TouchTunes Contract IMCOM G9 Business Operations

NAFBA1-15-D-0005

Modified April 2016

Guidelines – Revised 4/4/16

Our mission is to deliver and integrate base support to enable readiness for a self-reliant and globally-responsive All Volunteer Army

Table of ContentsTable of Contents........................................................................................................................................3

1. Introduction.........................................................................................................................................5

2. Services................................................................................................................................................5

Digital Music............................................................................................................................................5

Non-Interactive Background Music.........................................................................................................5

Interactive Background Music.................................................................................................................6

Additional services...................................................................................................................................6

Digital karaoke services.......................................................................................................................6

Photo Booth Service............................................................................................................................7

Wireless Broadband Services...............................................................................................................7

Installation and setup..........................................................................................................................7

Cash Collection Services (includes Labor) – CONUS.............................................................................7

Credit Card Processing Fees.................................................................................................................7

3. Procedures...........................................................................................................................................7

Connection..............................................................................................................................................7

Cash Collection........................................................................................................................................8

Maintenance...........................................................................................................................................8

4. Financial...............................................................................................................................................8

Net Profit.................................................................................................................................................8

Location Share.........................................................................................................................................9

Contractor Share.....................................................................................................................................9

Payment Process.....................................................................................................................................9

Billing.......................................................................................................................................................9

5. Reporting...........................................................................................................................................10

6. Contracting Procedures.....................................................................................................................10

Purchase requests.................................................................................................................................10

Period of Performance..........................................................................................................................10

Disputes.................................................................................................................................................10

Revisions................................................................................................................................................10

7. Appendices........................................................................................................................................11

Appendix 1 - AR-215-1 (Ch. 8-3)- Amusement/Vending Machines........................................................11

Description............................................................................................................................................11

Guidelines..........................................................................................................................................11

Machine malfunctions.......................................................................................................................11

Locking devices..................................................................................................................................11

Sales accountability...........................................................................................................................11

Appendix 2 – Cash Collection Form - DA4083-R..................................................................................14

1. Introduction

TouchTunes is the largest in-venue interactive music and entertainment platform, featured in over 71,000 bars and restaurants across North America and Europe. The network supports a growing portfolio of location-based digital solutions that encourage social interactions through shared experiences. The company began in 1998 with the release of the world’s first pay-for-play digital jukebox and since then they have transformed into a multi-application platform offering a variety of engaging and interactive experiences any location can access.

Music is core to the TouchTunes experience and the latest smart jukebox allows the interface to learn from the music most played in a location and adapt over time to highlight the songs, artists and search results that are most relevant.  The mobile app lets users find nearby jukebox locations and control their in-venue music experience from their smartphones.  Since launch, the app has been downloaded over 4.8 million times.  Also available on the jukebox is an integrated photo booth solution and a fully licensed commercial karaoke system.  

TouchTunes is a privately held company, one of only a few able to deliver end-to-end in-venue interactive entertainment solutions, encompassing hardware, software and network operations. TouchTunes is headquartered in New York City, with offices in Chicago, IL, Montreal, Quebec and London, UK.

The guidelines in this document describe an Indefinite Delivery Indefinite Quantity (IDIQ) contract with TouchTunes for delivery of interactive services. The purpose of this document is to describe the services provided, procedures for operating the machines, receiving or making payments, and for settling disputes.

2. ServicesThe base service is digital music service. All other services are optional and may

be added based on availability of funds. In order to maintain a positive cash flow, location managers should limit the amount of free music they choose to provide.

Digital MusicInteractive digital music service which allows patrons to play songs at a fee set

by the operator. Digital music services are available to all jukeboxes operating on Gen3 or later software and TouchTunes will make reasonable efforts to provide Digital Music Services to all jukeboxes operating on software earlier than Gen3. Each facility may download an unlimited number of music titles without charge.

Non-Interactive Background Music The ability to play background music at a fixed cost to the location (optional). a

selection of music titles grouped together and provided as distinct background lists available for play on jukeboxes operating on Gen3 or later software. Each facility shall

be charged the full monthly fee for the Non-Interactive Music Service for a jukebox if at any time during a billing month such jukebox plays any Non-Interactive Background Music

Interactive Background MusicThe facility may elect to provide Interactive Background Music (Free Plays)

through the management menu on the jukebox. Customers are not charged for these songs. This service is separate from the non-interactive background music which is provided for a flat monthly fee and which is not included in the number of songs played in interactive background music. Pricing is based on the percentage of music titles played on each jukebox, as shown here:

Additional services

Digital karaoke servicesAvailable exclusively on Virtuo, Playdium and successor model jukeboxes

installed with the required karaoke hardware as required by TouchTunes. Such services shall include a karaoke specialized background music service, which shall include a limited selection of music titles that are available in connection with the Karaoke Services, grouped together and provided as distinct background music playlists. Contractor shall charge the Karaoke Services fee for each jukebox if at any time during a billing week such jukebox either plays a karaoke music title or utilizes the karaoke specialized background music service. A “billing week” is defined as Monday through Sunday of each calendar week. Each facility may not charge less than $1.00 per karaoke music title (as converted into applicable credit amounts), or such other minimum amount as may be required by Contractor from time to time. The Contractor may from time to time, with the agreement of the Contracting Officer’s Representative

(COR), allow for promotional plays of karaoke titles on the jukeboxes at no charge to third parties.

Photo Booth ServiceDigital photo booth services are available exclusively on Virtuo, Playdium and

successor model jukeboxes. This option allows patrons to take and email digital photographs. Each Installation may not charge less than $1.00 per digital photograph (as converted into applicable credit amounts), or such other minimum amount as may be required by Contractor from time to time. Contractor may, at its sole discretion, allow for promotional allow for promotional digital photos at no charge to third parties.

Wireless Broadband Services Subscription and monthly services for jukeboxes operating on Gen3 or later software

and connecting to Contractor’s servers via a broadband internet connection in the United States, at the request of a facility. Contractor will provide the hardware required to provide wireless broadband service, which shall be provided at no cost. Each jukebox using the wireless broadband service shall require a 24 month commitment which begins with the first day of billing. Should any facility discontinue the wireless broadband service prior to the 24 month term, such facility shall pay Contractor an Early Termination Fee in the amount of $200 per discontinued wireless device

Installation and setupInstallation of new or old (existing or newly purchased) Equipment. Travel is an

additional expense to the fee for setup and installation of equipment

Cash Collection Services (includes Labor) – CONUSContact the COR for further information

Credit Card Processing FeesA sum per transaction charged to each facility of 2.95% of the amount charged and

ten cents ($0.10) for each transaction initiated by an end user using (i) a credit card or a debit card or (ii) credits from such end user’s account with Contractor (collectively, the “Credit Card Transaction Fee”). If the Contractor’s Credit Card Transaction Fee changes at any time or from time to time, the Contractor may adjust the fees set forth herein to take into account such change, effective immediately upon written notice to the Contracting Officer and accepted via contract modification.

3. ProceduresConnection

Jukeboxes must be connected to TouchTunes servers by means of an Internet connection. Virtuo, Playdium, and successor model jukeboxes may only be connected to Contractor’s servers via a broadband internet connection.

1. Each facility will ensure that every jukebox:

(i) Has uninterrupted access to a standard grounded AC (110 volt) continuous electrical power source.

(ii) A twenty-four (24) hour per day operational standard analog telephone line or broadband internet connection, as specified in the applicable jukebox operator manual.

(iii) Communicates with Contractor’s central server at least once every fourteen (14) days.

(iv) Is operated strictly in accordance with the owner’s manual applicable to that model of digital jukebox.

Cash CollectionCash collections will be performed IAW AR-215 (8.3). The collected cash will be recorded on the Daily Activity Report (DAR) as ‘Other

Operating Income, General Ledger Accounting Code (GLAC) 539 - Amusement Machine Income (Non-Concessionaire).

Expenses will be recorded as GLAC 698 - Vending Machine Income Sharing Expense.

Cash collection personnel will record the cash collected on Form 4083-R and verify the funds collected by comparison the machine bookkeeping data. The bookkeeping data will be reset after each cash collection is completed and before the machine is returned to operation.

Maintenance

The contractor shall provide technical support for the music services from 6am - 1:30am Central Time (CT) with the exception of Federal Holidays. Limited support or on-call troubleshooting shall be made available during Holidays and hours that the help desk services are not available. The Help Desk number is 847-419-3300. Technical Support email address is IMCOM-Support@touchtunes.com.

4. FinancialNet Profit

Net Profit is defined as the total revenue: gross cash, electronic payments, and additional fees per the contract, minus deductions for all contractor expenses (as per CLIN X 014) for a period of time, usually monthly. The additional fees include the fees for Non-Interactive background music and Karaoke services.

Pass Through Fees include the wireless broadband fees, credit card processing, and any other additional fees such as travel or installation charges. They are not included in the calculation of new profit.

Interactive background music is not included in the calculation of net revenue.

Location ShareTouchTunes provides a percentage of net revenue to the facility (as per CLIN X014 -

75% of net profit). The location share is defined as the net profit minus any background music charges, optional services, and pass through charges such as credit card processing and wireless.

Contractor ShareA TouchTunes fee of 25% is assessed on net revenue.

Payment ProcessAt the end of each billing period, usually monthly, TouchTunes will calculate the fees

for each jukebox. An invoice will be prepared and submitted to the facility by TouchTunes showing each jukebox’s revenue and the fees for the billing period. The invoice will detail the calculations used to determine the contractor share of revenue plus any additional and pass through charges. This amount will be due to TouchTunes.

The invoice is to be received by the 15th of each month for the prior month or billing period.

Payment of the fees by use of Government Purchase Card (GPC) is encouraged. Should payment through DFAS be required, the activity manager or designated authority will submit the following to the Defense Finance Accounting Service (DFAS) NLT than 15 days after receipt of the invoice.

1) The invoice.2) A completed DD250 Material Inspection and Receiving Report3) A copy of the original delivery order

Billing A “billing week” is defined as Monday through Sunday of each calendar week.

TouchTunes will invoice each facility for amounts calculated by each jukebox’s electronic metering, which reflect cash and electronic revenue, not based on the cash counted by the facility.

The activities will provide TouchTunes with billing contact information (contact names, phone numbers and email addresses) for each installation. The activity will update such contact information from time to time as necessary to ensure that TouchTunes has accurate billing information for each installation at all times.

5. ReportingThe COR will receive a roll up report of all the locations and payments on a monthly

basis. Updated information will be posted on the MWR BizBoard website periodically. Monthly updates on revenue and expenses are available through a download link posted on the site.

6. Contracting ProceduresNo Army entity outside of the NAFI Contracting Office that issued this IDIQ contract

may make changes to the contract. All requests for changes will be sent to the Army COR for consideration. Other DoD services will follow their own contracting procedures. Before service can be activated, a copy of the form at appendix A must be sent to TouchTunes and the COR.

Purchase requestsFunded PRs will be submitted by individual locations and routed through their

supporting regional NAF Contracting Office. Each PR will indicate funding for the optional services for the fiscal year. Locations participating in optional services will fund PR’s sufficiently to accommodate additional charges. Each PR should annotate the optional services desired by CLIN

Period of PerformanceOne base year, 1 September 2015 – 31 August 2016, and four option years. This is

a Firm Fixed Pricing contract. The contract term is for one base year, with 4 additional option years.

Disputes Disputes between operators and TouchTunes which cannot be resolved in a

reasonable period of time will be referred to the Army COR for coordination with the Contracting Officer on the appropriate action (e.g., delivery/task order, modification, final decision letter, termination action, etc.)

RevisionsThis document will be updated throughout the life of the contract by the Contracting

Officer Representative (COR) Any questions not addressed should be referred to the current COR, or IMWR-BO Jana Temple .

7. AppendicesAppendix 1 - AR-215-1 (Ch. 8-3)- Amusement/Vending MachinesDescription.

The term “amusement machine” as used in this chapter does not include slot machines, other mechanical, electrical, or electronic machines that enable players to receive monies. This section does not apply to any machines operated by ARMP (see para 8–4). For applicable Randolph-Sheppard criteria, see AR 210–25.

Guidelines Management controls for amusement and vending machine operations focus on

control of access to the machines/cash boxes and cash collection procedures, whether or not contractor owned or serviced. Controlled access and collection applies when the IMWRF receives a share of the revenue or the collection is done only with IMWRF personnel. Where the IMWRF receives a fee per machine, personnel monitor machine locations and track contractor overall revenue and/or units sold. Under no circumstance are cash boxes or merchandise cabinets emptied or serviced without an impartial observer.

Machine malfunctions. Customers are reimbursed from the petty cash fund for losses due to inoperable

machines.

Locking devicesConcessionaire-owned machines will have at least two locks; one to access the

machine and one NAFI-owned lock to access the cash box. The concessionaire may provide another locking device on the cash box so that both a NAFI key and a concessionaire key are required to open it. The following key controls will be written into the concessionaire contract:

(1) Keys are controlled to restrict access to cash boxes and internal control devices.

(2) Keys will remain in the custody of the DCA (or equivalent) or installation key control officer appointed in writing. Keys will be assigned to an impartial observer when required for cash collections or service calls by the concessionaire. The person responsible for key control will maintain an up-to-date key register.

Sales accountabilityAnalysis is made to project amusement and vending machine receipts

.(1) One method is to use counter metering devices on cash collection boxes.

Fund managers require contractors to install coin counters

(2) Another method is to inventory products placed in the machines at sales value. When machines are restocked, the value of the restocked merchandise at sales price is equal to the expected cash receipts. Actual cash collection adjusted for refunds because of malfunctioning machines is compared to expected receipts and any significant variances investigated.

a. Cash collections are made at least once each week, unless sales are anticipated to be less than $50 per machine; for these lower sales, collections may be made twice a month. Collection figures are furnished immediately after collections to the CAO prior to accounting close-out for the month.

b. If additional collections are needed, the DCA determines the frequency based upon:

1. Keeping accumulated receipts to a minimum.2. Anticipated sales.3. Risk factor for loss of receipts.4. Insurance factor.5. Collection costs in personnel and time.6. Interest earned on money deposited.

(3) The garrison commander or representative will appoint an impartial observer to sign for keys and participate in collections. The observer (or the fund representative when collecting cash from NAFI-owned machines) is briefed on procedures and accompanies concessionaire employees collecting cash from concessionaire-owned machines. The fund representative need not accompany the concessionaire and impartial observer when both a NAFI lock and a concessionaire lock are on the coin boxes.

(4) The DCA (or equivalent or delegatee) maintains an inventory of NAFI-owned and concessionaire-owned machines and State-licensed operations (AR 210–25), to include the serial numbers and location of each machine. Records are updated when machines are changed or rotated. Inventories are confirmed by IMWRF personnel on a random, periodic basis. A machine is never removed, rotated, or substituted without approval or before a final cash collection is made. The cash collection team always has a current inventory.

(5) DA Form 4083 (Vending or Amusement Machine Collections) is used to document cash collected in accordance with DOD 7000.14, volume 13.

(6) If the actual cash varies from the meter readings, the concessionaire and NAFI observer check for mechanical malfunction or tampering. If this does not resolve the discrepancy, the disputes provision of the contract governs.

(7) Receipts are divided at the time of collection between the activity representative and the concessionaire, based upon the percentage established in the contract.

a. Machine inventory records are the basis of payment. For example, $X per machine, per month or more frequently, consistent with the collection schedule.

b. Contracts may call for a review of the flat fee amounts as often as reasonable, until the number, type, and location of machines become static. Pro rata payments are authorized for machine changes.

c. Contractor furnished monthly revenue and/or units sold reports or other required documentation are used to make future flat fee adjustments.

d. A 100 percent verification of all machines, types, and locations will be made by NAFI personnel at the beginning, end, or renewal of a contract.

Appendix 2 – Cash Collection Form - DA4083-R