Sec. 1. 5 MRSA §20005, sub-§6-A, ¶A, as enacted by PL 1997, c. 381, §1, is amended to read:

A. A renewal contract with a provider is not subject to the request-for-proposal procedure requirement if the contract granted under this subsection is performance based performance-based. On or after January 1, 2000, contracts awarded or renewed under this section are subject to the following provisions:

(1)__A nonprofit provider of goods or services to the State may retain up to 5% of earned reserves from a contract with the State pursuant to Title 13-B, section 202, subsection 1, paragraph U.__The provider may retain more than this amount with the permission of the state agency for which the goods or services are provided;

(2)__Reserves retained under this paragraph may be used to meet financial liabilities, including costs incurred in preparation or for the fulfillment of the requirements of the contract or for those costs related to an existing contract;

(3)__Pursuant to Title 13-B, section 202, subsection 1, paragraph U, all reserves earned from state contracts exceeding 5% must be returned to the State within one year from the date of receipt.__All earned reserves under 5% that are not used for a legitimate purpose under this paragraph must be returned to the State within 4 years of the receipt of the earned reserve;

(4)__All providers electing to retain earned reserves under this paragraph may be subject to an audit to ensure adherence to this paragraph; and

(5)__If the State intends to renew a contract with a service provider and to change in any way the provisions of that contract, then the State must give notice to the provider at least 6 months prior to the expiration date of the contract.__The State must negotiate the contract in good faith.__If notice is not given by the State within the 6-month period, then the contract is automatically extended until good faith negotiations have concluded.

Sec. 2. 13-B MRSA §202, sub-§1, ¶S, as amended by PL 1989, c. 857, §51, is further amended to read: