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C. Implementation <br />Given the budgetary constraints local public sector entities, including the City, are facing, the City requests an <br />additional reduction in implementation service costs. Please provide an updated cost sheet taking this request into <br />account. <br />Lau%son and S &S Response: Revised services costs are included on the attached cost sheet. <br />2. Verify your understanding that the services will be performed on a "not to exceed" basis. For implementation <br />services under a not -to- exceed arrangement, the City compensates the Contractor on the basis of hours and <br />expenses incurred up to a ceiling amount. If there is a "residual" amount at the end of the project (difference <br />between total implementation contract amount and actual total costs), the City will retain the difference by simply <br />not spending the funds. By contrast, if the implementation cost ceiling is exceeded, the Contractor is to finish the <br />work at no additional compensation, unless the City does not meet specific assumptions outlined in the contract. <br />Lawson and S &S Response: Lawson re.connnemds the C`ily consider fixed fee pricing, however Lawson <br />understands the contract is based upon `not to exceed" pricing and we have estimated our services and fees <br />accordingly. Supplemental services will be billed only if specifically requested through the formal change order <br />process, approved in m- iting* by both parties, and provided during the contract term. <br />3. Also, please verify your understanding that the City will pay for services upon the completion of meaningful <br />milestones. The City expects that there will be approximately one milestone payment per month, and that payments <br />will be relatively evenly distributed amongst the milestones. Similarly, the City expects all payment to be more <br />results achieved, not effort expended. Meaning, there will be no "buckets of hours" for any project task including <br />data conversion, interfaces, or customizations. <br />1.awson and S &S Response: Lawson aurees that payment will be made based upon delivered milestones, <br />however, since each milestone is riot similar in effort, payment can not be evenly distributed amongst the <br />milestones. For example, System Test is a major milestone that requires significant effort. The milestone pa orient <br />for the System Test deliverable would be greater than the milestone payment for the Readiness Assessment <br />deliverable. which takes less effort. Even though both Lawson and the City will be assigned specific project <br />deliverables, milestones payments are based upon Lawson deliverables only. Deliverable -based milestone <br />payments are based upon the completion of specific tasks, and do not conform to monthly payments. However, <br />Lawson will agree to bill the City monthly for those milestones that have been completed during that period. <br />Lawson is willing to work with the City to develop a milestone payment schedule that meets our mutual <br />requirements. <br />Lawson recommends the City reconsider the "bucket of hours" concept. The City's requirements related to <br />interfaces, workflows, conversions, reports etc, and total effort for each individual interface, report, etc will only be <br />fully determined following the design phase of the project, after the business requirements and technical <br />requirement are agreed upon. At this point, Lawson has provided general estimates, but cannot make detailed <br />estimates. In most cases, Lawson will encourage the City to use a standard report, or standard process flow rather <br />than create ne�,v. The advantage of using a "bucket of hours" is that the City uses only what is required, it can inove <br />hours where needed between the programming tasks. and it will allow flexibility to minimize change orders. This <br />model is also completely consistent with the "not to exceed" pricing requested by the City, as the City will use only <br />what is needed. <br />D. Travel <br />1. Due to budgetary constraints, the City would like travel and reimbursable expenses to be included in the ceiling <br />amount of the contract. Please describe how you would be prepared to meet this concern. <br />Lawson and S &S Response: Lawson is willing to set a fixed fee amount for travel. In this case. Lawson will bill <br />travel separately on a monthly basis, not related to milestone payments. In either case, (actual or fixed travel) <br />Lawson requests that the City provide assistance in negotiating hotel rates, etc. to insure the lowest local rates are <br />obtained for the project team. <br />Lawson Software — Confidential 59 <br />