Reduction of Reporting Requirements for the State Systems Advance Planning Document (APD) Process

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 95

RIN 0970-AB46

Reduction of Reporting Requirements for the State Systems Advance

Planning Document (APD) Process

AGENCY: Administration for Children and Families, HHS.

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ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: These proposed rules would decrease the reporting burden on

States relative to the State systems advanced planning document (APD)

process by increasing the threshold amounts above which APDs and

related procurement documents need to be submitted for Federal

approval. The APD process is the procedure by which States obtain

approval for Federal financial participation in the cost of acquiring

automatic data processing equipment and services. Additionally, these

proposed rules would eliminate the requirement for State submittal of

biennial security plans for Federal review in order to approve and

ensure timely Departmental action on State funding requests.

DATES: Interested parties are invited to comment on these proposed

rules. Comments must be received on or before September 22, 1995.

FOR FURTHER INFORMATION CONTACT: Bill Davis, State Data Systems Staff,

370 L'Enfant Promenade SW., Washington, DC 20447, telephone (202) 401-

6404.

ADDRESSES: Comments should be submitted in writing to the Assistant

Secretary for Children and Families, Attention: Mr. Mark Ragan, Office

of Information Systems Management, room 300 E, Hubert H. Humphrey

Building, 200 Independence Avenue SW., Washington, DC 20201. Comments

may be inspected between 8 a.m. and 4:30 p.m. during regular business

days by making arrangement with the contact person identified above.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These proposed rules would reduce current information collection

activities and, therefore, no approvals are necessary under section

3504(h) of the Paperwork Reduction Act of 1980 (Pub. L. 96-511).

We estimate that the paperwork burden associated with advance

planning document reporting requirements would be reduced by 20 percent

and that a further reduction would result from the impact this

regulation would have on Request for Proposals (RFP) and contract

reporting requirements. Additionally, this proposed regulation would

eliminate all reporting burden previously associated with submission of

biennial security reports.

Statutory Authority

These proposed regulations are published under the general

authority of sections 402(a)(5), 452(a)(1), 1902(a)(4), and 1102 of the

Social Security Act (the Act).

Background and Description of Regulatory Provisions

State public assistance agencies acquire automatic data processing

(APD) equipment and services for computer operations which support the

Aid to Families with Dependent Children, Adult Assistance, Child

Support Enforcement, Medicaid, Child Welfare, and Refugee Resettlement

programs. Currently any competitive acquisition over $500,000 or any

sole source acquisition over $100,000 in total State and Federal costs

which will be matched at the regular Federal financial participation

(FFP) rate requires written prior approval of an APD. Project cost

increases of more than $300,000 require the submission of an APD

Update. Also, most procurement documents (Request for Proposals (RFPs)

and contracts) over $300,000, and contract amendments over $100,000

must be approved by the Federal funding agencies.

Experience since these thresholds have been in place shows that the

total costs of all regular match State acquisitions under $5 million

account for a small percentage of the total of all State systems

development and operations costs, but that they account for a

disproportionate share of the documents submitted for Federal review.

In order to reduce the reporting burden on States and to better use

Federal resources, we are proposing to raise the threshold amounts for

regular match acquisitions. We would continue to require written prior

approval for all equipment and services acquired at an enhanced

matching rate.

To further the goal of reduced burden and increased efficiency,

these rules also propose to eliminate the requirement for submitting

biennial security reports to HHS. In the four years that biennial

security reports have been required under this subpart, it has been our

experience that the submission and review of these reports by HHS

components has been of minimal value to assuring that States have

adequate security programs. Ultimately, the adequacy of these programs

rests with the States. For this reason, we are proposing to eliminate

this reporting requirement, but to continue requirements that States

must perform security reviews and be responsible for maintaining review

reports. These reports would then be available for inspection by HHS

staff during on-site reviews where their content could be compared to

actual operations.

We are also proposing to change the rules to provide prompt

Department action on State funding requests. On average the Department

takes 30 to 60 days to respond to State submissions. Delayed responses

to States can cause project delays and increased costs to all parties

including the Department. From its experience, the Department has

determined that response can and should be made within 60 days. In

recognition of that experience and our partnership and commitment to

State projects which support our programs, we are proposing to

establish a provision whereby, if the Department has not provided a

State written approval, disapproval, or a request for information

within 60 days of issuing an acknowledgement of receipt of a State's

request, the request would be deemed to have provisionally met the

prior approval requirements. In this way, States would have a firmer

basis upon which to establish project timeframes, including the need to

obtain HHS approvals, and the incidence of increased project costs due

to delays in Departmental action on State funding requests would be

reduced.

Provisional approval would not absolve a State from meeting all

Federal requirements which pertain to the computer project or

acquisition. Such projects would continue to be subject to Departmental

audit and review, and the determinations made from such audits and

reviews. Even written prior approval by the Department does not

guarantee absolutely that there will be no subsequent determination of

violation of the pertinent Federal statutes and regulations. States

which are confident that their project is in compliance would be able,

however, to proceed after the 60-day period has expired without further

delay awaiting Federal approval.

These proposed rules would revise 45 CFR 95.611(a)(1), which

provides that States must obtain prior written approval for APD

equipment or services anticipated to have total acquisition costs of

$500,000 or more in Federal and State funds, to increase the $500,000

threshold amount to $5 million or more. Similarly, paragraph (a)(4),

which requires prior written approval with respect to State plans to

acquire noncompetitively from a nongovernmental source, APD equipment

and services, with a total acquisition cost of greater than $100,000,

is proposed to be revised to require that a State obtain prior approval

of its justification for a sole source acquisition with total State and

Federal costs of more than $1 million but no more than $5 million and

would

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provide that noncompetitive acquisitions of greater than $5 million

continue to be subject to the requirements of paragraph (b), which

provides specific prior approval requirements.

The Department expects that justifications for sole source

acquisitions of between $1 million and $5 million would address

pertinent Federal and State requirements. For example, the

justification should include a description of the proposed acquisition,

the circumstances identified at 45 CFR part 74, Appendix G under which

a grantee may undertake a noncompetitive acquisition, and assurances

that the sole source acquisition meets the requirements of State laws,

regulations and other relevant guidelines. Contracts which results from

sole source acquisitions of greater than $1 million are subject to

prior approval in accordance with 45 CFR 95.611(b)(1)(iii).

We are also proposing to eliminate paragraph (a)(3), which provides

a separate threshold amount for acquisitions in support of State

Medicaid systems funded at the 75 percent FFP rate. The Health Care

Financing Administration (HCFA) would apply the new thresholds of Title

XIX funded projects and these rules would be described in an upcoming

revision to Part 11 of the State Medicaid Manual. Additionally, we are

proposing to modify paragraph (a)(2) to delete a reference to paragraph

(a)(3) and to redesignate paragraphs (a)(4) through (a)(7) as

paragraphs (a)(3) through (a)(6). We are also proposing to revise

paragraph (a)(4), as redesignated, to change the reference from (a)(6)

to (a)(5).

Paragraph (b)(1)(iii), which provides that unless specifically

exempted by the Department, approval must be received prior to release

of a Request for Proposal (RFP) or execution of a contract where costs

are anticipated to exceed $300,000, is proposed to be revised to

increase the threshold to $5 million with respect to competitive

procurements and $1 million for noncompetitive acquisitions from

nongovernment sources. As proposed, this paragraph would provide that

States may be required to submit RFPs and contracts under the threshold

amounts on an exception basis or if the procurement strategy is not

adequately described and justified.

With respect to contract amendments, we are proposing to revise 45

CFR 95.611(b)(1)(iv) is revised to provide that prior approval is

needed, unless specifically exempted by the Department, prior to

execution of a contract amendment involving cost increases of greater

than $1 million or time extensions of more than 120 days. In addition,

States would be required to submit for approval contract amendments

under these threshold amounts on an exception basis or if the contract

amendment was not adequately described and justified in the APD.

As indicated, with respect to both proposed changes to paragraph

(b), HHS would retain the right to review and approve all RFPs,

contracts, and contract amendments, regardless of dollar amount, on an

exception basis. This could include instances where new program

requirements or technology are involved, as in electronic benefits

transfer, or when adequate description and justification has not been

provided in the APD.

Paragraph (c)(1), which provides specific approval requirements

with respect to regular FFP requests, is also proposed to be revised to

provide increased thresholds. First, under (c)(1)(i), the $1 million

threshold with respect to the need for written approval from the

Department of Annual Advanced Planning Document Updates (APDU) would be

increased to $5 million. In paragraph (c)(1)(ii)(A), the threshold with

respect to the requirement for approval of an ``as needed'' APDU of

projected cost increases would be raised from a lesser of $300,000 or

10 percent of the project cost, to projected cost increases of $1

million or more.

We are also proposing to revise 45 CFR 95.611 to provide prompt

Federal action on State funding requests. Accordingly, paragraph (d)

would be revised to provide that, if the Department has not provided

written approval, disapproval, or a request for information within 60

days of issuing an acknowledgement of receipt of a State's request, the

request would be provisionally deemed to have met the prior approval

requirements.

Finally, we are proposing to amend 45 CFR 95.621(f)(6), which

requires States to submit biennial security reports for Federal review

and approval, to require that such reports be maintained by States for

on-site review by HHS in the future.

Regulatory Impact Analysis

Executive Order 12866 requires that regulations be reviewed to

ensure that they are consistent with the priorities and principles set

forth in the Executive Order. The Department has determined that this

rule is consistent with these priorities and principles. No costs are

associated with this rule as it merely decreases reporting burden on

States.

Regulatory Flexibility Act

Consistent with the Regulatory Flexibility Act (Pub. L. 96-354),

which requires the Federal government to anticipate and reduce the

impact of rules and paperwork requirements on small businesses and

other small entities, the Secretary certifies that this rule has no

significant effect on a substantial number of small entities.

Therefore, a regulatory flexibility analysis is not required.

List of Subjects in 45 CFR Part 95

Claims, Computer technology, Grant programs--health, Grant

programs, Social programs, Social Security.

(Catalog of Federal Domestic Assistance Program Numbers 93.645 Child

Welfare Services-State Grants; 93.658, Foster Care Maintenance;

93.659, Adoption Assistance; 93.563, Child Support Enforcement

Program; 93.174, Medical Assistance Program; 93.570, Assistant

Payments-Maintenance Assistance)

Dated: November 29, 1994.

Mary Jo Bane,

Assistant Secretary for Children and Families.

Approved: March 30, 1995.

Donna E. Shalala,

Secretary.

For the reasons set forth in the preamble, 45 CFR is proposed to be

amended as follows:

PART 95--GENERAL ADMINISTRATION--GRANT PROGRAMS (PUBLIC ASSISTANCE

AND MEDICAL ASSISTANCE)

1. The authority citation for part 95, subpart F continues to read

as follows:

Authority: Secs. 402(a)(5), 452(a)(1), 1102, and 1902(a)(4) of

the Social Security Act, 42 U.S.C. 602(a)(5), 652(a)(1), 1302,

1396a(a)(4); 5 U.S.C. 301 and 8 U.S.C. 1521.

2. Section 95.611 is amended by revising paragraphs (a)(1), (a)(2),

(b)(1)(iii), (b)(1)(iv), (c)(1)(i), (c)(1)(ii) (A) and (d) and by

removing paragraph (a)(3) and redesignating paragraphs (a)(4) through

(a)(7) as (a)(3) through (a)(6) and revising newly redesignated

paragraphs (a)(3) and (a)(4) to read as follows:

Sec. 95.611 Prior approval conditions.

(a) * * * (1) A State shall obtain prior written approval from the

Department as specified in paragraph (b) of this section, when the

State plans to acquire APD equipment or services with proposed FFP at

the regular matching rate that it anticipates will have total

acquisition costs of $5,000,000 or more in Federal and State funds.

(2) A State shall obtain prior written approval from the Department

as specified in paragraph (b) of this

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section, when the State plans to acquire APD equipment or services with

proposed FFP at the enhanced matching rate authorized by 45 CFR 205.35,

45 CFR part 307 or 42 CFR part 433, subpart C, regardless of the

acquisition cost.

(3) A State shall obtain prior written approval from the Department

of its justification for a sole source acquisition, when it plans to

acquire noncompetitively from a nongovernmental source APD equipment or

services, with proposed FFP at the regular matching rate, that has a

total State and Federal acquisition cost of more than $1,000,000 but no

more than $5,000,000. Noncompetitive acquisitions of more than

$5,000,000 are subject to the provisions of paragraph (b) of this

section.

(4) Except as provided for in paragraph (a)(5) of this section, the

State shall submit requests for Department approval, signed by the

appropriate State official, to the Director, Administration for

Children and Families, Office of Information Management Systems. The

State shall send to ACF one copy of the request for each HHS component,

from which the State is requesting funding, and one for the State Data

Systems Staff, the coordinating staff for these requests. The State

must also send one copy of the request directly to each Regional

program component and one copy to the Regional Director.

* * * * *

(b) * * *

(1) * * *

* * * * *

(iii) For the Request for Proposal and Contract, unless

specifically exempted by the Department, prior to release of the RFP or

prior to the execution of the contract when the contract is anticipated

to or will exceed $5,000,000 for competitive procurement and $1,000,000

for noncompetitive acquisitions from nongovernmental sources. States

will be required to submit RFPs and contracts under these threshold

amounts on an exception basis or if the procurement strategy is not

adequately described and justified in an APD.

(iv) For contract amendments, unless specifically exempted by the

Department, prior to execution of the contract amendment involving

contract cost increases exceeding $1,000,000 or contract time

extensions of more than 120 days. States will be required to submit

contract amendments under these threshold amounts on an exception basis

or if the contract amendment is not adequately described and justified

in an APD.

* * * * *

(c) * * *

(1) * * *

(i) For an annual APDU for projects with a total acquisition cost

of more than $5,000,000, when specifically required by the Department.

(ii) For an ``As Needed APDU'' when changes cause any of the

following:

(A) A projected cost increase of $1,000,000 or more.

* * * * *

(d) Prompt action on requests for prior approval. The ACF will

promptly send to the approving components the items specified in

paragraph (b) of this section. If the Department has not provided

written approval, disapproval, or a request for information within 60

days of the date of the Departmental letter acknowledging receipt of a

State's request, the request will automatically be deemed to have

provisionally met the prior approval conditions of paragraph (b) of

this section.

3. Section 95.621 is amended by revising paragraph (f)(6) to read

as follows:

Sec. 95.621 APD reviews.

* * * * *

(f) * * *

(6) The State agency shall maintain reports of their biennial APD

system security reviews, together with pertinent supporting

documentation, for HHS on-site review.

[FR Doc. 95-18070 Filed 7-21-95; 8:45 am]

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