to ensure that the requirements of this contract are met. The

Proposal shall include an organizational chart showing these positions or

position categories, and the number of staff to be allocated to each position

or position category.

4.11.3 Retailer Service Plan – Mandatory Feature(s):


The Vendor shall propose a comprehensive service plan for retailer

terminals. The Service Plan and its execution shall include a preventative

maintenance schedule and repair response plan that minimizes downtime

conditions for the terminals. The Vendor shall maintain and make available

to Lottery an electronic record tracking all such visits. The Lottery may

require a modified preventative maintenance period if the level of

performance changes. The Vendor shall propose performance measures and

values they feel are appropriate for this purpose.

The Vendor shall continuously monitor terminal operability and

immediately take proactive steps to promptly return inoperable terminals to

a working state. The Lottery may request or require the Vendor to "swap

out" terminals to resolve issues with retailers. The Vendor shall describe

how it will perform terminal repairs outside the retailer location.

4.11.4 Retailer Terminal Repair Response Times – Mandatory Feature(s):

A retailer terminal is defined to be non-operational if it cannot issue tickets

(this includes retailers that have no ticket stock), validate tickets or perform

instant ticket functions. This does not include terminals that are non-

operational due to hardware or software failure at the primary data center or

secondary data center.

For non-operational terminal calls, the Vendor shall arrive at the retailer's

location and commence repair of the terminal pursuant to the schedule set

forth in the Liquidated Damages section of this RFP.

The Vendor shall describe its proposed retailer service operating hours.

Any determination of terminal inoperability is subject to verification by the

Lottery.

4.11.5 Retailer Spare Equipment – Mandatory Feature(s):

The Vendor shall supply, at no cost to the Lottery, all spare equipment

(including parts and other components) necessary for the efficient operation

of equipment. Spare equipment (including terminals, ticket checkers,

monitors, monitor game boards, and so forth) shall be maintained in such a

way that the number of said items in use in the field is not affected. The

Vendor shall describe how it proposes to meet all terms of this requirement.

4.11.6 Equipment Maintenance (other than terminals) – Mandatory

Feature(s):

The Vendor shall propose its procedures and response times for maintaining

and repairing retailer equipment other than terminals. The Vendor must


maintain the appearance of supplied equipment looking and performing as

close to new as possible. The Lottery and the Vendor will discuss how to

determine when supplied equipment starts looking and performing poorly

and needs to be replaced. The Lottery will make the final determination on

specific supplied equipment. The Vendor may "swap out" (or may be

required to “swap out”) equipment to resolve issues with retailers.

4.11.7 Hotline – Mandatory Feature(s):

The Vendor shall provide a toll free number that provides support to

Lottery retailers, twenty-four hours a day, seven days a week with specific

emphasis on supporting the peak calling period between 6am and 8pm,

CTZ. The average time a customer should experience a wait or remain on-

hold prior to speaking to a human should be not more than one minute

during peak call periods except during cases of a regional power failure,

extreme weather or other similar circumstances beyond the control of the

Vendor. The personnel shall be fully trained to politely and efficiently

resolve the retailer’s questions, problems, request for supplies, or to route

the matter to the appropriate person(s) for resolution. The hotline

personnel shall accurately enter the specific nature of the retailer’s

complaint or problem in the Vendor’s software. This software shall be

searchable by time and date, nature of the problem/complaint(s), by retailer

licensure number and outlet location address (even if the licensure number

has changed). For quality assurance purposes, each call shall be recorded

and maintained for a minimum of six (6) months. A copy of any and all

recordings shall be provided to the Lottery upon request. The hotline

personnel shall be located in the United States. Hotline personnel

communications shall be understandable and professional as determined by

the Lottery.

4.11.8 Tracking and Reporting Retailer Service Calls – Mandatory

Feature(s):

The Vendor’s system shall capture all information related to retailer service

calls, dispatches and resolutions. Standard and Ad-hoc reports shall be

available to the Lottery for a minimum of six (6) months.

4.11.9 Hotline Call Management System – Mandatory Feature(s):

The Vendor shall describe how the Hotline shall be one toll-free number,

with sufficient lines to ensure that more than 99% of callers get through

without hearing a busy signal. The Vendor shall allow the Lottery to

actively participate in the development and revision of the information

resources developed to help Hotline operators handle calls.


The Vendor must make a follow-up call to any retailer after an initial

service request remains unfulfilled for more than two hours beyond the

expected response time. The Vendor must make an additional follow-up

call daily, so long as the retailer’s initial service request remains unfulfilled.

The Vendor must describe the procedure that its staff will use on follow-up

phone calls.

The Vendor shall describe how it proposes to support the hotline if the

primary call center becomes, at any time, inoperable. The Vendor shall

describe its proposed Hotline Quality Assurance and Training Program. The

Vendor shall bear the costs for up to two Lottery staff to visit the Vendor’s

call center once a year for user meetings.

4.12 Supply Warehousing and Delivery

4.12.1 Supply Delivery – Mandatory Feature(s):

The Vendor shall be responsible for providing warehousing facilities

throughout the state to facilitate the distribution of consumables to Lottery

retailers. The Vendor shall also be responsible for vehicles necessary for

the distribution of warehoused materials. The required vehicle(s) shall be

readily available and shall be approved by the Lottery.

The Vendor shall further maintain adequate supplies to prevent out-of-stock

conditions from occurring. The Vendor shall provide monthly inventory

reporting by warehouse location and in summary form to the Lottery.

The Vendor shall describe how it proposes to secure, record, track, fulfill,

and report on requested, delivered and consumed supplies. The Vendor

shall describe the delivery method(s) it proposes to use to deliver supplies

to retailers. That method shall reflect that the Vendor has taken the

retailers’ needs into account. The Vendor shall propose response times

within which it will deliver supplies in response to retailer requests.

Emergency delivery of ticket stock due to an outage shall receive the same

priority as a “down” service call.

4.12.2 Warehouse Requirements and Locations – Mandatory Feature(s):

The Vendor shall propose how it will order, ship, store inventory and

retrieve supplies for delivery to retailers.

4.12.3 Supply Requirements and Specifications – Mandatory Feature(s):

The Vendor shall provide, at no cost to the Lottery, all supplies needed for

the smooth and effective operation of the network of equipment. This

includes supplies that are not specified in this RFP. The Vendor shall


provide, at no cost to the Lottery, ticket stock and play slips. The Lottery

retains the right to approve, in advance, such factors as the paper thickness,

print, colors, format, design, and wording to be used on ticket stock and

play slips (front and back).

Every terminal draw game ticket shall be identified with a unique

preprinted stock number on the back of the ticket stock which shall be

accounted for in a computerized ticket stock tracking system, provided by

and maintained by the Vendor. The ticket stock tracking system shall

utilize a bar-code system to automate the process of transferring stock. The

ticket stock tracking system shall maintain a history of all movement of

ticket stock by carton number, by roll number, by date and time. The

Vendor shall ensure that the information in the ticket stock tracking system

is current at all times. Movement or transfer of ticket stock shall be entered

or scanned into the tracking system at the time movement or transfer

occurs. The Vendor shall provide Lottery security with the necessary

equipment to allow the production of standard queries and printed reports

of data stored in the ticket stock tracking system. Access shall allow

Lottery security to readily display the history of movement from an

individual roll of ticket stock using the preprinted number on the back of

the ticket stock as well as previous movement of the stock. The ticket stock

tracking system shall, by design, not permit any data processing employees

of either the Vendor or the Lottery to ascertain the ticket stock serial

numbers delivered to a particular retailer. The functionality of the ticket

stock tracking system shall be subject to approval of the Director of

Security and Video Lottery. The Lottery may require retailers to register,

via the terminal, ticket stock as it is loaded into the terminal.

If requested by the Lottery, the Vendor shall pick up and destroy existing

ticket stock and play slips.

Ticket stock shall contain anti-counterfeiting properties as approved by the

Lottery. The Vendor shall describe the properties it recommends for the

Lottery's ticket stock. Ticket stock shall contain pre-printed sequential

serial numbers on the back of the stock, to ensure that a minimum of one

number will appear on each report or ticket. When the Lottery contacts the

Vendor with an individual roll number, the Vendor shall be able to track the

number to a single retailer and report the name, location, retailer number

and date of delivery for the retailer to whom the ticket stock was delivered.

The Vendor shall report this information back to the Lottery within 15

minutes. The Vendor shall describe its proposed security over ticket stock.

4.12.4 Ticket Stock for Testing – Mandatory Feature(s):


The Vendor shall ensure that in addition to production ticket stock, there is

stock suitable for testing. Ticket stock used for testing shall be subject to

the approval of the Director of Security and Video Lottery.

4.12.5 Multiple Sources for Ticket Stock, Printing – Mandatory Feature(s):

In order to avoid dependence on one (1) supplier, the Vendor shall have

more than one (1) source of paper stock and printing service(s).

4.12.6 Ticket Stock Life Expectancy – Mandatory Feature(s):

All Lottery ticket stock shall have a life expectancy of at least 15 months.

Vendors shall describe life expectancy and durability of ticket stock.

4.13 Training:

4.13.1 Retailer Training Program – Mandatory Feature(s):

The Lottery shall have the primary responsibility for training retailers;

however, the Vendor shall also provide retailer training either at a retailer’s

location or classroom-style upon request of the Lottery. The Lottery has the

right of final approval for all training provided by the Vendor.

The Vendor may propose multi-media, interactive methods of training without

a live trainer present. Individuals should be able to stop at any point and pick

up the training again at a later point. Vendors should address their proposed

method of revising and distributing said training.

4.13.2 Retailer Training Locations – Mandatory Feature(s):

The Vendor is responsible for securing facilities to use when conducting

training sessions (retailers or staff) on a large scale basis. The Vendor shall

describe what facilities it anticipates using to train on a large scale basis

during conversion or implementation of new lottery products, equipment, or

operations. The Vendor shall bear all facility charges and any other costs

related to training.

4.13.3 Lottery Staff Training – Mandatory Feature(s):

The Vendor shall provide training for Lottery staff prior to conversion, or

other major revision to the Lottery’s games or operations. Training shall

include all functions. The Vendor shall provide training for new Lottery staff

and follow-up training to Lottery staff upon request.

The Vendor shall also provide other training for Lottery staff, as appropriate.

In particular, the Vendor shall specifically provide training and assume all


costs of training for the information security personnel at the Lottery for all

security features of the systems and hardware provided as determined by the

Director of Security.

The Vendor shall provide Business Intelligence Reporting and Analytics

training for Lottery employees before the system is in production use (prior to

Start-up Date).

The Vendor shall provide written training guides and manuals for all training

activities.

All training, guides and manuals shall be provided at the approval of the

Lottery.

4.13.4 Terminal Training Security – Mandatory Feature(s):

Terminals shall have a training mode. Tickets produced in training mode shall

be prominently identified as being void and not valid.

4.13.5 Terminal Training Materials – Mandatory Feature(s):

The Vendor shall provide current and up to date retailer training materials and

shall update training materials with each major Lottery change in games or

operations and distribute them to retailers before the effective date of the

change. Vendor shall describe said materials.

The Vendor shall provide current and up to date quick reference guides to the

retailers.

4.13.6 Lottery Specific User Documentation – Mandatory Feature(s):

The Vendor shall provide Lottery specific user documentation of its system

prior to conversion, including all back office functions. The Vendor shall

update its documentation with each software change. The updated

documentation shall be provided to the Lottery in an electronic format

approved by the Lottery prior to Customer Acceptance Testing. Training shall

be delivered prior to conversion. The Vendor must supply web-based

operations manuals for all trainees.

4.14 Software Control and Testing:

4.14.1 Software Control Policies and Procedures – Mandatory Feature(s):

The Vendor shall propose, for Lottery acceptance, its recommended policies

and procedures for software control.


4.14.2 Release Management Processes – Mandatory Feature(s):

The Vendor must follow ITIL Best Practice for Release Validation and

Control. The Vendor must demonstrate and provide written procedures for

how this requirement is met.

4.14.3 Software Control Tools – Mandatory Feature(s):

The Vendor shall describe its proposed software control tools.

4.14.4 Software Control Methodologies – Mandatory Feature(s):

The Vendor shall describe its proposed software control methodologies.

4.14.5 Software Testing Methodology – Mandatory Feature(s):

The Vendor shall describe its proposed software testing methodology.

4.14.6 User Acceptance Testing – Mandatory Feature(s):

The Lottery shall be solely responsible for determining the “pass” or “fail”

status of each acceptance test and test component. Before installation of any

Vendor-initiated new program or change to an existing program, the Lottery

reserves the right to conduct thorough acceptance testing. All software

installations, including terminal applications and central site applications,

shall be approved in writing by the Lottery Executive Director or designee

before installation.

The Vendor shall have a system dedicated to acceptance testing. The

acceptance testing system shall operate independent of the production

system and shall duplicate the production environment. The Vendor

assumes all overall responsibility for the development and execution of the

test scripts.

Before acceptance testing, the Vendor shall assist the Lottery in identifying

time schedules, evaluation procedures, software/hardware environments,

resources required and acceptance criteria. The Vendor shall perform

extensive self-testing, de-bugging and quality assurance on all software

before submitting it to the Lottery for acceptance testing. All software

submitted to the Lottery for acceptance testing shall be fully operational and

principally ready for production use. The Lottery reserves the right to reject

any software that is not in acceptance testing condition.

The Vendor shall not put acceptance-testing files in its production

environment. The Vendor shall conduct thorough acceptance testing of any

third party providers’ equipment and/or software, including connectivity.


4.15 Implementation:

4.15.1 Conversion Strategy – Mandatory Feature(s):

The Vendor shall describe its recommended implementation conversion

strategies. For each strategy proposed, the Vendor shall explain the

advantages and disadvantages of the strategy and provide an example of

where it has used the strategy.

The Lottery Gaming System, components, back office, ICS and integration

shall be delivered and fully operational by August 3, 2019. Failure to meet

this date may result in liquidated damages. To the greatest extent possible,

conversion shall be implemented while maintaining existing sales, minimizing

disruption to our retailers’ business, minimizing disruption to our players’

purchases, maximizing time spent with Lottery staff defining details and

maximizing time spent on user review sessions before final implementation.

4.15.2 Implementation Plan – Mandatory Feature(s):

4.15.2.1 Final Implementation Plan and Overview – Mandatory

Feature(s):

The Vendor shall include a summary overview and a final implementation

plan for the entire proposed project. The intent of this requirement is to

provide the Lottery with a concise but functional summary (the “Executive

Summary”) of each phase of the proposed plan, in order of progression. While

the Lottery expects a Vendor to provide full details in response to each

substantive section of this RFP, the Executive Summary shall provide a “map”

for the Lottery to use in reviewing the proposal. Each area summarized shall

be listed in chronological order, beginning with the date of contract execution,

to provide a clear indication of the flow and duration of the project.

The Proposal shall include a comprehensive final implementation plan to

ensure a smooth start-up of the procured system and Lottery games. Lottery

operations shall not be delayed during this process. The proposed

implementation plan shall describe, at a minimum, the portions of the

proposal that apply back to office systems, data migration, data center setups,

including retailer support (Hotline) equipment, computer hardware and

software installations, integration, telecommunication network activities,

delivery and installation of retailer equipment, software development

(including business rules), testing (including test script development) and

simulation, development of reporting, staffing requirements and

commitments, retailer and Lottery training, project reporting and monitoring,

lottery responsibilities (other than software acceptance testing activities) and a

detailed timeline, beginning with the contract execution date. Responsibilities

of the Vendor’s implementation team, of the Lottery’s implementation team,

and of any of the Lottery’s other providers (e.g., instant ticket supplier), shall


be identified. Retailer roles and responsibilities during conversion shall be

addressed.

The Vendor shall make its best good faith efforts to cooperate with all parties

playing any active role in implementation conversion. The Lottery and the

Vendor will negotiate the final implementation plan after the contract has

been awarded.

4.15.2.2 Proposed Methodologies – Mandatory Feature(s):

The software used by the Vendor to support the Lottery shall be of a high

level of quality. In particular, the Lottery requires that the startup software

accurately meets the Lottery’s business requirements, and that future changes

to the software are accomplished in a timely manner while accurately meeting

those business requirements.

To achieve this goal, the Vendor shall include, in its proposed methodology

for a Systems Development Life Cycle, both a Business Requirements

Definition phase and a Software Requirements Definition phase. These phases

should be conducted prior to software programming.

4.15.2.3 Testing – Mandatory Feature(s):

All systems, hardware, software, equipment, games, field staff, management

staff and all other necessary requirements shall be successfully tested by the

Vendor, the Lottery, and an independent testing laboratory designated by the

Lottery. All systems, hardware, software, equipment, games, field staff,

management staff and all other necessary requirements shall be in place

selling and validating tickets by August 3, 2019. The Vendor’s failure to meet

this starting date may result in the assessment of liquidated damages and/or

drawing upon the Vendor’s bond or insurance. Vendor shall pay the cost of

the independent testing laboratory acceptance testing.

For the purposes of developing timelines, the Vendor must bear in mind that

the Lottery requires 50 working days for software acceptance testing and 50

working days for data conversion testing. The Lottery will work with the

Vendor to develop a final timeline.

Once the Vendor resolves all exceptions noted during Vendor QA testing, the

software and/or hardware shall be made available for Lottery acceptance

testing. The Vendor shall provide the Lottery with a copy of its test script and

all test results (interim and final). The test system shall mirror the production

system. Any differences between the test system and the production system

shall be approved in writing by the Lottery. Additional testing equipment and

connectivity to the test system from a separate location may also be required


for third party testing as requested by the Lottery and shall be supplied at the

Vendor’s expense.

All testing shall have severity levels defined for issues identified during

testing and a risk process that defines the level of the severity, the risk to the

business or system and the Lottery shall have the right to accept any known

issues or reject the testing outcomes based on the severity and risks as

determined and agreed to. The Vendor will conduct Go-no-go meetings to

discuss issues and risks and Lottery will have the final decision of the

outcomes.

The Vendor shall resolve any exceptions noted during the Lottery’s and

independent laboratory’s testing within the timeframe set forth in the final

implementation plan. The Lottery will make the pass/fail decision for each

test. The Vendor shall provide sufficient staff to fix any problems found

during the Lottery’s acceptance testing. Failure to complete all quality

assurance testing and resolve exceptions noted within the timeline of the final

implementation plan may result in the assessment of liquidated damages.

Acceptance testing shall include, at a minimum, overall functionality, system

recovery tests, high volume tests, system response time, data conversion,

electronic file transmission, confirmation of accurate accounting and reporting

of all transactions over a minimum of two billing cycles and written

documentation of expected results, actual test results, and status of each

exception.

4.15.2.4 Previous Prizes – Mandatory Feature(s):

The Vendor shall describe how it proposes to handle prize redemption of draw

game and Instant tickets produced by the current lottery gaming system. The

Vendor shall provide operational support during the Lottery’s acceptance

testing. The Vendor shall provide simulators for processing transaction

volumes through the system.

4.15.2.5 Implementation Reviews – Mandatory Feature(s):

The Vendor and the Lottery shall have weekly implementation reviews. The

Vendor shall prepare weekly reports for the Lottery on the progress made

toward the goals and deadlines stated in the Final Implementation Plan. These

reports shall be shared electronically with the Lottery in a format approved by

Lottery. If it is necessary for Lottery staff to travel to the Vendor’s location

for testing or user reviews, the Vendor will bear all related travel and per diem

costs.

4.15.3 Business Requirements Definition — Mandatory Feature(s):

During the first 30 days after signing the contract, a team of Vendor business

analysts shall thoroughly familiarize themselves with the Lottery’s business


processes, including the retailer business processes related to the sale of

Lottery products. The team shall observe the business processes and meet with

end users as needed.

The Lottery will require the Vendor to demonstrate its understanding of the

Lottery’s business requirements and processes before software applications

for the Lottery Gaming System are written or modified. Also, beforehand, the

Lottery staff shall be given the opportunity to thoroughly understand and

agree to the functionality of the planned software applications. This goal

applies to the development of the initial (startup) software applications as well

as to subsequent software releases.

At the conclusion of the 30-day period the Vendor shall deliver to the Lottery

a separate Business Requirements Specification (Business Requirements)

document for each major functional area. The purpose of the Business

Requirements documents is for the Vendor to demonstrate its understanding

of the Lottery’s business requirements. The Lottery will review and approve

these documents within 14 days of receipt. The documents shall address each

business process currently performed by the Lottery, and the retailers’

business processes related to the sale of Lottery products. The documents shall

identify any modifications to current processes. At a minimum, the Vendor

shall produce a separate Business Requirements document for all games,

including draw game processing, Instant games, Back Office System,

Business Intelligence System, system administration, Internal Control System

(ICS), promotions and play slips.

4.15.4 Software Requirements Definition – Mandatory Features

Upon receiving the Lottery-approved BRS documents, the Vendor must

develop corresponding Software Requirements Specification (SRS)

documents. The Vendor must deliver these documents to the Lottery for

approval no later than 45 days after receipt.

The purpose of the SRS documents is to specify the functionality of the

software applications that will be provided by the Vendor at startup in support

of the Lottery’s business processes and the retailer business processes related

to the sale of Lottery products. The startup software must function as

described in the SRS documents. For each specification in the SRS documents

the Vendor must indicate if the functionality exists in the Vendor’s base

system. If it does not exist, or if modifications to the base system functionality

are required, the Vendor must provide an estimate of the time it will take to

develop the new functionality or modify the existing functionality. For each

specification the Vendor must identify how the Lottery may test the

functionality in acceptance testing. Optionally, the Vendor may also identify

how its own staff may test the functionality.


Lottery approval is required for any subsequent changes to SRS documents.

The Lottery may identify changes during software development and

acceptance testing.

4.15.4 Security and Compliance Audit – Mandatory Feature(s):

Following conversion, the Lottery may in its sole discretion contract with an

independent firm to perform a security and compliance audit of the Vendor’s

operations in conjunction with the contract. The Lottery shall be responsible

for the awarding of the audit contract and the Vendor shall reimburse the

Lottery for all costs of the audit and all background investigations. The

Vendor shall be responsible for remedying any deficiencies in security or

operations as noted in the audit and requested by the Lottery.

4.15.5 Interim Facilities and Processes – Mandatory Feature(s):

If the conversion involves interim configurations, facilities, staffing, or

business procedures, the Proposal shall explicitly describe them and note their

development and use within the schedule. Costs associated with interim

facilities are strictly the Vendor’s responsibility.

4.15.6 Randomizer Testing – Mandatory Feature(s):

Samples from the Vendor’s randomizer software in the retailer terminals or

central system shall be submitted for quality testing. The randomizer samples

are due on or before the start of the Lottery acceptance testing period. The

Vendor shall be responsible for the cost of third party testing and certification

of the randomizers by a Lottery-selected laboratory. The Vendor shall provide

the laboratory’s written analysis report summarizing the findings and offer a

conclusion as to whether the randomizing approach(es) should be used, not be

used, or be tested further before a conclusion could be reached. The Lottery

will request such testing from time to time throughout the contract.

4.15.7 Network Testing – Mandatory Feature(s):

At least 120 days prior to conversion of any new terminals to production, the

Vendor shall submit a comprehensive network configuration plan. The plan

shall show the networking method (cellular, telephone line, satellite, radio

etc.) for connecting each retailer location to the central Gaming System. The

primary wireless carrier must provide and support a private wireless network

for Lottery data transactions. Concurrent with the schedule for general

acceptance testing of the retailer terminals, all forms of communication media

to be used in the network shall be installed at the Lottery’s testing facility. As

the retailer network is rolled out, the Vendor shall demonstrate continuity to

each retailer location from both data center locations. Continuity shall also be

shown for any redundancy or diversity provisions for single or clustered


retailers, dual communication terminals, as well as main trunk landlines,

cellular, satellite or radio bridges or facilities that are incorporated into the

network. Acceptance testing of the network shall be conducted during times

when there are historically low sales volumes or during times when there are

no sales allowed. Acceptance testing shall demonstrate that the proposed

communications network configuration and its installed components, when

completely installed, including those components providing redundancy,

backup and diversity, shall satisfactorily provide the necessary support for

network bandwidth and transaction latency.

Vendor shall ensure primary and secondary network providers support testing

and smooth network transition.

4.15.8 Historical Data – Mandatory Feature(s):

The Vendor and Lottery will work together to develop a plan to warehouse

and extract data so that the Lottery and the retailers will see a continuity of

information in displays and reports from before, during, and after the start-up

day. A conversion process for historical Lottery data will need to be

developed by the Vendor in conjunction with the Lottery.

4.15.9 Data Base structure – Mandatory Feature(s):

The Vendor shall at a minimum provide the Lottery with a proposed data base

schema, data dictionary and an Entity Relationship Diagram at least 180 days

prior to start-up. The Vendor shall identify all fields available in the Vendor’s

system.

4.15.10 Key Performance Indicators (KPI) – Mandatory Feature(s):

The Vendor shall propose KPIs for performance measurements and tracking

of important system functions along with tools that will be used to measure

the success and outcomes of the KPIs. KPIs will at a minimum be included

but not limited to; games, services, systems availability, retail services

availability, retailer hotline, Instant inventory. KPIs will be negotiated and

become part of the contract and may be renegotiated at any time during the

life of the contract.

5. Technical Specifications: Video Lottery Central System (VLCS)

5.1 System Design

5.1.1 System Design Considerations (Systems Design) – Mandatory Feature(s)

5.1.1.1 Central Configuration: The VLCS is to be a state of the art, fault tolerant,

paired duplex, triplex or multi-redundant configuration, high availability


solution that includes a primary system, a backup system, and two or more

acceptance testing systems (one for Lottery testing and one for each approved

independent testing laboratory).

The VLCS’s storage management solution is to provide fault tolerance and

scalability. The remaining system(s) immediately assume the load in case of a

failure in one system without loss or corruption of any data and transactions

received prior to the time of the failure, with no service disruption and no loss

of processing continuity. All VLCS components and peripheral equipment,

including front-end communications processor(s), system printers, and tape

drives are to be similarly fault-tolerant and redundant and maintain high

availability. No performance degradation or loss of system functionality can

occur with the failure of a single system component.

The transfer of operations from the PDC to the BDC is to be executed in an

expedient and accurate manner that ensures continued operations without loss

of data.

The Vendor proposal is to depict the VLCS configuration in detail, including

configuration diagrams in response. Hardware and software items are to be

identified by manufacturer, product name, and model number as applicable.

Version numbers are to be provided for software.

All costs, coordination, and maintenance related to the design, installation,

training, testing, reporting, and support of a turnkey VLCS solution and all

equipment at VLT Establishments necessary for communicating with the

PDC, BDC, VLT floor, and each VLT within each VLT bank are the

responsibility of the Vendor.

The Vendor has the responsibility to provide, install, and support all site

controller hardware and software at the PDC and BDC, and each VLT

Establishment. Support for all VLCS hardware and software, including setup,

configuration, management, and maintenance for the life of the contract is to

be provided by the Vendor. This includes the software manufacturer’s

maintenance and support agreements. The Vendor shall provide a schedule

for all software license renewals after contract award.

All PDC, BDC, remote VLCS computer system components, peripheral

equipment, mainframes/servers, network communications devices, printers,

and tape drives will be provided by the Vendor.

Failure to meet performance requirements may result in the assessment of

Liquidated Damages by the State in accordance with section 3) Terms and

Conditions of this Contract, or in the assessment of damages to other entities.


Identify software engineering support services for the VLCS, error correction

procedures, and the process for handling VLCS revisions required due to

amendments to the Lottery’s rules and statutory requirements. Provide

engineering support for VLCS changes, including application enhancements,

operating system upgrades, vulnerability patches, updates, and upgrades.

Describe the process for monitoring application enhancements, operating

system upgrades, vulnerability patches and updates and upgrades.

5.1.1.2 Include documentation that describes how the VLCS will ensure the required

availability of hardware and system maintenance. Define how upgrades will

be performed throughout the term of the Contract, including any renewals,

updates and Contract extensions. At a minimum, semi-annual releases of

software maintenance are to be provided. Describe the process, timeline, and

approach for installation of the semi-annual batches including notification of

changes to the Lottery. The Vendor is to support emergency software releases

and describe the process and approach for installation of emergency software

releases, including notification of those changes to the Lottery.

5.1.1.3 Define methodology for determining whether to install or not install an

enhancement, upgrade or update. Define procedures for promoting new

changes to production status and procedures for restoring the system to a prior

status in the event of an error caused by the new changes.

5.1.1.4 The VLCS is to include a back office environment with a single point of entry

for all back office functions with a user friendly interface (web, GUI, or both)

for all reporting, monitoring, and management functions. The back office

system includes access to real-time data. This capability provides

functionality for the Lottery to restrict access to information necessary for

specific job functions. The Vendor is to describe how custom menus can be

created in the response.

The reporting module will be designed so that it is housed on a separate

database/warehouse to ensure it does not interfere with the production

environment. A data warehouse (DW) or an enterprise data warehouse

(EDW), is a central repository of current and historical data collected from

disparate sources. Data received in the production database is passed to the

warehouse where it is used for reporting and data analysis. Describe any

differences in data elements available only on the production database(s)

versus the DW which may store less detail, as the DW is intended for

historical reporting in your response. Current or future changes to data

elements cannot affect historical data.

All reports are to be able to be processed on the production system and the

DW Reports consisting of a single business day's data are to be designed to

take less than two minutes to generate, save, and print. All other reports are to

be designed to take less than fifteen (15) minutes to generate, print, and save.


5.1.1.5 The VLCS is to provide the ability to search in real time and view all

transaction data. The VLCS provides the Lottery users with the ability to

research transaction historical files. A historical view of device level

information by Unique Identification Number (UID) will be provided and

include, at a minimum, accounting meters received, net meter calculations,

enables, disables, configurations and software changes, and physical location

changes in chronological order, beginning with the most recent event for the

lifetime of the machine so that all transactions can be reviewed via a menu

option at the licensee and device level.

5.1.1.6 The Vendor is required to provide the following to the Lottery for the duration

of the Contract:

5.1.1.6.1 All changes necessary to comply with statutory or judicial changes

affecting video lottery after initial installations are complete. The date such

changes are required shall be the effective date of the law change or court

order.

5.1.1.6.2 Immediate action to bring the VLCS into compliance according to a

timetable that has been approved by the Lottery in the event an issue of non-

compliance is discovered.

5.1.1.6.3 Changes and enhancements to the VLCS as requested by the Lottery.

5.4.1.6.4 A toll-free hotline for telephone response and trouble-shooting

regarding any hardware or software issues related to the VLCS and its

peripherals at any hour of any day. The VLCS design includes supporting

remote dial-in access by the Vendor and provides monitoring of the remote

dial-in activity.

5.1.1.7 The Lottery and Vendor shall create a support level agreement on the response

times, incident reporting, and problem resolution subsequent to contract

award. In case of an emergency that the Lottery operations staff is unable to

resolve, contact will be made via hotline for immediate contact with a Vendor

technical operations support specialist who will coordinate resolution of the

issue. The operations support specialist will have immediate access to on-call

staff from all technical disciplines relating to the video lottery systems product

in order to efficiently address the issue.

5.1.1.8 All VLCS hardware and software is to be licensed to the Lottery and installed,

supported, and maintained by the Vendor. This hardware and software

includes, but is not limited to, operating systems, antivirus, database,

replication, backup, and communications.


5.1.1.9 The VLCS design is to include a time synchronizing mechanism to ensure

consistent time recording and reporting for events and transactions. Time is to

be synchronized on the primary, secondary, test and back-up systems to

ensure all systems have all transaction data. Synchronization will be with an

external time standard and be configured for Central Standard Time (CST)

and Daylight Savings Time (DST). Changes from CST to DST are to be

automatic without the loss of transaction data.

5.1.1.10 Capacity: The VLCS design is to include the capability to support and

monitor the operation of a network of 14,000 VLTs and associated controllers

during peak transaction activity. The VLCS configuration is to be scalable to

support 20,000 machines without major redesign or replacement if future need

requires increased capacity.

5.1.1.11 The VLCS design is to include the capability to support and monitor the

operation of a network of approximately 1,400 establishments during peak

transaction activity. The VLCS configuration is to be scalable to support

2,000 establishments without major redesign or replacement if future need

requires increased capacity.

5.1.1.12 The VLCS design is to have the capability to support, monitor and invoice

the operation of a network of approximately 150 owner/operators (permit

holders) with 10,000 permits during peak transaction activity. The VLCS

configuration is to be scalable to support 200 owner/operators (permit holders)

without major redesign or replacement if future need requires increased

capacity.

5.1.1.13 Acceptance Testing: Any modification of configuration, process, or device

is required to be submitted for certification to the Lottery’s primary

independent testing laboratory, pass the Lottery’s user acceptance testing on

the Lottery’s acceptance testing system, and be approved by the Lottery.

Errors found during testing are to be corrected by the Vendor and the testing

process repeated until approval is granted by the Lottery.

5.1.1.14 The Vendor is to provide 24/7 access and support to test systems at independent

testing laboratories and also at the Lottery test lab for the duration of the contract

or according to their hours of operation. Costs related to the independent testing

laboratories, other than initial acceptance testing at the primary testing laboratory

are to be excluded from the costs provided in this RFP response.

5.1.1.15 All VLCS hardware, software and configurations, including any changes and

updates, have to be certified by the primary independent testing lab approved

by the Lottery at the Vendor’s expense.

5.1.1.16 Acceptance Test Systems: The acceptance test systems will be at least two

separate identical test systems: The first located at the PDC for testing in the


Lottery test lab and the second dedicated for testing by an independent testing

lab at a non-Lottery site. As the Lottery approves additional testing

laboratories, each new test laboratory will be responsible for acquiring a

system that can be used for acceptance testing of software for the Lottery at its

own expense.

5.1.1.17 The acceptance test systems are to have identical components, processing

capacity, architecture, and configuration, except protective redundancy is not

required nor will the testing system have the same disk capacity. The test

system may have less processor speed than the production system but it is

required to have the capacity to complete testing in an efficient manner. The

acceptance test systems will mirror any modifications made to operational

configurations, processes, or devices at the PDC and BDC. The Vendor is

required to make these systems available to any Lottery approved test

laboratory and the Vendor will be responsible for ensuring they remain

synchronized with any changes implemented in the Lottery VLCS.

5.1.2 Communication Protocols (Systems Design) – Mandatory Feature(s)

5.1.2.1 VLT Communication Protocols: The VLCS design is to support and utilize

G2S, VLCS-Version D protocol, “SAS 6.02” and all prior versions, as well as

all future SAS or other approved protocol upgrades to facilitate

communication and control all VLTs approved in South Dakota. The VLCS

is to be configured to communicate with, control, and enroll all VLTs

approved for use in South Dakota and be able to communicate with, control,

and enroll all new VLTs approved during the term of the Contract.

Note: The majority of VLTs currently operate using the VLCS-Version D

protocol. While the Lottery is trying to move away from this protocol, some

VLCS-Version D protocol machines will likely still be in use at the beginning

of the new system’s implementation.

There are no G2S machines on the existing VLCS.

5.1.2.2 Describe how the VLCS will communicate with and control the current

network of VLTs through the concurrent use of SAS and VLCS-Version D

protocols, as well as the potential addition of G2S protocol in the future.

5.1.3 Redundancy (Systems Design) – Mandatory Feature(s)

The intent of this RFP is to have systems with no single point of failure; an

entire system shall be designed to be able to failover to an alternate data center

(the BDC) within 20 minutes. Both the PDC and the BDC are to be designed

to have independent communication circuits so that neither site is dependent

on the other for hardware/software and communications. The Vendor’s

response describes its capability to provide alternative failover hardware


within a given data center whereby alternative servers could be on active or

passive standby.

5.1.4 Backup/Restores (Systems Design) – Mandatory Feature(s)

5.1.4.1 Primary and Backup Data Center: The primary system and the backup system

are intended to be production systems configured with no shared peripherals

and used exclusively to support the VLCS. Vendor will provide the same

security, hardware, and software for the backup system as the primary system

so that the backup system is capable of performing all functions associated

with VLTs required by this RFP with no single point of failure.

5.1.4.2 The PDC shall be located at an approved site within the continental United

States which shall be approved by the Lottery. The Vendor shall be required

to submit the following information to the Lottery: site design and layout

specifications; site location address, owner(s) name, facility exterior

photographs/drawings and a proposed floor plan.

The PDC may be in a consolidated data center if adequate security is





onsite review of the PDC on a yearly basis.

5.1.4.3 Local (within PDC) recovery from any system application failure at the PDC

occurs immediately while still maintaining current transactions. As indicated

in other sections if the failover is to an alternate site, this should take less than

20 minutes. This requirement includes the ability to fully service the

communications network supporting the VLTs and management terminals.

The Vendor should document staffing and support requirements to transfer

control from the PDC to the BDC and vice versa.

5.1.4.4 Remote recovery from a failure at the PDC occurs immediately without loss

of any transactions. This includes the ability to fully service the

communications network supporting the VLTs and supplying management

terminal functions.

5.1.4.5 The Vendor shall propose the location for the new backup system based on

the Lottery’s needs.

5.1.4.6 The backup system mirrors the primary system in real-time with a

configuration that can take over for the primary system in the event of a

failure at the PDC. Data transferred to and recorded at the BDC contains the

most recent transactions and transactions within twenty minutes of the point


of failover. Note that the current VLCS provides this functionality by log

shipping with manual intervention required in the event of a failover to ensure

that all interim logs since the last synchronization point can be applied to

result in a current recovery point.

5.1.4.7 All Video Lottery establishment networks and communications systems are to

be routed so that all operations required by this RFP can occur at the BDC.

The BDC is designed to have a routing mechanism independent of the PDC so

that the BDC can be reached without the PDC in service.

5.1.4.8 Document the procedures for failure situations as part of its RFP response and

the Vendor is to support two controlled failover tests per year. The Lottery

will execute the failover based on a test plan submitted by Vendor. All

remote access to the VLCS shall be logged and accessible by the Lottery for

auditing. Vendor submits its test plan to the Lottery for approval at least

thirty (30) days prior to each failover test.

5.1.4.9 A technical requirement is that the backup system proves fully functional by

operating as the production system for a minimum of 24 hours per day at least

twice a year six months apart. The primary system is to function temporarily

as the backup system in this scenario.

5.1.4.10 All results of any test exercises are to be reviewed by the Lottery and the

Vendor within two (2) business days of completion date. Vendor is required

to correct any deficiencies discovered by audit findings or operational

recovery testing within five (5) business days of receiving written notification

to do so from the Lottery.

5.1.4.11 Data Backup: A technical requirement is for data backup via secure and

reliable methods with all backup data to be encrypted and protected from

unauthorized access. The backup solution includes a requirement to be fully

automated with no daily user intervention. Backup to disk (hard drive array)

and tape on a daily basis is required. A minimum of one month of “full

system backups” of VLCS data has to be stored to disk (hard drive array) and

tape. This backup solution is to be scalable, secure, provide data integrity,

support disaster recovery, and replicate from the PDC to the BDC and vice

versa.

The Data backup solution provides the following:

5.1.4.11.1 Automated monitoring with alert notifications: Alert notifications

sent via visual display and SMTP;

5.1.4.11.2 Fast and reliable restorations: The software includes rapid and

reliable recovery of data lost because of user error or server hardware failure;


5.1.4.11.3 Verification of backups; and,

5.1.4.11.4 Storage-based data deduplication.

5.1.4.12 Data Security Requirements: The system is designed to provide encryption

techniques. The network is designed to be secure and designed to protect

against disruption of service and corruption of data.

5.1.4.12.1 Comply with all of the Lottery and State Security and Access

Policies for Data Security.

5.1.4.12.2 Secure Connections: Capability to connect into the VLCS from a

non-lottery controlled terminal without Lottery approval cannot be

accomplished. Any remote access is to employ stringent security

mechanisms. Connections to other remote systems and terminals are to be

protected by firewalls, encryption, or other equivalent means. The

acceptability of any such security approach will be subject to Lottery

approval.

5.1.4.12.3 The Vendor will contract with an independent firm to conduct a

network security assessment subsequent to implementation of the VLCS. An

information technology infrastructure that meets or exceeds generally

accepted industry standards is required. Vendor is to specify the certifications

and standards that will be followed for this project such as specific ISO

standards (for example ISO 27002, or NIST 800-53). Alternatives can be

used if the Vendor can demonstrate that it has formally adopted and is

following such standards.

The vendor must also comply with section 3.18.3 of this RFP regarding a

SOC 1 Type 2 Audit.

5.1.4.12.4 All computer systems provided by the Vendor shall meet or exceed

the National Computer Security Center's security standard at the time of

implementation.

5.1.4.12.5 Data that is determined by the Lottery to be sensitive is to be

encrypted using an encryption level no less than 256 bit AES or other

comparable method.

5.1.4.12.6 The VLCS has the capability to produce system checksums and/or

comparable system file audit reports to ensure against inadvertent or

unauthorized changes.

5.1.4.12.7 The Vendor is not permitted to modify the software design or

databases of the VLCS after the VLCS has been certified by the independent


testing lab without the independent testing lab’s recertification of all

modifications.

5.1.4.12.8 User account data is not permitted to be in plain text format but is

to be encrypted. The VLCS writes to a log file and reports all successful and

unsuccessful sign-on and log-off attempts made on the VLCS. The VLCS

design is to have the following security features:

5.1.4.12.8.1 Capture the user ID, user name, sign-on date, time, and an

indicator that signifies a successful or unsuccessful sign-on;

5.1.4.12.8.2 Log and report all changes to the VLCS by all users

(including administrators);

5.1.4.12.8.3 All security log files are to be directly accessible by the

Lottery on a daily basis;

5.1.4.12.8.4 The VLCS is to have the ability to assign users to groups and

assign privileges at the menu level to each user or group. The operating

system of the VLCS is to have multiple security access levels to control

and restrict different classes of access. The VLCS operating system is to

have a password sign on with two level codes comprised of a personal

identification code and a special password;

5.1.4.12.8.5 VLCS access accounts are to be unique when assigned to the

authorized user; and,

5.1.4.12.8.6 The storage of passwords is to be accomplished in an

encrypted, non-reversible form.

5.1.4.12.8.6.1 Each individual user will be assigned one unique password

which will allow authorized access to the VLCS; users may manually

change their own VLCS passwords; only persons authorized by the

Lottery may access:

Sensitive or confidential data;

software programs and VLCS documentation;

disk, tape, and other media (DVD, CD), libraries and vaults; and

any other area deemed by the Lottery to warrant such authorization.

5.1.4.13 System Security Administration: The Vendor design includes a system in

place to monitor access to the VLCS system and a mechanism in place to

report any security breaches to the Lottery with timeframes and escalation

levels appropriate for the type of incident.


5.1.4.14 Remote Backup Data Center: Vendor shall propose an option, including

additional costs or savings, that will result from being able to provide, outfit,

and operate a remote back-up data center where transactions related to VLT

gaming are logged and processed.

The back-up data center shall be located in geographically separate regions

within the forty-eight (48) contiguous States, unless an alternate site is

approved by the Lottery in writing. All other functionality defined for the

BDC, as defined in this RFP, shall be required for an alternate location that is

not under the direct control of the Lottery. With prior approval by the Lottery,

the BDC may be located at a shared site with other venues supported by the

Vendor subject to it being a separate secured video monitored area with live

signal feed to the Lottery headquarters.


onsite review of the BDC on a yearly basis.

5.1.5 Security (Systems Design)

5.1.5.1 VLT software image files and VLT authentication: Describe how the

software on each VLT connected to the VLCS will be authenticated when

compared to the VLT software image file.

5.1.5.1.1 The VLCS will be designed to use the VLT software authentication

method defined in the SAS protocol specifications and any other methods

chosen by the Lottery. It cannot be possible to enable any VLT into normal

gaming mode that fails the software authentication until the VLT satisfies the

software authentication.

5.1.5.1.2 The software image files provided by the VLT manufacturers are to

be utilized for authentication of all VLTs connected to the VLCS. The files

used in the authentication of the VLT software may be comprised of multiple

image files which are concatenated into a single image file (i.e., the

concatenated VLT image may contain an image file for each jurisdiction,

main, personality and any other software program that controls

communication and affects game outcome in each VLT).

5.1.5.1.3 The VLCS design includes the ability to initiate a VLT software

authentication on any VLT connected to the VLCS at times determined by the

Lottery. The VLCS is to autonomously perform a software authentication on

a VLT upon detection as follows:

1. VLT offline event or communication loss with Site

Controller; and,

2. enrollment or enabling of a VLT.


5.1.5.1.4 The VLCS design allows for manual entry of the seed value used to

calculate the signature result of each VLT software image file. Manual entry

of the software authentication seed value is to be available to the Lottery

through the use of a GUI or other user interface. When the seed value is

entered, it shall be able to propagate down to individual VLTs automatically

without taking the machines offline or out of gameplay.

The frequency (i.e. static, per request, daily, monthly, and yearly) at which the

software authentication seed value is changed is to be a configurable

parameter on the VLCS.

5.1.5.1.5 The VLCS design includes the ability to generate a daily report to

users determined by the Lottery that details VLTs that passed and failed the

VLT image file authentication, including the seed and the signature value of

the ROM binary image, and the result returned by the VLT.

5.1.5.1.6 The VLCS design includes a requirement for a means of identifying

and reporting on revoked software images.

5.1.5.2 Site Controller Software Authentication: The Vendor Response is to

document the methodology used to authenticate the Site Controller software.

The VLCS communicates with and authenticates the software of each Site

Controller connected to the VLCS. It cannot be possible to enroll any Site

Controller that fails software authentication into operation until the device

satisfies the authentication process.

5.1.5.2.1 The VLCS is to be configured to perform a software authentication

on any Site Controller at any time upon Lottery request. The VLCS design

provides for functions to autonomously trigger software authentication on a

Site Controller upon detection as follows:

1. Control device offline event;

2. Communication loss with the VLCS; and,

3. Control device enrollment.

5.1.5.2.2 The VLCS is to generate a daily report for Site Controllers that

passed and failed the software authentication including the seed and the

signature value of the software image and the result returned by the device.

5.1.5.3 VLT Image File Storage: The VLCS design includes storing all VLT image

files on the PDC and provides no less than two (2) terabytes of hard disk

space for image files. The hard disk containing the VLT image files is to be

located within the same hardware enclosure of the PDC and scalable to

increase storage capacity as needed at no additional cost. The VLT image

files are to be accessible through a remote network connection to the VLCS

via the Lottery’s administrative LAN.


5.1.5.3.1 The VLT image files are to be backed up on a daily basis consistent

with the requirements previously provided in “Data Backup Requirements”,

section 5.1.4.11 of this RFP.

5.1.5.3.2 The VLT image files are data files that have appropriate security as

defined in “Data Security Requirements”, section 5.1.4.12 of this RFP.

Access to such data requires prior authentication of an individual user by

password and privilege level.

5.1.6 Archiving (Systems Design) – Mandatory Feature(s)

5.1.6.1 Archiving and Purging of Data: It is a technical requirement to include

archiving as a process that runs every business day on the production system

to move data from the production database(s) to an archival schema on the

Data Warehouse (DW).

5.1.6.2 Purging of data is to be a function performed on the production database

according to retention schedules set by the Lottery. As an example, financial

data related to data meters will be retained for ninety (90) days while event

logs and other log files will be retained for thirty (30) days. Purging shall be a

function processed daily on the DW with a retention schedule of thirty six

(36) months. Detailed retention schedules will be developed subsequent to

Contract award.

5.1.7 Hardware and Software Specifications (Systems Design) – Mandatory

Feature(s)

5.1.7.1 All VLCS hardware and software components include the following features:

5.1.7.1.1 Standardized fault tolerant and redundant with no single point of failure.

All components to be configured/setup by the Vendor;

5.1.7.1.2 Tested by the independent testing lab before installed. Vendor will

configure, support, and maintain VLCS for the life of the contract;

5.1.7.1.3 The Vendor shall offer a hardware refresh at the end of the base 7

year contract with the potential 8 years of extensions in consideration. The

Vendor is to provide any necessary software upgrades, including the VLCS

application and operating system software, and will provide the required

hardware specifications for each refresh period.

5.1.7.1.4 Fully supported by respective manufacturer or supplier at all times

during the contract through maintenance agreements acquired and maintained by

the Vendor subject to Lottery approval. All maintenance agreements require a

twenty-four hour on-site response time from all manufacturers.


5.1.7.1.4.1 If support for any hardware module, component, or software is

discontinued by the manufacturer or supplier then the Vendor is to replace the

respective hardware modules, component, or software modules at its own

cost prior to the support being discontinued. Vendor is to immediately

inform the Lottery of any support discontinuation.

5.1.7.1.4.2 If any hardware module, component or software is declared ‘end

of life’ by the manufacturer the Vendor is to immediately inform the Lottery

and a mutually agreeable schedule for replacement will be developed. The

vendor is responsible for 100% of the replacement cost during the base

contract and any extension(s).

5.1.7.1.4.3 The Lottery expects the Vendor to be the sole contact and

responsible party for any third party hardware/software solution utilized by

the Vendor during problem determination and remediation.

5.1.7.2 The Vendor shall obtain prior written approval from the Lottery before

making any enhancement or modification to the hardware or software

configuration and procedures.

5.1.8 Management Terminals: Vendor is not required to furnish Establishments with

management terminals but is required to provide any special application

software required for their operation. Vendor is responsible for providing

software and hardware specifications for optimum performance at

Establishments utilizing management terminals.

5.1.8.1 Web Portals: The Vendor design includes providing a web portal to be able to

access the functionality provided by a management terminal at the

Establishments, including the same operational functions, printing

capabilities, and security requirements. The Web Portal shall operate under

industry standard web browsers, including Internet Explorer Version 8 and

higher, Firefox, Safari, and Chrome among others. The Vendor is to identify

any functions known to cause compatibility issues with specific versions.

5.1.8.2 Report Security: Users shall have the capability to access and print reports for

the VLTs unique to each Establishment but not have the capability to view

reports for the VLTs in other Establishments. Operators shall have the

capability to access and print reports for the Establishments unique to each

operator, but cannot have the capability to view reports for the Establishments

of other operators.

5.1.8.3 Encryption: Each Establishment is to have secure, encrypted, remote, read-

only access to the VLCS so that financial information, VLT inventory, and

Establishment network status for the VLTs at each respective Establishment is

obtainable.


5.1.8.4 Document that Web Portal access conforms to the “Data Security

Requirements” as previously provided in section 5.1.4.12 of this RFP.

5.2. Site Controllers (Site Controllers) – Mandatory Feature(s)

Vendor is to make available and ensure an adequate inventory of Site

Controllers for all Establishments for the life of the Contract. The Lottery

uses the term Site Controllers to refer to any hardware/software systems that

interfaces between VLTs and the VLCS.

At the Establishments these Site Controllers are to include, but not limited to,

a PC with four primary functions:

(1) a touch screen monitor and/or monitor/mouse/keyboard;

(2) the chassis (PC);

(3) a scanner which is to be able to process winning tickets by

scanning a barcode, displaying the results on the monitor and storing the data

for ultimate processing by the VLCS during the daily polling process which

gathers information from all site controllers; and,

(4) a printer.

5.2.1 Site Controllers (Site Controllers): Controllers are to be purchased or leased

from the Vendor and are the responsibility of the Operator; all costs shall be

directly billed to the respective Operator. Each Operator shall be responsible

for entering into a sales or lease agreement with the Vendor for the

installation, cost, and maintenance of Site Controllers. The cost of initial

installation of Site Controllers should be calculated and included as part of the

purchase cost or annual lease fee. Operators that elect to lease Site

Controllers shall be directly billed on a quarterly basis so that the annual lease

fee is paid in four (4) installments. The Vendor is to provide cost projections

for communications, software and hardware in its response to this RFP as

discussed below.

5.2.1.1 Although the Site Controllers are not components of the VLCS purchased by

the Lottery, it is integral to the video lottery program for the Lottery to

consider costs borne by licensees and ensure a certain level of maintenance is

provided to Establishments in order to protect video lottery revenues.

Therefore, Vendor’s response shall include an estimated annual lease cost and

estimated purchase cost per Site Controller for the life of the Contract and

extension(s). Additionally, Vendor is to provide a proposed maintenance plan

with response times to handle service calls made by Establishments as will be

developed during business requirements. The Vendor is to document that

costs related to Site Controllers are not included in the Cost Section of the

RFP including the costs discussed in this section.


5.2.1.2 Responses shall be evaluated based on initial estimated fees, margin of

increase in estimated fees over the life of the Contract, and proposed response

times for Site Controller maintenance requests. Note that costs related to Site

Controllers and other communication costs are only included in the technical

section of this RFP and are not to be part of the cost to the Lottery and will not

be included in the cost proposal section.

5.3 Overall Network and Communications:

5.3.1 Network & Communications (Network & Communications) – Mandatory

Feature(s)

5.3.1.1 Communications Network and Network Monitoring: Vendor is responsible to

install, operate, and monitor the Communications Network(s) for all VLTs for

the life of the Contract.

5.3.1.2 Communications Network Costs: Operators are responsible for the equipment

and communication costs from their locations to the PDC and BDC.

5.3.1.3 Site Controller Communication Loss: Communication loss between the

VLCS and the Site Controller cannot interrupt gaming or stop communication

between the Site Controller and the VLTs. The Site Controller is designed to

have the capability of operating VLTs for at least one hundred forty-four

(144) hours without connection to the VLCS. During loss of communications

with the VLCS, the Site Controller needs to buffer all VLT meter, event, and

transaction data and be capable of relaying the buffered data back to the

VLCS upon restoration of communications. This aforementioned time span is

to be configurable at the VLCS by the Lottery.

5.3.1.4 Establishment (WAN) Communications Network Administration: Vendor is

responsible to design, implement, manage, support, maintain and monitor the

most efficient solution for the video lottery WAN. Vendor shall install all

communications equipment and troubleshoot and repair communication

outages. The Lottery will identify all new connections and any changes in the

location of video lottery terminals.

5.3.1.5 Vendor provides the following communications network and administrative

services for the life of the Contract:

5.3.1.5.1 Configuration management: maintain an inventory of network

resources and their operating parameters;

5.3.1.5.2 Fault management: detection, isolation, and correction of faults in

the network;


5.3.1.5.3 Performance management: monitor utilization and manage

resources to maximize capacity and assist the Lottery with performance

management of the VLCS;

5.3.1.5.4 Interface with the communication providers, Establishments,

Operators, and the Lottery to maximize uptime and provide information on

which decisions and actions can be based; and,

5.3.1.5.5 Placement of the necessary equipment as well as the inside wiring

from the point of demarcation if cellular, satellite or other technology

communications are utilized.

5.3.1.6 Establishment Communications Network: Vendor to design a communications

network that connects each Establishment location to the VLCS. Vendor

response documents similar installations to show that this proposed

connectivity solution is actually installed and works successfully in another

jurisdiction and describe how its designed telecommunication network is

economical, reliable, secure, and robust.

5.3.1.9 Advanced Communications Technologies (Specified Option): Vendor is

asked to identify advanced telecommunications options that may further

improve the reliability and/or performance of the network, beyond the

baseline design. This option could be relative to retailer last mile connections,

backbone communications, and/or gaming network to Agency

communications. Each Vendor is encouraged to propose a range of

technologies that may advance the Agency network infrastructure while

continuing to provide reliable, cost effective service to retailers. Any

proposed advanced technology will address key factors such as security,

availability of the service, reliability, maintainability, openness and

standardization, performance and cost.

5.3.2 Monitoring (Network & Communications) – Mandatory Feature(s)

5.3.2.1 WAN AND LAN Network Monitoring: Vendor is to provide a separate

industry standard network monitoring system which can be directly accessible

in real time by the Lottery that monitors connection with all Establishments.

The network management component of this VLCS provides a single pane

display of the status of all WAN and LAN equipment on the network.

Communications testing and monitoring capability are to be available at both

the PDC and BDC. Network monitoring tools are to be able to interface and

analyze all communication protocols used to communicate with all VLTs or

system data to the VLCS, view transaction data for performance and capacity

analysis, and create visual and/or audible alarms to provide notification of

problems. The monitoring software is to be capable of alerts, visual, and

audible notifications. The alerts are to be reported via the application GUI

(Graphical User Interface) and Simple Mail Transport Protocol (SMTP-


email). The following are examples of alerts: hardware, software, network,

database, resources, virus alerts, intrusion alerts, and any alerts as deemed

necessary by the Lottery.

5.3.2.2 The capability to determine whether failure has occurred in the equipment at

the PDC or BDC, within the wide area communications network or at the

Establishments down to the VLT bank level is to be included in the VLCS

design. Network monitoring equipment is to display connection status of each

VLT Establishment in real-time that indicates when VLT Establishments

experience communication problems and when VLT Establishments lose

connectivity.

5.3.2.3 The Vendor is to provide a real time display of network and equipment status

to the Lottery which will include viewing and reporting capabilities. The

monitoring system alerts the Lottery of any Establishment where service has

been disrupted and assists in determining whether the equipment is at fault or

the communication network, or both, is responsible for the service disruption.

Vendor is to supply an application that displays the down time of any and all

equipment and/or communications circuit in the network over a period of time

definable by the Lottery.

5.3.2.4 The Vendor is to provide network monitoring tools for all of the networked

devices. The networked devices are to employ a standard protocol such as

Simple Network Management Protocol (SNMP) to facilitate monitoring from

end to end of the communication path and to immediately extend this

capability to new network devices.

5.3.2.5 The Vendor’s communications maintenance technicians trained in the use of

testing and monitoring equipment are to be present at the active (terminal-

serving) system site whenever the Agency requests such support for test

purposes.

5.3.2.6 The Vendor is responsible for developing Establishment trouble reporting

procedures and have appropriate mechanisms for working communications

problems to resolution through the common carriers. Vendor’s proposal is to

describe the process, including escalation procedures, as well as a time line to

resolution.

5.3.3 VLT Wiring (Network & Communications) – Mandatory Feature(s)

5.3.3.1 VLT Wiring: The Vendor shall propose an appropriate method of wiring

within each Establishment connecting the VLTs to the Site Controllers.

5.3.3.2 The Vendor may propose other cabling methods of connecting the VLTs to

the VLCS (i.e. serial 232, serial 485, cat 5, cat 6, etc.). Costs related to this

alternate cabling are to be excluded from this RFP response.


5.3.3.3 Any method used to connect the VLTs to the VLCS shall be reviewed and

approved by the external testing lab and the Lottery before implementation at

an Establishment.

5.3.3.4 The Vendor is to provide a software-driven diagnostic utility that can detect

deficiencies in the communication cabling connecting the VLTs to the Site

Controller at an Establishment. A diagnostic utility is to be accessible at the

Site Controller and be available to the Operator to utilize at their convenience.

The diagnostic utility design includes providing a simple user interface that

will report the condition of the communication line to the Operator. The

diagnostic utility is to be capable of testing all types of communication

cabling used to connect the VLTs to the Site Controller.

5.4 Operations

5.4.1. Progressives [VLCS Controlled] Specified Option(s)

5.4.1.1 Vendor to describe in its response how the VLCS may communicate with and

control a network of VLCS controlled SAS progressive VLTs.

5.4.1.2 The VLCS would be required to function according to the guidelines defined

in GLI-12 progressive standards and all other criteria specified in this RFP.

5.4.2 Downloadable Games (Operations) – Mandatory Feature(s)

5.4.2.1 Server Based Downloadable Gaming: All VLCS equipment, hardware, and

software necessary for server based downloadable gaming monitoring,

authentication and reporting is to be provided by the Vendor when notified by

the Lottery that this option (G2S) is available for Establishments.

5.4.2.2 All VLTs and servers are to communicate with an open protocol system

architecture that is designed to Gaming Standards Association (“GSA”)

recommendations for utilizing Game to System (“G2S”) and System to

System (“S2S”) protocols or other protocols approved for use in South Dakota

5.4.3 Taxable Winnings (Operations) – Mandatory Feature(s)

Vendor shall propose a solution for ensuring that players receive a form W-2G

as required by the IRS upon winning a qualifying amount in a single event.

This is in the event that max payout is increased or progressive jackpots are

introduced.

5.4.4 TITO [Ticket-In Ticket-Out] (Operations) – Mandatory Feature(s)


The Lottery currently does not allow TITO or other cashless transaction

processes. If the Lottery determines there is a need for TITO at a later date,

the VLCS design will be required to be able to support TITO processes, and to

handle regular ticket out validations (cash tickets).

5.4.5 Data Fields (Operations) – Mandatory Feature(s)

The VLCS is intended to maintain accurate records utilizing extended format

meters from the VLTs. Additionally, all data field sizes and data field view size

are to be consistent across all modules and reports (i.e. if a data field is 20

character spaces, it shall contain 20 character spaces throughout the system and

on all reports).

5.4.6 Data Collection (Operations) – Mandatory Feature(s)

5.4.6.1 The VLCS design utilizes a data collection method that reports events from

the VLT level by time and date of occurrence and ensures all events and

transactions are recorded and accurate.

5.4.6.2 The VLCS provides real-time information retrieval, and the logging and

reporting of events at the VLT level. The system is required to support all

events; however the lottery needs the ability to filter by event types for display

or reporting. The VLCS is to maintain event data for a minimum of 18

months. Detailed retention schedules will be developed subsequent to

Contract award.

5.4.6.3 The VLCS design will process all VLT meter sizes and record lengths with

scalability for future growth or enhancement. The VLCS design will receive

all meter data in real time in an online, automated fashion. Manual reading of

meter values may not be substituted for automated requirements.

5.4.6.4 The VLCS is designed to utilize Site Controllers for the collection of VLT

data with transfer of data to the VLCS at scheduled periods. At a minimum,

the VLCS is to receive metered data from the Site Controllers at the end of

every business day. In addition, the VLCS is to have the capability of on-

demand data collection.

5.4.6.5 The VLCS is to maintain recorded meter readings based on a unique

identification number and those meter readings shall be available for

transaction history viewing and printing. The designation shall be the same as

used for asset tracking as described in Asset Tracking section 5.4.9.

5.4.6.6 The VLCS is to provide a report for each VLT when polled meters and events

are outside of Lottery configurable parameters. The VLCS design provides

user configurable settings and monitoring of thresholds that provide a system

report to the Lottery for each machine in the event any meter, including game


level meters, falls outside of the established threshold values, and the report is

designed to have options provided for user selected time and date, single VLT,

all VLTs, site controllers, and single event selectable parameters.

5.4.7 Adjustments (Operations) – Mandatory Feature(s)

The VLCS must be capable of accepting and processing machine and game

level adjustments at the VLT level, to include specification of financial

amounts (dollar and cent), the number of games played or won and an

explanation for the adjustment. These adjustments are designed to carry

through all relevant reports and screens. Posting of adjustments is designed to

be allowed from either management terminals or from computer files supplied

by the Lottery. The VLCS design provides for a single screen for meter

adjustments. The adjustment function is to be limited based on user or group

security rights.

5.4.8 Daily Tasks (Operations) – Mandatory Feature(s)

5.4.8.1 The VLCS design provides a single point of entry for all management

functions from management terminals on the Lottery's Local Area Network

(LAN).

5.4.8.2 The VLCS is designed to have a single menu application that provides

automatic updates to all records and control units at the time the operator exits

the screen without further intervention by the operator. No degradation shall

occur at the time of these routine daily tasks. Transactions are to be

committed to the database without any user intervention. If the Vendor does

not provide such functionality, detailed narrative is to be included to illustrate

how the system will function and how this commitment of data aids in the

integrity of the system. Each major functional process is managed on a single

screen, such as software assignment and device location and review of data.

5.4.8.3 The vendor is to describe in detail the complete steps involved and time to do

the following tasks based on a representative 10 machine scenario, which is a

typical Establishment based project. (Lottery’s required time specifications

are in parentheses):

Machine moves (3 minutes or less)

Machine software changes (10 minutes or less)

Enable and disable a machine (2 minutes or less)

Enable and disable section of an Establishment (2 minutes or less)

Enable and disable Establishment (two minutes or less)

Enable and disable of all machines on system (two minutes or less)

Global disable game (25 minutes or less)

Global disable software (25 minutes or less)

Global disable binary files (25 minutes or less)


Setup software for games (10 minutes or less)

Setup of software for Site Controllers (10 minutes or less)

Downloading of software to Site Controllers (10 minutes or less)

Setup of Establishment start to finish (10 minutes or less)

Make accounting adjustments (one minute or less)

Make adjustments for billing (debit and credits) on invoices (one

minute or less)

Adding a device (VLT, Site Controller) (two minutes or less)

5.4.8.4 Disable/Enable: The VLCS design provides a process for executing both

scheduled and manual shutdowns where VLTs cease to function and

executing both scheduled and manual startups to start gaming functions. The

VLCS has the functionality to disable and enable VLTs at a Establishment

level or system wide with a single command. When a machine with a RAM

failure has been disabled by an operator, the machine is prohibited from

coming into play after a RAM clear. A Site Controller’s last command

(enable/disable) controls a machine when it resumes communication.

5.4.8.5 At the direction of the Lottery, the VLCS design includes the feature to be

able to immediately start or cease gaming functions by disabling or enabling

VLTs by any individual VLT, or all VLTs, any group of VLTs, at a minimum,

by: manufacturer, or by Establishment, or by operator, or by software version,

or software image and/or software image game slot, or by license expiration

date. The VLCS prevents previously disabled software from becoming

enabled; lottery computer operator intervention is required to enable the

software.

5.4.8.6 The Vendor is intended to provide documentation procedures and processes

for activating, de-activating and re-activating by any individual VLT, or all

VLTs, any group of VLTs, by manufacturer, by Establishment, by operator,

by software version, or software image and/or software image game slot, or by

license expiration.

5.4.8.7 An enabled VLT cannot be disabled by the central system when non-critical

VLT configuration options are changed by the Establishment, such as game

volume, date and time, game play options and any other parameters as

specified by the Lottery. The central system is designed to always disable a

VLT if critical VLT configuration options are changed such as: pay table

percentage, game denomination, SAS poll address, and any other parameters

as specified by the Lottery.

5.4.9 Asset Tracking (Operations) – Mandatory Feature(s)

5.4.9.1 The Vendor provides and configures asset management software for all VLTs,

Site Controllers/management terminals, and other equipment.


5.4.9.2 The VLCS, as designed by the Vendor, maintains the following fields as an

example for the life of the machine: device type, unique identification

number, serial number, permit number, manufacturer name, model number,

installation date, physical location and ownership of each VLT, Site

Controller/management terminal, or other equipment.

5.4.9.3 The Lottery is to be able to access the history of the following for the life of

the machine: the hardware status (meaning active/inactive/decommissioned),

location, maintenance history, software change history, enable history, disable

history, meter readings history, inventory status, permit number, installation

date, physical location and ownership of each VLT, Site

Controller/management terminal, or other equipment.

5.4.9.4 The Vendor provides and configures the asset management software so that

the Lottery can track VLTs that are operational on a VLT Establishment floor

and VLTs that are not currently active but remain in the State. VLTs in

warehouses are to be tracked by owner/permit holder or manufacturer-owned

VLTs stored within the state.

5.4.9.5 The Vendor response is intended to describe how the VLCS will track the

following VLT activities:

VLT moves;

VLTs out of service;

decommissioned VLTs;

VLTs located at more than one location in a single business day;

warehoused VLTs;

VLTs active for testing/not active for accounting or invoicing

purposes; and,

VLT software changes.

5.4.9.6 Asset management software used for required asset tracking interfaces with

external Lottery databases.

5.4.9.7 VLTs are to be searchable and retrievable by UID, serial number, permit

number, and establishment license number.

5.4.9.8 For each major data collection or logical data segment maintained (i.e.,

retailer versus machine detail), the Vendor is to document having the

capability to include User Defined Fields (UDF) which can be configured by

the Lottery and populated with batch interfaces to store data that is significant

to Lottery operations and which currently does not exist in the VLCS design.

The Vendor response describes how this data will be configured and any

limits on functionality, such as maximum field lengths, data types and number

of UDF’s per logical data segment.


5.4.9.9 Advanced Asset Tracking Functionality (Specified Option): Vendor is asked

to propose an option that may further improve the reliability and/or

performance of our external Asset Tracking database beyond the baseline

design in this section of the RFP. This option would include additional

functionality to provide system generated “work orders” to field staff for

installation of new VLTs, removal of VLTs, moves of VLTs, destruction of

VLTs, software changes on VLTs, VLT host disables, non-reporting

terminals, and other common field functions. These work orders could be

generated both by the permit holder and internally.

5.4.9.10 Each Vendor is encouraged to propose a range of functionality that may

advance the Agency network infrastructure while continuing to provide

reliable, cost effective service to the Lottery. The Vendor’s Proposal of any

proposed asset tracking functionality addresses key factors such as security,

availability of the service, reliability, maintainability, openness and

standardization, performance, and cost.

5.4.10 Licensing (Operations) – Mandatory Feature(s)

5.4.10.1 The successful Vendor provides software to allow for data entry of licensing

information into the VLCS. For regulatory control, before enrolling a

machine, all required licensing information is to be available on the system.

Licensing data varies depending on whether it relates to the owner of the

machines or the retail Establishment where the machines are placed, but in all

cases, the VLCS database design includes the capability of managing

information for both the owner and the retailer.

5.4.10.2 The following are examples of the type of licensing data elements that are

designed to reside in the VLCS and there may be others as specified by the

Lottery. Attributes may be reported on, and linked to financial data and

statistical data as appropriate.

5.4.10.2.1 VLT serial and permit number, establishment license number, and

operator license number are the key fields that drive many requirements in the

current VLCS and it is envisioned that this RFP will produce the same

capabilities.

5.4.10.2.2 Additional demographic requirements are: Business organization

legal structure type, business organization name, DBA name, operator name,

physical location address, physical location county, mailing address, email

address, phone number, alternate phone number, fax number, contact name

with mailing address, email address, and phone number. In the event the

VLCS only allows venue lookups by name, it would be advantageous to

provide for a VLCS name field which would be different than location name.


5.4.10.2.3 Additional fields required, but not limited to: Establishment license

number, control number, operator number, IP address, operator name,

establishment name, alcohol license number, date licensed, license expiration

date, active or inactive status, date of last compliance check, date last meters

received, date Establishment disabled, machine removal date, and a comment

field.

5.4.10.2.4 Additional user defined fields (UDF) are recommended for all

license types as described in section 5.4.10 in this RFP.

5.4.10.3 Advanced Establishment Licensing Functionality (Specified Option):

Vendor is asked to propose an option that may further improve the reliability

and/or performance of our external licensing database beyond the baseline

design in this section of the RFP. This option would include additional

tracking fields for pre-licensing and re-licensing requirements, license renewal

tracking and printing, permit processing, and permit renewal fees as well as

reporting capabilities on these fields.

5.4.10.4 Each Vendor is encouraged to propose a range of functionality that may

advance the Agency network infrastructure while continuing to provide

reliable, cost effective service to the Lottery. The Vendor’s Proposal of any

proposed licensing functionality includes addressing key factors such as

security, availability of the service, reliability, maintainability, openness and

standardization, performance, and cost.

5.4.10.5 Advanced Establishment Compliance Functionality (Specified Option):

Vendor is asked to propose an option that may further improve the reliability

and/or performance of our external Establishment compliance database.

Requirements include a system generated site survey checklist with

approximately 10 items and a system generated Establishment compliance

report checklist with approximately 20 items that would be required for each

retailer group. This option would include additional reporting functions for

site surveys, compliance checks due, compliance checks overdue, and out of

compliance Establishments. Additionally, as part of this database an incident

reporting function with approximately 20 incident types and multi-line

comment section would be required.

5.4.11 Finance & Administration (Operations) – Mandatory Feature(s)

5.4.11.1 The VLCS design includes a bi-monthly reporting feature that will be

utilized for invoicing VLT gaming activity. Invoices have options for sorting

by operators.

5.4.11.2 Invoicing functionality is to be variable and customizable for a specific

retailer group. The VLCS has to accommodate for tax rate changes and be


configurable in the event that a rate is changed during a specific tax period. In

addition, there shall be user defined gaming date ranges for billing.

5.4.11.3 Billing should be capable of variable based rates and will be custom for each

retailer group. Rate changes are to be Lottery configurable and updates to the

rate are to be identifiable to a Lottery-defined period. A manual adjustment

process at the operator level is also be included.

5.4.11.4 The VLCS design is to be configurable to facilitate the Electronic Funds

Transfer (EFT) sweeps.

5.4.11.5 The VLCS design allows for the downloading of billing statements in file

layouts specified by the Lottery to be loaded into a database and displayed on

an operator portal (currently maintained and operated by the Lottery and BIT)

whereby invoices can be retrieved and printed locally as desired. The VLCS

has options to define invoice recipients by operator license number so that

each operator and their accounting staff could be included. The VLCS has the

ability to restrict access to only authorized individuals. An operator could

view all establishments under their control. Some operators will delegate this

function to their independent accountant.

5.4.12 System Accounting Audit & Analysis (Operations) – Mandatory

Feature(s)

The VLCS design is to monitor the operation of each VLT and create reports

using data received from VLCS-Version D and SAS 6.02 communication

protocols or any later approved standard related to commands and meter code

values.

5.5 Interfaces

5.5.1 Interfaces (Databases) – Mandatory Feature(s)

5.5.1.1 The Lottery maintains off-system databases containing various types of

information related to financial, licensing and security aspects of the video

lottery program. Therefore, the VLCS is to provide a relational database

management system that is OLE DB or ODBC compliant. The VLCS is to

transfer and receive flat files of all required data elements for importation into

the Lottery sub-system per Lottery specifications.

5.5.1.2 All data is confidential and is the sole property of the Lottery.

5.5.1.3 The Vendor response is to provide a detailed, functional database schema for

the data warehouse (DW) that can be utilized by the Lottery database

administrator.


5.5.1.4 The Vendor is to provide a security model that will provide a wide range of

Lottery employees varying levels of access to this data.

5.5.1.5 The VLCS, as designed by the Vendor, is to be capable of interfacing with the

Microsoft SQL Server version per BIT specifications in their implementation

of the VLCS and DW Relational Database Management System.

5.5.1.6 The Vendor design includes creating and maintaining a real time data

warehouse (DW) at the PDC and near real time DW at the BDC for Lottery

reporting purposes. The warehouse will be a SQL Server compatible database

and maintained at the current version as the production environment.

5.5.1.7 The Vendor design includes designing and maintaining a metadata model and

database diagram of the DW database system in order for the Lottery to

understand the relationships between tables. This model is to be in an

organized format so that the Lottery’s DBA and related “super users” can

easily identify data elements and their relationship.

5.5.1.8 The Vendor shall maintain a model (such as a relational database) specifically

for the Lottery containing data elements and relationships to be agreed upon

by the Lottery and the Vendor. Data items are to be made current in real time

or as close to real time as possible. Database information includes all

information collected by the system. Lottery system users need to be able to,

using the relational database architecture, develop, modify, save and schedule

individual reports. All information retrieved from the relational database

architecture in user-developed reports is intended to be able to be indexed and

sorted. This relational database is also referred to as the DW or EDW in other

sections.

5.5.1.9 The VLCS design is to send machine update data (location/attribute changes,

enables, disables) back to the Lottery maintained databases as they occur.

5.5.1.10 The Vendor response documents how they can control the flow of data

between the VLCS and external databases. The Vendor is encouraged to

document how they can maintain data integrity with certain data elements

flowing forward from the external databases to the VLCS. This would

include items like object identity and demographics. At the same time, certain

data elements from the VLCS would flow back to the external database such

as machine status changes. In both cases, the interfaces would consist of flat

file formats to be developed during system configuration with appropriate

controls.

5.6 Reporting

5.6.1 Reporting Requirements (Reporting) – Mandatory Feature(s)


5.6.1.1 The VLCS provides reports on a “business day” format, defined as 6:00:00

a.m. through 5:59:59 a.m. CTZ the following calendar date or as agreed upon.

The business date is defined as the calendar day that begins at 6:00:00 am.

5.6.1.2 Describe how the VLCS provides the ability for all data to be capable of

extracting/exporting to such tools as Excel, Access, text format, etc. Describe

how all reports can be exportable with and without headings in CSV format,

Excel data only format, printable in PDF format or as an XML file, and have

date, time and user imbedded in the report.

5.6.1.3 The VLCS is to be capable of generating all daily, weekly, monthly, and

yearly reports and invoices as well as Ad Hoc reports as requested by the

Lottery utilizing user defined date ranges. Appendix L contains a reference of

minimally required reports.

5.6.1.4 Describe how the VLCS has the capability of processing reports so users are

able to perform daily tasks while reports are processing in the background

without locking the user’s workstation. All reports are to be viewable with the

report progress and status available.

5.6.1.5 The VLCS requires the capability of immediately cancelling a requested

report or queued report without system degradation.

5.6.1.6 The Lottery requires maximum flexibility in utilizing the information that is

contained on the System. The VLCS design has the ability to execute reports

based on various attributes, and is to support the selection of multiple

attributes concurrently. Users are to have the ability to add or remove

attributes as needed. At the minimum, attributes include: date, Establishment,

VLT, operator/owner, software version, VLT manufacturer, region, county,

retailer group, chain, and site controller.

5.6.1.7 The VLCS provides at least two types of reporting sub systems: The first sub

system is defined as “regularly scheduled reports/Ad Hoc reporting”. The Ad

Hoc reports will include the ability for filtering input data, defining sort fields

and grouping fields as well as the ability to restrict the display of non-key

field columns. The Vendor is to create new standard scheduled reports and Ad

Hoc reports, within agreed upon schedules. VLCS report modifications and

new reports will be required during the life of the contract and are to be

considered as routine requests to be completed according to mutually

agreeable schedules. The reports and/or modifications are to be completed

and submitted to the Lottery within 20 business days after functional

specifications are approved. Ad Hoc report writing shall be available to the

Lottery at a user group level assignment.


5.6.1.8 The second sub system will be an integrated report writing tool, which may be

supplied by a third party, and integrated with the VLCS. This report writing

tool will have the ability to include different levels of detail segments, design

report formats, and include sorting and grouping capabilities. Output formats

will include paper, PDF, Excel, XML and/or CSV.

5.6.1.9 Pre-designed reports requested by the Lottery from the VLCS are to be

accurate and readily available to be generated by the Lottery on demand.

5.6.1.10 The Vendor will describe how the proposed VLCS will meet the

requirements of section 5.6.

5.7 Conversion

5.7.1 Conversion Requirements (Conversion) – Mandatory Feature(s)

5.7.1.1 Conversion Plan: Describe and include a proposed Conversion Plan. The

Vendor is to submit within sixty (60) days after the Notice to Proceed, a

detailed and finalized version of this Conversion Plan which, when approved

by the Lottery, is to become the basis for Conversion.

5.7.1.2 This Conversion Plan includes, but is not limited to, the following:

5.7.1.2.1 Executive Summary: This Executive Summary provides the Lottery

with a concise but functional summary of each phase of the Conversion Plan

and includes a table of milestones for the Lottery to use in reviewing the Plan.

Each phase is to be listed in chronological order in order to achieve a

November 16, 2019 cutover.

5.7.1.2.2 High Level Conversion Plan: This includes a brief description, start

and end dates, roles and responsibilities, dependencies, input and outputs and

deliverables, and ensures a smooth start-up of the VLCS. This Plan includes a

timeline beginning with the Contract award date.

5.7.1.2.3 Conversion: The VLCS and components are to be delivered and

operational by a date specified by the Lottery in which live operations will

commence at that time. All VLCS hardware, software, equipment, and all

other required components are to be successfully tested by both the Vendor

and the Lottery and are to be in place and operational by the specified date.

5.7.1.2.4 Project Reporting and Monitoring Requirements: Describe how you

will have weekly conversion reviews in person involving the Lottery and the

Vendor. The Vendor is to prepare weekly reports detailing the progress made

on accomplishing the goals by the deadlines stated in the conversion plan and

shall electronically submit these to the Lottery in an agreed format.


5.7.1.2.5 Definition of Business Requirements: During the first sixty (60)

calendar days after the Notice to Proceed date, the Vendor’s business analysts

are to thoroughly familiarize themselves with the Lottery’s business processes

operations and the Establishments' business operations related to VLTs. The

Vendor’s analysts are to observe the business processes and meet with end

users as part of this process.

5.7.1.3 At the conclusion of this sixty (60) calendar day period, the Vendor is to

deliver to the Lottery a separate business requirements specification document

for each major functional area ("Business Requirements"). The purpose of the

business requirements documents is for the Vendor to demonstrate its

understanding of the Lottery’s operational needs. The Lottery will review and

approve these documents within thirty (30) days of receipt. The documents

address each business process currently performed by the Lottery as it relates

to the VLCS. The documents identify any modifications to current processes.

At a minimum, the Vendor is to produce a separate business requirements

document for each of the following functional areas that apply to the system:

i. System administration

ii. Daily operations

iii. Maintenance

iv. Accounting and billing

v. Licensing

vi. Security/compliance/asset tracking

5.7.1.4 Software Requirements Specification ("SRS"): Upon receiving the Lottery

approved business requirements, the Vendor develops corresponding Software

Requirements Specification ("SRS") documents. The Vendor is to deliver

these documents to the Lottery for approval no later than 45 business days

after receipt of the Lottery approved business requirements.

5.7.1.5 The SRS documents specify the functionality of the software applications that

will be provided by the Vendor at start-up in support of the Lottery’s business

processes related to VLTs. The startup software functions as described in the

SRS documents which include the following:

5.7.1.5.1 Each SRS specification references the corresponding business

requirement or process in the corresponding business specification document.

5.7.1.5.2 For each SRS specification, the Vendor indicates if the functionality

exists in the Vendor’s base system. If it does not exist, or if modifications to

the base system functionality are required, the Vendor provides an estimate of

the time it will take to develop the new functionality or modify the existing

functionality. The estimate, development and or modification is to be at no

additional cost to the Lottery.


5.7.1.5.3 Lottery approval is required for any subsequent changes to SRS

documents. The Lottery may identify changes required during software

development and acceptance testing.

5.7.1.5.4 If modifications or enhancements are required, the following

objectives apply:

5.7.1.5.4.1 Software Development: The startup software is to meet the

Lottery’s business requirements, and future changes to the software are to

be accomplished in a timely manner while accurately meeting those

business requirements at no additional cost to the Lottery.

5.7.1.5.4.2 The Vendor demonstrates its understanding of the Lottery’s

business requirements and processes before software applications for the

VLCS are written or modified. The Lottery is to be given the opportunity

to thoroughly understand and agree to the functionality of the planned

software applications. This goal applies to the development of any initial

software applications as well as to subsequent software releases.

5.7.1.6 Conversion Strategy/Conversion Plan: Vendor is to provide a conversion plan

for implementing the VLCS at each Establishment. The Lottery will be

operating two VLCS systems until the Conversion is completed. The plan

includes processes and procedures for conversion to the new VLCS, including

risks, resources, any downtime, VLCS functionality, and estimated timeframe.

Alternate conversion strategies may be proposed and the proposal should

weigh the advantages and disadvantages of each. The proposal is to contain a

detailed conversion plan and time chart detailing the transition from the

current VLCS to the Vendor’s VLCS. The Establishment plan is to identify

the major milestones to be accomplished for the business requirements

definition, equipment delivery, software programming, installation, testing,

and file conversions. The plan makes clear where items are on the critical

path for timely Conversion.

5.7.1.7 Responsibilities of the Vendor’s conversion team and the Lottery’s conversion

team are to be identified. Establishment roles and responsibilities during

conversion are also to be defined. The Vendor shall not proceed with the

conversion plan until it is approved by the Lottery.

5.8 Training

5.8.1 Training Requirements (Training) – Mandatory Feature(s)

5.8.1.1 The VLCS Vendor is to provide training on system operations and user

interfaces for all applications. The Vendor provides the materials, equipment,

training personnel, and temporary Establishments for licensee training efforts.

The Lottery will provide space for on-site training of Lottery employees.


5.8.1.2 The Vendor response describes in detail the proposed training program for the

Lottery, and any training necessary for video lottery operators, technicians,

and establishment staff. (This is in addition to training supplied by the Vendor

to its own staff, sub Vendors, consultants, and associated businesses.) The

program description describes proposed materials, Establishments, staff

qualifications, sessions (including length and class size), and schedule.

5.8.1.3 Materials include, at a minimum, (a) training and operational manuals on the

correct use and management of the system and (b) updates to these materials

with any system changes. Online training videos for Lottery and field staff

may be utilized.

5.8.1.4 The Vendor response includes plans for providing periodic training updates on

an ongoing basis throughout the life of the contract and as necessary with

upgrades or system modifications in addition to the provision of any training

necessitated by upgrades or other system changes.

5.9 Acceptance Testing

5.9.1 Acceptance Requirements (Acceptance Testing) – Mandatory Feature(s)

5.9.1.1 Initial Acceptance of VLCS: At the Vendor’s sole cost, the VLCS is to be

tested and certified, at a minimum, by an independent test laboratory which the

Lottery has selected to provide testing services associated with video lottery. The

Vendor response provides an additional system, which is of the same

architecture, but not necessarily the same size, at the independent testing

laboratory for testing purposes. This system is intended to be used for

acceptance testing of the new VLCS, as well as system upgrades, and to

conduct interoperability testing on VLTs designed to communicate with the

VLCS.

5.9.1.2 The Lottery will conduct acceptance testing during the initial installation of

the VLCS.

5.9.1.3 The Lottery, or its designee, will conduct a series of acceptance tests, which

the Vendor is to support. To support acceptance testing, the Vendor is

intended to have the PDC computer hardware, communications hardware,

software, as well as video lottery controllers, and test VLTs installed and

operational at least sixty (60) days prior to the scheduled conversion date for

the first VLT Establishment to become operational. At that time, the BDC is

also to be ready for testing. Acceptance testing completion and approval is to

be achieved prior to initiation of the field machine installations.

5.9.1.4 Acceptance testing will include processing through daily, weekly, and

monthly tasks, failover to the BDC and file backup and restoration testing.


5.9.1.5 The Lottery takes a comprehensive approach to acceptance testing after

conditional approval from the external testing lab for conversion of the VLCS

and for subsequent software releases. Lottery shall have the right to perform

any acceptance test that it deems necessary.

5.9.1.6 Acceptance testing at the Lottery test laboratory shall last through a complete

monthly billing cycle after conditional approval. The results of these tests

will determine whether the Lottery accepts the VLCS. The Lottery has the

sole right for determining the pass or fail decision for each of the acceptance

tests and test components and will notify the independent testing lab to issue

final certification.

5.9.1.7 The Lottery requires that acceptance testing be a cooperative effort between

the Vendor and the Lottery. The Vendor response describes how the on-site

test system is available to the Lottery and that operational resources are

available to assist the Lottery in conducting and evaluating the acceptance

testing. Vendor shall provide a test script for use by the Lottery and

independent test lab to conduct user acceptance testing

5.9.1.8 During acceptance testing the Vendor is to provide on-site personnel capable

of modifying the support systems and the VLCS. The on-site personnel are to

be assigned to the Lottery on a full-time basis during acceptance testing and

be experienced with the specific hardware and software that is being tested.

5.9.1.9 Performance Criteria: The Vendor response ensures that all VLCS support,

including any network, software, hardware, meets documented specifications

and standards and is required to pass performance testing criteria and be

approved by the Lottery in order to be in compliance with the Contract.

5.9.1.10 Major central system tasks to be completed during the Lottery’s acceptance

testing of new VLCS include, but are not limited to:

Install machines at a Establishment;

Machine moves;

Machine software changes;

Enable and disable a VLT;

Enable and disable of Establishment;

Enable and disable of all VLT’s in an Establishment;

Enable and disable of all machines on system;

Global disable of a game;

Global disable of software;

Global disable of binary files;

Setup of software for games;

Setup of software for site controllers;

Downloading of software to site controllers;


Setup of Establishment start to finish;

Make accounting adjustments;

Make adjustments for billing (debit and credits) on invoices;

Merging of files to create a binary image for software;

Test format of EFT flat file;

Verify TITO accuracy;

Verify VLCS and VLT general functionality and response time;

Verify all VLCS reporting and accounting is accurate and complete;

Real-time polling of full set of VLT meters;

Validating of full set of VLT meters;

Perform validations and balancing accounting reports;

Perform validations and balancing performance reports;

Perform transaction look-ups;

Test of distribution and response of monthly invoice;

Validate and balance the results of a coin test during installation;

Balance cash activity to machine financial data;

Verify exporting of reports – all formats;

Printing and validation of all security reports;

Verify asset tracking software;

Verify system venue circuit failover;

Verify VLCS failover;

Verify Establishment failure/site controller failure and data recovery

when back online;

Check for proper VLCS response to thresholds by forcing the VLCS to

reach its failure levels (transactions, meters, etc.);

Force VLT failures to verify proper system notification (including

create print jams, disconnect power and communication cables, door opens,

etc.);

Force primary and backup system failures to verify proper VLCS

recovery (disconnect power and communication cables, improper VLCS

operation, etc.); and,

Force VLT, network, and system failures by volume testing system

performance in transaction rate and capacity.

5.10 Mandatory Requirements

Instructions: The following mandatory requirements MUST be met by the

Vendor as a part of the submitted proposal. Failure on the part of the Vendor

to meet any of the mandatory specifications shall result in the disqualification

of the proposal. The terms “MUST”, “will”, “shall”, “minimum”,

“maximum”, or “is/are required” identify a mandatory item or factor.

Decisions regarding compliance with any mandatory requirements shall be at

the sole discretion of the Lottery.


5.10.1 The Vendor MUST have experience in the North American state regulated

market with the installation of multiple video gaming networks in the past five

years. The Vendor MUST have experience with the conversion of an existing

system in the past five years.

5.10.2 The Project Manager MUST have been involved in prior video gaming

network conversions. In addition, the Project Manager MUST be assigned to

the project through the final conversion process with significant on-site

presence during major phases of the project.

5.10.3 The Vendor MUST propose alternatives to dial-up communications at

Establishments. The Lottery believes that multiple technologies, including but

not limited to VSAT and cellular, will be required due to the locations of

current VLTs.

5.10.4 The Vendor MUST support advanced communication protocols, at no

additional cost to the Lottery, including G2S when the Lottery believes it is

appropriate to start migration away from VLCS-Version D and/or SAS.

5.10.5 Vendor SHALL schedule meetings relating to the Project Plan at dates and

times approved by the Lottery upon Contract Award.

5.10.6 Hardware and Software: The components of all hardware and software MUST

be new and unused. Hardware and software MUST be compliant with current

electronic technology standards (such as IEEE and ANSI) and be of then-

current manufacturer model equivalent or better equipment in the event a

proposed device is phased out or replaced.

5.10.7 All VLCS hardware and software MUST be licensed to the Lottery and

installed, supported, and maintained by the Vendor. This hardware and

software includes, but is not limited to, operating systems, antivirus, database,

replication, backup, and communications.

5.10.8 If a Vendor proposes the use of technologically-equivalent equipment in lieu

of either controllers or modems, or both controllers and modems, the Vendor

MUST provide live site demonstration of this equipment solution as it is

actually installed in another jurisdiction or business application.

5.10.9 Vendor is required to submit any hardware or software used by the VLCS to

link one or more progressive VLTs to the primary Lottery independent testing

lab for certification and all hardware and software MUST also pass user

acceptance testing by the Lottery, and be approved by the Lottery.

5.10.10 Conversion Testing (Data Transfer/Conversion): The Vendor MUST import

certain active data from the current VLCS for use in the new system. This


data may be exported from the current system in the form of a report, by file

transfer, or other appropriate format. All data MUST be audited, reviewed,

and approved by the Lottery prior to being imported and after the import is

complete.

5.10.11 The Lottery requires a rolling conversion, or phase-in, of the new VLCS.

Under this approach, the VLTs MUST be converted to operate under the new

VLCS on a group-at-a-time basis with minimal downtime and no loss of

revenue. The Lottery will be operating two VLCS systems during this time

period with converted Establishments operating under the new VLCS which is

the objective of this RFP and those awaiting conversion operating under the

existing VLCS.

5.10.12 Historical Data: The Vendor MUST initially convert at least 36 months of

pre-existing data so that the Lottery will see a continuity of data in reports

from before, during, and after the startup. In addition to conversion of data

from the current system for reporting continuity, the Lottery currently requires

that all VLT data is maintained for the life of the machine. The Vendor will

develop a conversion process for historical data from both the Lottery’s

current and prior systems subject to the approval of the Lottery. Vendor’s

response MUST contain a description of this process detailing how and where

this data will be stored and how it will be retrieved.

5.10.13 The VLCS MUST be capable of accepting and processing machine and game

level adjustments at the VLT level, to include specification of financial

amounts (dollar and cent), the number of games played or won, amount

played or won, and an explanation for the adjustment. These adjustments are

designed to carry through all relevant reports and screens. Posting of

adjustments is designed to be allowed from management terminals by the

Lottery. The VLCS design provides for a single screen for meter adjustments.

The adjustment function is to be limited based on user or group security

rights.

5.11 Mandatory Deliverables

5.11.1 Project Deliverables: The Vendor MUST comply with all requirements in

this section related to report formats, timeframes and delivery.

5.11.1.1 Deliverable Submission and Acceptance Process: For each written

deliverable, draft and final, the Vendor MUST submit to the Lottery one hard

copy and one electronic copy.

5.11.1.2 Final Deliverable Drafts: Drafts of all final deliverables are required at least

two weeks in advance of all final deliverable due dates. Written deliverables

defined as draft documents MUST demonstrate due diligence in meeting the


scope and requirements of the associated final written deliverable. A draft

written deliverable may contain limited structural errors but MUST:

Be presented in a format appropriate for the subject matter and depth

of discussion;

Be organized in a manner that presents a logical flow of the

deliverable’s content;

Represent factual information reasonably expected to have been

known at the time of submittal;

Present information that is relevant to the section of the deliverable

being discussed;

Represent a significant level of completeness towards the associated

final written deliverable that supports a concise final deliverable acceptance

process.

5.11.1.3 Format of Final Deliverable: Upon completion of a deliverable, the Vendor

MUST document each deliverable in final form to the Lottery for acceptance

and memorialize such delivery in a receipt of deliverable form to be provided

by the Lottery. The Lottery MUST countersign the receipt of deliverable

form indicating receipt of the contents described therein.

5.11.1.4 Acceptance Testing: Upon receipt of a final deliverable, the Lottery MUST

commence acceptance testing or review of the deliverable as required to

validate the completeness and quality in meeting requirements. Upon

completion of validation, the Lottery MUST issue to the Vendor notice of

acceptance or rejection of the deliverables in a certified acceptance of

deliverable form. In the event of rejection, the Vendor MUST correct the

identified deficiencies or non-conformities. Subsequent project tasks may not

continue until deficiencies with a deliverable are rectified and accepted by the

Lottery who has specifically issued in writing a waiver for conditional

continuance of project tasks. Once the Lottery’s issues have been resolved

and accepted by the Lottery, the Vendor will incorporate the resolutions into

the deliverable and resubmit the deliverable for acceptance.

5.11.1.5 Final Written Deliverables: When presented for acceptance, a written

deliverable defined as a final document MUST satisfy the scope and

requirements of the RFP for that deliverable. Final written deliverables

MUST not contain structural errors such as poor grammar, misspellings, or

incorrect punctuation and MUST:

Be presented in a format appropriate for the subject matter and depth

of discussion;


Be organized in a manner that presents a logical flow of the

deliverable’s content;

Represent factual information reasonably expected to have been

known at the time of submittal; and,

Present information that is relevant to the section of the deliverable

being discussed.

5.11.2 Manuals: The Vendor MUST provide manuals and schematics as discussed in

this section, including timeframes for delivery.

5.11.2.1 Electronic Documents: The Vendor MUST provide, electronically to the

extent possible, all associated operation manuals, service manuals, and

relevant schematic diagrams, such as network circuit diagrams. Any

customization of third party software MUST be documented. Operation

manuals and service manuals MUST be expressed in terms that are directly

relevant to the approved and installed VLCS and searchable electronically.

5.11.2.2 Service Manuals: All service manuals MUST accurately depict the VLCS

which the manual is intended to cover.

5.11.2.3 Circuit Schematics: All circuit schematic diagrams MUST:

5.11.2.3.1 Accurately depict the PDC and BDC communications network(s)

and wiring at each Establishment (when such diagram becomes available);

5.11.2.3.2 Provide adequate detail with clear wording and visual images so

that qualified technical staff may perform an evaluation on the design of the

component; and,

5.11.2.3.3 Be professionally drafted and kept up-to-date at all times.

5.11.2.3.4 Updates MUST be submitted simultaneously with any testing

submission.

5.11.2.4 Preliminary Documents: All preliminary documents MUST be delivered

within thirty days of contract execution and Notice to Proceed so that the

Lottery and Vendor may collaborate during the business analysis phase to

ensure that the VLCS is developed with a mutual understanding of the

Lottery’s business processes and practices.

6. Interfaces/API’s – Mandatory Feature(s)

This section applies to any and all features in this RFP.


The following API’s are not all inclusive, but serve as an example of potential

API’s; the Vendor shall provide a means to interface with their systems at the

Lottery’s request.

Retailer API

The Vendor shall propose solutions for allowing potential third parties to

programmatically query for retailer information such as locational, stocking,

and billing.

Customer/Player (CRM) API


programmatically query for customer/player information.

Ticket Validation API


programmatically check tickets.

Transaction/Sales API


programmatically query for transactional and sales information.

7. Pricing

7.1. Introduction

This section describes the manner in which Vendors shall submit pricing for

the Lottery’s consideration. Vendors shall provide price quotes for all goods

and services to be furnished under the Proposal. The objective of the Price

Proposal is to document in a uniform format the cost of the features included

in the Technical Proposal.

The Lottery will consider a variety of pricing options, but to ensure

comparability between Vendors, Pricing Proposals shall at a minimum

comply with the following requirements:

A. The Pricing Proposal shall cover the entire term of the contract.

B. The Pricing Proposal may be based on a fixed-fee, percentage-of-sales, or

a combination of both methods.

C. The Lottery will pay the successful Vendor weekly over the term of the

contract based upon the Vendor’s invoice. A weekly invoice may include

weekly fees, a monthly or annual fee, as well as any one-time fees or

costs. Accordingly, the price proposal should identify all costs as fixed

(F) or variable (V) with the amount or percentage, or no cost (N/C). The


invoicing period shall be shown as weekly (W), monthly (M), annual (A),

one-time (O), or special (S).

D. Pricing on the Price Proposal should also be broken down into the

following: Base System Price, Specified Options, Invited Options, and

Offered Options. The totals by category should be summarized.

E. If pricing varies between fiscal years, a Price Proposal Sheet shall be

completed for each of the Lottery’s fiscal years (July 1 through June 30

of the following year) encompassing the contract. If the price proposal is

based upon a percentage of sales for each year, then only the percentage

proposed for each year need be displayed:

Year 1 FY-2020

Year 2 FY-2021

Year 3 FY-2022

Year 4 FY-2023

Year 5 FY-2024

Year 6 FY-2025

Year 7 FY-2026

7.2. Letter of Transmittal

The price proposal must include a submittal letter signed by an individual

authorized to obligate the Vendor to the prices quoted. Those prices must be valid

for at least 240 days from the proposal submission date.

7.3. Price Proposal Requirements

Vendors shall submit their proposed pricing in a separate sealed envelope,

which shall accompany their entire proposal package. The proposed pricing

shall include a system, equipment and services that at a minimum meet all of

the terms and conditions, technical specifications, quantities and other

mandatory requirements of this RFP.

Price proposals shall include all items and/or features required by this RFP

and proposed by the Vendor, unless the Vendor specifically states that an item

or feature is offered as a separately priced option.

Vendors are required to propose pricing for mandatory features and Specified

Options; however, if a Vendor is unable to provide a mandatory feature or

Specified Option the Vendor shall specifically describe why it is unable to do

so and whether an alternative to said feature is proposed.

7.4. Pricing of Options

Any options the Vendor wishes to include as part of the base system should be

clearly marked by the Vendor as No Cost (N/C) options included in the base.


Options that are separately priced shall be clearly noted in the technical

proposal, and their corresponding prices shall be listed as separate line items

in the pricing proposal. Any options that are included in a Vendor’s proposal

and are not priced shall be considered a No-Cost (N/C) item and part of the

base system.

In determining the pricing for additional equipment, a separate price shall be

provided for each equipment type (if the pricing is different)


Appendix A: BIT Standard State Technology Contract Terms


Appendix A: BIT Standard State Technology Contract Terms

CONFIDENTIALITY OF INFORMATION

For purposes of this paragraph, “State Proprietary Information” shall include all information disclosed to the

Consultant by the State. The Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated

Entities shall not disclose any State Proprietary Information to any third person for any reason without the express

written permission of a State officer or employee with authority to authorize the disclosure. The Consultant, and

Consultant’s Subcontractors, Agents, Assigns and/or Affiliated Entities shall not: (i) disclose any State Proprietary

Information to any third person unless otherwise specifically allowed under this agreement; (ii) make any use of

State Proprietary Information except to exercise rights and perform obligations under this agreement; (iii) make

State Proprietary Information available to any of its employees, officers, agents or third party Consultants except

those who have a need to access such information and who have agreed to obligations of confidentiality at least as

strict as those set out in this agreement. The Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or

Affiliated Entities is held to the same standard of care in guarding State Proprietary Information as it applies to its

own confidential or proprietary information and materials of a similar nature, and no less than holding State

Proprietary Information in the strictest confidence. The Consultant, and Consultant’s Subcontractors, Agents,

Assigns and/or Affiliated Entities shall protect the confidentiality of the State’s information from the time of receipt

to the time that such information is either returned to the State or destroyed to the extent that it cannot be recalled or

reproduced. The Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated Entities agree to

return all information received from the State to State’s custody upon the end of the term of this agreement, unless

otherwise agreed in a writing signed by both parties. State Proprietary Information shall not include information

that:

(i) was in the public domain at the time it was disclosed to the Consultant, and Consultant’s

Subcontractors, Agents, Assigns and/or Affiliated Entities;

(ii) was known to the Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated

Entities without restriction at the time of disclosure from the State;

(iii) that was disclosed with the prior written approval of State’s officers or employees having authority to

disclose such information;

(iv) was independently developed by the Consultant, and Consultant’s Subcontractors, Agents, Assigns

and/or Affiliated Entities without the benefit or influence of the State’s information;

(v) becomes known to the Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated

Entities without restriction from a source not connected to the State of South Dakota.

State’s Proprietary Information can include names, social security numbers, employer numbers, addresses and other

data about applicants, employers or other clients to whom the State provides services of any kind. Consultant

understands that this information is confidential and protected under State law. The parties mutually agree that

neither of them nor any Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated Entities

shall disclose the contents of this agreement except as required by applicable law or as necessary to carry out the

terms of the agreement or to enforce that party’s rights under this agreement. Consultant acknowledges that the

State and its agencies are public entities and thus may be bound by South Dakota open meetings and open records

laws. It is therefore not a breach of this agreement for the State to take any action that the State reasonably believes

is necessary to comply with South Dakota open records or open meetings laws.

DISPOSAL OF STATE DATA

The Consultant, and Consultant’s Subcontractors, Agents, Assigns and/or Affiliated Entities shall securely dispose

of all data in all forms, such as disk, CD/ DVD, backup tape and paper, when requested by the State. Data shall be

permanently deleted and shall not be recoverable, according to National Institute of Standards and Technology

(NIST) approved methods. Certificates of Destruction shall be provided to the State upon request.

CYBER LIABILITY INSURANCE

The Consultant shall maintain cyber liability insurance with liability limits in the amount of $10,000,000 to protect

any and all State data the Consultant receives as part of the project covered by this agreement including State data

that may reside on devices, including laptops and smart phones, utilized by Consultant employees, whether the

device is owned by the employee or the Consultant. If the Consultant has a contract with a third-party to host any


State data the Consultant receives as part of the project under this agreement, then the Consultant shall include a

requirement for cyber liability insurance as part of the contract between the Consultant and the third-party hosting

the data in question. The third-party cyber liability insurance coverage will include State data that resides on

devices, including laptops and smart phones, utilized by third-party employees, whether the device is owned by the

employee or the third-part Consultant. The cyber liability insurance shall cover expenses related to the management

of a data breach incident, the investigation, recovery and restoration of lost data, data subject notification, call

management, credit checking for data subjects, legal costs, and regulatory fines. Before beginning work under this

Agreement, the Consultant shall furnish the State with properly executed Certificates of Insurance which shall

clearly evidence all insurance required in this Agreement and which provide that such insurance may not be

canceled, except on 30 days prior written notice to the State. The Consultant shall furnish copies of insurance

policies if requested by the State. The insurance will stay in effect for 2 years after the work covered by this

agreement is completed.

CHANGE MANAGEMENT PROCESS

From time to time it may be necessary or desirable for either the State or the Consultant to propose changes to the

Services provided. Such changes shall be effective only if they are in writing and contain the dated signatures of

authorized representatives of both parties. Unless otherwise indicated, a change or amendment shall be effective on

the date it is signed by both parties. Automatic upgrades to any software used by the Consultant to provide any

services that simply improve the speed, efficiency, reliability, or availability of existing services and do not alter or

add functionality, are not considered “changes to the Services” and such upgrades will be implemented by the

Consultant on a schedule no less favorable than that provided by the Consultant to any other customer receiving

comparable levels of services.

WORK PRODUCTS

The Consultant shall be responsible for the professional quality, technical accuracy, timely completion, and

coordination of all services furnished by the Consultant and any subcontractors, if applicable, under this Agreement.

It shall be the duty of the Consultant to assure that the services and the system are technically sound and in

conformance with all pertinent Federal, State and local statutes, codes, ordinances, resolutions and other

regulations. The Consultant shall, without additional compensation, correct or revise any errors or omissions in its

work products.

Consultant hereby acknowledges and agrees that all reports, plans, specifications, technical data, miscellaneous

drawings, agreements, State Proprietary Information, any information discovered by the State, End User Data,

Personally Identifiable Information (PII), data protected under Family Educational Rights and Privacy Act

(FERPA), Personal Heath Information (PHI), Federal Tax Information (FTI) or any information defined under state

statute as confidential, and all information contained therein provided to the State by the Consultant in connection

with its performance under this Agreement shall belong to and is the property of the State and will not be used in

any way by the Consultant without the written consent of the State.

Papers, reports, forms or other material which are a part of the work under this Agreement will not be copyrighted

without written approval of the State. In the event that any copyright does not fully belong to the State, the State

reserves a royalty-free, non-exclusive, non-transferable and irrevocable license to reproduce, publish, and otherwise

use and to authorize others to use on the State’s behalf any such work for government purposes.

PRODUCT CONFORMITY

The State has twelve (12) months following final acceptance of the product(s) delivered by the Consultant pursuant

to this Agreement to verify that the product(s) conform to the requirements of this Agreement and perform

according to the Consultant’s system design specifications. Upon the State’s recognition of an error, deficiency, or

defect, the Consultant shall be notified by the State. The notification shall cite any specific deficiency (deficiency

being defined as the Consultant having performed incorrectly with the information previously provided by the State,

not the Consultant having to modify a previous action due to additional and/or corrected information from the State).

The Consultant, at no additional charge to the State, shall provide a correction or provide a mutually acceptable plan

for correction within thirty-days following the receipt of the State’s notice to the Consultant. If the Consultant’s

correction is inadequate to correct the deficiency, or defect, or if error recurs, the State may, at its option, act to

correct the problem. The Consultant shall be required to reimburse the State for any such costs incurred or the State


will consider this to be a breach of the agreement. Payment by the Consultant pursuant to this provision does not

waive any other rights and remedies available to the State.

CURING OF BREACH OF AGREEMENT

In the event of a breach of these representations and warranties the State may, at the State’s discretion, provide the

Consultant with the opportunity to rectify the breach. The Consultant shall immediately, after notice from the State,

begin work on curing such breaches. If the notice is telephonic the State will provide, at the Consultant’s request, a

written notice to reaffirm the telephonic notice. If such problem remains unresolved after three days, at State’s

discretion, Consultant will send, at Consultant’s sole expense, at least one qualified and knowledgeable

representative to the State’s site where the system is located. This representative will continue to address and work

to remedy the deficiency, failure, malfunction, defect, or problem at the site. The rights and remedies provided in

this paragraph are in addition to any other rights or remedies provided in this Agreement or by law.

DOMAIN NAME OWNERSHIP

Any website(s) that the Consultant creates as part of this project must have the domain name registered by and

owned by the State. If as part of this project the Consultant is providing a service that utilizes a website with the

domain name owned by the Consultant, the Consultant must give thirty (30) days’ notice before abandoning the site.

If the Consultant intends to sell the site to another party the Consultant must give the State thirty days (30) notice

and grant the State the right of first refusal. For any site or domain, whether hosted by the Consultant or within the

State web infrastructure, any and all new web content should first be created in a development environment and then

subjected to security scan before being approved for a move up to the production level. This paragraph does not

include websites developed for the Consultant’s internal use.

SERVICE BUREAU

Consistent with use limitations specified in the agreement, the State may use the Product to provide services to the

various branches and constitutional offices of the State of South Dakota as well as county and city governments and

school districts. The State will not be considered a service bureau while providing these services and no additional

fees may be charged unless agreed to in writing by the State.

SOURCE CODE ESCROW

A. Deposit in Escrow: “Source Code” means all source code of the Software, together with all commentary

and other materials supporting, incorporated into or necessary for the use of such source code, including all

supporting configuration, documentation, and other resource files and identification by Consultant and

version number of any software (but not a license to such third-party software) used in connection with the

source code and of any compiler, assembler, or utility used in generating object code.

1. Within ninety (90) days of the effective date, Consultant shall deposit the Source Code for the

software with a nationally recognized software escrow company (subject to the approval of the State,

not to be unreasonably withheld) (the “Escrow Agreement”). Within thirty (30) days after delivery to

Customer of any major update, Consultant shall deposit the Source Code for such update with the

Escrow Agent pursuant to the Escrow Agreement. For all other updates, Consultant shall deposit the

Source Code for such updates on a semiannual basis with the Escrow Agent pursuant to the Escrow

Agreement.

2. The parties agree that the Escrow Agreement is an “agreement supplementary to” the Agreement as

provided in Section 365(d) of Title 11, United States Code (the “Bankruptcy Code”). Immediately

upon termination of this Agreement, the Source Code shall be released back to Consultant.

B. Conditions for release: The State will have the right to obtain the Source Code in accordance with and

subject to the terms and conditions of this Section and the Escrow Agreement provided that all of the

following three conditions are met (collectively a “Release Event”):

1. Consultant winds down its business or liquidates its business under a Chapter 7 Bankruptcy

proceeding; or Consultant discontinues maintenance and support to the Software,


2. No entity has succeeded to Consultant’s obligations to provide maintenance and support on the

Software in accordance with the Agreement in effect between the parties, and

3. The State is not in breach of its obligations under this Agreement.

C. Source Code: In no event shall the State have the right to use the Source Code “barring a release event” for

any purpose, and the State is specifically prohibited from using the Source Code to reverse engineer,

develop derivative works or to sublicense the right to use the Source Code to any other person or entity for

any purpose. Customer will also be obligated to treat the Source Code as Confidential Information of

Consultant under the Agreement.

D. The cost for establishing and maintaining the Escrow Account will be that of the State.

PROVISION OF DATA

Upon notice of termination by either party, the State will be provided by the Consultant all current State Data and End

User Data in a non-proprietary form. Upon the effective date of the termination of the agreement, the State will again be

provided by the Consultant with all current State Data and End User Data in a non-proprietary form.

SECURITY INCIDENT NOTIFICATION

The Consultant will implement, maintain and update Security Incident procedures that comply with all State

standards and Federal requirements. A Security Incident is a violation of any BIT security or privacy policies or

contract agreements involving sensitive information, or the imminent threat of a violation. The BIT security

policies can be found in the Information Technology Security Policies attached to this RFP. The State requires

notification of a Security Incident involving any of the State’s sensitive data in the Vendor’s possession. The parties

agree that, to the extent probes and reconnaissance scans common to the industry constitute Security Incidents, this

Agreement constitutes notice by Consultant of the ongoing existence and occurrence of such Security Incidents for

which no additional notice to the State shall be required. Probes and scans include, without limitation, pings and

other broadcast attacks in the Consultant’s firewall, port scans, and unsuccessful log-on attempts, as long as such

probes and reconnaissance scans do not result in a Security Incident as defined above. Except as required by other

legal requirements the Consultant shall only provide notice of the incident to the State. The State will determine if

notification to the public will be by the State or by the Consultant. The method and content of the notification of the

affected parties will be coordinated with, and is subject to approval by the State, unless required otherwise by legal

requirements. If the State decides that the Consultant will be distributing, broadcasting to or otherwise releasing

information on the Security Incident to the news media, the State will decide to whom the information will be sent

and the State must approve the content of any information on the Security Incident before it may be distributed,

broadcast or otherwise released. The Consultant must reimburse the State for any costs associated with the

notification, distributing, broadcasting or otherwise releasing information on the Security Incident.

A. The Consultant shall notify the State Contact within one (1) hour of the Consultant becoming aware that a

Security Incident has occurred.

If notification of a Security Incident to the State Contact is delayed because it may impede a criminal

investigation or jeopardize homeland or federal security, notification must be given to the State within one

(1) hour after law-enforcement provides permission for the release of information on the Security Incident.

B. Notification of a Security Incident at a minimum is to consist of the nature of the data exposed, the time the

incident occurred and a general description of the circumstances of the incident. If not all of the

information is available for the notification within the specified time period Consultant shall provide the

State with all of the available information along with the reason for the incomplete notification. A delay in

excess of one (1) hour is acceptable only if it is necessitated by other legal requirements.

C. At the State’s discretion within twenty-four (24) hoursthe consultant must provide to the State all data

available including: (i) Name of and contact information for the Consultant’s Point of Contact for the

Security Incident: (ii) date and time of the Security Incident; (iii) date and time the Security Incident was

discovered: (iv) description of the Security Incident including the data involved, being as specific as

possible; (v) the potential number of records, and if unknown the range of records; (vi) address where the


Security Incident occurred: and, (vii) the nature of the technologies involved. If not all of the information

is available for the notification within the specified time period Consultant shall provide the State with all

of the available information along with the reason for the incomplete information. A delay in excess of

twenty-four (24) hours is acceptable only if it is necessitated by other legal requirements.

For the purposes of this Agreement the Security Incident definition in the State’s Information Technology Security

Policy does not apply.

HANDLING OF SECURITY INCIDENT

At the State’s discretion the Consultant will preserve all evidence including but not limited to communications,

documents, and logs. The Consultant will also:

(i) fully investigate the incident,

(ii) cooperate fully with the State’s investigation of, analysis of, and response to the incident,

(iii) make a best effort to implement necessary remedial measures as soon as it is possible and,

(iv) document responsive actions taken related to the Security Incident, including any post-incident review

of events and actions taken to implement changes in business practices in providing the services

covered by this agreement.

At the State’s discretion and at the Consultant’s expense the Consultant will use a credit monitoring service, call

center, forensics company, advisors, or public relations firm services that are acceptable to the State. At the State’s

discretion the Consultant shall offer 2 year’s credit monitoring to each person whose data was compromised. The

State will set the scope of any investigation. The State can require a risk assessment of the Consultant, the State

mandating the methodology to be used as well as the scope. At the State’s discretion a risk assessment may be

performed by a third party at the Consultant’s expense.

If the Consultant is required by federal law or regulation to conduct a Security Incident or data breach investigation,

the results of the investigation must be reported to the State within one (1) hour of the investigation report being

completed. If the Consultant is required by federal law or regulation to notify the affected parties, the State must

also be notified, unless otherwise required by legal requirements.

Notwithstanding any other provision of this agreement, and in addition to any other remedies available to the State

under law or equity, the Consultant will reimburse the State in full for all costs incurred by the State in investigation

and remediation of the Security Incident including, but not limited, to providing notification to regulatory agencies

or other entities as required by law or contract. The Consultant shall also pay any and all legal fees, audit costs,

fines, and other fees imposed by regulatory agencies or contracting partners as a result of the Security Incident.

REJECTION OR EJECTION OF CONSULTANT, AND CONSULTANT’S SUBCONTRACTORS,

AGENTS, ASSIGNS AND/OR AFFILIATED ENTITIES EMPLOYEE(S)

The State, at its option, may require the vetting of any of the Consultant, and Consultant’s Subcontractors, Agents,

Assigns and/or Affiliated Entities. The Consultant is required to assist in this process as needed. The State reserves

the right to reject any person from the project who the State believes would be detrimental to the project or is

considered by the State to be a security risk.

The State reserves the right to require the Consultant to remove from the project any person the State believes is

detrimental to the project or is considered by the State to be a security risk. The State will provide the Consultant

with notice of its determination, and the reasons removal is deemed necessary. If the State signifies that a potential

security violation exists with respect to the request, the Consultant shall immediately remove the individual from the

project.

SECURITY ACKNOWLEDGEMENT FORM

The Consultant will be required to sign the Security Acknowledgement form which is attached to this RFP. The

signed Security Acknowledgement form must be submitted to the State and approved by the South Dakota Bureau

of Information and Telecommunications and communicated to the Consultant by the State contact before work on

the contract may begin. This form constitutes the agreement of Consultant to be responsible and liable for ensuring


that the Consultant, Consultant’s employee(s), and Subcontractor’s, Agents, Assigns and or Affiliated Entities and

all of their employee(s), participating in the work will abide by the terms of the Information Technology Security

Policy- Vendor (ITSP) attached to this RFP. Failure to abide by the requirements of the ITSP or the Security

Acknowledgement form can be considered a breach of this Agreement at the discretion of the State. It is also a

breach of this Agreement, at the discretion of the State, if the Consultant does not sign another Security

Acknowledgement form covering any employee(s) and any Subcontractor’s, Agents, Assigns and or Affiliated

Entities employee(s), any of whom are participating in the work covered by this Agreement, and who begin working

under this Agreement after the project has begun. Any disciplining of the Consultant’s, Consultant’s employee(s) or

Subcontractor’s, Agents, Assigns and or Affiliated Entities employee(s) due to a failure to abide by the terms of the

Security Acknowledgement Form will be done at the discretion of the Consultant or Subcontractor’s, Agents,

Assigns and or Affiliated Entities and in accordance with the Consultant’s or Subcontractor’s, Agents, Assigns and

or Affiliated Entities personnel policies. Regardless of the actions taken by the Consultant and Subcontractor’s,

Agents, Assigns and or Affiliated Entities, the State shall retain the right to require at its discretion the removal of

the employee(s) from the project covered by this agreement.

INFORMATION TECHNOLOGY STANDARDS

Any software or hardware provided under this agreement will comply with state standards which can be found at

http://bit.sd.gov/standards/ .

LICENSE AGREEMENTS

Consultant warrants that it has provided to the State and incorporated into this agreement all license agreements,

End User License Agreements, and terms of use regarding its software or any software incorporated into its software

before execution of this agreement. Failure to provide all such license agreements, End User License Agreements,

and terms of use shall be a breach of this agreement at the option of the State. The parties agree that neither the State

nor its end users shall be bound by the terms of any such agreements not timely provided pursuant to this paragraph

and incorporated into this Agreement. Consultant agrees that it shall indemnify and hold the State harmless from

any and all damages or other detriment, actions, lawsuits or other proceedings that arise from failure to provide all

such license agreements, End User License Agreements, and terms of use or that arise from any failure to give the

State notice of all such license agreements, End User License Agreements, and terms of use. Any changes to the

terms of this Agreement or any additions or subtractions must first be agreed to by both parties in writing before

they go into effect. This paragraph shall control and supersede the language of any such agreements to the contrary.

THE STATE OF SOUTH DAKOTA TECHNOLOGY OVERSIGHT

Pursuant to South Dakota Codified Law 1-33-44, the Bureau of Information and Telecommunications ("BIT")

oversees the acquisition of office systems technology, software and services; telecommunication equipment,

software and services; and data processing equipment, software, and services for departments, agencies,

commissions, institutions and other units of state government. BIT requires the contract provisions which are

attached to this Agreement as Appendixes A and B and incorporated into this Agreement by reference. It is

understood and agreed to by all parties that BIT, as the State’s technology governing organization, has reviewed

only Appendixes A and B of this agreement.

http://bit.sd.gov/standards/


In Witness Whereof, the parties signify their agreement effective the date below first written by the signatures

affixed below. By signing this agreement, the Bureau of Information and Telecommunications (BIT) is representing

that as the State’s technology governing organization it has reviewed only the technical provisions of this agreement.

State Consultant

BY:_____________________________________

(Name)

BY:_____________________________________

(Name)

________________________________________

(Title and State Agency)

________________________________________

(Title)

________________________________________

(Date)

________________________________________

(Date)

BY:_____________________________________

(David Zolnowsky)

Bureau of Information and Telecommunications

(Commissioner)

________________________________________

(Date)


Appendix B: Consultant Hosting and Software as a Service State Technology Contract Terms


Appendix B: BIT Consultant Hosting, SaaS and Cloud Services State Technology Contract Template Terms

CONSULTANT ELECTION NOT TO RENEW CONTRACT OR TO INCREASE FEES

The Consultant is obligated to give the State one hundred and eighty (180) days written notice in the event the

Consultant intends not to renew the contract or intends to raise any fees or costs associated with the Consultant’s

products or services in a subsequent contract unless such fees or costs have previously been negotiated and included in

this contract.

DATA LOCATION

The Consultant shall provide its services to the State as well as storage of State data solely from data centers in the

continental United States. This restriction also applies to disaster recovery; any disaster recovery plan must provide

for data storage entirely within the continental United States. The Consultant shall not allow its personnel or

contractors to store State data on portable devices, including personal computers, except for devices that are used

and kept only at its data centers. The Consultant shall permit its personnel and contractors to access State data

remotely only as required to provide technical support.

DATA PROTECTION

Protection of personal privacy and data shall be an integral part of the business activities of the Consultant to ensure

there is no inappropriate or unauthorized use of State’s data at any time. To this end, the Consultant shall safeguard

the confidentiality, integrity and availability of State’s data and comply with the following conditions:

A. The Consultant shall implement and maintain appropriate administrative, technical and organizational

security measures to safeguard against unauthorized access, disclosure or theft of Personally Identifiable

Information (PII), data protected under the Family Educational Rights and Privacy Act (FERPA), Personal

Heath Information (PHI), Federal Tax Information (FTI) or any information that is confidential under state

law. Such security measures shall be in accordance with recognized industry practice and not less

protective than the measures the Consultant applies to its own non-public data.

B. At no time shall any data that either belong to or are intended for the use of the State or its officers, agents

or employees — be copied, disclosed or retained by the Consultant or any party related to the Consultant

for subsequent use in any transaction that does not include the State.

C. The Consultant will not use such data for the Consultant’s own benefit and, in particular, will not engage in

data mining of State’s data or communications, whether through automated or manual means, except as

specifically and expressly required by law or authorized in writing by the State through a State employee or

officer specifically authorized to grant such use of State data.

ACCESS TO SECURITY LOGS AND REPORTS

The Consultant shall provide reports to the State, as requested in a format as agreed to by both the Consultant and

the State. Reports shall include latency statistics, user access, user access IP address, user access history and security

logs for all State files related to this contract.

NON-DISCLOSURE AND SEPARATION OF DUTIES

The Consultant shall enforce separation of job duties and require non-disclosure agreements of all staff that have or

can have access to State data or the hardware that State data resides on. The Consultant will limit staff knowledge to

those staff who duties that require them to have access to the State’s data or the hardware the State’s data resides on.

BUSINESS CONTINUITY AND DISASTER RECOVERY

The Consultant shall provide a business continuity and disaster recovery plan upon request and ensure that the

State’s Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) as determined during negotiations

are met. For purposes of this contract, a “Disaster” shall mean any unplanned interruption of the operation of or

inaccessibility to the Consultant’s service in which the State, using reasonable judgment, requires relocation of

processing to a recovery location. The State shall notify the Consultant as soon as possible after the State deems a

service outage to be a Disaster.


WEB SERVICES

The Consultant shall use Web services exclusively to interface with the State’s data.

STOLEN DATA LIABILITY

In no event shall the Consultant be liable for loss of good will, or for special, indirect, incidental, consequential or

punitive damages arising from the state’s use of the services of the Consultant, regardless of whether such claim

arises in tort or in contract.

If the state’s records or other data submitted for processing are lost or damaged as a result of any failure by the

Consultant, its employees or agents to exercise reasonable care to prevent such loss or damages the Consultant’s

liability on account of such loss or damages shall not exceed the reasonable cost of reproducing such records or data.

This limitation shall not apply in the event that the records or data cannot be reproduced at reasonable cost.

EXTRACTION OF DATA

Upon notice of termination by the Consultant or upon reaching the end of the term, any information stored in

repositories not hosted on the State’s infrastructure shall be extracted in a format to enable to State to load the

information onto\into repositories. If this is not possible the information metadata, including data structure

descriptions and data dictionary, and data will be extracted into a text file format and returned to the State. Upon the

effective date of the termination of the agreement the State again requires that State applications that store information

to repositories not hosted on the State’s infrastructure require the Consultant before termination (whether initiated by

the State or the Consultant) to extract the State’s information such that the state is able to load the information onto

or into repositories listed in the State’s standards. If the information cannot be extracted in a format that allows the

information to be loaded onto or into the State’s Standard repositories the information (metadata (data structure

descriptions) and data) will be extracted into a text file format and returned to the State. The Consultant recognizes

and agrees that the State cannot enter into an agreement providing for hosting of any of its data on the Consultant’s

servers and networks without provisions protecting its ability to access and recover its data in a usable, non-proprietary

format in the event of termination of this contract with sufficient time to convert that data and the business functions

provided by the Consultant to another system and Consultant.

INDEPENDENT AUDIT

The Consultant will disclose any independent audits that are attempted on any of its systems; disclosure of

information will be provided whether the audit or certification is successfully completed or not or whether the audit

process did not result in a positive outcome. The systems included under this requirement are the data centers,

servers, and applications being used by the Consultant. The Consultant will provide a copy of the detailed findings

of the audit(s) to the State.

FACILITIES INSPECTION

The Consultant grants authorized State and/or federal personnel access to inspect their systems, facilities, work

areas, contractual relationships with third parties involved in supporting any aspects of the hosted system, and the

systems that support/protect the hosted system. This access will be granted on 24-hour notice. Such personnel will

be limited to staff authorized by the state or the federal government to audit the system, and representatives of the

state entity that funds the hosting. The State accepts that access will be arranged with an escort, and the Consultant

commits that the escort will have the access and authority to provide physical access to facilities, answer appropriate

questions, and provide requested documentation, including but not limited to executed contract terms, operating

procedures, records of drills and tests, evidence of background checks, security logs, and any other items required by

state or federal audit requirements or as deemed by the State to be required to demonstrate the Consultant is

complying with all contract terms.

HOST FACILITY PHYSICAL SECURITY

The Consultant will provide documentation and, at the discretion of the State, allow for on-site inspections as

needed to demonstrate that all facilities supporting the application have adequate physical security. This includes, at

a minimum, centrally administered electronic locks that control entry and exit from all rooms where the hosted

system resides. Any door security system must either be connected to the building’s power backup system as

defined elsewhere or have internal battery power sufficient to last 24 hours in normal usage. Security events for the

physical access system must be logged and the logs stored electronically in a secure location in a non-changeable

format and must be searchable. Retention on the logs must be not less than 7 years. Log entries must be created for


at least: successful entry and exit (indicating whether the access was to enter or exit the room) as well as all security

related events such as, doors left open more than 30 seconds, forced entries, failed entry attempts, repeat entries

without exit, repeat exits without entry, attempts to access doors for which access was not authorized. The

Consultant agrees to provide, at the State’s request, full access to search the security logs for any access or security

events related to any and all rooms and physical locations hosting the State’s system.

REDUNDANT POWER AND COOLING TO ALL HARDWARE


needed to demonstrate all facilities supporting the application have adequate redundant power and cooling capacity

to operate uninterrupted, and without the need to refuel generators, for not less than 24 hours in the event the local

external power fails.

UPS BACKUP


needed to demonstrate that all facilities supporting the application have adequate UPS power to carry the systems for

not less than 10 minutes, and to protect the system from power fluctuations including, but not limited to, surge,

spikes, sags, and instability.

RIGHTS AND LICENSE IN AND TO STATE DATA

The parties agree that between them, all rights including all intellectual property rights in and to State’s data shall

remain the exclusive property of the State, and that the Consultant has a limited, nonexclusive license to use these

data as provided in this Agreement solely for the purpose of performing its obligations hereunder,. This Agreement

does not give a party any rights, implied or otherwise, to the other’s data, content, or intellectual property, except as

expressly stated in the Agreement.

CESSATION OF BUSINESS

The Consultant will notify the State of impending cessation of its business or that of a tiered provider and the

Consultant’s contingency plan. This plan should include the immediate transfer of any previously escrowed assets

and data and State access to the Consultant’s facilities to remove or destroy any State-owned assets and data. The

Consultant shall implement its exit plan and take all necessary actions to ensure a smooth transition of service with

minimal disruption to the State. The Consultant will provide a fully documented service description and perform and

document a gap analysis by examining any differences between its services and those to be provided by its

successor. The Consultant will also provide a full inventory and configuration of servers, routers, other hardware,

and software involved in service delivery along with supporting documentation, indicating which if any of these are

owned by or dedicated to the State. The Consultant will work closely with its successor to ensure a successful

transition to the new equipment, with minimal downtime and impact on the State, all such work to be coordinated

and performed in advance of the formal, final transition date.

SERVICE LEVEL AGREEMENTS

The Consultant warrants that all services will be performed in a professional and workmanlike manner consistent

with industry standards reasonably applicable to such services. The Consultant further warrants that the services

will be operational at least 99.99% of the time in any given month during the term of this Agreement. In the event

of a service outage, the Consultant will:

A. Promptly and at the Consultant’s expense, use commercial best efforts to restore the services as soon as

possible, and

B. Unless the outage was caused by a Force Majeure event refund or credit the State, at the State’s election,

the pro-rated amount of fees corresponding to the time Services were unavailable or $100 US funds per

incident, whichever is the greater amount. For the purpose of this agreement, an incident, regardless of

time required to return to online position and whether re-keying of data is necessary to return, is defined as

any significant reduction in the availability of hosted services lasting more than one minute or resulting in

data loss, rework, or occurring more than 3 times in a 24 hour time period. For example, being forced

offline no more than twice in 24 hours would not be an incident if the user could get back online within 60

seconds and continue work where he or she left off. Being forced off line 3 times in a day would be an

incident, regardless. Being forced off line once in a 24 hour period of time, however, that resulted in the


user having to rekey data that was lost would be an incident. Entering User authentication to log on shall

not be considered data entry.

The Consultant will provide the State with seven days prior notice of scheduled downtime in the provision of

services for maintenance or upgrades. To the extent possible, the Consultant will schedule downtime during times of

ordinarily low use by the State. In the event of unscheduled or unforeseen downtime for any reason, except as

otherwise prohibited by law, the Consultant will promptly notify the State and respond promptly to the State’s

reasonable requests for information regarding the downtime.

LEGAL REQUESTS FOR DATA

Except as otherwise expressly prohibited by law, the Consultant will:

A. Immediately notify the State of any subpoenas, warrants, or other legal orders, demands or requests

received by the Consultant seeking State data maintained by the Consultant,;

B. Consult with the State regarding its response;

C. Cooperate with the State’s requests in connection with efforts by the State to intervene and quash or modify

the legal order, demand or request; and

D. Upon the State’s request, provide the State with a copy of both the demand or request and its proposed or

actual response.

EDISCOVERY

The Consultant shall contact the State upon receipt of any electronic discovery, litigation holds, discovery searches,

and expert testimonies related to, or which in any way might reasonably require access to the data of the State. The

Consultant shall not respond to service of process, and other legal requests related to the State without first notifying

the State unless prohibited by law from providing such notice.

DATA RETENTION AND DISPOSAL

A. The Consultant will use commercially reasonable efforts to retain data in an End User’s account until the

End User deletes them, or for an alternate time period mutually agreed by the parties.

B. Using appropriate and reliable storage media, the Consultant will regularly back up State’s data and End

User Data and retain such backup copies for a minimum of thirty-six months. At the end of that time

period and at the State’s election, the Consultant will either securely destroy or transmit to the State

repository the backup copies. Upon the State’s request, the Consultant will supply the State with a

certificate indicating the nature of the storage media destroyed, the date destroyed, and the method of

destruction used.

C. The Consultant will retain logs associated with End User activity for a minimum of seven years, unless the

parties mutually agree to a different period.

D. The Consultant will immediately place a “hold” on the destruction under its usual storage media retention

policies of storage media that include State’s data and End User Data, in response to an oral or written

request from authorized State personnel indicating that those records may be relevant to litigation that the

State reasonably anticipates. Oral requests by the State for a hold on storage media destruction will be

reproduced in writing and supplied to the Consultant for its records as soon as reasonably practicable under

the circumstances. The State will promptly coordinate with the Consultant regarding the preservation and

disposition of storage media. The Consultant shall continue to preserve the storage media until further

notice by the State. The Consultant will provide documentation and, at the discretion of the State, allow for

on-site inspections as needed to demonstrate that all facilities supporting the methods of disposal of storage

media, are appropriate to and fulfill all of the State’s needs. By way of example but not of limitation, all

hard drives and tapes used to store State data must, upon destruction be properly disposed of.


MULTI-TENANT ARCHITECTURE LOGICALLY/PHYSICALLY SEPARATED TO INSURE DATA

SECURITY


needed to demonstrate that all facilities supporting the application have adequate safeguards to assure that needed

logical and physical separation is in place and enforced to insure data security, physical security, and transport

security.

ACCESS ATTEMPTS

All access attempts, whether failed or successful, to any system connected to the hosted system which can access,

read, alter, intercept, or otherwise impact the hosted system or its data or data integrity shall be logged by the

Consultant. For all systems, the log must include at least: log-in page used, username used, time and date stamp,

incoming IP for each authentication attempt, and the authentication status, whether successful or not. Logs must be

maintained not less than 7 years in a searchable database in an electronic format that is un-modifiable. At the

request of the state, access must be granted to search those logs as needed to demonstrate compliance with the terms

of this contract, and any and all audit requirements related to the hosted system.

PASSWORD POLICIES

Password policies for all Consultant employees will be documented annually and provided to the state to assure

adequate password protections are in place. Logs and administrative settings will be provided to the state on request

to demonstrate such policies are actively enforced.

APPLICATION OF CONTRACT TERMS

All of the following terms and provisions are applicable to each and every entity that hosts State data. If the

Consultant is proposing to subcontract any hosting of State data to another entity, the relationship between

Consultant and any such subcontracting entity must be that of Principal and Agent. No such Agent may act as an

independent contractor for Consultant. Consultant must include in its contract with any such Agent explicit terms

providing for this Principal and Agent relationship, and Consultant must further supervise such Agent so as to insure

that such Agent complies with all of the following terms.

THIRD PARTY HOSTING

If the Consultant has the State’s data and or End User’s Data hosted by another party the Consultant must provide

the State the name of this party The Consultant must provide the State with contact information for this third party

and the location of their data center(s). The Consultant must receive from the third party written assurances that the

state’s data and or End User Data will reside in the continental United States at all times and provide these written

assurances to the State. If during the term of this agreement the consultant changes from the Consultant hosting the

data to a third-party hosting the data or changes third-party hosting provider, the Consultant will provide the State

with one hundred and eighty (180) days’ advance notice of this change and at that time provide the state with the

information required above.

SECURING OF DATA

All facilities used to store and process State’s data and or End User Data will employ commercial best practices,

including appropriate administrative, physical, and technical safeguards, to secure such data from unauthorized

access, disclosure, alteration, and use. Such measures will be no less protective than those used to secure the

Consultant’s own data of a similar type, and in no event less than commercially reasonable in view of the type and

nature of the data involved. Without limiting the foregoing, the Consultant warrants that all State’s data and or End

User Data will be encrypted in transmission (including via web interface) and storage at no less than AES256 level

encryption with SHA256 or SHA2 hashing.

SECURITY PROCESSES

The Consultant shall disclose its non-proprietary security processes and technical limitations to the State such that

adequate protection and flexibility can be attained between the State and the Consultant. For example: virus

checking and port sniffing.

IMPORT AND EXPORT OF DATA

The State shall have the ability to import or export data piecemeal or in entirety at its discretion without interference

from the Consultant. This includes the ability for the State to import or export data to/from other Consultants.


SCANNING AND AUDIT AUTHORIZATION

The Consultant will provide the State at no cost and at a date, time and for duration agreeable to both parties,

authorization to scan and access to a test system containing test data for security scanning activities. The system and

data provided to the State by Consultant for testing purposes will be considered a test system containing test data.

The State will not scan any environment known by the State to be a production environment at the time the scan is

performed by the State. Consultant provides their consent for the State or any third-party acting for the State to scan

the systems and data provided as the State wishes using any methodology that the State wishes. Any scanning

performed by the State will not be considered a violation of any licensure agreements the State has with the

Consultant or that the consultant has with a third-party.

The Consultant will also allow the State at the State’s expense, not to include Consultant’s expenses, to perform up

to two security audit and vulnerability assessments per year to provide verification of Consultant’s IT security

safeguards for the system and its data. The State will work with the Consultant to arrange the audit at a time least

likely to create workload issues for the Consultant and will accept scanning a test or UAT environment on which the

code and systems are a mirror image of the production environment.

The Consultant indemnifies the state for ordinary, consequential and incidental damages to the Consultant’s

computer system and the data it contains that is the result of scanning. Scanning by the State or any third-party

acting for the State will not be considered reverse engineering. If the State’s security scans discover security issues

the State may collaborate, at the State’s discretion with, the Consultant on remediation efforts. These remediation

efforts will not be considered a violation of any licensure agreements between the State and Consultant. The State

while engaged, and after, with the Consultant on remediation is indemnified and held harmless from all actions,

lawsuits, damages (including all ordinary, consequential and incidental damages) or other proceedings that arise

from security scanning, remediation efforts, and any after effects of security scanning or remediation. This

indemnification includes all defense costs as well as reasonable attorneys’ fees the State of South Dakota is required

to pay in any such proceedings. The State will not be charged for any costs incurred by the consultant in these

remediation efforts unless agreed to by the State in advance in writing. In the event of conflicting language this

clause supersedes any other language in this or any other agreement made between the State and the Consultant.

The Consultant agrees to work with the State to rectify any serious security issues revealed by the security audit and

or security scanning. This includes additional security audits and security scanning that shall be performed after any

remediation efforts to confirm the security issues have been resolved and no further security issues exist.


Appendix C: Cost Proposal Worksheet


Appendix C: Cost Sheet

Cost information below as detailed in the Request for Proposal and submitted in a separate

sealed envelope. Cost should be clearly marked. Vendors may request an separate electronic

copy of Appendix C for use in completing their Price Proposal(s).

This RFP is intended to have a total refresh of all hardware in the final years of the original

contract pursuant to negotiations of the contract extensions. The Vendor should include the

projected costs of anticipated software upgrades and related installation refresh years. Each

independent testing laboratory approved by the Lottery will be responsible for acquiring its own

hardware including connectivity to the Vendor. It is intended by the Lottery that the initial

software (Video Lottery Central System and/or On-line Central System) will be made available to

these laboratories with the costs for the base installation of that software included in this

response.

If the vendor wishes to submit a cost proposal that includes pricing for both systems together

rather than separate, they should still supply two copies of this worksheet with the prices broken

down between the two systems. If the vendor submits such a cost proposal, the two worksheets

must be clearly marked to indicate that they are a joint cost proposal for both systems. As

indicated above, vendors are not restricted to one cost proposal.

Components Purchase

1. Basic License and Service Fee. These

amounts shall be the annual fee to cover

all hardware, software, licenses, training,

and conversion to include all hardware and

software maintenance costs for the initial

eighty-four (84) months of the contract.

This fee should be in percentage of sales

for the On-line Central System and

percentage of Net Machine Income for the

Video Lottery Central System. Cost is to

be included for each year of the seven-year

period. No more than twenty (20) percent of the total seven (7) year costs

are allowed in any one year.

Year 1: ___________

Year 2: ___________

Year 3: ___________

Year 4: ___________

Year 5: ___________

Year 6: ___________

Year 7: ___________

2. Renewal License and Service Fee.

This amount shall be the fee to cover all

hardware, software, licenses and training, to

include all hardware and software

maintenance costs for each of the optional

eight (8) one (1) year renewal years of the

contract.

Year 1: ___________

Year 2: ___________

Year 3: ___________

Year 4: ___________

Year 5: ___________

Year 6: ___________

Year 7: ___________

Year 8: ___________

3. Total Basic and Renewal Fees ___________________


Specified Optional Services: A separate price quote for options requested which may be

purchased under a contract resulting from this RFP. If a specified option is to be included in the

base system price, indicate in the table and mark the price as N/C (No Charge). If additional

space is needed, attach an additional sheet using the format of the table below.

Specified Optional Services

a. $

b. $

c. $

d. $

e. $

f. $

g. $

h. $

i. $

j. $

k. $

Invited Optional Services: A separate price quote (not mandatory) for options invited to be

offered by the Vendor which may be purchased under a contract resulting from this RFP. If an

invited option is to be included in the base system price, indicate in the table and mark the price

as N/C (No Charge). (Attach a description for each commodity and/or service):

Invited Optional Services

a. $

b. $

c. $

d. $

e. $

f. $

g. $

h. $

i. $

j. $

k. $

Offered Optional Services: A separate price quote (not mandatory) for options not

specifically requested but may be offered which may be purchased under a contract resulting

from this RFP. (Attach a description for each commodity and/or service):

Offered Optional Services


a. $

b. $

c. $

d. $

e. $

f. $

g. $

h. $

i. $

j. $

k. $


Appendix D: Annual Revenues


FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

Annual Sales, Audited $23,009,677 $28,992,932 $25,340,133 $28,580,432 $32,048,317 $28,365,084

Gross Gaming Revenue $11,416,492 $14,408,165 $12,525,977 $14,093,914 $15,843,265 $14,013,601

GGR as Percentage of Sales 49.62% 49.70% 49.43% 49.31% 49.44% 49.40%

Sales Growth (%) -20.64% 14.42% -11.34% -10.82% 12.99%

GGR Growth (%) -20.76% 15.03% -11.12% -11.04% 13.06%

FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

Annual Cash-In, Audited $702,820,214 $678,898,195 $641,668,506 $590,520,297 $580,092,145 $550,055,033

Net Machine Income $212,376,196 $207,602,544 $199,129,996 $185,246,728 $184,640,564 $176,644,130

NMI as Percentage of Cash-In 30.22% 30.58% 31.03% 31.37% 31.83% 32.11%

Cash-In Growth (%) 3.52% 5.80% 8.66% 1.80% 5.46%

NMI Growth (%) 2.30% 4.25% 7.49% 0.33% 4.53%

On-Line Sales

Video Lottery Net Machine Income


Appendix E: Draw Game Sales By Week


Powerball Dakota Cash Wild Card 2 Hot Lotto Mega Millions Lucky for Life Lotto America Grand Total

Jul 04, 2015 $192,678 $34,297 $32,793 $67,638 $70,276 $397,682

Jul 11, 2015 $175,394 $37,018 $33,631 $46,940 $76,728 $369,711

Jul 18, 2015 $184,314 $38,705 $34,112 $45,279 $88,055 $390,465

Jul 25, 2015 $192,092 $42,509 $34,173 $46,854 $73,203 $388,831

Aug 01, 2015 $231,294 $45,055 $34,607 $46,707 $52,623 $410,286

Aug 08, 2015 $178,729 $46,009 $34,177 $46,347 $53,032 $358,294

Aug 15, 2015 $185,443 $50,120 $36,301 $46,809 $52,965 $371,638

Aug 22, 2015 $195,682 $52,146 $35,683 $46,606 $54,301 $384,418

Aug 29, 2015 $219,501 $54,510 $36,181 $46,462 $57,001 $413,655

Sep 05, 2015 $241,924 $43,342 $39,168 $49,311 $63,284 $437,029

Sep 12, 2015 $244,923 $25,672 $41,169 $48,562 $64,979 $425,305

Sep 19, 2015 $287,180 $26,465 $42,679 $50,656 $48,581 $455,561

Sep 26, 2015 $366,503 $27,715 $32,999 $52,114 $51,308 $530,639

Oct 03, 2015 $330,749 $30,012 $33,585 $53,596 $56,141 $504,083

Oct 10, 2015 $211,674 $30,070 $33,546 $54,112 $58,564 $387,966

Oct 17, 2015 $185,105 $31,208 $33,087 $53,760 $60,392 $363,552

Oct 24, 2015 $208,719 $33,389 $33,513 $55,335 $70,512 $401,468

Oct 31, 2015 $221,960 $35,233 $33,225 $55,569 $83,164 $429,151

Nov 07, 2015 $218,011 $37,876 $34,977 $56,887 $86,724 $434,475

Nov 14, 2015 $173,333 $40,021 $33,208 $56,735 $108,337 $411,634

Nov 21, 2015 $173,557 $42,738 $30,595 $57,101 $48,082 $352,073

Nov 28, 2015 $194,539 $43,767 $29,460 $57,275 $48,615 $373,656

Dec 05, 2015 $215,904 $47,476 $30,880 $58,882 $52,825 $405,967

Dec 12, 2015 $250,250 $51,663 $32,798 $50,688 $57,208 $442,607

Dec 19, 2015 $272,597 $27,724 $34,184 $43,125 $58,597 $436,227

Dec 26, 2015 $330,132 $27,170 $35,247 $42,228 $67,153 $501,930

Jan 02, 2016 $577,411 $31,013 $39,316 $48,313 $75,319 $771,372

Jan 09, 2016 $3,573,643 $43,687 $47,052 $62,824 $100,428 $3,827,634

Jan 16, 2016 $3,577,938 $43,966 $45,289 $57,624 $67,535 $3,792,352

Jan 23, 2016 $217,016 $36,387 $40,946 $48,657 $51,719 $394,725

Jan 30, 2016 $215,241 $37,746 $42,311 $48,777 $54,105 $398,180

Feb 06, 2016 $236,673 $41,069 $43,173 $43,795 $56,958 $421,668

Feb 13, 2016 $240,500 $42,285 $43,113 $43,487 $55,399 $424,784

Feb 20, 2016 $262,668 $46,292 $45,795 $45,172 $57,971 $457,898

Feb 27, 2016 $280,141 $50,632 $32,769 $46,877 $62,397 $472,816

Mar 05, 2016 $241,654 $55,762 $50,544 $67,171 $415,131

Mar 12, 2016 $182,666 $58,750 $48,026 $60,589 $350,031

Mar 19, 2016 $186,522 $62,138 $48,999 $47,379 $345,038

Mar 26, 2016 $197,852 $65,238 $48,626 $48,542 $360,258

Apr 02, 2016 $219,599 $74,319 $50,529 $51,200 $395,647

Apr 09, 2016 $230,961 $54,042 $52,309 $53,674 $390,986

Apr 16, 2016 $256,235 $29,961 $53,580 $54,437 $394,213

Apr 23, 2016 $283,394 $29,914 $53,570 $57,660 $424,538

Apr 30, 2016 $335,236 $32,009 $54,569 $62,463 $484,277

May 07, 2016 $564,235 $33,928 $58,190 $68,647 $725,000

May 14, 2016 $175,936 $28,509 $55,756 $75,604 $335,805

May 21, 2016 $182,818 $28,414 $56,131 $81,165 $348,528

May 28, 2016 $189,715 $28,931 $56,255 $93,683 $368,584

Jun 04, 2016 $207,507 $27,971 $57,494 $96,684 $389,656

Jun 11, 2016 $211,632 $28,196 $56,560 $104,081 $400,469

Jun 18, 2016 $222,949 $29,052 $57,747 $117,076 $426,824

Jun 25, 2016 $234,144 $31,577 $56,602 $141,171 $463,494

Draw Game Sales by Week


Jul 02, 2016 $295,237 $36,087 $60,608 $204,089 $596,021

Jul 09, 2016 $334,893 $38,687 $61,692 $456,527 $891,799

Jul 16, 2016 $330,796 $39,161 $61,485 $59,878 $491,320

Jul 23, 2016 $365,325 $42,116 $62,698 $56,306 $526,445

Jul 30, 2016 $678,653 $39,509 $68,324 $56,830 $843,316

Aug 06, 2016 $193,669 $29,278 $70,817 $58,123 $351,887

Aug 13, 2016 $203,166 $29,130 $56,092 $58,663 $347,051

Aug 20, 2016 $223,869 $31,580 $45,359 $62,342 $363,150

Aug 27, 2016 $237,958 $32,835 $47,987 $64,668 $383,448

Sep 03, 2016 $249,745 $52,188 $44,914 $67,702 $414,549

Sep 10, 2016 $252,363 $52,912 $45,291 $68,387 $418,953

Sep 17, 2016 $284,182 $57,074 $47,015 $72,876 $461,147

Sep 24, 2016 $174,783 $61,312 $45,735 $49,912 $331,742

Oct 01, 2016 $189,021 $71,349 $47,241 $53,335 $360,946

Oct 08, 2016 $197,591 $75,549 $46,911 $55,720 $375,771

Oct 15, 2016 $217,465 $75,752 $47,215 $51,980 $392,412

Oct 22, 2016 $230,606 $78,095 $47,484 $49,267 $405,452

Oct 29, 2016 $239,510 $83,930 $47,714 $50,258 $421,412

Nov 05, 2016 $276,572 $44,366 $52,861 $54,618 $428,417

Nov 12, 2016 $294,379 $42,719 $50,977 $54,476 $442,551

Nov 19, 2016 $332,391 $42,005 $50,580 $55,637 $480,613

Nov 26, 2016 $472,458 $43,561 $52,801 $46,182 $615,002

Dec 03, 2016 $173,955 $39,497 $53,122 $48,983 $315,557

Dec 10, 2016 $181,584 $38,914 $52,825 $49,220 $322,543

Dec 17, 2016 $208,410 $39,722 $52,109 $52,031 $352,272

Dec 24, 2016 $200,139 $45,890 $57,616 $59,918 $363,563

Dec 31, 2016 $187,137 $45,968 $54,159 $59,843 $347,107

Jan 07, 2017 $187,998 $48,005 $53,553 $65,822 $355,378

Jan 14, 2017 $203,876 $51,943 $54,688 $69,501 $380,008

Jan 21, 2017 $219,097 $56,029 $55,511 $73,241 $403,878

Jan 28, 2017 $217,247 $56,669 $53,559 $74,437 $401,912

Feb 04, 2017 $273,721 $66,161 $58,293 $48,308 $446,483

Feb 11, 2017 $297,994 $68,477 $57,573 $48,944 $472,988

Feb 18, 2017 $373,198 $57,599 $62,097 $51,551 $544,445

Feb 25, 2017 $433,207 $41,802 $66,787 $55,209 $597,005

Mar 04, 2017 $190,094 $41,225 $69,700 $64,102 $365,121

Mar 11, 2017 $202,408 $41,786 $68,363 $66,361 $378,918

Mar 18, 2017 $218,583 $44,654 $65,754 $67,852 $396,843

Mar 25, 2017 $203,121 $47,813 $67,146 $72,283 $390,363

Apr 01, 2017 $179,208 $49,378 $66,815 $82,506 $377,907

Apr 08, 2017 $169,283 $52,351 $69,178 $49,465 $340,277

Apr 15, 2017 $181,665 $56,759 $68,665 $50,123 $357,212

Apr 22, 2017 $188,345 $62,442 $66,910 $51,673 $369,370

Apr 29, 2017 $212,618 $65,699 $67,814 $54,394 $400,525

May 06, 2017 $221,521 $67,304 $67,738 $47,788 $404,351

May 13, 2017 $235,343 $68,959 $66,721 $48,338 $419,361

May 20, 2017 $274,921 $71,747 $68,675 $49,595 $464,938

May 27, 2017 $302,235 $78,066 $68,338 $52,310 $500,949

Jun 03, 2017 $364,286 $80,794 $68,384 $53,142 $566,606

Jun 10, 2017 $502,092 $86,587 $71,094 $56,736 $32,532 $749,041

Jun 17, 2017 $165,490 $86,064 $69,098 $65,156 $40,502 $426,310

Jun 24, 2017 $175,996 $92,169 $68,346 $69,674 $39,662 $445,847


Jul 01, 2017 $201,894 $97,714 $71,716 $64,374 $40,678 $476,376

Jul 08, 2017 $205,799 $100,098 $68,457 $74,538 $42,274 $491,166

Jul 15, 2017 $218,650 $103,559 $70,390 $82,520 $42,930 $518,049

Jul 22, 2017 $232,573 $109,044 $70,551 $87,803 $43,784 $543,755

Jul 29, 2017 $246,639 $110,442 $68,773 $91,297 $45,298 $562,449

Aug 05, 2017 $300,650 $122,800 $73,089 $115,379 $48,594 $660,512

Aug 12, 2017 $484,523 $130,003 $78,002 $193,449 $51,932 $937,909

Aug 19, 2017 $937,980 $177,370 $85,159 $60,575 $52,684 $1,313,768

Aug 26, 2017 $1,272,020 $189,790 $88,599 $60,507 $58,502 $1,669,418

Sep 02, 2017 $187,336 $173,075 $82,188 $53,672 $47,506 $543,777

Sep 09, 2017 $195,557 $114,613 $82,496 $52,385 $47,316 $492,367

Sep 16, 2017 $205,289 $42,838 $84,299 $55,347 $48,360 $436,133

Sep 23, 2017 $168,945 $42,439 $83,746 $62,052 $47,658 $404,840

Sep 30, 2017 $179,387 $42,551 $83,716 $44,748 $48,718 $399,120

Oct 07, 2017 $195,695 $44,609 $80,587 $47,025 $48,706 $416,622

Oct 14, 2017 $204,712 $38,771 $80,110 $46,374 $47,122 $417,089

Oct 21, 2017 $219,286 $39,129 $80,286 $41,233 $47,200 $427,134

Oct 28, 2017 $194,611 $38,048 $84,135 $40,778 $46,716 $404,288

Nov 04, 2017 $178,158 $47,095 $71,541 $50,408 $347,202

Nov 11, 2017 $183,008 $48,127 $66,782 $52,606 $350,523

Nov 18, 2017 $193,466 $43,166 $66,403 $48,518 $45,248 $396,801

Nov 25, 2017 $200,899 $37,052 $68,113 $47,196 $43,307 $396,567

Dec 02, 2017 $222,254 $39,934 $76,142 $48,176 $46,958 $433,464

Dec 09, 2017 $229,624 $39,242 $76,789 $48,746 $46,778 $441,179

Dec 16, 2017 $267,090 $43,898 $86,346 $50,438 $48,767 $496,539

Dec 23, 2017 $340,883 $49,094 $103,281 $53,022 $50,916 $597,196

Dec 30, 2017 $465,238 $49,639 $162,810 $50,926 $48,530 $777,143

Jan 06, 2018 $1,065,760 $66,029 $411,937 $60,290 $57,074 $1,661,090


Appendix F: Sales Runs on Jackpots


Draw # Draw Date Jackpot Annuity Powerball Sales Draw # Draw Date Jackpot Annuity Powerball Sales

1 11/07/2015 $40,000,000 $92,317 1 06/14/2017 $40,000,000 $82,802

2 11/11/2015 $50,000,000 $85,213 2 06/17/2017 $53,000,000 $82,688

3 11/14/2015 $60,000,000 $88,120 3 06/21/2017 $65,000,000 $86,802

4 11/18/2015 $70,000,000 $88,844 4 06/24/2017 $78,000,000 $89,194

5 11/21/2015 $80,000,000 $84,713 5 06/28/2017 $91,000,000 $94,466

6 11/25/2015 $90,000,000 $104,582 6 07/01/2017 $109,000,000 $107,428

7 11/28/2015 $100,000,000 $89,957 7 07/05/2017 $123,000,000 $99,773

8 12/02/2015 $110,000,000 $103,937 8 07/08/2017 $140,000,000 $106,026

9 12/05/2015 $128,000,000 $111,967 9 07/12/2017 $155,000,000 $109,370

10 12/09/2015 $145,000,000 $125,188 10 07/15/2017 $170,000,000 $109,280

11 12/12/2015 $161,000,000 $125,062 11 07/19/2017 $186,000,000 $113,187

12 12/16/2015 $180,000,000 $123,266 12 07/22/2017 $201,000,000 $119,386

13 12/19/2015 $204,000,000 $149,331 13 07/26/2017 $218,000,000 $121,028

14 12/23/2015 $232,000,000 $185,775 14 07/29/2017 $242,000,000 $125,611

15 12/26/2015 $261,000,000 $144,357 15 08/02/2017 $262,000,000 $135,830

16 12/30/2015 $301,000,000 $231,008 16 08/05/2017 $287,000,000 $164,820

17 01/02/2016 $355,000,000 $346,403 17 08/09/2017 $323,000,000 $217,355

18 01/06/2016 $528,000,000 $1,148,671 18 08/12/2017 $371,000,000 $267,168

19 01/09/2016 $947,000,000 $2,424,972 19 08/16/2017 $432,000,000 $350,291

20 01/13/2016 $1,586,000,000 $3,452,880 20 08/19/2017 $541,000,000 $587,689

21 08/23/2017 $758,000,000 $1,185,564


1 03/27/2013 $40,000,000 $107,515 1 12/08/2012 $40,000,000 $116,095

2 03/30/2013 $40,000,000 $122,710 2 12/12/2012 $50,000,000 $122,939

3 04/03/2013 $50,000,000 $125,032 3 12/15/2012 $60,000,000 $126,178

4 04/06/2013 $50,000,000 $124,997 4 12/19/2012 $70,000,000 $130,648

5 04/10/2013 $60,000,000 $105,420 5 12/22/2012 $80,000,000 $133,018

6 04/13/2013 $70,000,000 $128,653 6 12/26/2012 $90,000,000 $145,185

7 04/17/2013 $80,000,000 $132,420 7 12/29/2012 $100,000,000 $158,227

8 04/20/2013 $95,600,000 $141,953 8 01/02/2013 $110,000,000 $161,671

9 04/24/2013 $116,000,000 $152,112 9 01/05/2013 $126,300,000 $177,276

10 04/27/2013 $139,400,000 $164,831 10 01/09/2013 $145,600,000 $181,069

11 05/01/2013 $163,800,000 $185,683 11 01/12/2013 $163,500,000 $183,025

12 05/04/2013 $193,800,000 $209,724 12 01/16/2013 $187,400,000 $208,299

13 05/08/2013 $222,000,000 $252,336 13 01/19/2013 $219,200,000 $247,273

14 05/11/2013 $279,000,000 $280,699 14 01/23/2013 $262,900,000 $311,960

15 05/15/2013 $363,900,000 $528,330 15 01/26/2013 $327,000,000 $525,154

16 05/18/2013 $590,500,000 $1,441,130 16 01/30/2013 $587,500,000 $2,031,340

Sales Runs on Powerball Jackpots above $500 Million



1 12/03/2014 $40,000,000 $97,273 1 10/28/2017 $40,000,000 $77,987

2 12/06/2014 $50,000,000 $93,430 2 11/01/2017 $50,000,000 $89,145

3 12/10/2014 $60,000,000 $94,837 3 11/04/2017 $62,000,000 $89,013

4 12/13/2014 $70,000,000 $99,362 4 11/08/2017 $75,000,000 $91,980

5 12/17/2014 $80,000,000 $95,079 5 11/11/2017 $89,000,000 $91,028

6 12/20/2014 $90,000,000 $106,080 6 11/15/2017 $103,000,000 $97,583

7 12/24/2014 $100,000,000 $144,740 7 11/18/2017 $120,000,000 $95,883

8 12/27/2014 $110,000,000 $95,928 8 11/22/2017 $134,000,000 $109,873

9 12/31/2014 $120,000,000 $130,537 9 11/25/2017 $147,000,000 $91,026

10 01/03/2015 $132,000,000 $120,706 10 11/29/2017 $161,000,000 $106,884

11 01/07/2015 $146,000,000 $121,795 11 12/02/2017 $178,000,000 $115,370

12 01/10/2015 $160,000,000 $123,920 12 12/06/2017 $194,000,000 $109,820

13 01/14/2015 $176,000,000 $134,368 13 12/09/2017 $211,000,000 $119,804

14 01/17/2015 $190,000,000 $141,330 14 12/13/2017 $230,000,000 $127,106

15 01/21/2015 $211,000,000 $166,595 15 12/16/2017 $249,000,000 $139,984

16 01/24/2015 $235,000,000 $179,935 16 12/20/2017 $272,000,000 $154,532

17 01/28/2015 $259,000,000 $205,048 17 12/23/2017 $309,000,000 $186,351

18 01/31/2015 $285,000,000 $225,430 18 12/27/2017 $340,000,000 $171,237

19 02/04/2015 $324,000,000 $323,026 19 12/30/2017 $390,000,000 $294,001

20 02/07/2015 $394,000,000 $468,573 20 01/03/2017 $460,900,000 $430,527

21 02/11/2015 $564,000,000 $1,172,336 21 01/06/2017 $559,000,000 $635,233


Appendix G: Instant Sales by Price Point


CY & MM $1 $2 $3 $5 $10 $20 Grand Total

2016 $2,758,886 $5,016,832 $4,792,377 $7,414,840 $3,628,940 $2,571,100 $26,182,975

1 $340,822 $528,068 $391,536 $596,055 $288,990 $213,000 $2,358,471

2 $212,182 $505,160 $401,487 $518,065 $346,780 $220,140 $2,203,814

3 $182,700 $525,602 $437,283 $517,035 $408,360 $238,000 $2,308,980

4 $196,694 $434,126 $376,449 $537,265 $278,710 $223,760 $2,047,004

5 $188,731 $377,662 $381,714 $579,905 $312,050 $239,840 $2,079,902

6 $188,639 $365,900 $417,399 $642,110 $288,810 $210,380 $2,113,238

7 $153,336 $320,750 $387,636 $596,360 $272,470 $218,880 $1,949,432

8 $229,706 $394,470 $400,131 $665,855 $287,510 $223,300 $2,200,972

9 $180,141 $324,428 $358,650 $640,755 $247,110 $202,240 $1,953,324

10 $171,555 $359,674 $439,221 $760,030 $280,580 $187,200 $2,198,260

11 $231,439 $337,642 $367,860 $629,390 $279,900 $182,460 $2,028,691

12 $482,941 $543,350 $433,011 $732,015 $337,670 $211,900 $2,740,887

2017 $3,081,454 $4,516,608 $4,895,418 $7,313,895 $3,958,100 $3,709,940 $27,475,415

1 $249,517 $328,764 $387,450 $609,785 $297,680 $203,720 $2,076,916

2 $218,779 $321,036 $397,485 $590,565 $299,410 $153,160 $1,980,435

3 $266,606 $419,120 $464,169 $754,630 $341,890 $257,180 $2,503,595

4 $216,563 $310,554 $362,727 $610,450 $316,220 $249,600 $2,066,114

5 $269,087 $333,632 $374,496 $627,530 $363,050 $255,140 $2,222,935

6 $235,605 $351,730 $395,268 $626,570 $336,020 $246,640 $2,191,833

7 $218,371 $391,476 $385,233 $630,470 $330,440 $262,800 $2,218,790

8 $208,914 $355,798 $390,396 $633,985 $352,750 $313,180 $2,255,023

9 $271,361 $364,144 $370,368 $567,065 $320,630 $440,900 $2,334,468

10 $194,468 $357,362 $416,406 $549,675 $288,460 $445,060 $2,251,431

11 $261,102 $405,516 $420,477 $514,985 $275,580 $418,800 $2,296,460

12 $471,081 $577,476 $530,943 $598,185 $435,970 $463,760 $3,077,415

Grand Total $5,840,340 $9,533,440 $9,687,795 $14,728,735 $7,587,040 $6,281,040 $53,658,390

Instant Sales by Price Point


Appendix H: Retailers by City


City Retailers City Retailers City Retailers City Retailers

ABERDEEN 20 DOLAND 1 MARION 1 VIBORG 1

ALCESTER 1 EDGEMONT 2 MARTIN 5 VOLGA 3

ALEXANDRIA 1 ELK POINT 3 MELLETTE 1 WAGNER 6

ARLINGTON 2 ELKTON 1 MENNO 1 WAKONDA 1

ARMOUR 1 EMERY 1 MIDLAND 1 WALL 3

ARTESIAN 1 ESTELLINE 1 MILBANK 5 WATERTOWN 22

AURORA 1 EUREKA 1 MILLER 2 WAUBAY 1

AVON 1 FAITH 2 MINA 1 WEBSTER 4

BALTIC 2 FAULKTON 2 MITCHELL 20 WESSINGTON 2

BELLE FOURCHE 7 FEDORA 1 MOBRIDGE 4 WESSINGTON SPRINGS 1

BERESFORD 4 FLANDREAU 4 MURDO 2 WHITE 1

BIG STONE CITY 2 FORT PIERRE 4 NEW UNDERWOOD 1 WHITE LAKE 2

BISON 2 FREEMAN 2 NEWELL 2 WHITE RIVER 2

BLACK HAWK 2 GARRETSON 1 NORTH SIOUX CITY 4 WHITEWOOD 2

BLUNT 2 GEDDES 2 OACOMA 4 WILLOW LAKE 1

BONESTEEL 2 GETTYSBURG 3 ONIDA 1 WILMOT 1

BOWDLE 1 GREGORY 3 PARKER 1 WINFRED 1

BOX ELDER 3 GROTON 2 PARKSTON 2 WINNER 5

BRADLEY 1 HARRISBURG 2 PEEVER 1 WOLSEY 1

BRANDON 6 HARROLD 1 PHILIP 3 WOOD 1

BRITTON 3 HARTFORD 2 PICKSTOWN 1 WOONSOCKET 1

BROOKINGS 15 HENRY 1 PIEDMONT 1 WORTHING 1

BUFFALO 1 HERMOSA 2 PIERRE 15 YANKTON 21

BURBANK 1 HERREID 1 PLANKINTON 2

BURKE 2 HIGHMORE 2 PLATTE 4

CANISTOTA 1 HILL CITY 2 PRESHO 2

CANTON 3 HOT SPRINGS 7 RAPID CITY 66

CASTLEWOOD 2 HOVEN 1 REDFIELD 6

CENTERVILLE 1 HOWARD 1 ROSHOLT 1

CENTRAL CITY 1 HUMBOLDT 1 ROWENA 1

CHAMBERLAIN 6 HURLEY 1 SALEM 1

CHANCELLOR 1 HURON 17 SCOTLAND 1

CHESTER 1 IPSWICH 1 SELBY 1

CLAREMONT 1 IRENE 1 SIOUX FALLS 88

CLARK 2 JEFFERSON 1 SISSETON 3

CLEAR LAKE 3 KADOKA 2 SPEARFISH 11

COLMAN 1 KIMBALL 1 SPENCER 1

COLOME 1 LAKE ANDES 2 SPRINGFIELD 3

COLTON 1 LAKE NORDEN 1 STICKNEY 1

CORSICA 1 LAKE PRESTON 2 STURGIS 10

CROOKS 1 LANGFORD 1 SUMMERSET 1

CUSTER 5 LEAD 3 SUMMIT 1

DAKOTA DUNES 1 LEMMON 2 TEA 3

DE SMET 3 LENNOX 4 TORONTO 1

DEADWOOD 3 LEOLA 1 TRIPP 1

DELL RAPIDS 5 MADISON 7 VERMILLION 7

On-line Retailers by City


Appendix I: Establishments & Terminals by City


City Establishments Terminals City Establishments Terminals City Establishments Terminals

Aberdeen 52 385 Chancellor 2 20 Gettysburg 6 32

Akaska 2 5 Chester 2 9 Glenham 2 4

Alcester 4 29 Claire City 1 2 Gregory 6 32

Alexandria 3 11 Claremont 1 3 Grenville 2 11

Alpena 1 6 Clark 2 5 Groton 5 25

Altamont 1 3 Clear Lake 4 19 Harrisburg 5 37

Amherst 1 3 Colman 3 25 Hartford 4 29

Andover 1 4 Colome 1 4 Hayti 1 6

Arlington 5 35 Colton 1 7 Hecla 1 8

Armour 3 15 Corona 2 5 Henry 2 9

Artesian 2 7 Corsica 1 4 Hermosa 4 32

Aurora 2 13 Corson 1 10 Herreid 2 12

Avon 3 12 Crocker 1 2 Herrick 1 2

Baltic 3 14 Crooks 3 18 Highmore 3 19

Belle Fourche 11 73 Custer 8 59 Hill City 4 23

Belvidere 1 4 Dakota Dunes 1 2 Hosmer 2 4

Beresford 7 47 Dallas 1 9 Hot Springs 12 98

Big Stone City 7 60 Davis 1 4 Hoven 2 10

Bison 2 7 De Smet 4 29 Howard 2 10

Black Hawk 7 60 Deadwood 3 10 Hudson 2 20

Blunt 2 8 Dell Rapids 4 29 Humboldt 3 28

Bonesteel 2 10 Delmont 1 2 Hurley 2 7

Bowdle 2 8 Dimock 1 6 Huron 28 221

Box Elder 9 85 Doland 2 6 Interior 3 16

Bradley 1 4 Eden 1 8 Ipswich 4 17

Brandon 12 105 Edgemont 3 24 Irene 3 17

Brandt 1 4 Egan 1 4 Jefferson 2 18

Bridgewater 1 3 Elk Point 5 30 Kadoka 6 36

Bristol 2 6 Elkton 2 13 Kaylor 1 2

Britton 4 29 Ellsworth AFB 1 7 Kennebec 1 3

Brookings 22 168 Estelline 1 3 Keystone 2 8

Bruce 2 7 Ethan 1 3 Kimball 4 16

Bryant 1 3 Eureka 1 4 Kranzburg 2 5

Buffalo 4 16 Faith 4 23 Lake Andes 4 26

Buffalo Gap 1 2 Faulkton 2 11 Lake City 2 14

Burbank 2 13 Ferney 1 2 Lake Norden 1 5

Burke 4 20 Flandreau 3 27 Lake Preston 1 5

Camp Crook 2 7 Florence 1 3 Langford 2 9

Canistota 2 12 Forestburg 1 2 Lead 3 10

Canova 2 5 Fort Pierre 8 56 Lebanon 1 4

Canton 6 38 Frederick 1 4 Lemmon 7 33

Carthage 1 5 Freeman 4 32 Lennox 6 48

Castlewood 3 19 Garretson 5 27 Leola 1 3

Centerville 3 14 Gary 4 26 Lesterville 1 3

Central City 1 4 Gayville 1 3 Letcher 2 6

Chamberlain 10 54 Geddes 2 7 Ludlow 1 6

Establishments & Terminals by City


City Establishments Terminals City Establishments Terminals City Establishments Terminals

Madison 12 79 Revillo 1 3 Whitewood 3 17

Marion 2 9 Rockerville 1 6 Willow Lake 2 11

Martin 7 59 Roscoe 1 4 Wilmot 3 9

Marvin 1 3 Rosholt 2 11 Winfred 1 6

Meckling 1 4 Roslyn 1 4 Winner 9 55

Mellette 1 5 Saint Onge 1 5 Wolsey 2 12

Menno 4 23 Salem 5 17 Wood 1 5

Midland 2 11 Scotland 1 3 Woonsocket 3 19

Milbank 8 52 Selby 4 19 Worthing 2 14

Miller 4 30 Sherman 1 4 Yankton 45 354

Mina 2 6 Sioux Falls 147 1328

Mission Hill 1 6 Sisseton 9 64

Mitchell 40 332 South Shore 2 6

Mobridge 13 70 Spearfish 17 121

Monroe 1 2 Spencer 1 8

Montrose 1 2 Springfield 2 18

Mound City 1 4 Stickney 2 5

Mount Vernon 2 9 Strandburg 1 4

Murdo 3 24 Sturgis 10 73

New Effington 1 5 Summerset 3 28

New Underwood 2 12 Summit 3 18

Newell 3 17 Tabor 1 3

Nisland 1 3 Tea 5 43

North Sioux City 56 549 Toronto 3 12

Nunda 1 4 Trent 1 5

Oacoma 4 26 Tripp 3 8

Oelrichs 4 34 Tulare 1 3

Onida 3 15 Twin Brooks 1 6

Parker 2 12 Tyndall 3 20

Parkston 4 21 Valley Springs 1 10

Peever 2 8 Veblen 1 6

Philip 4 31 Vermillion 18 117

Pickstown 3 11 Viborg 2 11

Piedmont 3 21 Vivian 1 6

Pierpont 1 4 Volga 4 25

Pierre 34 281 Wagner 8 65

Plankinton 4 25 Wakonda 2 6

Platte 5 26 Wall 4 30

Pollock 3 13 Ward 1 3

Presho 3 11 Warner 1 4

Pukwana 2 5 Watertown 50 367

Quinn 1 3 Waubay 7 37

Ramona 1 4 Webster 6 45

Rapid City 103 942 Wessington Springs 3 19

Redfield 8 50 White 2 7

Reliance 1 4 White Lake 3 10

Renner 3 24 White River 4 31

Establishments & Terminals by City


Appendix J: Security and Vendor Questions


Appendix J Security and Vendor Questions

Vendors: The following questions are asked to help BIT determine the best ways to integrate your product with the State’s technology infrastructure. Some questions may not apply but please review all of them. You will see that this is divided into sections to help identify the point of the questions. Use the last column as needed to explain your answers. Please note that many questions explicitly ask you to explain your response. Where we feel that a Yes/No/NA response is not appropriate, the cell has been greyed out. The “BIT” column corresponds to the branch that will be the primary reviewers. If you have questions about the meaning or intent of a question, we can contact them on your behalf. DAT = Data Center; DEV = Development; TEL = Telecommunications; PMO = Project Management office

Section: System Security - Applicable to All Proposals

The following questions pertain to all vendors, contractors or third-parties engaged in this system, and pertain to relevant security practices for your system, coding, and business processes.

Response

# BIT Question YES NO NA Explain answer as needed A1 DAT Is a user required to change their password? How often? What are

the complexity requirements for the passwords? (BIT password requirements are available in Section 230.67.4.4 of the Information Technology Security Policy which can be supplied upon request).

A2 DEV TEL

Will the system implement its own level of security?

A3 DAT TEL x

Will the system provide Internet security functionality on public portals using encrypted network/secure socket layer connections in line with current recommendations of the Open Web Application Security Project (OWASP)?

A4 TEL x Will the system provide Internet security functionality on a public portal to include firewalls?


A5 PMO Will the system distinguish between local versus global administrators where local administrators have rights to user management only for the program area that they are associated with and global administrators have rights for the entire system?

A6 DAT TEL

Does the application contain mitigations for risks associated to uncontrolled login attempts (response latency, re-Captcha, lockout, IP filtering, Multi Factor authentication)? Which mitigations are in place? What are the optional mitigations?

A7 DAT TEL

Are account credentials hashed and encrypted when stored?

A8 DAT TEL x

The State does not allow applications to be placed on the State’s system, or the State’s system to connect to another system, or the consultant to store or process State data without first doing security scans. The State would want to scan a test system; not a production system. Scanning would also take place annually as well as when there are code changes. Are either of these an issue? If so, please explain.

A9 DAT Will SSL traffic be decrypted and inspected? A10 PMO

x Will organizations other than the State of South Dakota have access to our data?

A11 PMO Will the State’s data be protected?

A12 DEV TEL

Describe the training your company offers related to defining security requirements, secure architecture and design, secure coding practices, and security testing.

A13 DEV TEL

Do you have developers that possess software security related certifications (e.g., the SANS secure coding certifications)?

A14 DEV Are there some requirements for security that are “structured” as part of general releasability of a product and others that are “as needed” or “custom” for a particular release?

A15 TEL What process is utilized by your company to prioritize security related enhancement requests?

A16 TEL What threat assumptions were made, if any, when designing protections for the software and information assets processed?


A17 TEL How do you minimize the threat of reverse engineering of binaries? Are source code obfuscation techniques used?

A18 TEL What security criteria, if any, are considered when selecting third-party suppliers?

A19 TEL How has the software been measured/assessed for its resistance to identified, relevant attack patterns such as Common Vulnerabilities & Exposures (CVE®) or Common Weakness Enumerations (CWEs)? How have the findings been mitigated?

A20 TEL Has the software been evaluated against the Common Criteria, FIPS 140-2, or other formal evaluation process? If so, please describe what evaluation assurance level (EAL) was achieved, what protection profile the product claims conformance to, and indicate if the security target and evaluation report are available.

A21 DAT TEL

Are static or dynamic software security analysis tools used to identify weaknesses in the software that can lead to exploitable vulnerabilities? If yes, which tools are used? What classes of weaknesses are covered? When in the SDLC are these scans performed? Are SwA experts involved in the analysis of the scan results?

A22 DAT TEL x

Has the product undergone any penetration testing? If yes, when, by whom, and are the test reports available under a nondisclosure agreement? How have the findings been mitigated?

A23 DEV Are there current publicly-known vulnerabilities in the software (e.g., an unrepaired CWE entry)? If yes, please explain.

A24 DAT Does your company publish a security section on its website? If so, do security researchers have the ability to report security issues?

A25 DAT Does your company have an executive-level officer responsible for the security of your company’s software products and/or processes?

A26 DAT Are security requirements developed independently of the rest of the requirements engineering activities? Or are they integrated into the mainstream requirements activities?

A27 DAT Does the software have any security critical dependencies or need additional controls from other software (e.g., operating system, directory service, application), firmware, or hardware? If yes, please


describe.

A28 DAT What risk management measures are used during the software’s design to mitigate risks posed by use of third-party components?

A29 DAT Does your company perform background checks on members of the software development team? If so, are there any additional “vetting” checks done on people who work on critical application components, such as security? Explain.

A30 DEV Does your company have formally defined security policies associated with clearly defined roles and responsibilities for personnel working within the software development life cycle? Explain.

A31 TEL What are the policies and procedures used to protect sensitive information from unauthorized access? How are the policies enforced?

A32 DAT Is two-factor authentication used for administrative control of all security devices and critical information systems?

A33 DAT TEL

Do you have an automated security event management system?

A34 DAT Are security logs and audit trails protected from tampering or modification?

A35 DAT It is State policy that if your system connects to another system providing SaaS, IaaS, or PaaS that this system has a security scan. The State would want to scan a test system; not a production system. Is this an issue? If so, please explain.

A36 DAT x

A) Will the system support authentication?

B) Does the system give clues about valid username or password content or structure, for example when a user forgets their username or after a failed login attempt?

C) Are usernames and passwords generated by the system using user-specific information such as last name or birthdate?

If Yes to these, please explain.


A37 DEV Are security-specific regression tests performed during the development process? If yes, how frequently are the tests performed?

A38 TEL What type of firewalls (or application gateways) do you use? How are they monitored/managed?

A39 TEL What type of Intrusion Detection System/Intrusion Protection Systems (IDS/IPS) do you use? How are they monitored/managed?

A40 DAT TEL

What are your procedures for intrusion detection, incident response, and incident investigation/escalation?

A41 DAT How do you control physical and electronic access to the log files? Are log files consolidated to single servers?

A42 DAT TEL

Describe your security testing processes.

A43 DAT TEL

Do you have a BYOD policy that allows your staff to put any sort of sensitive or legally protected State data on their device personal device(s) or other non-company owned system(s)?

A44 DAT TEL

Do you require multifactor authentication be used by employees and subcontractors who have potential access to legally protected State data? If yes, please explain your practices on multifactor authentication including the authentication level used as defined in NIST 800-63 in your explanation. If no, do you plan on going to multifunction authentication? If so, when?

A45 PMO Will this system provide the capability to track data entry/access by the person, date and time?

A46 DAT DEV PMO TEL

Will the system provide data encryption for sensitive or legally protected information both at rest and transmission? If yes, please provide details.

A47 DAT a. Do you have a SOC 2 audit report? b. Is the audit done annually? c. Does the audit cover all 5 of the trust principles? d. Does the audit include subservice providers? e. Has the auditor always been able to attest to an acceptable

audit result?


f. Will you provide a copy of your latest SOC 2 audit upon request, a redacted version is acceptable.

A48 DAT TEL

Are you providing a device or software that is a part of the Internet of Things (IoT)? If yes, what is your process for ensuring the software on your IoT devices that are connected to the state’s system, either permanently or intermittently, are maintained and/or updated?

Section: Hosting

Only for vendor/cloud hosted applications, systems, databases and any other technology not hosted on the State's infrastructure.

Response

# BIT Question YES NO NA Explain answer as needed B1 PMO Typically the State of South Dakota prefers to host all systems. In

the event that the State decides that it would be preferable for the vendor to host the system, is this an option?

B2 PMO Are there expected periods of time where the application will be unavailable for use?

B3 DAT If you have agents or scripts executing on servers of hosted applications and what are the procedures for reviewing the security of these scripts or agents?

B4 DAT What are the procedures and policies used to control access to the servers? How are audit logs maintained?

B5 DAT DEV PMO TEL

Do you have a formal disaster recovery plan? Please explain what actions will be taken to recover from a disaster? Are warm or hot backups available?

B6 DAT What are the set of controls to ensure separation of data and security information between different customers that are physically located in the same data center? On the same host server?

B7 DAT What are your data backup policies and procedures? How frequently are your backup procedures verified?

B8 DAT Are you or if the data is being hosted by a subservice provider are they FedRAMP certified?


B9 DAT DEV TEL

If any cloud services are provided by a third-party, do you have contractual requirements with them dealing with: · Security for their I/T systems; · Staff vetting; · Staff security training?

If yes, summarize the contractual requirements. If yes, how do you evaluate the third-party’s adherence to the

contractual requirements?

B10 DAT If your application is hosted by you or a third party, are all costs for your software licenses in addition to third-party software (i.e. MS-SQL, MS Office, and Oracle) included in your cost proposal? If so, will you provide copies of the licenses with a line-item list of their proposed costs before they are finalized?

Section: Database

Applies to any application that stores data.

Response

# BIT Question YES NO NA Explanation C1 DAT Will the system require a database? C2 DAT Will the system infrastructure require database replication? C3 DAT Will the system require transaction logging for database recovery? C4 DAT

DEV How does data enter the system (transactional or batch or both)?

C5 PMO Is the system data exportable by the user for use in tools like Excel or Access?

C6 PMO Will user customizable data elements be exportable also?

C7 DAT DEV PMO

Will the State of South Dakota have access to the underlying data and data model for ad hoc reporting purposes? If yes, will the access be on-site or off-site?

C8 DAT DEV

Will the system infrastructure include a separate OLTP or Data Warehouse Implementation?

C9 DAT DEV

Will the system infrastructure require a Business Intelligence solution?


Section: Vendor Process - Applicable to all proposals

The following questions pertain to all vendors, contractors or third-parties engaged in this system, and pertain to relevant business practices.

Response

# BIT Question YES NO NA Explain answer as needed D1 DAT

PMO Will the vendor provide assistance with installation?

D2 DAT DEV PMO TEL

Does your company have a policy and process for supporting/requiring professional certifications? If so, how do you ensure certifications are valid and up-to date?

D3 TEL In preparation for release, are undocumented functions in the software disabled, test/debug code removed, and source code comments sanitized?

D4 DEV What types of functional tests are/were performed on the software during its development (e.g., spot checking, component-level testing and integrated testing)?

D5 TEL Who and when are security tests performed on the product? Are tests performed by an internal test team, by an independent third party, or by both?

D6 DEV Are misuse test cases included to exercise potential abuse scenarios of the software?

D7 TEL What release criteria does your company have for its products with regard to security?

D8 DEV What controls are in place to ensure that only the accepted/released software is placed on media for distribution?


D9 DAT DEV

Is there a Support Lifecycle Policy within the organization for the software in question? Does it outline and establish a consistent and predictable support timeline?

D10 DAT How will patches and/or Service Packs be distributed to the Acquirer?

D11 DEV What services does the help desk, support center, or (if applicable) online support system offer and when are these services available?

D12 DAT DEV

How extensively are patches and Service Packs tested before they are released?

D13 DAT Can patches and Service Packs be uninstalled? Are the procedures for uninstalling a patch or Service Pack automated or manual?

D14 DAT DEV

How are reports of defects, vulnerabilities, and security incidents involving the software collected, tracked, and prioritized?

D15 DAT How do you set the relative severity of defects and how do you prioritize their remediation?

D16 DAT What are your policies and practices for reviewing design and architecture security impacts in relation to deploying patches?

D17 DAT Are third-party developers contractually required to follow your configuration management policies?

D18 DEV What policies and processes does your company use to verify that software components do not contain unintended, “dead,” or malicious code? What tools are used?

D19 DEV How is the software provenance verified (e.g. any checksums or signatures)?

D20 DEV Does the documentation explain how to install, configure, and/or use the software securely? Does it identify options that should not normally be used because they create security weaknesses?

D21 DAT Does your company’s defect classification scheme include security categories?

D22 DAT Is a validation test suite or diagnostic available to validate that the application software is operating correctly and in a secure configuration following installation?


D23 DEV Does your company develop security measurement objectives for phases of the SDLC? Has your company identified specific statistical and/or qualitative analytical techniques for measuring attainment of security measures?

D24 DEV How is the assurance of software produced by third-party developers assessed?

D25 DEV Does your company have a vulnerability management and reporting policy? Is it available for review?

D26 DAT What are the procedures for evaluating any vendor security alerts and installing patches and Service Packs?

D27 DAT Is testing done after changes are made to servers? What are your rollback procedures in the event of problems resulting from installing a patch or Service Pack?

D28 DAT What are your procedures and policies for handling and destroying sensitive data on electronic and printed media?

D29 DAT TEL

How are virus prevention, detection, correction, and updates handled for the products?

D30 DAT TEL

Do you perform regular reviews of system and network logs for security issues?

D31 DAT Do you provide security performance measures to the customer at regular intervals?

D32 DAT PMO

Is there an installation guide available and will you provide a copy to the State?

D33 DAT DEV PMO

Will the implementation plan include user acceptance testing?

D34 DAT DEV PMO TEL

Will the implementation plan include performance testing?

D35 DAT DEV PMO TEL

What technical documentation will be provided to the State?


D36 DEV PMO

Will there be documented test cases for future releases including any customizations done for the State of South Dakota?

D37 PMO Is the user manual electronically available and can the manual be printed?

D38 PMO Describe your Support and on-line assistance options and any additional costs associated with the options.

D39 DAT PMO

Is there a method established to communicate availability of system updates?

D40 DEV PMO

If the State of South Dakota will gain ownership of the software, does the proposal include a knowledge transfer plan?

D41 DEV PMO

Has your company ever conducted a project where your product was load tested?

D42 DEV PMO

Have you ever created a User Acceptance Test plan and test cases? If yes, what were the test cases? Do you do software assurance?

D43 PMO Is there a strategy for mitigating unplanned disruptions and what is it?

D44 DAT Please explain the pedigree of the software. Include in your answer who are the people, organization and processes that created the software.

D45 DAT Explain the change management procedure used to identify the type and extent of changes allowed in the software throughout its lifecycle. Include information on the oversight controls for the change management procedure.

D46 TEL Does your company have corporate policies and management controls in place to ensure that only corporate-approved (licensed and vetted) software components are used during the development process? Provide a brief explanation. Will the supplier indemnify the Acquirer from these issues in the license agreement? Provide a brief explanation.

D47 DEV What are the processes (e.g., ISO 9000, CMMi), methods, tools (e.g., IDEs, compilers) techniques, etc. used to produce and transform the software (brief summary response)?

D48 DAT DEV

Does the software contain third-party developed components? If yes, are those components scanned by a static code analysis tool?


D49 DAT DEV TEL

What security design and security architecture documents are prepared as part of the SDLC process? How are they maintained? Are they available to/for review?

D50 DEV Does your organization incorporate security risk management activities as part of your software development methodology? If yes, please provide a copy of this methodology or provide information on how to obtain it from a publicly accessible source.

D51 DAT Does the organization ever perform site inspections/policy compliance audits of its U.S. development facilities? Of its non-U.S. facilities? Of the facilities of its third-party developers? If yes, how often do these inspections/audits occur? Are they periodic or triggered by events (or both)? If triggered by events, provide examples of “trigger” events.

D52 DEV When does security testing occur during the SDLC (e.g., unit level, subsystem, system, certification and accreditation)?

D53 DAT TEL

How are trouble tickets submitted? How are support issues, specifically those that are security-related escalated?

D54 DAT TEL

Do you perform penetration testing of the service? If yes, how frequently are penetration tests performed? Are the tests performed by internal resources or by a third party?

D55 DAT How frequently is the security tests performed? Are the tests performed by internal resources or by a third party?

D56 DAT DEV

Please describe the scope and give an overview of the content of the security training you require of your staff, include how often the training is given and to whom.

D57 DAT TEL

What is your process for ensuring the software on your IoT devices that are connected to your system, either permanently or intermittently, is maintained and updated?

D58 DAT TEL x

It is State policy that all Vendor/Vendor Remote Access to systems for support and maintenance on the State Network will only be allowed through Citrix Netscaler. Would this affect the implementation of the system?


D59 PMO TEL x

The Vendors/Vendors are also expected to reply to follow-up questions in response to the answers they provided to the security questions. At the State’s discretion, a vendor’s answers to the follow-up questions may be required in writing and/or verbally. The answers provided may be used as part of the vendor selection criteria. Is this acceptable?

D60 DAT DEV PMO TEL x

(For PHI only) a. Have you done a risk assessment? If yes, will you share it?

b. If you have not done a risk assessment, would you be willing to do one based on the Health and Human Services assessment tool (https://www.healthit.gov/providers-professionals/security-risk-assessment-tool)? If yes, will you share it? The State is willing to sign a Non-disclosure Agreement before viewing any risk assessment.

c. If you have not done a risk assessment, when are you planning on doing one?

D61 DEV PMO

Will your web site and/or web application conform to the accessibility requirements of the Web Content Accessibility Guidelines 2.0? If not discuss what steps you take to make your web site and/or web application accessible. The guidelines can be found at http://www.w3.org/TR/WCAG20/.

Section: Software Development - Applicable to All Proposals

The following questions pertain to the tools and third-party components used to develop your product.

Response

# BIT Question YES NO NA Explain answer as needed

http://www.w3.org/TR/WCAG20/


E1 DEV PMO x

What is the development technologies used for this system? Please indicate version as appropriate

ASP.Net VB.Net C#.Net .NET Framework Java/JSP MS SQL

E2 DAT TEL

Is this a browser based User Interface?

E3 DEV PMO

Will the system have any workflow requirements?

E4 DAT Can the system be implemented via Citrix? E5 DAT Will the system print to a Citrix compatible networked printer? E6 TEL If your application does not run under the latest Microsoft operating

system, what is your process for updating the application?

E7 DEV Identify each of the Data, Business and Presentation layer technologies your product would use and provide a roadmap outlining how your release and or update roadmap aligns with the release and or update roadmap for this technology.

E8 TELx Will your system use Adobe Air, Adobe Flash, Adobe ColdFusion, Apache Flex, JavaFX, Microsoft Silverlight, PHP or QuickTime? If yes, explain?

E9 DEV In order to connect to other applications or data, will the State be required to develop custom interfaces?

E10 DEV In order to fulfill the scope of work, will the State be required to develop reports or data extractions from the database? Will you provide any APIs that the State can use?

E11 DEV PMO

Has your company ever integrated this product with an enterprise service bus to exchange data between diverse computing platforms?

E12 DAT If the product is hosted at the State, will there be any third-party application(s) or system(s) installed or embedded to support the product (for example, database software, run libraries)? If so, please list those third-party application(s) or system(s).


E13 DEV What coding and/or API standards are used during development of the software?

E14 DEV Does the software use closed-source Application Programming Interfaces (APIs) that have undocumented functions?

E15 DEV How does the software’s exception handling mechanism prevent faults from leaving the software, its resources, and its data (in memory and on disk) in a vulnerable state?

E16 DEV Does the exception-handling mechanism provide more than one option for responding to a fault? If so, can the exception handling options be configured by the administrator or overridden?

E17 DEV What percentage of code coverage does your testing provide?

E18 DAT A) Will the system infrastructure involve the use of email? B) Will the system infrastructure require an interface into the State’s

email infrastructure?

C) Will the system involve the use of bulk email distribution to State users? Client users? In what quantity will emails be sent, and how frequently?

E19 TEL x

A) Does your application use Java?

B) If yes, is it locked into a certain version? C) Will it use the latest version of Java? D) If so, what is your process for updating the application?

E20 DAT Explain how and where the software validates (e.g., filter with white listing) inputs from untrusted sources before being used.

E21 TEL Has the software been designed to execute within a constrained execution environment (e.g., virtual machine, sandbox, chroot jail, single-purpose pseudo-user)? Is it designed to isolate and minimize the extent of damage possible by a successful attack?

E22 TEL Does the program use run-time infrastructure defenses (such as address space randomization, stack overflow protection, preventing execution from data memory, and taint checking)?

E23 DEV Do you use open source software or libraries? If yes, do you check for vulnerabilities in your software or library that are listed in:


a. Common Vulnerabilities and Exposures (CVE) database? b. Open Source Vulnerability Database (OSVDB)? c. Open Web Application Security Project (OWASP) Top Ten?

Section: Infrastructure - Applicability to all systems

This pertains to how your system interacts with the State's technology infrastructure.

Response

# BIT Question YES NO NA Explain answer as needed F1 TEL Is there a workstation install requirement? F2 DAT Will the system infrastructure have a special backup requirement? F3 DAT Will the system infrastructure have any processes that require

scheduling?

F4 DAT The State expects to be able to move your product without cost for Disaster Recovery purposes and to maintain high availability. Will this be an issue?

F5 TEL x

Will the network communications meet Institute of Electrical and Electronics Engineers (IEEE) standard TCP/IP (IPv4, IPv6) and use either standard ports or State-defined ports as the State determines?

F6 DAT x

It is State policy that all systems must be compatible with BIT’s dynamic IP addressing solution (DHCP). Would this affect the implementation of the system?

F7 TEL x

It is State policy that all software must be able to use either standard Internet Protocol ports or Ports as defined by the State of South Dakota BIT Network Technologies. Would this affect the implementation of the system? If yes, explain.

F8 DAT It is State policy that all HTTP/SSL communication must be able to be run behind State of South Dakota content switches and SSL accelerators for load balancing and off-loading of SSL encryption. If need is determined by the State, would this affect the implementation of the system? If yes, explain.


F9 DAT x

The State has a virtualize first policy that requires all new systems to be configured as virtual machines. Would this affect the implementation of the system? If yes, explain.

F10 TEL x

It is State policy that all access from outside of the State of South Dakota’s private network will be limited to set ports as defined by the State and all traffic leaving or entering the State network will be monitored. Would this affect the implementation of the system? If yes, explain.

F11 TEL It is State policy that systems must support NAT and PAT running inside the State Network. Would this affect the implementation of the system? If yes, explain.

F12 TEL x

It is State policy that systems must not use dynamic TCP or UDP ports unless the system is a well-known one that is state firewall supported (FTP, TELNET, HTTP, SSH, etc.). Would this affect the implementation of the system? If yes, explain.

F13 DAT The State of South Dakota currently schedules routine maintenance from 0400 to 0700 on Tuesday mornings for our non-mainframe environments and once a month from 0500 to 1200 for our mainframe environment. Systems will be offline during this scheduled maintenance time periods. Will this have a detrimental effect to the system?

F14 DEV PMO

Does your product run on Citrix Metaframe?

F15 PMO TEL

Please describe the types and levels of network access your system/application will require. This should include, but not be limited to: TCP/UDP ports used, protocols used, source and destination networks, traffic flow directions, who initiates traffic flow, whether connections are encrypted or not, and types of encryption used. Vendor should specify what access requirements are for user access to the system and what requirements are for any system level processes. Vendor should describe all requirements in details and provide full documentation as to the necessity of the requested access.

F16 PMO x

List any hardware or software you propose to use that is not State standard, the standards can be found at http://bit.sd.gov/standards/.


F17 DAT If your application is hosted on the State’s infrastructure, will it require a dedicated environment?

F18 DEV PMO

Will the system provide an archival solution? If not, is the State expected to develop a customized archival solution?

F19 DAT Who configures and deploys the servers? Are the configuration procedures available for review, including documentation for all registry settings?

F20 DAT What are your policies and procedures for hardening servers? F21 DAT

TEL Explain or provide a diagram of the architecture for the application including security mitigation.

F22 TEL x

What is your process for ensuring default remote login protocols and default passwords are disabled on Internet of Things ( IoT) devices that are connected to your system either permanently or intermittently?

F23 DAT Can the system be integrated with our enterprise Active Directory to ensure access is controlled?

F24 TEL x

It is State policy that no equipment can be connected to State Network without direct approval of BIT Network Technologies. Would this affect the implementation of the system?

F25 DAT x

Will the server-based software support: a. Windows server 2012 R2

b. IIS7.0 or higher c. MS SQL Server 2008R2 or higher d. Exchange 2010 or higher e. Citrix presentation server 4.5 or higher f. VMWare ESXi 5.5 or higher g. MS Windows Updates h. Symantec End Point Protection

F26 TEL x

All network systems must operate within the current configurations of the State of South Dakota’s firewalls, switches, IDS/IPS and desktop security infrastructure. Would this affect the implementation of the system?


F27 DAT It is State policy that all systems that require an email interface must leverage existing SMTP processes currently managed by BIT Datacenter. Mail Marshal is the existing product used for SMTP relay. Would this affect the implementation of the system?

F28 DAT TEL

The State implements enterprise-wide anti-virus solutions on all servers and workstations as well as controls the roll-outs of any and all Microsoft patches based on level of criticality. Do you have any concerns in regards to this process?

F29 DAT TEL

What physical access do you require to work on hardware?

Section: Business Process - Applicability to all proposals

These questions relate to how your business model interacts with the State of South Dakota.

Response

# BIT Question YES NO NA Explain answer as needed G1 DAT If your application is hosted on a dedicated environment within the

State’s infrastructure, are all costs for your software licenses in addition to third-party software (i.e. MS-SQL, MS Office, and Oracle) included in your cost proposal?

If so, will you provide copies of the licenses with a line-item list of their proposed costs before they are finalized?

G2 PMO Explain the software licensing model.

G3 DAT DEV PMO

Is on-site assistance available? If so, is there a charge?

G4 DEV PMO

Will you provide customization of the system if required by the State of South Dakota?

If yes, are there any additional costs for the customization? G5 PMO Will the source code for the system be put in escrow for the State of

South Dakota? If yes, will you pay the associated escrow fees?


G6 PMO Explain the basis on which pricing could change for the State based on your licensing model.

G7 PMO Contractually, how many years price lock are you offering the State as part of your response? Also as part of your response, how many additional years are you offering to limit price increases and by what percent?

G8 PMO Will the State of South Dakota own the data created in your hosting environment?

G9 PMO Will the State acquire the data at contract conclusion?

G10 PMO Will the State’s data be used for any other purposes other than South Dakota’s usage?

G11 DAT Has your company ever filed for Bankruptcy under U.S. Code Chapter 11? If so, please provide dates for each filing and describe the outcome.

G12 DAT Has civil legal action ever been filed against your company for delivering or failing to correct defective software? Explain.

G13 DAT Please summarize your company’s history of ownership, acquisitions, and mergers (both those performed by your company and those to which your company was subjected).

G14 DAT Will you provide on-site support 24x7 to resolve security incidents? G15 DEV What training programs, if any, are available or provided through

the supplier for the software? Do you offer certification programs for software integrators? Do you offer training materials, books, computer-based training, online educational forums, or sponsor conferences related to the software?

G16 DAT TEL

Are help desk or support center personnel internal company resources or are these services outsourced to third parties?

G17 DAT Are any of the services you plan to use located offshore (examples include data hosting, data processing, help desk and transcription services)?

G18 DAT Is the controlling share (51%+) of your company owned by one or more non-U.S. entities?

G19 DAT What are your customer confidentiality policies? How are they enforced?


G20 DAT Are you ISO 27001 certified? Is the certification done annually? Will you provide a copy of your certification report?

G21 DAT (Use if PHI is involved) Are you HITRUST certified? Is the certification done annually? Will you provide a copy of your assessment?

G22 DAT PMO x

Will this application now or possibly in the future share PHI with other entities on other networks, be sold to another party or be accessed by anyone outside the US?

G23 DAT If the product is hosted at the State, will there be a request to include an application to monitor license compliance?

G24 DAT PMO

Is telephone assistance available for both installation and use? If yes, are there any additional charges?


Appendix K: Information Technology Security Policy and Acknowledgement


Appendix K

The South Dakota Bureau of Information and Technology’s Security Policy and a

Security Acknowledgement document are attached to this RFP as separate PDF’s and are

available on the RFP webpage: http://lottery.sd.gov/about/rfp/1160.aspx. The apparent successful

Vendor shall be required to abide by this policy and shall be required to sign the security

acknowledgement.

http://lottery.sd.gov/about/rfp/1160.aspx


Appendix L: Video Lottery Central System Reports


Appendix L

The Video Lottery Central System shall include but not be limited to the list of reports

below. Additional mandatory or desired reports shall be determined through negotiations and

Business Requirements discussions.

SYSTEM REPORTS - Video Lottery

Transaction Report Lists VLT sale transactions and video game play

information for a specified date range.

Revenue/Game Level Analysis

Report

Lists VLT device level and game level financials with net

differences for a specified date range.

Event Logs Report Lists all events for a VLT, TC or RT for a specified date

range.

Non-Reporting Terminal Report Lists VLTs that did not respond successfully during the

latest poll.

VLT Movement Report Tracks movement of VLTs between establishments and

operators.

ROM Signature Report Lists ROM signature calculation failures.

Operator Listing Report Provides list of operators.

Establishment Listing Report Provides list of establishments.

Device Listing Report (VLTs, TCs,

MCDs, Redemption Terminals)

Lists device, operator, and establishment information for

all devices.

Game Summary Report Summarizes game level information for a specified date

range.

Meters Anomalies Report Lists the meter fetches that failed data integrity

verifications.

Soft Meter Adjustments Report Provides details for meter adjustments made at the device

and game level.

Raw Meters Listing Report Provides raw meters for VLT for specified date range.

Operator Billing Statements Provides invoice details for each operator for a given

billing period.

Billing Statement Summary Report Provides basic invoice information for a selected billing

period.

EFT Report Summarizes the EFT sweep details and operator

information for a given billing period.

EFT Non-Swept Report Provides listing of non-swept operators for a given billing

period.

License Billing Report Provides license billing invoice for each operator with

VLTs licensed during a billing period.

Manual Adjustments Report Lists manual accounting adjustments for a specified date

range.

Operator Billing Statements Provides invoice details for each operator for a given

billing period.