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Second Amendment to the Processing and
Service Agreement between
National Electronic Information Corporation
and GTE Data Services Incorporated
The Processing and Service Agreement entered into as of
September 10, 1993 (hereinafter called the "Agreement") by and between National
Electronic Information Corporation (hereinafter called "NEIC") and GTE Data
Services Incorporated (hereinafter called "GTEDS"), The November 18, 1994 Letter
Amendment to the Processor Proposal letter of September 10, 1993 forming part of
the Agreement (hereinafter called the "Letter Amendment"), the First Amendment
to the Agreement executed as of January 4, 1995 (hereinafter called the "First
Amendment") and Supplement No. 1 to the First Amendment dated as of June 28,
1995 (hereinafter called the "Supplement"), all hereinafter called the
"Contract", are hereby modified, as applicable, by the following:
1. Term of Agreement
The term of the Agreement as set forth in Section 9.1 thereof is
hereby extended through the close of business on December 31, 1998, provided
that NEIC shall have the right in its sole discretion by notice to GTEDS given
no later than October 1, 1997 to effect premature termination of the Agreement
and the rights and obligations of the parties under the Agreement effective at
the close of business on June 30, 1998. In the event NEIC effects such
premature termination, NEIC shall pay GTEDS upon the effective date of such
termination, NEIC shall pay GTEDS upon the effective date of such termination
$50,000 per month for each month or portion thereof from the date of actual
termination through December, 1998.
2. Exclusivity
Section 4 of the Agreement regarding exclusivity is hereby
changed so that such Section shall have no force or effect during the last six
months of the term of the Agreement as set forth in Section 1 of this Amendment,
i.e. January 1, 1998 through June 30, 1998 if a premature termination is
effected by NEIC pursuant to Section 1 of this Amendment or July 1, 1998 through
December 31, 1998 if no such premature termination is effected by NEIC.
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3. Non-Competition
The obligations of non-competition imposed on GTEDS pursuant to
Section 5.1 of the Agreement are hereby modified such that GTEDS may provide
services to or assist in any way an entity which competes with NEIC provided,
however, that GTEDS shall ensure that any information, expertise or other
capabilities acquired by GTEDS solely through its performance of the Contract in
connection with NEIC CPS Services shall not be utilized for services or
assistance to such entity.
4. Right of Refusal
In the event that NEIC intends to outsource the CPS Services
upon the termination of the Agreement, NEIC shall allow GTEDS to participate in
the bid process. In the event that GTEDS presents a proposal in conformity with
such bid process and an alternative proposal is preliminarily selected for award
by NEIC, NEIC shall furnish to GTEDS business terms and conditions of the
preliminarily selected proposal and GTEDS shall have 15 days within which to
match such proposal by notice to NEIC. If GTEDS matches such proposal, it shall
be awarded the contract. If GTEDS fails to give timely notice to NEIC that it
shall match the preliminarily selected proposal or fails within a reasonable
time to conclude a contact with NEIC pursuant to its terms, the restrictions of
this Section 4 shall automatically expire. Furthermore, the restrictions of
this Section 4 shall not apply in the event that NEIC decides to have the CPS
Services following termination of the Agreement performed by NEIC, Envoy
Corporation, or any affiliate thereof.
5. Pricing
A. Item 1 of Exhibit F of the Agreement is hereby deleted
in its entirety and replaced with the following:
"1. CHARGES FOR PROCESSOR'S SERVICES
The per claim/encounter fee shall be as follows for transactions
submitted to GTEDS for processing under the Agreement during the
following calendar years:
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Calendar Year Charge Per Claim/Encounter
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1996 4 cents
1997 3.75 cents
1998 3.50 cents
The foregoing prices shall be further discounted by 1/2% for each 1%
reduction in the amount of GTEDS data center and telecommunications
resources required to process claim/encounter transactions as such
reduction is determined pursuant to the measurement criteria and Base
Line Resources Usage Ratio set forth in Exhibit A (hereinafter
called the "Base Line"). Subject to Section 6B of this Amendment, the
measurement period for 1996 will be the actual Usage Ratio as defined
in Exhibit A (hereinafter called "Usage Ratio") for the period of April
through December 1996, the measurement period for 1997 will be the
Usage Ratio for that full year and the measurement period for 1998 will
be the actual Usage Ratio for that full year. Discounts will be
awarded retroactively for all claims/encounter transactions of the
applicable year as soon as the amount of such discount can be
calculated and the full value of the aggregate discount so calculated
shall be applied as a credit to the next invoice(s) issued to NEIC
hereunder. Notwithstanding the foregoing, the maximum discount applied
to claims/encounters of 1996 shall be 15%, the maximum discount applied
to claims/encounters of 1997 shall be 10% and the maximum discount
applied to claims/encounters of 1998 will be 5%.
If the actual Usage Ratio determined for claims/encounters of any year
exceeds the Base Line, the price for claim/encounter transactions of the
following year shall be surcharged by 1/2% for each 1% of such Usage
Ratio increase, provided that such surcharge shall be limited to a
maximum of 15% for claims/encounters of 1997 and 10% for
claims/encounters of 1998. In the event that the actual Usage Ratio in
1998 exceeds the Base Line and NEIC has not renewed the Agreement or in
any way retained GTEDS for like services beyond 1998, NEIC will, within
90 days following December 31, 1998 or, in the event of a premature
termination, the date of such premature termination, pay
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GTEDS a surcharge equal to 1/2% for each 1% of increased actual Usage
Ratio over the Base Line up to a maximum of 5% of the 1998 price per
claim/encounter times the actual number of claims/encounters processed
in 1998.
Claims/encounters are counted as a claim subject to fee hereunder as
they enter the validation programs of NEIC's system for the NEIC CPS
Services. In the event of a rerun of any portion or all of such system,
for whatever reason, the applicable claims/encounters shall be counted
only once for each pricing processing cycle.
The charges set forth in this Section cover all telecommunications and
data center services required to process the NEIC CPS Service
claims/encounters and Claim Status transactions associated with such
claims/encounters, including, without limitation, Tymnet surcharges
referenced in Exhibit A to the Letter Amendment which shall no longer be
imposed commencing January 1, 1997. These charges also include the Non
Transaction Services falling within the Monthly Threshold in Exhibit B
attached to this Amendment. Only in the event Non Transaction Services
exceed such Threshold will the charges set forth in Item 1 of Exhibit B
to the Second Amendment to the Agreement below apply."
B. Items 2 and 3 of Exhibit F of the Agreement are hereby
deleted in their entirety and replaced with the charges set forth in Items 1 and
2 of Exhibit B attached to this Amendment.
C. The pricing set forth in this Section 5 shall be
effective retroactively to January 1, 1996. GTEDS shall provide to NEIC on the
next invoice(s) issued under the Agreement a credit for the aggregate difference
between the amounts charged previously by GTEDS for 1996 claim/encounters and
the amounts to be charged for 1996 claim/encounters pursuant to this Amendment.
6. Changes in GTED's Performance Obligations
The GTEDS services to be produced under the Agreement are hereby
changed as follows:
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A. Telecommunications Capabilities
GTEDS shall continue to provide all existing
telecommunications capabilities currently in use or in test by NEIC including
the new TCP/IP 800 service that supports up to 28.8 KBPS dial up. In addition,
on or before June 30, 1996, GTEDS shall add ISDN and Frame Relay access using
the TCP/IP protocol. Capabilities and support for the additional ASYNC
protocols of XMODEM, YMODEM, YMODEM-G and ZMODEM plus the ability to dial out
for file transfers using these protocols and BISYNC 3780 shall also be provided
by GTEDS. A sufficient subset of such capabilities shall be provided by GTEDS
in a timely fashion to effect the cutover of customers from ENVOY-NEIC's Palm
Harbor, FL facility to GTEDS no later than August 31, 1996. The complete
version of such capabilities shall be provided by GTEDS no later than October
31, 1996.
B. Telecommunications Alternative
GTEDS shall provide to NEIC, no later than October 31,
1996, a full functioning version of NEIC CommLink (i.e. the NEIC Product
pursuant to the First Amendment and Supplement) that utilizes an ASYNC protocol
other than Kermit or Relay Gold. In addition, GTEDS shall provide to NEIC, no
later than October 31, 1996, a full functioning version of said NEIC Product
that interfaces with the TCP/IP capability provided by GTEDS pursuant to
Section 6A of this Amendment. GTEDS acknowledges that the timely performance
by GTEDS of its obligations under this Section 6B is essential to NEIC's
ability to reduce telecommunication resources associated with the processing of
its claims/encounters. Accordingly, the 1996 measurement period of
telecommunications resources for purposes of determining price discounts or
surcharges pursuant to Section 5A of this Amendment shall be delayed by one
month for each month or portion thereof of a delay in GTEDS' performance of
either obligation under this Section beyond the due date for such performance.
C. Performance Monitoring Reports
By the date of execution by both parties of this
Amendment, GTEDS shall provide NEIC performance monitoring
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reports on a weekly and monthly basis containing sufficient detail to enable
NEIC to determine the changes in the Usage Ratios for each batch job, data set
in storage, telecommunications user, and TSO user for both processing of
transactions under Section 5A of this Amendment (hereinafter called "Production
Transactions") and Non Transaction Processing Services under Exhibit B Item 1
of this Amendment (hereinafter called "Non-Transaction Processing").
D. Mailboxing
Effectively immediately, GTEDS shall support the access
of users of the NEIC CPS Services who prefer to use third party mailboxing,
provided, however, that GTEDS shall not be responsible for the character and
usage costs for transferring information to and from such mailboxes.
E. Advantis/Frame Relay Usage
Effectively immediately, GTEDS shall be responsible for
all costs from the service provider to the GTEDS facility with respect to
Advantis and Frame Relay usage, but GTEDS shall have no other obligation for the
costs of such usage.
F. Dial up to Dedicated Line Conversion Threshold
The requirement of Section IIB.5 of the NEIC RFP
imposing on GTEDS the obligation to provide a dedicated circuit to each user of
the NEIC CPS Services that routinely transmits 5,000 or more transactions per
day is hereby altered to allow GTEDS to reduce such user's transmission times
through the use of more efficient telecommunications methods, provided, however,
that each affected user agrees to accept such alternative solution.
G. Alternative Communications
The "alternative facilities" identified in Section IIB.4
of the NEIC RFP is hereby modified to include (i) a facility which requires an
access method not yet supported by GTEDS, (ii) a facility all of whose volume is
considered Non-Transaction Processing and (iii) a facility that has no
anticipated Production Transactions.
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7. Audits of Product Code
An audit of product codes requested by either party at
any time in order to confirm the proper identification of transactions as
Non-Transaction Processing or Production Transactions shall be performed by the
parties pursuant to mutually agreed upon conventions for naming programs.
8. Disaster Recovery
The disaster recovery obligations of GTEDS pursuant to
Sections 5 and 6 of Exhibit B of the Agreement are hereby modified as follows:
A. Section 5.B of Exhibit B is hereby deleted in
its entirety and replaced with the following:
"5.B In the event of a CPU failure, GTEDS shall,
within two hours of such failure, determine whether the NEIC CPS
Services must be switched to the backup CPU and GTEDS shall
within four hours of such determination fully restore the NEIC
CPS Services on the backup CPU."
B. GTEDS shall restore the NEIC CPS Services
functionality within 24 hours of the declaration of a disaster at the GTEDS data
center and shall restore the test and development functions within 48 hours of
such declaration.
C. In the event that NEIC shall propose to add
additional transactions or services pursuant to the Agreement which are to be
performed or processed at the GTEDS data center, NEIC shall as part of the
proposal propose disaster recovery (including without limitation redundancy)
requirements for such services or transactions, which if agreed to by GTEDS
shall be included in the agreement between the parties with respect to such
services or transactions.
9. NEIC Volume Commitments
A. The pricing set forth under this Agreement has
been furnished by GTEDS with the understanding that the actual
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claim/encounter volume for 1996 shall be 120 million plus or minus 10%, for 1997
165 million plus or minus 20%, and for 1988 220 million plus or minus 30%. In
the event that the actual claim/encounter volume for any such year fails to fall
within the permissible range of volume set forth in this paragraph for such
year, the parties agree that the pricing listed in Section 5A herein may be
negotiated in good faith at the request of either party.
B. NEIC shall, by the fifth business day in
November of each year during the term of this Amendment, provide to GTEDS an
update of NEIC's estimate of the monthly transaction (i.e. claim/encounter, ERA,
rosters and other transactions then processed pursuant to the Agreement by
GTEDS) volume for the following year. NEIC shall, by the fifth working day of
each quarter during the term of the Agreement as extended by this Amendment,
provide to GTEDS an update of such volume estimates for the remainder of the
then current year. NEIC shall use reasonable efforts to notify GTEDS of any
anticipated deviations in such monthly volume projections reasonably promptly
following NEIC's determination of any such deviation.
10. General Terms
A. The parties acknowledge and agree that, except
as expressly modified herein, all of the provisions of the Contract shall be
applicable to this Amendment to the extent that by the sense and context of such
provisions, such provisions are applicable to the subject matter of this
Amendment, for which purpose the word Processor under the Agreement shall mean
GTEDS or Processor under this Amendment.
B. In the event of any conflict between a provision
of this Amendment and a provision of the Contract, the provision of this
Amendment shall govern.
C. The definitions of terms appearing in the
Agreement shall apply to such terms as used in this Amendment, except
when such terms have been expressly defined otherwise herein.
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D. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Contract remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the ______day of April, 1996.
NATIONAL ELECTRONIC INFORMATION
CORPORATION
By:___________________________________
Name: Joseph P. Sullivan
Title: V.P. Product Management
Date: ________________________________
GTE DATA SERVICES INCORPORATED
By:___________________________________
Name:
Title:
Date:_________________________________
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