[Federal Register Volume 60, Number 141 (Monday, July 24, 1995)]
[Proposed Rules]
[Pages 37858-37861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18070]



=======================================================================
-----------------------------------------------------------------------

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.


[[Page 37859]]

ACTION: Notice of proposed rulemaking (NPRM).

-----------------------------------------------------------------------

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 

[[Page 37860]]
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 

[[Page 37861]]
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]
BILLING CODE 4184-01-M