Human Services
Federal Approval and Funding Processes for States' Information Systems Gao ID: GAO-02-347T July 9, 2002This testimony discusses federal agency processes for approval of state information technology (IT) projects supporting state-administered federal human services programs. Federal approval and funding processes for state IT development and acquisition projects for the Child Support Enforcement, Child Welfare, and Food Stamps programs require the establishment of federal funding participation rates, the documentation that states must submit, and the time frames in which the federal agency must respond to the request. Assessment of the federal approval and funding process requires complete and reliable data that track a request from agency receipt until the agency finally approves or disapproves the request. However, such information is not readily available and the process cannot be thoroughly assessed because (1) the system used by the Administration for Children and Families (ACF) and The Centers for Medicare and Medicaid Services (CMS) headquarters to manage the approval process does not track the life cycle of a request and (2) the Department of Agriculture's Food and Nutrition Services (FNS) and CMS regional offices do not have a central tracking system. However, in a vast majority of cases, agencies responded to states' IT planning and acquisition requests within 60 days, as required by regulation. State cost allocation plans--which are used to identify, measure, and allocate expected project costs among the state and the federal programs--for systems development and acquisition projects must be approved by each federal agency expected to provide funding. To ensure that they provide a consistent response to state requests that include cost allocation plans, ACF, CMS, and FNS officials stated that they coordinate their reviews of multiprogram requests. These reviews are based on the requirements in OMB Circular A-87, which provides the states wide latitude in developing cost allocation plans for IT development and acquisition projects.
GAO-02-347T, Human Services: Federal Approval and Funding Processes for States' Information Systems
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on Technology and Procurement Policy, Committee
on Government Reform, House of Representatives:
For Release on Delivery:
Expected at 10 a.m. EDT:
Tuesday, July 9, 2002:
Human Services:
Federal Approval and Funding Processes for States‘ Information Systems:
Statement of David L. McClure:
Director, Information Technology Management Issues:
GAO-02-347T:
Mr. Chairman and Members of the Committee:
We are pleased to be here today to discuss the federal agency processes
related to the approval of state information technology (IT) projects
supporting state-administered federal human services programs. These
programs include Child Support Enforcement, Child Welfare, Medicaid,
and Food Stamps (app. I describes these programs).
Information systems play a central role in the management of human
services. Historically, information systems have been used to determine
participants‘ eligibility, to process claims, and to provide
participant and program information. States are also facing new
information systems challenges as a consequence of the sweeping changes
brought about by welfare reform, [Footnote 1] in which states‘ programs
for needy families with children have dramatically shifted their
objectives and operations. The technology challenge of welfare reform
is to provide the information needed to integrate services to clients
and track their progress towards self-sufficiency. To help needy
families prepare for and obtain work, case managers need detailed
information about factors such as family circumstances, job openings,
and support services, which is very different from the information
needed to issue timely and accurate cash assistance payments.
Recognizing the importance of automated systems in state-administered
federal human services programs, the Congress enacted various
legislative provisions encouraging states to implement certain systems
to improve program efficiency. In addition, federal agencies have
provided technical and funding assistance. For example, in the Family
Support Act of 1988 and other acts, Congress provided funding to states
to develop a single statewide child support enforcement system.
[Footnote 2] The federal agencies responsible for the Child Support
Enforcement, Child Welfare, Medicaid, and Food Stamps programs also
have processes in place to review and approve state IT planning and
acquisition documents supporting state human services systems as a
prerequisite for states to receive federal funding for these systems.
Although there are exceptions, as a general rule, the federal agencies
are required to respond to these state requests for approval within 60
days. This federal review and approval process was designed to promote
accountability for the use of federal funds, mitigate financial risks,
and avoid incompatibilities among systems.
Because of the importance of IT in achieving the programmatic goals of
state-administered federal human services programs, you asked us to
study the approval and funding of information technology projects for
state-administered federal programs for the following four programs:
(1) the Department of Health and Human Services‘ (HHS) Administration
for Children and Families (ACF) Child Support Enforcement program,
(2) ACF‘s Child Welfare program, (3) HHS‘s Centers for Medicare and
Medicaid Services (CMS) Medicaid program, and (4) the Department of
Agriculture‘s Food and Nutrition Services (FNS) Food Stamps program.
Specifically, our objectives were to determine, for these four
programs:
* the statutory and regulatory requirements for federal approval and
funding of state IT development and acquisition projects;
* whether agency processes for reviewing, approving, and funding state
IT development and acquisition projects for these programs hinder or
delay states‘ efforts to obtain approval for these projects; and;
* how the agencies ensure that they consistently apply the Office of
Management and Budget‘s (OMB) Circular A-87, Cost Principles for State,
Local and Indian Tribal Governments, to fund IT development and
acquisition projects.
In doing this work, we reviewed applicable federal statutes and
regulations as well as ACF, CMS, and FNS policies and guidance. We also
obtained and analyzed information on state requests for the approval of
planning documents (called advance planning documents and advance
planning document updates) and acquisition documents (i.e., requests for
proposals, [Footnote 3] contracts, [Footnote 4] and contract
modifications) for fiscal years 2000 and 2001. On the basis of this
information, we selected and analyzed examples of cases in which the
federal agency took more than 60 days to process the request. [Footnote
5] As part of this analysis, we reviewed files and interviewed
responsible federal and state officials. However, we did not assess the
adequacy of the analyses performed and the subsequent response by the
applicable federal agency. We also interviewed agency and OMB officials
on how they ensure that the cost allocation provisions of OMB Circular
A-87 pertaining to IT development and acquisition projects are
consistently applied. Appendix II provides additional details of our
scope and methodology.
Results in Brief:
Federal approval and funding for state IT development and acquisition
projects for the Child Support Enforcement, Child Welfare, Medicaid, and
Food Stamps programs are largely governed by statutory and regulatory
requirements. These requirements establish the federal funding
participation rates, the documentation (e.g., advance planning
documents, each of which includes a cost allocation plan and
feasibility study; requests for proposals; and contracts) that states
must submit, and the timeframes in which the federal agency must
respond to the request. With some exceptions (primarily related to the
federal financial participation rates), the requirements for the four
programs are largely the same. States cannot receive federal funding
for developing and acquiring IT systems for the Child Support
Enforcement, Child Welfare, Medicaid, and Food Stamps programs without
obtaining approval of these planning and acquisition documents.
A thorough assessment of the federal approval and funding process
requires complete and reliable data that track a request from the time
the federal agency first receives it until the agency finally approves
or disapproves the request. However, such information is not readily
available and the process cannot be thoroughly assessed because (1) the
system used by ACF and CMS headquarters to manage the approval
process does not track the life cycle of a request [Footnote 6] and (2)
FNS and CMS regional offices do not have a central tracking system.
[Footnote 7] However, through a meticulous manual inspection of related
paper documents and reviews of system reports, we were able to
determine that in a vast majority of cases, agencies responded to
states‘ IT planning and acquisition requests within 60 days, as
generally required by regulation. [Footnote 8] Moreover, in 48 of 51
cases in which the agency did not respond within 60 days, state
officials reported that the timing of the federal response did not
hinder state IT projects. Nevertheless, in response to state complaints
that the federal approval process was burdensome and to a prior GAO
recommendation to identify and implement plans to facilitate states‘
efforts to improve their systems, ACF, CMS, and FNS formed a workgroup
about 2 years ago to improve the federal approval process. However,
progress has been stymied by a lack of agreement among the agencies.
Accordingly, at this time there are no plans to improve the APD
process.
State cost allocation plans”which are used to identify, measure, and
allocate expected project costs among the state and the federal
program(s)”for systems development and acquisition projects must be
approved by each federal agency expected to provide funding. To ensure
that they provide a consistent response to state requests that include
cost allocation plans, ACF, CMS, and FNS officials stated that they
coordinate their reviews of multiprogram requests. These reviews are
based on the requirements set forth in OMB Circular A-87, [Footnote 9]
which provides the states wide latitude in developing cost allocation
plans for IT development and acquisition projects. However, in 3 of 11
cases we reviewed, [Footnote 10] the departments of Agriculture and HHS
provided inconsistent responses to the state. State officials noted
that inconsistent federal responses cost the state in time and staff
resources to negotiate and resolve these differences. Accordingly, to
lessen the burden on the states, it is critical that the federal
departments work together to ensure that they respond to the states in
a consistent manner.
Background:
The federal government has spent billions of dollars supporting the
planning, development, and operation of state systems that support the
Child Support Enforcement, Child Welfare, Medicaid, and Food Stamps
programs. For example, in fiscal year 2000 alone, the federal
government‘s expenditures for IT planning, development, acquisition,
and operations for these systems totaled $1.9 billion. [Footnote 11]
States request funding for a wide variety of projects, such as the
following:
* Electronic benefits transfer systems, which allow food stamp
recipients to authorize the electronic transfer of their government
benefits from a federal account to a retailer account to pay for
products received. According to FNS, as of June 2002, 49 states, the
District of Columbia, and Puerto Rico were using these systems in some
form to issue food stamp benefits.
* Statewide systems that support the Child Support Enforcement and Child
Welfare programs. For example, one state was developing a statewide
child welfare system to compile and help implement a comprehensive set
of child welfare and protection practices. When implemented, the system
is expected to replace many nonintegrated systems with a single,
comprehensive one.
* Infrastructure projects that support multiple programs. For example,
one state planned to procure an enterprise portal to serve as a
universal point of access to the state government‘s information and
services, including those related to federal programs.
State initiatives for human services systems can be complex, large-scale
undertakings, and states face a broad range of issues in developing and
implementing them. At a 2001 conference on modernizing information
systems for human services sponsored by GAO and others,12 participants
identified the following issues states face in developing and
implementing these systems: [Footnote 13]
* obtaining support for the project from the state‘s leadership;
* obtaining support for the project from staff who will use the system;
* providing adequate training to staff who will use the system;
* obtaining adequate funding for developing and operating state and
local information systems;
* maximizing the system‘s compatibility with other systems and the
capability to support future upgrades;
* minimizing the risk that conversion to the new system will result in
the loss of functions or data;
* overseeing contractors‘ performance to maximize the cost
effectiveness of systems development;
* ensuring adequate state management of the project that can survive
personnel changes; and;
* minimizing adverse effects of competition among state agencies for
information systems resources.
In addition, one of the key challenges for systems modernization
identified by the participants at this conference was simplifying the
approval process for obtaining federal funding for information systems.
[Footnote 14] This process, generally called the ’APD process,“
requires states to submit various documents for approval in order to
receive federal funding. Specifically, subject to the statutory and
regulatory requirements and thresholds discussed in appendix III,
states submit the following:
* Advance planning documents (APDs), which, depending on whether the
project is in the planning or implementation stage, can include a
statement of needs and objectives, a requirements analysis, [Footnote
15] a feasibility study, [Footnote 16] a cost-benefit analysis, a
statement of alternatives considered, a project management plan, a
proposed budget, and prospective cost allocations. There are two major
types of APD submissions”planning and implementation”which are used at
prescribed stages in the state systems development and acquisition
process.
* APD updates, which are used by federal agencies to keep informed of
the project status and by the states to obtain funding throughout the
project‘s life. APD updates must be submitted annually or ’as needed,“
which is defined as when there is a projected cost increase of $1
million or more, a schedule extension for major milestones of more than
60 days, a significant change in the procurement approach, a change in
system concept or scope, or a change to the approved cost allocation
methodology.
* Requests for proposals (RFPs) related to the planned system, such as
to solicit bids to develop a system or to provide independent
verification and validation services. RFPs may be submitted throughout
the life of the project (i.e., the planning, implementation, or
operations phase). Unless specifically exempted by the agency(s), RFPs
are to be approved before public.
* Contracts and contract modifications related to the planned system,
which must include certain standard clauses and may be submitted
throughout the life of the project. Unless specifically exempted by the
agency(s), contracts are to be approved before being finalized.
ACF, CMS, and FNS review these submissions and make funding decisions
on the basis of their review, which they are generally required to
complete within 60 days. [Footnote 17] Once the federal agency has
reviewed the state request, it can respond by approving or disapproving
the request or requesting additional information from the state.
[Footnote 18] Although the agency‘s response is generally to be
provided to the state within 60 days, if the federal agency requests
additional information from the state, once the state responds the
agency has another 60 days to review and respond to the state reply.
[Footnote 19] Figure 1 is a simplified illustration of this general
process. In addition, although figure 1 shows an iterative process,
under various circumstances states may submit documents concurrently.
Figure 1: APD Process Overview:
{See PDF for image]
This figure is a flow-chart of the APD Process Overview. Note that all
state actions in all phases are inter-related, acting as a continuous
loop. The following information is included in the flow-chart:
Planning phase:
State Actions:
* Begin project/notify federal agency(s);
* Plan project;
Federal actions:
* State submits request;
* Review state submission;
- ADP planning;
- ADP update, if applicable;
- RFP, if applicable;
- Contract/modification, if applicable;
* Federal response (approve, disapprove, or request information) to
project plan.
Development and implementation phase:
State actions:
* design, develop and implement plan;
Federal actions:
* State submits request;
* Review state submission;
- ADP planning;
- ADP update, if applicable;
- RFP, if applicable;
- Contract/modification, if applicable;
* Federal response (approve, disapprove, or request information) to
project plan.
Operations phase:
State actions:
* Operate system;
* Modify or enhance system;
Federal actions:
* State submits request;
* Review state submission;
- RFP, if applicable;
- Contract/modification, if applicable;
* Federal response (approve, disapprove, or request information) to
project plan.
Source: GAO.
[End of figure]
If a system is to be used for more than one federal program, documents
that meet the separate requirements of each program must be submitted
and approved, and planning and development costs are allocated to the
various programs benefiting from the system investment. (The same
documents can be submitted to each agency. [Footnote 20]) For example,
a state request related to a project that supports the Food Stamps,
Medicaid, and Child Support Enforcement programs requires submission to
the departments of Agriculture and HHS. Within HHS, for multiprogram
requests, ACF‘s State Systems Policy Division is to distribute the
material to applicable program offices (in the above case to CMS and
ACF‘s Office of Child Support Enforcement) and coordinate responses so
that a single departmental letter is sent to the state.
Statutory and Regulatory Requirements Govern the Federal Approval
Process:
The Congress and the departments of Agriculture and HHS have issued
statutory and regulatory requirements, respectively, that govern the
processes related to the approval of funding for state information
technology projects associated with state-administered federal human
services programs. This funding is intended to encourage states to
implement systems to achieve programmatic goals, such as to improve
program management and performance and to reduce error rates.
However, to exercise their stewardship responsibilities over funding
provided to the states, the departments and, in the case of Child
Support Enforcement, the Congress, require states to submit planning and
acquisition documents for approval. States cannot receive federal
funding for developing and acquiring IT systems for the Child Support
Enforcement, Child Welfare, Medicaid, and Food Stamps programs
without obtaining such approval.
Although many of the requirements for these programs are the same, there
are differences. For example, as shown in table 1, the federal financial
participation rates vary.
Table 1: Federal Financial Participation Rates by Program:
Program: Child support enforcement;
Nature of funding: Entitlement;
Federal/state funding percentage for information systems:
66/34”system planning and development;
66/34”system operations.
Program: Child welfare;
Nature of funding: Entitlement;
Federal/state funding percentage for information systems:
50/50”system planning and development;
50/50”system operations.
Program: Medicaid: eligibility;
Nature of funding: Entitlement;
Federal/state funding percentage for information systems:
50/50”system planning and development;
50/50”system operations.
Program: Medicaid: claims processing;
Nature of funding: Entitlement;
Federal/state funding percentage for information systems:
90/10”system planning and development;
75/25”system operations.
Program: Food stamps;
Nature of funding: Entitlement;
Federal/state funding percentage for information systems:
50/50”system planning and development;
50/50”system operations.
Source: GAO analysis of applicable statutes.
[End of table]
In addition, whereas the APD requirements relating to the approval and
funding process for the Child Support Enforcement program are based in
part in statute, the requirements for the other programs are based on
regulations separately promulgated by the departments of Agriculture and
HHS (although they largely mirror each other). [Footnote 21] Appendix
III provides additional detail on selected federal statutory and
regulatory requirements related to the process for obtaining federal
funding for IT development and acquisition projects.
States Reported Limited Impact from Federal Responses Provided after 60
Days, but Key Information Is Lacking:
Although some state officials have reported that the federal approval
process takes too long, we were unable to comprehensively analyze how
much time the process took because the federal agencies did not track
the life cycle of state requests. While the entire approval process time
generally could not be determined, ACF, CMS, and FNS responded (i.e.,
approved, disapproved, or requested additional information) to state
requests within established timeframes about 89 percent of the time.
[Footnote 22] Moreover, according to state officials, in only a few
cases in which the federal response took over 60 days was the state IT
project negatively affected. Nevertheless, officials from about one-
third of the states in our review cited overall concerns with the
federal approval process or wanted a more streamlined process. To
address state concerns, ACF, CMS, and FNS formed a workgroup about 2
years ago to improve the federal approval process, but progress has
been slow, and there are no plans at this time to improve the APD
process.
Agencies Do Not Track Data Necessary to Assess the Timeliness of the APD
Process:
The APD process was designed to promote accountability for the use of
federal funds, mitigate financial risks, and avoid incompatibilities
among systems. However, among the concerns raised at the 2001
conference on modernizing information systems for human services
[Footnote 23] was that with technology advancing so quickly, by the
time federal funding under this process is approved, state plans may be
obsolete.
Because the federal response to a state request may be to ask for
additional information, a thorough assessment of the state‘s concerns
about timeliness requires reliable data that track a request from the
time the federal agency first receives it until the agency finally
approves or disapproves it. However, this information is not readily
available because (1) the system used by ACF and CMS headquarters to
manage the approval process does not track the life cycle of a request
[Footnote 24] and (2) FNS and CMS regional offices do not have a
central tracking system (although some of these regional offices used
automated spreadsheets to track the status of state requests).
According to an FNS official, one of the agency‘s regions had developed
a central tracking system to be used by all regions, but it is not
being used because staff found that it required too much data entry and
it was easier to use their own spreadsheets. In addition, at the
conclusion of our review, a CMS official reported that the agency had
recently implemented a centralized tracking system for state submissions
related to the Health Insurance Portability and Accountability Act.
Since the Food Stamps program had a relatively small number of cases, we
reviewed copies of state requests and federal approval letters for
fiscal years 2000 and 2001 and determined the average time until the
federal approval or disapproval of the state requests to be about 66
days and ranged from 6 to 314 days. [Footnote 25] Table 2 provides an
example of an FNS case in which the initial federal response was in 31
days but the total time to approve the request took an additional 130
days, out of which the agency was awaiting a state reply for 89 days.
Table 2: Chronology of a Sample Case in Which Agency Response Was
Within 60 Days, but Approval Took Much Longer:
Date:
Federal or state action:
Number of days:
Date: 4/23/01;
Federal or state action: State APD update submission was date stamped as
received by FNS;
Number of days: [Empty].
Date: 5/24/01;
Federal or state action: FNS E-mailed questions and concerns;
Number of days: 31.
Date: 6/22/01;
Federal or state action: State responded to FNS E-mail;
Number of days: 29.
Date: 7/6/01;
Federal or state action: FNS E-mailed additional questions;
Number of days: 14.
Date: 8/10/01;
Federal or state action: State responded to additional questions;
Number of days: 35.
Date: 8/23/01;
Federal or state action: FNS E-mailed additional questions;
Number of days: 13.
Date: 8/28/01;
Federal or state action: FNS E-mailed additional questions;
Number of days: 5.
Date: 9/14/01;
Federal or state action: State submitted a revised APD update via E-
mail;
Number of days: 17.
Date: 9/19/01;
Federal or state action: FNS E-mailed question on revised APD update;
Number of days: 5.
Date: 9/20/01;
Federal or state action: FNS E-mailed additional question;
Number of days: 1.
Date: 9/28/01;
Federal or state action: State responded to questions on revised APD
update;
Number of days: 8.
Date: 10/1/01;
Federal or state action: FNS provided final approval of revised APD
update;
Number of days: 3.
Total number of days to approval: 161.
Source: GAO analysis of FNS file.
[End of table]
As illustrated by the FNS example, the length of the approval process
can be substantial and attributable to both the states and the federal
agencies, which makes tracking the state requests throughout their life
cycle important to determining the cause of delays.
Federal Actions on State Submissions Are Generally within Prescribed
Timeframes:
Although we generally could not determine the total time it took for the
federal agencies to approve or disapprove a state request, we were able
to ascertain whether the agencies responded (i.e., approved,
disapproved, or requested additional information) to the states within
60 days, as generally required. In fiscal years 2000 and 2001, states
submitted almost 1,150 requests for federal approval related to the
four federal programs: [Footnote 26]
* 377 planning (APDs and APD updates) and acquisition documents (RFPs,
contracts, and contract modifications) for the Child Support Enforcement
program;
* 212 planning and acquisition documents for the Child Welfare program;
* 370 planning and acquisition documents for the Medicaid program;
* 75 planning and acquisition documents that were reviewed by two or
more of the HHS programs in our review; and;
* 105 planning and acquisition documents for the Food Stamps program.
The three federal agencies responded to these state requests within 60
days about 89 percent of the time. [Footnote 27]
Figure 2 shows the extent to which Agriculture and HHS responses
exceeded 60 days (app. IV provides additional detail of this analysis).
Although we were able to determine the percentage of requests that were
completed within 60 days, we could not rely on data from the system used
by ACF and CMS headquarters for a more thorough analysis (e.g., a
further breakdown of how long it took for the federal government to
provide its initial response). In comparing the dates in this system to
the actual documentation, we found numerous discrepancies (see appendix
V for more information on the data reliability concerns associated with
this system).
Figure 2: Percentage of Cases in Which the Agency Response Exceeded 60
Days[A]:
[See PDF for image]
This figure is a stacked vertical bar graph depicting the percentage of
cases in which the agency response exceeded 60 days. The following
approximated data is illustrated:
Agency: HHS/ACF Child Support Enforcement;
Response, 0-60 days: approximately 82%;
Response over 60 days: approximately 18%.
Agency: HHS/ACF Child Welfare;
Response, 0-60 days: approximately 90%;
Response over 60 days: approximately 10%.
Agency: HHS/CMS Medicaid;
Response, 0-60 days: approximately 95%;
Response over 60 days: approximately 5%.
Agency: HHS multiprogram;
Response, 0-60 days: approximately 80%;
Response over 60 days: approximately 20%.
Agency: Agriculture/FNS Food Stamps;
Response, 0-60 days: approximately 90%;
Response over 60 days: approximately 10%.
[A] This analysis includes APD updates. However, except for the Food
Stamps program, the agencies are not required to provide their response
to states within 60 days for APD updates.
Note: The HHS multiprogram category contains state requests that
involved two or more of the HHS programs in our review. For
multiprogram requests at HHS, the department sends a single response
to the state. The majority of the cases in the Child Support
Enforcement, Child Welfare, and Medicaid categories were for single-
program requests (some requests included other federal programs).
Source: GAO analysis based on agency data.
[End of figure]
ACF‘s acting deputy assistant secretary for administration did not agree
with the inclusion of APD updates in our analysis, noting that ACF and
CMS are not required to respond to this type of state request within 60
days. Although ACF and CMS are not required to respond to the states
within 60 days for APD updates, these are critical documents that
require federal approval in order for states to continue receiving
federal funding. In addition, in some cases, a federal agency has
withheld approval of other state submissions, such as an RFP, pending
the approval of an APD update, which illustrates the importance of
timely federal responses to the states for APD updates. Finally, as I
just mentioned, we had to limit our analysis of the timeliness of the
federal agency responses because of the numerous errors we found in the
dates contained in the system used by ACF and CMS headquarters. We
chose 60 days as our cutoff point because the regulations generally
called for an agency response within this timeframe and ACF officials
told us that they try to respond to all state requests, including APD
updates, within 60 days.
At the conclusion of our review, ACF and CMS officials also explained
that the timeliness of the HHS multiprogram cases suffers because these
projects are almost always large, expensive, and complex undertakings
that frequently require more analysis, extensive coordination with other
federal agencies (both within and outside of HHS) and additional
discussions with the state. In addition, ACF officials stated that other
required responsibilities, such as the performance of certification
reviews for certain state systems, affected the timeliness of their
reviews.
In about half of the 51 cases taking over 60 days that we reviewed, we
could not ascertain why the agency took additional time to respond to
the state request because the applicable federal analyst was no longer
with the agency or the analyst could not provide an explanation.
However, when reasons were cited for the late federal response, the
most common were (1) resource issues (e.g., lack of staff), (2)
complicated issues to be resolved, (3) multilayer review within the
agency, and (4) difficulty in reaching agreement with another agency.
In addition, in those cases in which the federal agency requested
additional information or approved the state request but asked the
state to address certain concerns, there was no single common issue or
problem. Instead agencies raised a variety of issues in their responses
to the states requests, which are summarized in table 3.
Table 3: Summary of Federal Agency Issues for 29 Cases[A] in Which the
Federal Response Exceeded 60 Days:
Issues:
Number of times cited[B]:
Issues: Cost estimate issues, including unexplained, incomplete,
inconsistent, and inaccurate amounts;
Number of times cited[B]: 17.
Issues: Cost allocation issues;
Number of times cited[B]: 13.
Issues: Missing required elements of the submission;
Number of times cited[B]: 7.
Issues: Functionality issues, such as how the system will meet its
goals and objectives;
Number of times cited[B]: 7.
Issues: Other;
Number of times cited[B]: 13.
[A] We reviewed a total of 51 cases in which the federal agency
response was over 60 days but 22 were approvals without any outstanding
federal issues or the documentation indicated that the federal agency
requested additional information but did not provide any details.
[B] More than one issue may have been cited by the agency.
Source: GAO analysis.
[End of table]
State Officials Cited Limited Impact on Projects Due to Federal
Responses Provided After 60 Days:
According to state officials involved in 48 of the 51 cases (at 22
states) that we reviewed in which the federal agency took over 60 days
to respond, the timing of the federal response reportedly had no
negative impact on state IT projects. State officials cited various
reasons for the lack of negative impact on their projects.
Specifically, the effect of some of the federal responses that were
over 60 days was mitigated because the state maintained good
communications with the federal agencies or had sufficient state
funding to continue the project. In other cases, additional or
concurrent delays were caused by internal state processes or the state
was seeking retroactive approval for a document. For example, officials
from seven states reported that they maintain a good working
relationship or communication with the federal agency that performed
the review. Other states used their own funding to continue project
planning while awaiting federal approval. Also, in three cases, state
officials reported that an internal state review process contributed to
the delay. Finally, in six cases that we reviewed, the states requested
retroactive approval for actions they had already taken.
Although most states reported no negative impact on their projects,
officials in three states (related to three cases) reported project
delays, funding losses, and other negative impacts because of the
federal approval process. For example, an official from one state‘s
public welfare office asserted that the federal delay in reviewing an
APD caused the project to be temporarily delayed for several weeks and
that the project staff was reassigned until the response was received.
In another case, the state‘s federal liaison reported that the late
federal response caused a delay in the release of an RFP and the loss
of state funding. Specifically, according to the state‘s federal
liaison, by the time the state received the final federal approval of
an APD update and accompanying RFP, the state legislature had frozen
spending on all new IT expenditures until the beginning of the new
state fiscal year. As a result, according to this official, as of late
June, the state funding earmarked for this project had not been
released and the planned RFP had not yet been issued.
Similar to the responses provided on the effect of the federal delay,
in 18 of the 24 cases in which the federal agency requested additional
information, [Footnote 28] state officials stated that the federal
requests were reasonable. For example, ACF disagreed with one state‘s
APD update request because it contained inadequate cost and benefit
information and requested that the state resubmit a revised document.
The state official for this project agreed with the agency‘s assessment
and resubmitted a revised APD update. However, in six cases (in two
states), the state officials did not believe that the federal request
was reasonable. For example, one state Chief Information Officer stated
that although there were some valid points in ACF‘s response to an APD
request, other points (1) indicated a lack of technical sophistication
or understanding of the state project and (2) misapplied the federal
regulation. This Chief Information Officer noted that the state had to
devote staff time to responding to these federal issues.
Although they generally did not cite a negative impact in the particular
cases in our review, officials from about one-third of the states in our
review mentioned problems related to the overall federal approval
process or sought a more streamlined process. For example, officials in
two states told us that the overall process takes too long. One of
these officials noted that each part of the federal review process
’seems to take 60 days“ and makes the overall time too long. Other
comments were that (1) it is challenging to meet the many requirements
for receiving federal funds, (2) the federal APD process is costly to
comply with, and (3) federal reviewers are not as accessible as in the
past and communication had declined. Finally, according to an official
in one state, one agency routinely requested more information than the
official believed was necessary, asserting that about one-half of his
staff was needed to respond to these requests.
ACF‘s acting deputy assistant secretary for administration and FNS‘
information technology division director noted that we did not address
what, if any, concerns the federal agencies had with the state
submissions in our review or the validity of the state officials‘
views. As I mentioned at the beginning of my statement, the scope of
our review was limited to analyzing the timeliness of the federal
response and discussing the effect of the response with appropriate
state officials. Accordingly, we did not review the adequacy of the
federal responses or corroborate the views of the state officials.
Federal Agencies Began Work to Improve the Federal Approval Process,
but Progress Is Slow:
Responding to state complaints that the APD process was burdensome
and a prior GAO recommendation to identify and implement plans to
facilitate states‘ efforts to improve their systems, [Footnote 29] in
June 2000 ACF, CMS, and FNS established a workgroup to improve the
federal approval process. In the summer of 2001, this workgroup, which
obtained feedback on the approval process from nine states, proposed
raising the threshold for when states have to submit a request for
approval. The workgroup originally believed that this change could be
done administratively. However, HHS‘s Office of the General Counsel
ruled that such a change would have to go through the regulatory
process, which involves a review process and public comment period. As
of mid-April, the chair of this workgroup stated that the agencies had
not yet decided whether to pursue a regulatory change. This workgroup
also considered whether to propose other changes to the federal
approval process, such as adopting a streamlined APD format used by CMS
for requests related to the Health Insurance Portability and
Accountability Act.
After several meetings to discuss and develop plans, the progress of
this workgroup has stalled. According to the chairman of the workgroup,
little progress has been made since the summer of 2001. He stated that
progress began to slow down when the agencies underwent leadership
changes. In addition, according to the chairman, although the workgroup
has continued to meet, there is no consensus among the federal partners
about the direction to take in improving the federal process. As a
result, at this time there are no plans to change the APD process.
Agency Responses to State Cost Allocation Plans for IT Projects Are
Sometimes Inconsistent:
While federal officials from the departments of Agriculture and HHS
stated that they ensure the consistency of cost allocation requirements
for IT projects by coordinating their reviews, we identified instances
of inconsistent federal actions. Specifically, in 3 of 11 cases we
reviewed, [Footnote 30] FNS and HHS provided different directions to
the states, largely due to a lack of effective coordination among the
federal departments. State officials told us that such federal
inconsistency can cause additional state staff time to negotiate and
resolve the differences and ultimately can affect a project‘s funding.
When submitting an APD or, in some cases, an APD update, states are
required to submit cost allocation plans. These plans are used to
identify, measure, and allocate expected project costs between the
state and the federal program(s). Governmentwide guidance pertaining to
cost allocation is explained in OMB Circular A-87 and in A Guide for
State, Local, and Indian Tribal Governments: Cost Principles and
Procedures for Developing Cost Allocation Plans and Indirect Cost Rates
for Agreements with the Federal Government”Implementation Guide for
Office of Management and Budget Circular A-87. The cost allocation
requirements set forth in OMB Circular A-87 are based on 31 U.S.C.
1301(a), which provides that an agency, absent statutory authority, may
not expend appropriated funds for purposes other than those for which
the appropriations were made. Since the cost allocation principles that
are articulated in OMB Circular No. A-87 are statutorily based, they
are not subject to agency discretion. Moreover, the principles also
apply to appropriations provided through an agency grant to a state,
such as in the case of the four programs in our review.
OMB Circular A-87 provides the states wide latitude in developing a cost
allocation plan. According to the circular, to receive federal
approval, the cost allocation plan must be complete and provide
sufficient detail to demonstrate that the costs are allowable and
fairly allocated among the various federal and state programs that
benefit from the project. Thus, states are free to submit plans using a
wide variety of methodologies, within the scope of the requirements set
forth by OMB Circular A-87. For example, a state may submit a cost
allocation methodology that allocates project costs based on the size
of program caseloads.
State cost allocation plans for systems development and acquisition
projects must be approved by each federal agency expected to provide
funding. In the case of multiprogram projects, ACF‘s State Systems
Policy Division coordinates the review of these plans by the various
program divisions within the department to help ensure that the
circular is consistently applied within HHS. This division also helps
resolve differences resulting from the various program division reviews
and then issues the department‘s response to the state request. FNS
performs a separate review and provides its own response to a state for
multiprogram reviews. FNS, ACF, and CMS officials stated that they
coordinate their cost allocation issues to ensure consistency.
Although the federal agencies reported coordinating their responses, we
found examples of inconsistent federal responses. Specifically, while
ACF and FNS provided a consistent response in eight cases in which
there was a common APD or APD update submitted to the agencies (i.e.,
neither department disagreed with the plan submitted by the state), in
three other cases (for three states), one agency questioned the cost
allocation plan or methodology proposed by the state, whereas the other
did not. In one example, FNS approved an APD update, whereas ACF did
not approve the same submission, in part due to cost allocation
concerns. Although after several discussions with ACF, the state agreed
to change the case load statistics being used in support of its cost
allocation plan, it also requested that FNS and ACF coordinate their
instructions to the state in reviewing the revised plan. Figure 3
provides a timeline of this example, which illustrates this
disagreement as well as the 13 months and multiple state submissions
necessary before federal approval was provided. State officials
involved in this case stated that receiving inconsistent initial
directions from federal agencies, having to negotiate an agreement
satisfactory to both federal agencies, and having to change their cost
allocation plan took three state staff over 2 months and may negatively
affect the amount of the federal funding reimbursement for this
project.
Figure 3: Timeline of a Sample Cost Allocation Case In Which the
Federal Responses Were Inconsistent:
[See PDF for image]
This figure is an illustration of a timeline of a sample cost
allocation case in which the federal responses were inconsistent. The
following information is depicted:
Event: State submits APD update to FNS and HHS;
Date: Early February 2001.
Event: FNS requests information, no cost allocation issues;
Date: March 2001.
Event: HHS requests information, cost allocation issues;
Date: Mid-April 2001.
Event: State resubmits revised APD to FNS and HHS;
Date: June 2001.
Event: FNS approves state resubmittal;
Date: Mid-September 2001.
Event: HHS does not approve state resubmittal, citing cost allocation
issues;
Date: Late September 2001.
Event: State agrees to revise cost allocation plan;
Date: November 2001.
Event: State resubmits revised APD update to FNS and HHS;
Date: February 2002.
Event: FNS approves resubmission;
Date: March 2002.
Event: HHS conditionally approves resubmission (no cost allocation
issues);
Date: April 2002.
Source: GAO, based on agency and state documents.
[End of figure]
In another example, FNS questioned a state‘s submission of an APD
update because the submission did not contain a cost allocation plan and
requested the state to submit documentation explaining how the costs
would be allocated for this project. However, ACF (responding on behalf
of CMS) approved the APD update without comment.
Examples such as these illustrate the importance of effective federal
coordination. At the conclusion of our review, HHS officials stated that
communication among the federal agencies on multiprogram projects is
very important and may have deteriorated in recent years due to
significant staff attrition. One of the ACF officials also asserted
that there can be valid reasons for agencies having different opinions
of a state‘s cost allocation plan. Nevertheless, the HHS officials
acknowledged that the correspondence from the federal agencies to the
states should be explicit and well-coordinated in order to avoid
misunderstandings. Without such coordination, states can be put in the
untenable position of trying to satisfy competing or even contradictory
federal direction.
In summary, Mr. Chairman, the federal approval and funding process in
which states are required to submit various planning and acquisition
documents for federal agency approval is largely governed by regulation.
As a result, changing the existing process would require modifying
regulations and, possibly, legislation to amend current statutes. One
major concern that the states have with this process is that it can be
untimely and can negatively affect state system initiatives. However,
complete and reliable data on the total time to process a state request
throughout its life cycle are not available to assess the timeliness of
the overall agencies‘ approval process. Nevertheless, the federal
agencies‘ responses to state requests, which may be to request
additional information, generally have been within 60 days”the
timeframe generally prescribed by the regulations, and when the
response has been beyond 60 days, the vast majority of state officials
in our review stated that there was no impact on the state IT project.
However, the federal agencies did not always adequately coordinate
their reviews of one critical aspect of the APD process, the cost
allocation plan.
State concerns regarding the timeliness of federal reviews and
inconsistent federal responses could be addressed by the federal
agencies‘ workgroup formed to improve the federal approval process, but
this group has made little progress in the 2 years it has been in
place, and it has no plans to change the APD process. This workgroup
needs to expeditiously reach agreement on a plan, including specific
tasks and milestones that will address improving the APD process,
including (1) the feasibility of tracking state requests throughout
their life cycle and (2) how the departments of Agriculture and HHS can
more effectively coordinate their responses to the states.
Contacts and Acknowledgments:
For information about this testimony, please contact me at (202) 512-
6257 or by E-mail at mcclured@gao.gov. Individuals making key
contributions to this testimony include Robert Crocker, Jr.,
Pamlutricia Greenleaf, Norman Heyl, James Houtz, Franklin Jackson,
Brian Johnson, and Linda Lambert.
[End of section]
Appendix I: Selected Federally Funded State-Administered Human Services
Programs:
Department of Agriculture:
Food Stamps: This program provides low-income households with coupons
or electronic benefits transfer cards to ensure that they have
resources with which to obtain food. The Food and Nutrition Service
(FNS) funds the program benefits, while state agencies administer it at
the state and local levels.
Department of Health and Human Services:
Child Support Enforcement: This federal/state-funded program provides
four major services”locating noncustodial parents, establishing
paternity, establishing child support obligations, and enforcing child
support orders”to ensure that children are financially supported by both
parents. The Administration for Children and Families (ACF) provides
funding to states and local governments to run this program.
Child Welfare: This federal/state-funded program provides federal grants
for programs delivering foster care, adoption assistance, independent
living for older foster children, family preservation and support
services, child welfare services, prevention of neglect/disabled
infants, and programs designed to improve the investigation and
prosecution of child abuse and neglect cases. ACF provides grants to
states and local agencies to develop and administer such programs.
Medicaid: This is a federal/state-funded health care program furnishing
medical assistance to eligible needy persons, which is overseen by the
Centers for Medicare and Medicaid Services (CMS). Within broad federal
guidelines, each state establishes its own eligibility standards;
determines the type, amount, duration, and scope of services; sets the
rate of payment for services; and administers its own program.
[End of section]
Appendix II: Scope and Methodology:
To determine the statutory and regulatory requirements for federal
approval and funding of state information technology (IT) development
and acquisition projects for the Child Support Enforcement, Child
Welfare, Medicaid, and Food Stamps programs, we reviewed applicable
provisions of the U.S. Code and Code of Federal Regulations. In
addition, we reviewed committee and conference reports to ascertain the
legislative history of certain provisions.
To assess whether agency processes for reviewing, approving, and funding
state IT development and acquisition projects for the four programs in
our reviews hindered or delayed states‘ efforts to obtain approval for
these projects, we reviewed the departments of Agriculture and HHS‘s
regulations, policies, and procedures related to the approval of Advance
Planning Documents (APD), APD updates, requests for proposals (RFP),
and contracts and contract modifications. We also interviewed applicable
agency officials, including the chairman of the workgroup formed to
improve federal processes.
In addition, we obtained information from ACF, CMS, and FNS on the time
it took for the agencies to respond to state requests that were
submitted in fiscal years 2000 and 2001. For ACF and CMS headquarters,
this information was obtained from the State Systems Approval
Information System (SSAIS). We assessed the reliability of this system
by reviewing the documentation supporting the cases listed in the SSAIS
that were over 60 days old and a sample of cases that were listed as
having been completed in 60 days or less. Except for the Child Support
Enforcement program, the types of errors we found did not affect the
results of our analysis. In the case of Child Support Enforcement, the
type and extent of errors we found caused us to verify the dates of all
cases in the system against the actual documentation. While we were
able to perform sufficient work to perform the analysis provided in
this report, we found a significant number of errors in the dates
contained in this system, which is explained further in appendix IV.
Because CMS regional offices and FNS do not have a central system that
tracks state requests, we obtained summary data from these
organizations, which we verified. For FNS, we obtained all relevant
documentation needed to confirm the state request and federal response
dates because our preliminary analysis found substantive errors in the
summary provided by the agency. For CMS, we obtained relevant
documentation on all requests that took over 60 days to complete and a
sample of all those that took 60 days or less.
We also reviewed 51 cases for 22 states in which the federal agency
responded to the state in over 60 days to assess the types of issues
involved and ascertain the reasons why it took longer than 60 days. We
chose cases to obtain a variety of states and types of requests (e.g.,
APD, APD update, RFP, or contract). We interviewed applicable federal
analysts to determine why the response was delayed. In addition, we
interviewed appropriate state officials about the reasonableness of the
federal response and to ascertain what impact, if any, the federal
delay had on the project. However, we did not assess the adequacy of
the analyses performed and subsequent response by the applicable
federal agency. Table 4 shows the number of cases we reviewed by state
and program.
Table 4: Cases We Reviewed That Took over 60 Days for a Federal
Response, by State and Program:
State: Alaska;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Arizona;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 1 APD update;
Department of Agriculture, FNS/Food Stamps: None.
State: Arkansas;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 contract;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: California;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update; 1 contract;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 3 APD
updates;
Department of Agriculture, FNS/Food Stamps: 5 APD updates; 1 contract
modification.
State: Delaware;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update; 2 contract modifications;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Georgia;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: 1 APD;
Department of Health and Human Services, Multiprogram[A]: 1 APD;
Department of Agriculture, FNS/Food Stamps: None.
State: Idaho;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 RDP;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Illinois;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: 1 APD
update; 2 contracts;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Maine;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: 1 PAD update;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Maryland;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: 1 APD
update;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 1 contract
modification;
Department of Agriculture, FNS/Food Stamps: 1 APD update.
State: Missouri;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: 1 APD update.
State: Nevada;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: 1 APD
update;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: 2 APD updates.
State: New Hampshire;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: 1 APD;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: New Jersey;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 2 APDs; 3 APD
updates;
Department of Agriculture, FNS/Food Stamps: None.
State: New Mexico;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 1 APD;
Department of Agriculture, FNS/Food Stamps: None.
State: North Dakota;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update;
Department of Health and Human Services, ACF/Child Welfare: 1 APD
update;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Pennsylvania;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 RFP; 1 contract modification;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: 1 APD;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: South Carolina;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: 1 APD;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
State: Utah;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 1 APD update;
Department of Agriculture, FNS/Food Stamps: None;
State: Vermont;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: 1 contract;
Department of Agriculture, FNS/Food Stamps: None.
State: West Virginia;
Department of Health and Human Services, ACF/Child Support Enforcement:
None;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: 1 contract.
State: Wyoming;
Department of Health and Human Services, ACF/Child Support Enforcement:
1 APD update; 1 contract;
Department of Health and Human Services, ACF/Child Welfare: None;
Department of Health and Human Services, CMS/Medicaid: None;
Department of Health and Human Services, Multiprogram[A]: None;
Department of Agriculture, FNS/Food Stamps: None.
[A] This category contains state requests that involved two or more of
the HHS programs in our review. For multiprogram requests at HHS, the
department sends a single response to the state. The majority of the
cases in the Child Support Enforcement, Child Welfare, and Medicaid
categories were for single-program requests (some requests included
other federal programs).
Source: GAO, based on agency documentation.
[End of table]
To determine how agencies ensure that they consistently apply the Office
of Management and Budget‘s (OMB) Circular A-87, for funding IT
development and acquisition projects, we reviewed the circular and
discussed its applicability with officials from OMB and each of the
agencies. We also compared the departments of Agriculture and HHS‘s
responses for 11 APDs and APD updates.
We performed our work at ACF headquarters in Washington, D.C.; CMS
headquarters in Baltimore, Md., and FNS headquarters in Alexandria, Va.;
CMS regional offices in Atlanta, Ga., Boston, Ma., and San Francisco,
Ca.; and FNS regional offices in Atlanta, Ga., Boston, Ma.,
Robbinsville, N.J., and San Francisco, Ca. We conducted our review
between August 2001 and mid-June 2002 in accordance with generally
accepted government audit standards.
[End of section]
Appendix III: Selected Federal Statutory and Regulatory Requirements
Related to Obtaining Federal Financial Participation Funding:
State requirements:
Type of request: APDs;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 42 U.S.C. Sec. 654(16) requires states to submit
APDs for mandated statewide automated data processing and information
retrieval systems.[B] Also covered by requirements set forth in 45
C.F.R. Sec. 95.611;
Department of Health and Human Services, ACF/Child Welfare[A]: 45
C.F.R. Sec. 95.611 requires states to obtain prior written approval of
APDs for automated data processing systems if the system is expected to
exceed $5 million ($1 million if noncompetitively acquired from a
nongovernment source);
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Welfare requirements;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires states to obtain prior written approval of APDs for automated
data processing systems with an expected cost exceeding $5 million ($1
million if noncompetitively acquired from a nongovernment source)... If
the request involves electronic benefits transfer systems, there is no
threshold.
Type of request: APD updates;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 42 U.S.C. Sec. 654(16) requires states to annually
update their APDs. Also covered by requirements set forth in 45 C.F.R.
Sec. 95.611, as explained in the Child Welfare column;
Department of Health and Human Services, ACF/Child Welfare[A]: 45
C.F.R. Sec. 95.611 requires states to annually update their APDs when
the project has a total acquisition cost of $5 million or, in the case
of ’as needed“ APD updates,[C] when the change causes an increase of
more than $1 million, a schedule extension of 60 days or more for major
milestones, a significant change in the procurement approach, a change
in system concept or scope, or a change to the approved cost allocation
methodology;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Welfare requirements;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (e)
requires states to annually update their APDs if the expected cost of
the project is expected to exceed $5 million or, in the case of ’as
needed“ APD updates,[C] when the change causes an increase of more than
$1 million, a schedule extension of 60 days or more for major
milestones, a significant change in the procurement approach, a
change in system concept or scope, or a change to the approved cost
allocation methodology.
Type of request: RFPs;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 45 C.F.R. Sec. 95.611 requires states to submit RFPs
for approval for purchases of automated data processing equipment or
services if it exceeds $5 million when competitively acquired and $1
million when non-competitively acquired;
Department of Health and Human Services, ACF/Child Welfare[A]: See
Child Support Enforcement requirement;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Support Enforcement requirement;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires states to submit RFPs for approval for purchases of automated
data processing systems with an expected cost exceeding $5 million if
competitively bid and $1 million if not competitively bid. If the
request involves electronic benefits transfer systems, there is no
threshold.
Type of request: Contracts/contract modifications;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 45 C.F.R. Sec. 95.611 requires states to submit
contracts for approval for purchases of automated data processing
equipment or services if the system is expected to exceed $5 million
when competitively acquired and $1 million when noncompetitively
acquired. Approval is required of a contract modification if it includes
an increase of more than $1 million or more than a 120-day schedule
change;
Department of Health and Human Services, ACF/Child Welfare[A]: See
Child Support Enforcement requirement;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Support Enforcement requirement;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires states to submit contracts for approval for purchases of
automated data processing equipment or services if the system is
expected to exceed $5 million when competitively acquired and $1 million
when noncompetitively acquired. If the contract involves electronic
benefits transfer systems, there is no threshold. Approval is required
of a contract modification if it includes an increase of more than $1
million or more than a 120-day schedule change.
Federal approval requirements:
Type of request: APDs;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 45 C.F.R. Sec. 95.611 requires the agency to approve,
disapprove, or request additional information within 60 days of the
date of acknowledgment of receipt of the state request. States
automatically receive provisional approval, which allows the state to
proceed, if the federal response is not provided within 60 days;
Department of Health and Human Services, ACF/Child Welfare[A]: See
Child Support Enforcement requirement;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Support Enforcement requirement;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires the agency to approve, disapprove, or request additional
information within 60 days of the date of acknowledgment of receipt of
the state request. States automatically receive provisional approval,
which allows the state to proceed, if the federal response is not
provided within 60 days.
Type of request: APD updates;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: No statutory or regulatory time limit is set for
approval;
Department of Health and Human Services, ACF/Child Welfare[A]: No
statutory or regulatory time limit is set for approval;
Department of Health and Human Services, CMS/Medicaid[A]: No statutory
or regulatory time limit is set for approval;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires the agency to approve, disapprove, or request additional
information within 60 days of the date of acknowledgment of receipt of
the state request. States automatically receive provisional approval,
which allows the state to proceed, if the federal response is not
provided within 60 days.
Type of request: RFPs;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 45 C.F.R. Sec. 95.611 requires the agency to approve,
disapprove, or request additional information within 60 days of the
date of acknowledgment of receipt of the state request. States
automatically receive provisional approval, which allows the state to
proceed, if the federal response is not provided within 60 days;
Department of Health and Human Services, ACF/Child Welfare[A]: See
Child Support Enforcement requirement;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Support Enforcement requirement;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires the agency to approve, disapprove, or request additional
information within 60 days of the date of acknowledgment of receipt of
the state request. States automatically receive provisional approval,
which allows the state to proceed, if the federal response is not
provided within 60 days.
Type of request: Contracts/contract modifications;
Department of Health and Human Services, ACF/Child Support
Enforcement[A]: 45 C.F.R. Sec. 95.611 requires the agency to approve,
disapprove, or request additional information within 60 days of the
date of acknowledgment of receipt of the state request. States
automatically receive provisional approval, which allows the state to
proceed, if the federal response is not provided within 60 days;
Department of Health and Human Services, ACF/Child Welfare[A]: See
Child Support Enforcement requirement;
Department of Health and Human Services, CMS/Medicaid[A]: See Child
Support Enforcement requirement;
Department of Agriculture, FNS/Food Stamps: 7 C.F.R. Sec. 277.18 (c)
requires the agency to approve, disapprove, or request additional
information within 60 days of the date of acknowledgment of receipt of
the state request. States automatically receive provisional approval,
which allows the state to proceed, if the federal response is not
provided within 60 days.
[A] The thresholds discussed in this table address only current IT
development and acquisition projects. Different or no thresholds apply
to those IT projects that began when the Child Support Enforcement,
Child Welfare, and Medicaid programs provided enhanced funding to
states.
[B] The Family Support Act of 1988 requires states to implement
statewide child support enforcement systems.
[C] APDs are required to be updated annually or ’as needed,“ which is
defined as when there is a projected cost increase of $1 million or
more, a schedule extension for major milestones of more than 60 days, a
significant change in the procurement approach, a change in system
concept or scope, or a change to the approved cost allocation
methodology.
Source: GAO, based on an analysis of applicable federal statutes and
regulations.
[End of table]
[End of section]
Appendix IV: Number of Days for Federal Response to a State Request:
Agency/program: ACF/Child Support Enforcement;
Type of request[A]: Advance planning document (APD);
Federal response time[B]: 0–60 days: 8;
Federal response time[B]: Over 60 days: 1;
Federal response time[B]: Percentage over 60 days(%): 11.
Agency/program: ACF/Child Support Enforcement;
Type of request[A]: APD update[C];
Federal response time[B]: 0–60 days: 80;
Federal response time[B]: Over 60 days; 43;
Federal response time[B]: Percentage over 60 days(%): 45.
Agency/program: ACF/Child Support Enforcement;
Type of request[A]: Request for proposal (RFP);
Federal response time[B]: 0–60 days: 106;
Federal response time[B]: Over 60 days: 6;
Federal response time[B]: Percentage over 60 days(%): 5.
Agency/program: ACF/Child Support Enforcement;
Type of request[A]: Contract/contract modification;
Federal response time[B]: 0–60 days: 120;
Federal response time[B]: Over 60 days: 13;
Federal response time[B]: Percentage over 60 days(%): 10.
Agency/program: ACF/Child Welfare;
Type of request[A]: APD;
Federal response time[B]: 0–60 days: 10;
Federal response time[B]: Over 60 days: 2;
Federal response time[B]: Percentage over 60 days(%): 17.
Agency/program: ACF/Child Welfare;
Type of request[A]: APD update[C];
Federal response time[B]: 0–60 days: 71;
Federal response time[B]: Over 60 days: 11;
Federal response time[B]: Percentage over 60 days(%): 13.
Agency/program: ACF/Child Welfare;
Type of request[A]: RFP;
Federal response time[B]: 0–60 days: 32;
Federal response time[B]: Over 60 days: 1;
Federal response time[B]: Percentage over 60 days(%): 3.
Agency/program: ACF/Child Welfare;
Type of request[A]: Contract/contract modification;
Federal response time[B]: 0–60 days: 80;
Federal response time[B]: Over 60 days: 5;
Federal response time[B]: Percentage over 60 days(%): 6.
Agency/program: CMS/Medicaid[D];
Type of request[A]: APD;
Federal response time[B]: 0–60 days: 149;
Federal response time[B]: Over 60 days: 10;
Federal response time[B]: Percentage over 60 days(%): 6.
Agency/program: CMS/Medicaid[D];
Type of request[A]: APD update[C];
Federal response time[B]: 0–60 days: 42;
Federal response time[B]: Over 60 days: 4;
Federal response time[B]: Percentage over 60 days(%): 9.
Agency/program: CMS/Medicaid[D];
Type of request[A]: RFP;
Federal response time[B]: 0–60 days: 39;
Federal response time[B]: Over 60 days: 1;
Federal response time[B]: Percentage over 60 days(%): 3.
Agency/program: CMS/Medicaid[D];
Type of request[A]: Contract/contract modification;
Federal response time[B]: 0–60 days: 120;
Federal response time[B]: Over 60 days: 5;
Federal response time[B]: Percentage over 60 days(%): 4.
Agency/program: HHS multiprogram[E];
Type of request[A]: APD;
Federal response time[B]: 0–60 days: 10;
Federal response time[B]: Over 60 days: 5;
Federal response time[B]: Percentage over 60 days(%): 33.
Agency/program: HHS multiprogram[E];
Type of request[A]: APD update[C];
Federal response time[B]: 0–60 days: 22;
Federal response time[B]: Over 60 days: 8;
Federal response time[B]: Percentage over 60 days(%): 27.
Agency/program: HHS multiprogram[E];
Type of request[A]: RFP;
Federal response time[B]: 0–60 days: 9;
Federal response time[B]: Over 60 days: 0;
Federal response time[B]: Percentage over 60 days(%): None.
Agency/program: HHS multiprogram[E];
Type of request[A]: Contract/contract modification;
Federal response time[B]: 0–60 days: 19;
Federal response time[B]: Over 60 days: 2;
Federal response time[B]: Percentage over 60 days(%): 10.
Agency/program: FNS/Food Stamps;
Type of request[A]: APD;
Federal response time[B]: 0–60 days: 24;
Federal response time[B]: Over 60 days: 1;
Federal response time[B]: Percentage over 60 days(%): 4.
Agency/program: FNS/Food Stamps;
Type of request[A]: APD update[C];
Federal response time[B]: 0–60 days: 21;
Federal response time[B]: Over 60 days: 8;
Federal response time[B]: Percentage over 60 days(%): 28.
Agency/program: FNS/Food Stamps;
Type of request[A]: RFP;
Federal response time[B]: 0–60 days: 23;
Federal response time[B]: Over 60 days: 0;
Federal response time[B]: Percentage over 60 days(%): None.
Agency/program: FNS/Food Stamps;
Type of request[A]: Contract/contract modification;
Federal response time[B]: 0–60 days: 26;
Federal response time[B]: Over 60 days: 2;
Federal response time[B]: Percentage over 60 days(%): 7.
[A] For ACF and Medicaid headquarters, which use a common tracking
system, each state submission, along with its federal response, is
generally tracked separately. Therefore, if ACF or CMS headquarters
responded to a state by requesting additional information, the state
response (or resubmission of a corrected document) would be counted as
a second submission. In contrast, under the same scenario, FNS and CMS
regional offices, which do not have a central tracking system, would
count the state response or resubmission as part of the original
submission.
[B] According to regulations of the departments of Agriculture and HHS,
the 60-day requirement for federal response begins on the date the
federal government sends an acknowledgement letter to the state. While
ACF and CMS headquarters sent acknowledgement letters, some FNS and CMS
regional offices did not. In the latter instances, we calculated the
time to respond from the regional office receipt date stamp or date of
the state letter. This federal response generally took the form of a
letter or E-mail, but in a few cases it was a documented telephone call
or a meeting with state officials.
[C] The regulation does not set a time limit for a federal response to
an APD update for these programs.
[D] Three additional Medicaid cases are not included in this table
because the applicable regional offices (1) did not review two state
requests and (2) could not provide the date of the state request.
[E] This category contains state requests that involved two or more of
the HHS programs in our review. For multiprogram requests at HHS, the
department sends a single response to the state. The majority of the
cases in the Child Support Enforcement, Child Welfare, and Medicaid
categories were for single-program requests (some requests included
other federal programs).
Source: GAO analysis based on agency information.
[End of table]
[End of section]
Appendix V: Data Reliability Concerns:
In attempting to obtain statistics on how long the federal agencies
took to respond to state requests, we encountered substantial data
reliability problems related to the SSAIS, which is used to track these
data for the Child Support Enforcement, Child Welfare, and Medicaid
(headquarters only) programs. [Footnote 31] The SSAIS assigns a
tracking number to each state submission, and ACF officials are
responsible for entering information related to the federal review
process, including the date that the state request was acknowledged and
the date that the federal response was sent. [Footnote 32] SSAIS also
calculates the number of days in review based on these dates.
To determine whether we could rely on the number of days in review
calculated by this system, we performed a preliminary review of a sample
of cases. Because we found numerous errors during this preliminary
review, we decided to limit our analysis to determining the number of
federal responses completed within or over 60 days. Accordingly, we
checked the dates in the system for all cases reportedly over 60 days
and a sample of cases 60 days or less and made adjustments to the data
as needed. [Footnote 33] We found that over half of the cases we
reviewed had errors in one or more of the dates in the system. However,
only a few of the errors affected the category in which the case was
placed.
An official in ACF‘s Office of Child Support Enforcement attributed the
incorrect dates in the system to a number of reasons, including (1)
human error in entering the data; (2) a system that is not user
friendly; [Footnote 34] (3) the official not being informed when
superiors actually sign a response; and (4) the official not being
informed when administrative staff date and send the response. ACF
needs to ensure that appropriate processes are put in place to make
certain that the data in the SSAIS are accurate and reliable to improve
its usefulness as a management tool.
[End of section]
Footnotes:
[1] The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996.
[2] Various legislative provisions authorized up to 90 percent federal
funding of these systems between fiscal years 1988 and 1997, up to 80
percent from fiscal years 1998 to 2001, and 66 percent thereafter.
[3] States used various terms to describe procurement request
documents, such as request for proposals and invitations to bid. For
purposes of this statement, we refer to such documents as requests for
proposal.
[4] States used various terms to describe acquisition documents, such
as contracts and purchase orders. For purposes of this statement, we
refer to such documents as contracts.
[5] Federal regulations require ACF, CMS, and FNS to respond to state
requests for approval of advance planning documents, requests for
proposals, contracts, and contract modifications within 60 days.
Federal regulations also require FNS to respond to state requests for
approval of advance planning document updates within 60 days.
[6] The system used by ACF and CMS tracks the state request and the
federal response. However, if the federal response is to ask for
additional information, the case is closed with the date of the letter
requesting the information, even though the federal agency has not made
a final approval or disapproval determination. A state response to this
request for additional information is assigned a separate case number
and tracked separately.
[7] Because FNS had a relatively small number of state requests, we
reviewed the necessary documentation for each state request and
calculated the total time until federal approval or disapproval to be
about 66 days.
[8] Federal regulations require ACF, CMS, and FNS to respond to state
requests for approval of advance planning documents, requests for
proposal, contracts, and contract modifications within 60 days. Federal
regulations also require FNS to respond to the state requests for
approval of advance planning document updates within 60 days.
[9] Office of Management and Budget, Circular A-87, Cost Principles for
State, Local, and Indian Tribal Governments (Aug. 29, 1997).
[10] These 11 cases were common submissions (i.e., the same submission
was made to FNS and HHS) in which at least one of the departments‘
responses to the state exceeded 60 days. There could be additional
state submissions sent to both the departments of Agriculture and HHS
that we did not identify because both departments responded within 60
days or the documents were not clear that it was a common submission
(e.g., the dates of the state submission to the two departments were
significantly different).
[11] This figure reflects only the fiscal year 2000 expenditures
actually reported to the states to date. States have up to two years to
claim reimbursement for their IT expenditures, so these figures may
change in the future. We did not verify this amount, which was provided
by the agencies in our review.
[12] The other sponsors of this conference were the Nelson A.
Rockefeller Institute of Government, the National Health Policy Forum,
and the Finance Project (Welfare Information Network).
[13] U.S. General Accounting Office, Human Services Integration:
Results of a GAO Cosponsored Conference on Modernizing Information
Systems, GAO-02-121 (Washington, D.C., Jan. 31, 2002). Appendix II of
this report identifies the participants of this conference, which
included individuals representing the four key sectors involved in
developing information systems for human services”the Congress, federal
agencies, state and local governments, and IT contractors.
[14] Two other challenges identified were enhancing strategic
collaboration among different levels of government and obtaining staff
expertise in project management and information technology.
[15] According to 45 C.F.R. Sec. 95.605, a requirements analysis
documents the information needs and functions and technical
requirements that the proposed system must meet.
[16] According to 45 C.F.R. Sec. 95.605, a feasibility study is a
preliminary study to determine whether it is sufficiently probable that
effective and efficient use of automatic data processing equipment or
systems can be made to warrant a substantial investment of the staff,
time, and money being requested and whether the plan is capable of being
accomplished successfully.
[17] Except for FNS, agencies are not required to provide their
response to states within 60 days for APD updates. For HHS agencies,
the regulations do not specify a timeframe for the federal response to
an APD update. If the agencies do not respond to the state in the
required timeframes, then the states automatically receive provisional
approval, which allows the state to proceed.
[18] Federal agencies sometimes responded with a conditional approval
of the state request, providing approval but asking the state to
address certain concerns.
[19] Of course, rather than ask the state to submit additional
information, the agency could disapprove the request, and the state
would have to submit for approval a new or revised document to obtain
federal funding.
[20] According to FNS and CMS officials, states can submit to the
federal agencies the same documentation needed for internal state
review processes.
[21] For Child Welfare, the requirements related to APDs and APD
updates and, for Medicaid, the requirements for APDs used to be in
statute. However, legislation in 1996 (the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996) and 1997 (the Balanced
Budget Act of 1997) eliminated these statutory requirements for Child
Welfare and Medicaid, respectively.
[22] Except for APD updates submitted to the Department of Health and
Human Services, agencies are required to respond to the state within 60
days.
[23] GAO-02-121 (Jan. 31, 2002).
[24] The system used by ACF and CMS tracks the state request and the
federal response. However, if the federal response is to ask for
additional information, the case is generally closed with the date of
the letter requesting the information, even though the federal agency
has not made a final approval or disapproval determination. A state
response to this request for additional information is then given a
separate case number and tracked separately.
[25] The final disposition of one of these cases has not yet been made,
about a year after the receipt of the request.
[26] For ACF and Medicaid headquarters (which use a common tracking
system), each state submission, along with its federal response, is
generally tracked separately. Therefore, if ACF or CMS headquarters
responded to a state by requesting additional information, the state
response (or resubmission of a corrected document) would be counted as
a second submission. In contrast, under the same scenario, FNS and CMS
regional offices, which do not have a central tracking system, would
count the state response or resubmission as part of the original
submission.
[27] According to regulations of the departments of Agriculture and
HHS, the 60-day requirement for federal response begins on the date the
federal government sends an acknowledgement letter to the state. While
ACF and CMS headquarter sent acknowledgement letters, some FNS and CMS
regional offices did not. In the latter instances, we calculated the
time to respond from the date stamp or date of the state letter. In
addition, federal responses generally took the form of a letter or E-
mail, but in a few cases it was a telephone call or a meeting with
state officials.
[28] In some cases, the federal agency approved the state request but
also requested that additional information be provided.
[29] U.S. General Accounting Office, Welfare Reform: Improving State
Automated Systems Requires Coordinated Federal Effort, GAO/HEHS-00-48
(Washington, D.C., Apr. 27, 2000).
[30] These 11 cases were common submissions in which at least one of
the departments‘ responses to the state exceeded 60 days. There could
be additional state submissions sent to both the departments of
Agriculture and HHS that we did not identify because both departments
responded within 60 days or the documents were not clear that it was a
common submission (e.g., the dates of the state submission to the two
departments were significantly different).
[31] CMS headquarters reviews state Medicaid eligibility system
requests, while its regional offices review other Medicaid system
requests (primarily related to Medicaid Management Information
Systems). There is no central system used to track state requests and
federal responses for the regional offices.
[32] Because CMS cannot enter data into the SSAIS, ACF performs this
function for this agency.
[33] Because we found three errors related to the Child Support
Enforcement program in which the category the case was to be placed in
moved from 60 days and below to over 60 days, we reviewed all cases for
this program.
[34] When entering the case closure, the system defaults to the current
date, and it takes several operations to change the date to the date of
the letter, if it is different. Also, in certain situations, when
program managers query the system to determine the current status of
cases, the system will automatically close the case on the date of the
query.
[End of section]
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