Human Services: Federal Approval and Funding Processes for	 
States' Information Systems (09-JUL-02, GAO-02-347T).		 
                                                                 
This 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.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-347T					        
    ACCNO:   A03920						        
  TITLE:     Human Services: Federal Approval and Funding Processes   
for States' Information Systems 				 
     DATE:   07/09/2002 
  SUBJECT:   Information technology				 
	     State-administered programs			 
	     Public assistance programs 			 
	     Information systems				 
	     Child Support Enforcement Program			 
	     Food Stamps					 
	     Medicaid Program					 
	     ACF Child Welfare Program				 

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GAO-02-347T
     
Testimony Before the Subcommittee on Technology and Procurement Policy,
Committee on Government Reform, House of Representatives

United States General Accounting Office

GAO 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

Page 1 GAO- 02- 347T Human Services Systems

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, 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 selfsufficiency. 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. 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

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.

Page 2 GAO- 02- 347T Human Services Systems

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, 3
contracts, 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

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.

Page 3 GAO- 02- 347T Human Services Systems

process the request. 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.

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 6 and (2) FNS and CMS

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.
Results in Brief

Page 4 GAO- 02- 347T Human Services Systems

regional offices do not have a central tracking system. 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. 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, 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, 10 the departments of
Agriculture and HHS provided inconsistent responses to

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).

Page 5 GAO- 02- 347T Human Services Systems

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.

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. 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

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. Background

Page 6 GAO- 02- 347T Human Services Systems

systems for human services sponsored by GAO and others, 12 participants
identified the following issues states face in developing and implementing
these systems: 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. 14 This process,

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.

Page 7 GAO- 02- 347T Human Services Systems

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, 15 a feasibility study, 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.

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.

Page 8 GAO- 02- 347T Human Services Systems

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. 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. 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. 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.

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.

Page 9 GAO- 02- 347T Human Services Systems

Figure 1: APD Process Overview

Source: GAO. Begin

project/ notify federal agency( s)

Plan project Design, develop, and implement project

Federal actions State actions Review state

submission Modify or enhance system

Operate system

State submits request Federal response

(approve, disapprove, or request information) Review state

submission State submits request

RFP Contract/

modification

! ! Review state submission

If applicable State submits request Planning

phase Development and implementation phase

Operations phase

APD update RFP Contract/

modification

! ! !

If applicable APD (implementation) !

APD update RFP Contract/ modification

! ! !

If applicable APD (planning) !

Federal response (approve, disapprove, or request information) Federal
response

(approve, disapprove, or request information)

Page 10 GAO- 02- 347T Human Services Systems

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. 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.

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.

20 According to FNS and CMS officials, states can submit to the federal
agencies the same documentation needed for internal state review processes.
Statutory and

Regulatory Requirements Govern the Federal Approval Process

Page 11 GAO- 02- 347T Human Services Systems

Table 1: Federal Financial Participation Rates by Program Program Nature of

funding Federal /state funding percentage for information systems

Child support enforcement Entitlement 66/ 34- system planning and
development

66/ 34- system operations Child welfare Entitlement 50/ 50- system planning
and development

50/ 50- system operations Medicaid -eligibility

-claims processing Entitlement

50/ 50- system planning and development 50/ 50- system operations 90/ 10-
system planning and development 75/ 25- system operations Food stamps
Entitlement 50/ 50- system planning and development

50/ 50- system operations Source: GAO analysis of applicable statutes.

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). 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.

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.

Page 12 GAO- 02- 347T Human Services Systems

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. 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.

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 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 24 and (2) FNS and CMS regional offices do
not have a central tracking system (although some of

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. States Reported

Limited Impact from Federal Responses Provided after 60 Days, but Key
Information Is Lacking Agencies Do Not Track

Data Necessary to Assess the Timeliness of the APD Process

Page 13 GAO- 02- 347T Human Services Systems

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. 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

4/ 23/ 01 State APD update submission was date stamped as received by FNS 5/
24/ 01 FNS E- mailed questions and concerns 31 6/ 22/ 01 State responded to
FNS E- mail 29 7/ 6/ 01 FNS E- mailed additional questions 14 8/ 10/ 01
State responded to additional questions 35 8/ 23/ 01 FNS E- mailed
additional questions 13 8/ 28/ 01 FNS E- mailed additional questions 5 9/
14/ 01 State submitted a revised APD update via E- mail 17 9/ 19/ 01 FNS E-
mailed question on revised APD update 5 9/ 20/ 01 FNS E- mailed additional
question 1 9/ 28/ 01 State responded to questions on revised APD update 8
10/ 1/ 01 FNS provided final approval of revised APD update 3

Total number of days to approval 161

Source: GAO analysis of FNS file.

25 The final disposition of one of these cases has not yet been made, about
a year after the receipt of the request.

Page 14 GAO- 02- 347T Human Services Systems

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.

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: 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. 27

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. Federal Actions on State

Submissions Are Generally within Prescribed Timeframes

Page 15 GAO- 02- 347T Human Services Systems

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

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.

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

Page 16 GAO- 02- 347T Human Services Systems

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.

Page 17 GAO- 02- 347T Human Services Systems

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

Cost estimate issues, including unexplained, incomplete, inconsistent, and
inaccurate amounts 17 Cost allocation issues 13 Missing required elements of
the submission 7 Functionality issues, such as how the system will meet its
goals and objectives 7 Other 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.

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 State Officials Cited

Limited Impact on Projects Due to Federal Responses Provided After 60 Days

Page 18 GAO- 02- 347T Human Services Systems

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, 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.

28 In some cases, the federal agency approved the state request but also
requested that additional information be provided.

Page 19 GAO- 02- 347T Human Services Systems

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.

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, 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.

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). Federal Agencies Began

Work to Improve the Federal Approval Process, but Progress Is Slow

Page 20 GAO- 02- 347T Human Services Systems

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, 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

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). Agency Responses to

State Cost Allocation Plans for IT Projects Are Sometimes Inconsistent

Page 21 GAO- 02- 347T Human Services Systems

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.

Page 22 GAO- 02- 347T Human Services Systems

Figure 3: Timeline of a Sample Cost Allocation Case In Which the Federal
Responses Were Inconsistent

Source: GAO, based on agency and state documents.

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

Feb. 2001 May 2001

July 2001 Oct.

2001 Jan.

2002 Apr. 2002 State submits

APD update to FNS and HHS FNS requests

information, no cost allocation issues HHS requests

information, cost allocation issues

State resubmits revised APD

update to FNS and HHS

FNS approves

state resubmittal

HHS does not approve state resubmittal,

citing cost allocation issues

State agrees to revise cost allocation plan

State resubmits revised APD

update to FNS and HHS

FNS approves resubmission

HHS conditionally approves resubmission (no

cost allocation issues)

July 2002

Page 23 GAO- 02- 347T Human Services Systems

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.

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.
Contacts and

Acknowledgments

Page 24 GAO- 02- 347T Human Services Systems 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.

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. Appendix I: Selected
Federally Funded StateAdministered

Human Services Programs Department of Agriculture

Department of Health and Human Services

Page 25 GAO- 02- 347T Human Services Systems

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.
Appendix II: Scope and Methodology

Page 26 GAO- 02- 347T Human Services Systems

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 Department of Health and Human Services Department of

Agriculture

State

ACF/ Child Support Enforcement ACF/ Child

Welfare CMS/ Medicaid Multiprogram a FNS/ Food Stamps

Alaska 1 ADP update None None None None Arizona None None None 1 APD update
None Arkansas 1 contract None None None None

California 1 APD update

1 contract None None 3 APD updates 5 APD updates

1 contract modification Delaware

1 APD update 2 contract modifications None None None None Georgia None None
1 APD 1 APD None Idaho 1 RFP None None None None

Illinois None 1 APD update

2 contracts None None None Maine None None 1 APD update None None

Maryland None 1 APD update None 1 contract modification 1 APD update

Missouri None None None None 1 APD update Nevada None 1 APD update None None
2 APD updates New Hampshire None None 1 APD None None

New Jersey 1 APD update None None 2 APDs

3 APD updates None New Mexico 1 APD update None None 1 APD None North Dakota
1 APD update 1 APD update None None None

Pennsylvania 1 RFP

1 contract modification None 1 APD None None South Carolina None None 1 APD
None None Utah None None None 1 APD update None

Page 27 GAO- 02- 347T Human Services Systems

Department of Health and Human Services Department of Agriculture

State

ACF/ Child Support Enforcement ACF/ Child

Welfare CMS/ Medicaid Multiprogram a FNS/ Food Stamps

Vermont None None None 1 contract None West Virginia None None None None 1
contract

Wyoming 1 APD update

1 contract None None None 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.

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.

Page 28 GAO- 02- 347T Human Services Systems

Department of Health and Human Services Department of Agricultur Type of
request ACF/ Child Support

Enforcement a ACF/ Child Welfare a CMS/ Medicaid a FNS/ Food Stamps

State requirements

APDs 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.

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).

See Child Welfare requirements

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. APD updates 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.

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.

See Child Welfare requirements

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. RFPs 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.

See Child Support Enforcement requirement See Child

Support Enforcement requirement

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.

Appendix III: Selected Federal Statutory and Regulatory Requirements Related
to Obtaining Federal Financial Participation Funding

Page 29 GAO- 02- 347T Human Services Systems

Department of Health and Human Services Department of Agricultur Type of
request ACF/ Child Support

Enforcement a ACF/ Child Welfare a CMS/ Medicaid a FNS/ Food Stamps

Contracts/ contract modifications

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.

See Child Support Enforcement requirement See Child

Support Enforcement requirement

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

APDs 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.

See Child Support Enforcement requirement See Child

Support Enforcement requirement

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.

APD updates No statutory or regulatory time limit is set for approval.

No statutory or regulatory time limit is set for approval. No statutory or

regulatory time limit is set for approval.

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.

Page 30 GAO- 02- 347T Human Services Systems

Department of Health and Human Services Department of Agricultur Type of
request ACF/ Child Support

Enforcement a ACF/ Child Welfare a CMS/ Medicaid a FNS/ Food Stamps

RFPs 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.

See Child Support Enforcement requirement See Child

Support Enforcement requirement

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.

Contracts/ Contract modifications

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.

See Child Support Enforcement requirement See Child

Support Enforcement requirement

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.

Page 31 GAO- 02- 347T Human Services Systems

Federal response time b Agency/ program Type of request a 0- 60 days Over 60
days Percentage over 60

days (%)

Advance planning document (APD) 8 1 11 ACF/ Child Support Enforcement APD
update c 80 43 35

Request for proposal (RFP) 106 6 5 Contract/ contract modification 120 13 10
ACF/ Child Welfare APD 10 2 17

APD update c 71 11 13 RFP 32 1 3 Contract/ contract modification 80 5 6 CMS/
Medicaid d APD 149 10 6

APD update c 42 4 9 RFP 39 1 3 Contract/ contract modification 120 5 4 HHS
multiprogram e APD 10 5 33

APD update c 22 8 27 RFP 9 0 None Contract/ contract modification 19 2 10
FNS/ Food Stamps APD 24 1 4

APD update 21 8 28 RFP 23 0 None Contract/ contract modification 26 2 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.

Appendix IV: Number of Days for Federal Response to a State Request

Page 32 GAO- 02- 347T Human Services Systems

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. 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. 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. 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; 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

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. Appendix
V: Data Reliability Concerns

Page 33 GAO- 02- 347T Human Services Systems

place to make certain that the data in the SSAIS are accurate and reliable
to improve its usefulness as a management tool.

(310423)
*** End of document. ***