(1) Unless otherwise provided by law, a contract for supplies or services may be entered into for any period of time deemed to be in the best interests of the state if the term of the contract and conditions of renewal or extension, if any, are included in the solicitation and if funds are available for the first year at the time of contracting. If the chief procurement officer determines that extenuating circumstances exist and an extension of the contract beyond the term included in the solicitation is in the best interest of the governmental body, then the chief procurement officer may approve a longer term for a reasonable time based on what is practicable and necessary given the circumstances. The state shall initiate the renewal or extension of a contract for supplies or services. Payment and performance obligations for succeeding fiscal years shall be subject to the availability and appropriation of funds therefor.

(2) Prior to the utilization of a multiyear contract, it shall be determined in writing:

(a) That estimated requirements cover the period of the contract and are reasonably firm and continuing; and

(b) That such a contract will serve the best interests of the state by encouraging effective competition or otherwise promoting economies in state procurement.

(3) When funds are not appropriated or otherwise made available to support continuation of performance in a subsequent fiscal year, the contract shall be cancelled, and the contractor may be reimbursed for the reasonable value of any nonrecurring costs incurred but not amortized in the price of the supplies or services delivered under the contract.