Multiyear revenue contracts in the state of ga

Multi-year agreement refers to any contract which exceeds twelve months and/or will cover more than one fiscal year. To avoid pledging the state’s credit, the state entity almost always must divide the multi-year agreement into two or more contract terms. The most common multi-year structure is to define an initial term of twelve months or less followed by up to four one-year renewal terms which may be exercised by the state entity. No contract may exceed five years without prior written approval from SPD State Purchasing Division .

When determining beginning and ending dates of the initial contract term, the state entity must consider both its needs and its budget. To ensure the contract dates comply with state policy prohibiting the pledging of the state’s credit, the state entity must set aside sufficient funds to meet the entire financial obligation of the initial term of the contract when the contract is signed. Thereafter, the state entity must ensure sufficient funds are available prior to exercising any renewal option. It may be necessary to structure the end of the initial term to coincide with the end of the state’s fiscal year so that renewal terms will align with the state’s fiscal year for budgetary reasons. Open contracts (or contracts that do not commit the state entity to spending any money) are an exception to this requirement.

State entities are authorized to enter into multi-year lease, purchase, or lease purchase contracts for the acquisition of goods, materials, equipment, services, and supplies. However, the multi-year agreements must be structured as follows: