Emergency Funding Request

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
and
Centers for Medicare & Medicaid Services

State Systems APD Guide
October 2010

HHS

State Systems APD Guide (October 2010)

TABLE OF CONTENTS

Table of Contents

PREFACE ...........................................................................................................iii
CHAPTER I: INTRODUCTION....................................................................... 5
A. OVERVIEW OF GUIDE ............................................................. 5
B. BACKGROUND AND OBJECTIVES ....................................... 5
C. RESPONSIBILITIES ................................................................... 7
D. TYPES OF APDs .......................................................................... 8
E. APPROVAL REQUIREMENTS ................................................. 9
F. SUBMISSION INFORMATION ............................................... 10
G. PROCESS STREAMLINING .................................................... 11
H. PROMPT ACTION ON REQUESTS FOR PRIOR
APPROVAL................................................................................ 11
CHAPTER II: PLANNING APD .................................................................... 15
A. STATEMENT OF NEED ........................................................... 16
B. PROJECT MANAGEMENT PLAN FOR PLANNING ........... 16
C. PLANNING PROJECT BUDGET AND COST
ALLOCATION ........................................................................... 17
D. TOTAL PROJECT COST .......................................................... 18
CHAPTER III: IMPLEMENTATION APD ................................................... 21
A. STATEMENT OF NEEDS AND OBJECTIVES ..................... 23
B. SUMMARY OF REQUIREMENTS ANALYSIS,
FEASIBILITY STUDY, AND ALTERNATIVES
ANALYSIS ................................................................................. 23
C. PROJECT MANAGEMENT PLAN.......................................... 24
E. PROPOSED BUDGET............................................................... 26
F. PROSPECTIVE COST ALLOCATION ................................... 26
G. ACTIVITY SCHEDULE............................................................ 26
CHAPTER IV: APD UPDATES ..................................................................... 29
A. ANNUAL APD UPDATE.......................................................... 29
B. AS-NEEDED APD UPDATES.................................................. 32
C. Operational APD Updates........................................................... 35
CHAPTER V: CONTRACTING DOCUMENTS .......................................... 37
A. SOLE SOURCE JUSTIFICATIONS ......................................... 37
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State Systems APD Guide (October 2010)

B.
C.
D.

HHS

SOLICITATION DOCUMENTS .............................................. 38
CONTRACTS AND CONTRACT AMENDMENTS .............. 41
Exemptions .................................................................................. 43

CHAPTER VI: HIGH RISK PROJECTS........................................................ 45
Appendix A: Submission Requirements for APDs ......................................... 47
Appendix B: Authorities................................................................................... 51

ii

HHS

State Systems APD Guide (October 2010)

PREFACE
This State Systems APD Guide was initially developed in September 1996 by the
Department of Health and Human Services' (HHS) Administration for Children and
Families (ACF), in cooperation with the Health Care Finance Administration (HCFA), to
help States prepare Advance Planning Documents (APDs) and related documents for
approval for Federal financial participation (FFP). This revision updates the Guide to reflect
regulatory changes in Part 95 as reflected in the final rule published on October 28, 2010. It
is intended to streamline the process by establishing certain discrete standards that State
submissions must meet prior to approval and by limiting these standards to the most
essential.
This document will be used by HHS staff as a standard for review. It should also be used by
State personnel and their consultants and contractors working on systems subject to HHS'
review, approval, and certification.
The true test of this manual is how well it supports the States during the systems life cycle
and whether it remains relevant and useful. In this sense, the final test of this guide by the
ultimate users — the States — remains.
HHS welcomes suggestions from those using this guide. Written comments may be sent to:
Department of Health and Human Services
Administration for Children and Families
Attn: Jim Blackie
370 L'Enfant Promenade, SW
Washington, DC 20447-0001

iii

State Systems APD Guide (October 2010)

HHS

[This page is deliberately blank.]

iv

CHAPTER I : I NTRODUCTI ON
A.

OVERVI EW OF GUI DE

This guide sets forth requirements related to the preparation, submission, and review of
APDs and supporting documentation. This guide is for State use in acquiring and
managing information systems and in preparing, submitting, and updating Advance
Planning Documents (APDs). This guide is also used by Federal personnel in HHS
central and regional offices in advising State personnel and reviewing submissions.
A comprehensive table of contents supports the guide's use as a reference document. The
guide is divided into five chapters and two appendices.
·

Chapter I is the introduction.

·

Chapter II describes the requirements for Planning APDs.

·

Chapter III addresses the requirements for Implementation APDs.

·

Chapter IV covers APD Updates.

·

Chapter V addresses solicitation documents and contracts.

Appendix A contains detailed submission requirements for APDs. Appendix B is a list of
authorities.
B.

BACKGROUND AND OBJECTI VES

The Department of Health and Human Services (HHS) provides leadership and direction in
planning, managing, and coordinating the administration and financing of a broad range of
comprehensive and supportive programs for vulnerable children and families. These
programs are carried out in part by public and private, State and local agencies and are
designed to promote stability, economic security, responsibility, and self-sufficiency.
Although the programs are carried out at the State and local levels, HHS is responsible for
approving, monitoring, and certifying that the programs are being implemented as intended
by law and regulation — and that the expenditure of Federal funds is made wisely.
This guide describes HHS' policies and procedures for Federal review, approval, and
funding of information systems supporting the operation of the Administration's programs.
An important element of the process is the preparation and approval of Advance Planning
Documents (APDs).

I-5

The three primary purposes of the APD process are to:
·

Describe in broad terms the State's plan for managing the design, development,
implementation, and operation of a system that meets Federal, State, and user
needs in an efficient, comprehensive, and cost-effective manner;

·

Establish system and program performance goals in terms of projected costs and
benefits; and

·

Secure Federal financial participation (FFP) for the State.

This State Systems APD Guide — referred to in short as the APD Guide — is intended to:
·

Provide a single guide addressing policies and procedures that apply across HHS'
programs and apply equally to all States;

·

Inform States how to obtain approval and funding through Advance Planning
Documents (APDs); and

·

Provide insight on the most critical elements of the approval process so that States
can prepare more effective APDs and so that Federal approval can be granted more
readily.

In developing this guide, HHS was cognizant of the requirements of Administration for
Children and Families (ACF), the Centers for Medicare & Medicaid, and the U.S.
Department of Agriculture's Food and Nutrition Service (FNS). Given that State agencies
must at times develop automation plans that integrate and address the requirements of ACF,
CMS and FNS, this guide endeavors to describe high-level processes, procedures, and
documents that are compatible within HHS and with those of FNS, given existing
regulations and policies.
Nonetheless, to be useful to the States, this guide goes beyond high-level requirements to
describe, for example, aspects of the review of APDs which reflect HHS' perspective. States
developing APDs for systems which require approval from ACF, CMS, and FNS should
refer also to HHS' APD Guide, HCFA's guidance in Chapter 11 of the State Medicaid
Management Manual, and FNS's APD Handbook.

I-6

EXHIBIT I-1: RESPONSIBILITIES
State Responsibilities

HHS Responsibilities

Propose cost-effective systems solutions.

Set standards for systems and for
document approval.

Implement systems that meet Federal and
State programmatic requirements.

Review and approve or disapprove State
submissions.

Achieve maximum practicable
competition.

Provide FFP.

Set system and program performance
goals in terms of costs and benefits.

Ensure performance progress against
projected costs and benefits.

Measure performance against projected
costs and benefits.

Serve as information source on system
initiatives across all States.

Establish State procurement standards that
govern systems procurements that apply
to projects not funded with FFP as well as
those projects receiving matching FFP.

C.

RESPONSI BI LI TI ES

As Exhibit I-1 on the prior page indicates, the administration of HHS' programs is a
cooperative endeavor, with Federal and State governments working together to
implement information systems that support the management of human service programs.
Given the State's operational role, considerable responsibility rests with the State for
operating welfare-related programs efficiently, effectively, and economically.
Automated systems are needed to accomplish this task.
The cost of these automated systems is typically provided by matching Federal funds to
State expenditures, resulting in shared funding responsibilities. While currently most
programs do not have authority to provide enhanced FFP for system development, we
have retained the enhanced FFP thresholds and provide guidance in this document should
statutory authority be provided (See Exhibit I-2 below.)

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EXHIBIT I-2: PROGRAM FUNDING INFORMATION
Regular
FFP
Percentage
Rate

Enhanced
FFP
Percentage
Rate

Approved
by:

N/A

N/A

ACF

Title IV-B: Child Welfare

75

N/A

Title IV-E: Foster Care and Adoption

50

Title IV-D: Child Support

66

N/A
N/A

ACF

Title XIX

50

N/A

CMS

Program

Title IV-A: TANF (Block Grant)

D.

TYPES OF APDs

Each State seeking Federal funding above the regulatory thresholds (covered in the next
section) for the development and implementation of information systems must prepare
and submit an Advance Planning Document (APD) for approval by HHS. The APD
process may involve one or a series of documents used to secure Federal funding.
Eligible State information systems are planned and developed under HHS' approval
process which can include two major submissions:
·
·

The Planning APD, and
The Implementation APD.

In addition, States may use three types of APD Updates (APDUs) to keep HHS advised
and to obtain continued funding throughout the systems life. The three types of APDUs
are:
·

Annual APD Updates, used for routine reporting on the status of the project and
for requesting continued, phased project funding, and

·

As-Needed APD Updates, used if significant changes occur in project approach,
procurement, schedule, or costs.

·

Operational APD Updates, a 1-2 page annual document that provides updated
information on the M&O status in three areas, 1) description of the activity, 2)
estimated annual cost, and 3) summary of the acquisition methods.

I-8

As part of the APD process, States may also be required to submit copies of solicitation
documents, contracts, and contract amendments for prior written approval when
regulatory thresholds are exceeded (unless exempted at the time of APD approval). If the
APDU requests exemption and provides the information required by Section 95.610, the
State can assume that their APD approval includes an approval of their exemption request
unless the approval letter specifically requires submission of the procurement documents.
The information needed for an exemption request is as follows:
A)
B)
C)
D)
E)

Type and scope of project
Procurement strategy
Estimated cost or not to exceed cost
Timeframe of contract
A statement or certification that the proposed acquisition will comply with all
State and Federal requirements including the retention of software ownership
rights specified in Section 95.617

Although use of the formats described in this guide is encouraged — to ease and expedite
Federal review and approval — the formats are not mandatory.
E.

APPROVAL REQUI REM ENTS

In the past, dollar thresholds alone determined whether States must obtain written
approval from HHS before proceeding or before being authorized Federal financial
participation (FFP). With the publication of the final rule, the authority to exempt
acquisitions from prior Federal approval is greatly expanded and is based on assessment
of risk, not solely dollar cost of the proposed acquiring. Exhibit I-3 beginning on page 11
illustrates the current approval requirements in brief.
The following chapters detail the APD requirements and set standards against which
HHS conducts reviews. These standards should help States — and by extension HHS —
in developing well-prepared APDs.
A State best serves its own interests if, prior to submission, State analysts review the
draft APD to anticipate questions or problems and resolve them before submission.
States should be aware that the quality, completeness, and organization of the APD are
directly related to the time needed by HHS to reach a funding decision.

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F.

SUBM I SSI ON I NFORM ATI ON

All APD submissions must be signed by the State agency head or authorized State agency
official 1. These signatures indicate to HHS that the project has the requisite
organizational and financial support of the State, conforms with the State Plan, satisfies
State users and organizations, and (to the State's knowledge) meets all policy and
regulatory requirements.
The State sends APD submissions involving a single program to that applicable program
office. See Appendix A for additional information.
Electronic submissions:
The final rule revised the regulations to eliminate the requirement of written submissions
and encourage electronic submissions and electronic Federal approvals. The Federal
program offices vary in their ability to accept and send electronic documentation.
However, all Federal program offices have set this as a goal and encourage electronic
submissions of the APD and other procurement documentation wherever possible. Due
to staff turn-over, please click on the links provided in Appendix A to verify the correct
email(s) for each program office to email the electronic version of the APD or related
procurement documentation. If submitting electronically without an accompanying hard
copy, please ensure that the cover letter signed by the State authorized requestor is faxed
or provided in a scanned PDF version. The size of the files may prevent some HHS or
FNS program offices from receiving the electronic versions. If you don’t receive an
acknowledgement letter related to your electronic submission, please contact the
appropriate program offices for alternative means of electronic submission.
APD’s and acquisition documents involving multiple programs should be sent to:
Department of Health and Human Services
Administration for Children and Families
Director, Office of State Systems
370 L'Enfant Promenade, SW
Washington, DC 20447-0001
Due to reorganization, some program offices, such as OCSE, no longer require the State
to submit a copy of the APD to the respective Regional office. For single-program
request, please consult with the program office to determine if the ACF Regional offices
require copies of the APD. Central Office consolidates headquarters and regional office
comments (if appropriate) on the APD submission and notifies the State whether the
APD is approved, conditionally approved, deferred, or disapproved.
Further information about submission requirements is included at Appendix A.

1

State agency heads are required to notify ACF in writing of the individuals authorized to submit APDs.
Unsigned submissions and those signed by any person other than the State agency head or authorized officials may
be returned.

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G.

PROCESS STREAM LI NI NG

This document establishes certain discrete standards that State submissions must meet
before Federal financial participation is approved. It is intended to ensure that HHS
analysts will measure submissions against a common set of standards. It helps HHS by
focusing review on areas critical to HHS' responsibilities under the law. It helps the
States by finitely defining the rules for approval and supporting preparation of more
concise, to-the-point submission documents.

H.

PROM PT ACTI ON ON REQUESTS FOR PRI OR APPROVAL

The regulations at 45 Code of Federal Regulations (CFR) §95.611(d) specify that HHS
must provide a State written approval, disapproval, or a request for information within 60
days of the date of the acknowledgement of receipt of the State's request. The Federal
acknowledgement of receipt of the States submission may be hard copy or electronic or
both. The acknowledgment letter will identify the Federal program office that was
assigned this control and provides a control number that is useful in identifying the
submission in later correspondence or when inquiring as to status. If the Federal program
office does not request additional information or respond within 60 days of the date of the
acknowledgement letter, "the request will automatically be deemed to have provisionally
met the prior approval conditions" of 45 CFR §95.611. Decision Table 1 in Exhibit I-3
shows when APD submission is required. Decision Table 2 in Exhibit I-3 shows when
Contract and RFP approval is required. Decision Table 3A-D in Exhibit I-3 shows when
Contract amendment approval is required.

EXHIBIT I-3: SUMMARY OF 45 CFR §95-611's
KEY APPROVAL REQUIREMENTS
Decision Table 1: HHS Approvals
If the State is
seeking:

and the total
acquisition cost
(Federal and State
funds) is:

and the
acquisition is:

then:

Regular Funding

< $1,000,000

Competitive or
Non-Competitive

No submission is
required.

Regular Funding

≥ $5,000,000

Competitive or
Non-Competitive

An APD is
required.

Enhanced Funding

>0

Competitive or
Non-Competitive

An APD is
required.

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EXHIBIT I-3 continued:
SUMMARY OF 45 CFR §95-611's KEY APPROVAL REQUIREMENTS

Decision Table 2: HHS Approvals: RFPs 2 and Contracts
and the total
acquisition cost
(Federal and State
funds) is:

and the
acquisition is:

then:

If APD is required
and Funding is:
Regular

< $1,000,000

Competitive or
NonCompetitive

No submission is
required.

Regular

$1,000,000 - $6,000,000
for software application
procurements*

Competitive

No submission is
required.

Noncompetitive

submission of the RFP
and contract is required
unless exempted

for software application
procurements

Competitive or
NonCompetitive

submission of the RFP
and contract is required
unless exempted

Regular

$20,000,000 for
hardware and COTS
procurements

Competitive or
NonCompetitive

Submission of the RFP
and contract is required
unless exempted

Regular

Maintenance and
operations procurements

Competitive or
NonCompetitive

Exempt from
submission for prior
Federal approval if 1-2
page M&O APD is
submitted.

Regular

IV&V Procurements

Competitive or
NonCompetitive

Must be submitted for
prior Federal approval
regardless of cost

Regular

Regular

≥ $6,000,000

* Prior Federal approval of sole source contracts over $1 million is still required. Submission of sole
source justification is also still required, however the Federal program office will defer to the State
procurement policies and procedures.

2

Or other types of solicitation documents, such as Invitations for Bids (IFBs).

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EXHIBIT I-3 continued:
SUMMARY OF 45 CFR §95-611's KEY APPROVAL REQUIREMENTS

Decision Table 3A: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
cost increase is:

then:

Regular

≤$1,000,000 or under 20% of the
base contract, whichever is
higher

No submission is required.

Regular

> $1,000,000 or cumulative
contract amendments exceed
20% of base contract, whichever
is higher

Submission of the contract
amendment and APDU is
required unless exempted

Decision Table 3B: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
time extension is:

then:

Regular

≤ 120 days

No submission is required.

Regular

> 120 days

Submission of the contract
amendment and APDU is
required.

Decision Table 3C: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
cost increase is:

then:

Enhanced

≤ $300,000

No submission is required.

Enhanced

> $300,000

Submission of the contract
amendment and APDU is
required.

Decision Table 3D: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
time extension is:

then:

Enhanced

≤ 60 days

No submission is required.

Enhanced

> 60 days

Submission of the contract
amendment and APDU is
required.

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(this page deliberately left blank)

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CHAPTER I I : PLANNI NG APD
A Planning APD is a written plan of action to determine the need for, feasibility of, and
projected costs and benefits of an automatic data processing (ADP) equipment or
services acquisition.
Standards for Approval
•

Is the need clear?

•

Does the State have a reasonable plan to plan?

•

Has the State committed to preparing a needs assessment, feasibility
study, alternatives analysis, and cost/benefit analysis?

•

Has the State estimated the costs to plan?

•

Are the estimated planning costs and cost allocation reasonable for the
project?

•

Has the State estimated the project cost?

Planning APDs are used by States that want to be reimbursed for the costs of planning
for the implementation of a system, including acquisition of ADP equipment or services.
Planning activities eligible for Federal financial participation (FFP) by HHS include:
·
·
·
·
·
·
·
·
·

Preparing a detailed Project Management Plan
Determining system needs,
Assessing project feasibility,
Evaluating alternatives,
Conducting cost/benefit analyses,
Preparing Advance Planning Documents,
Developing functional requirements,
Assessing other States' systems for transfer, and
Preparing procurements.

The Planning APD is a very brief document prepared and submitted prior to initiating
Planning Phase activities. It is a plan to plan. The purpose is not to provide needs and
plans in detail but to develop a high-level management statement of vision, needs,
objectives, plans, and estimated costs. The focus is on describing how planning will be
II - 15

accomplished and demonstrating that the State has established a plan that is reasonable
for the level of effort of the project. Planning APDs that meet the standards for approval
shown in the box on the preceding page will be approved within 60 days.

The Planning APD has four sections:
·
·
·
·

Statement of need,
Project Management Plan for planning,
Planning project budget, and
Estimate of total project cost.

The four sections of the Planning APD are described in the following paragraphs.

A.

STATEM ENT OF NEED

This section of the Planning APD should set forth the State's information and services
"vision," 3 including the scope and objectives of the planned information system and its
interrelationships with other systems (if known). In addition, the needs statement should
define the system requirements in terms of problems and needs which may represent:
·
·
·

Deficiencies in existing capabilities,
New or changed program requirements, or
Opportunities for economies or efficiencies.

For example, the State may identify new requirements based on insufficient system
capacity for current or projected caseloads, lengthy case processing times, limited
functional automation, or current or projected operating costs. Therefore, deficiencies or
needs may be based on functional, programmatic, technical, operational, or resource
requirements.
This section should answer the question, "Is the need clear?"

B.

PROJECT M ANAGEM ENT PLAN FOR PLANNI NG

The Project Management Plan summarizes how the State will plan.
The State's planning project organization is briefly described. At this point in the project,
all that is required is that the State identify key players in the planning phase, such as the
project manager and other key planning staff by name and title. This information can be
3

"Vision" means the State planners' view of future program needs and the systems architecture necessary to
support those needs.

II - 16

depicted in an organization chart.
The Project Management Plan for planning describes how and when the activities for the
Planning Phase will be conducted and schedules milestones for completion of key events.
For example, provisions at 45 CFR §95.605 require a State to commit to:
·
·

Conducting and preparing a needs assessment 4, feasibility study, alternatives
analysis, and cost/benefit analysis; and
Preparing a functional requirements specification and/or a General Systems
Design. 5

If applicable and if known, this section sets forth how and when contractor services to
support planning will be acquired. In some cases, the State may be able to describe an
overall strategy — the number of contractors, the products and services they will provide,
and their relationships to each other and to the State. 6 An effective way to present this
information is graphically.
This section should answer the questions, "Does the State have a reasonable plan to
plan?" and "Has the State committed to preparing a needs assessment, feasibility study,
alternatives analysis, and cost/benefit analysis?"

C.

PLANNI NG PROJECT BUDGET AND COST ALLOCATI ON

This section succinctly describes in narrative form the resource needs for which funding
support during the Planning Phase may be requested by the State. These needs may
relate to State and contractor staff costs, computer time, hardware and commercially
available software, travel, space, supplies, telephones, photocopying, and so forth.
This section of the APD also provides the budget and the cost allocation to be used
during the Planning Phase.
1.

4

Budget Typically, the planning project budget provides estimated expenditures
by category, with cost projections summarized annually and totaled for the
Planning Phase. In very large or complex projects, budget data may be broken
down by task or phase and category. (At times, ACF may require this on an

Referred to as a "requirements analysis" in this guide.

5

Note that, in many cases, only the Conceptual System Design will be completed during the planning phase. In
that event, the Conceptual System Design may be referenced in the Planning APD with a note that the General
System Design will be developed during the implementation phase.
6

. Under 92.36(a) the Federal program offices will defer to the State’ s procurement laws, policies and procedures
related to conflict of interest.

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exception basis.) Unless modified by HHS' approval, the total is the ceiling for
expenditures during the Planning Phase. The budget format States should use is
shown in Exhibit II-1 on the following page.
2.

Cost Allocation. Cost allocation should be described in narrative and in an
exhibit depicting share and dollars. First, the Planning Phase cost allocation
plan is described, including procedures to identify, record, allocate, and report
direct and indirect costs, partially and fully attributable to the system project, for
funding at regular and enhanced rates. The State also describes how it will fund
its portion of the costs. The planning cost allocation is applied to the total
planning project budget to calculate budget totals by program. States should
follow the format for a cost allocation plan used in the Cost Allocation Toolkit.
For planning APD’s the Federal program offices have indicated that they will
accept cost allocation of equal shares among programs participating in the
planning phase. This is not the only acceptable cost allocation methodology for
planning. Other reasonable approaches to allocating costs during this phase will
also be considered.
For additional information on cost allocation, see Cost Allocation Methodology
Toolkit. http://www.acf.hhs.gov/programs/cse/stsys/dsts_plan_ca.html

This section should answer the questions, "Has the State estimated the costs to plan?"
and "Are the estimated planning costs and cost allocation reasonable for the project?"

D.

TOTAL PROJECT COST

This section provides a gross estimate of total project costs for the entire system
acquisition — including planning and implementation. This information is very
preliminary and will be updated in the Implementation APD.
This section should answer the question, "Has the State estimated the project cost?"

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EXHIBIT II-1
Planning APD: Planning Project Budget
Cost Category*

Year 1

Direct Personnel
Contractor Services
System Hardware
System Software
Training
Overhead
Supplies
Other
TOTALS
* Actual State cost categories may differ
** If required.

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Year 2**

Total

[This page is deliberately blank.]

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CHAPTER I I I : I M PLEM ENTATI ON APD
Implementation APDs are written plans of action that States use to request Federal
financial participation (FFP) in the costs of designing, developing, and implementing the
system. Implementation activities eligible for matching funds from HHS include:
·
·
·
·
·
·
·

Developing detailed system designs,
Preparing solicitations for system hardware, software, and services,
Converting data and software,
Developing and testing software,
Preparing sites,
Training users, and
Installing systems.
Standards for Approval
•

What will this investment buy?

•

Is the need for investment clear?

•

Did the State analyze requirements, feasibility, and alternatives?

•

Were at least two alternatives to the status quo evaluated for costs and
benefits?

•

Is the basis for selection of the chosen alternative reasonable?

•

Is the acquisition well planned?

•

How much will this investment cost?

•

How will the costs be shared?

States are required to submit an Implementation APD prior to incurring costs for system
design and development, when the total project costs (including planning) are estimated
to exceed the thresholds in 45 CFR §95.611(b). See Exhibit III-1 on the next page.
Implementation APDs that meet the standards for approval shown in the box to the right
will be approved within 60 days.

III - 21

EXHIBIT III-1: Prior Written Approval Required:
Implementation APD [45 CFR §95.611(b)]
Funding

Circumstance
Enhanced

Implementation APD for ADP equipment or services,
regardless of costs
— before incurring costs

Regular

Implementation APD for ADP equipment or services,
with total project costs (including planning costs)
projected at $5,000,000 or more for competitive
acquisitions
— before incurring costs

Unlike the Planning APD, the Implementation APD is a comprehensive and thorough
document which sets forth specific, detailed information and summarizes or provides key
documents prepared during the Planning Phase.
The detail in the Implementation APD should be commensurate with the complexity and
scope of the acquisition. For example, States can set forth the need, costs, and benefits
for a mainframe upgrade in significantly fewer pages than required for a new, multiprogram, multimillion dollar, system development project. It is the State's responsibility
to determine how much text and graphics are required to explain with clarity its plan of
action. However, as a rule of thumb, HHS does not expect submissions that are too large
to fit in a two- or three-inch binder. In general, less is better, provided clarity is not
sacrificed.
As described in 45 CFR §95.610, the Implementation APD should have six sections,
organized and categorized as follows:
Section A.
Section B.
Section C.

Section D.
Section E.
Section F

Statement of needs and objectives;
Summary of results of the requirements analysis, feasibility study, and
alternatives analysis;
Project Management Plan; (description of nature and scope of activities
to be undertaken and the methods be used to accomplish the project and
personnel resource statement).
Proposed budget; and
Prospective cost allocation.
Proposed activity schedule

In addition, the Implementation APD has two enclosures:
Tab 1.
Tab 2.

Cost/benefit analysis, and
Budget detail

III - 22

To support HHS' timely review, States should prepare the Implementation APD in the
format and order described in this chapter. The key components of the APD are
described in the following paragraphs.
Section 610 (b) Implementation APD does not include criteria for seeking an exemption
from prior approval of RFP and contacts because the criteria for an exemption in Section
610(b) (ii) indicates that the acquisition cannot be the initial acquisition for a high risk
activity such as software application development.

A.

STATEM ENT OF NEEDS AND OBJECTI VES

The State should summarize the current environment and the new system needs,
objectives, and anticipated benefits. Needs may be expressed in terms of deficiencies in
existing capabilities, new or changed program requirements, or opportunities for
economies or efficiencies.
This section should serve as an executive summary to the project. It should answer the
questions "What will this investment buy?" and "Is the need for the investment clear?"

B.
SUM M ARY OF REQUI REM ENTS ANALYSI S, FEASI BI LI TY STUDY,
AND ALTERNATI VES ANALYSI S
The regulation at 45 CFR §95.605(2) requires that the Implementation APD include a
summary of the results of the requirements analysis, feasibility study, and alternatives
analysis. Note that copies of these documents are not required; their submission may
delay action on the APD due to increased review time.
The requirements section should describe the functional and technical needs, including
system interface requirements. System interface requirements may relate to IV-A, IV-D,
IV-E, Medicaid, Federal Parent Locator Service (FPLS), Child Care, State Labor and
Employment, IRS, and others as needed.
This section should also identify each of the alternatives analyzed for the system project
and the considerations and conclusions reached regarding each one. It should also
identify which alternatives were selected for evaluation of costs and benefits and provide
the rationale for selection of the chosen alternative. If applicable, system transfer is
addressed, summarizing which State systems were assessed for possible transfer and the
results of the assessment.
Unless specifically requested by HHS, States are not required to enclose copies of the
requirements analysis, feasibility study, or alternatives analysis.
This section answers the questions "Did the State analyze requirements, feasibility, and
alternatives?" "Were at least two alternatives to the status quo evaluated for costs and
III - 23

benefits?," and "Is the basis for selection of the chosen alternative reasonable?"

Former Section C.

COST/BENEFIT ANALYSIS – is deleted

This requirement for a baseline CBA and subsequent annual updates in the APD Updates
was deleted in the final rule. However, the requirement for a functional cost/benefit
analysis for each of the alternatives in the Feasibility Study/Analysis of Alternatives is
retained.
C.

PROJECT M ANAGEM ENT PLAN

The Project Management Plan summarizes the project activities, deliverables, and
products; project organization; State and contractor resource needs; and anticipated
system life. Any significant differences from the Project Management Plan submitted
with the Planning APD should be explained.
1.

Nature, Scope, Methods, Activities, Schedule, and DeliverablesThis section of the
Project Management Plan describes in narrative and graphics how and when the
project activities will be conducted and sets forth the resulting project
documentation and contractor deliverables.
To support timely review, this section should provide a workflow (Gantt) chart
addressing project activities, documentation, and contractor deliverables.
Relationships between activities — sequential and parallel — are established in
the plan, responsibilities identified, and provisions included to check progress.
The schedule describes each activity and sets milestones for beginning and
ending significant tasks.
Among the most critical activities of the Implementation Phase for a large
system acquisition are:

7

·

Developing the General 7 and/or Detailed System Designs;

·

Preparing solicitations and awarding contracts for contractor support
services, hardware, and software;

·

Developing the conversion plan, test management plan, installation plan,
facilities management plan, training plan, users' manuals, and security and
contingency plans;

·

Converting and testing data;

·

Developing, modifying, or converting software;

For a system transfer project, a new General System Design may not be necessary.

III - 24

·

Testing software;

·

Training staff for systems testing and operation; and

·

Installing, testing, and accepting systems.

If applicable with regard to procurement activities, this section should describe
how and when contractor services to support the project will be acquired.
Specifically, the State's overall strategy is established — the number of
contractors, the products and services they will provide (such as hardware,
software, and quality assurance), and their relationships to each other and to the
State. 8
2.

Project Organization and Personnel ResourcesThe State's project
organization is described in overview in terms of staff, responsibility, and
relationships. The project organization, preferably shown by organization chart:
·

Identifies the project manager and other key staff by name and title;

·

Identifies the relationship of the project team to the project steering
committee (if applicable); and

·

Identifies interrelationships with user groups and contractors.

3.

State and Contractor Resource Needs. This section succinctly describes in
narrative form the resource needs for which funding support may be requested
by the State. These needs may relate to State and contractor staff costs,
computer time, hardware and commercially available software, depreciation,
travel, space, supplies, telephones, photocopying, office equipment, furniture,
and so forth. This information serves as a narrative explanation of the budget
(which is addressed in the next section of the Implementation APD).

4.

System Life. This section describes the anticipated system life for the required
resources, inclusive of planning, implementation, and operational phases.

The Project Management Plan answers the question "Is the acquisition well planned?"

8

Note that State procurement laws and policies may exclude Planning Phase contractors from competing for or
participating as a prime contractor or subcontractor on follow-on Implementation Phase activities and/or any
resulting procurements.

III - 25

E.

PROPOSED BUDGET

The State's proposed budget, summarized in the APD, considers all costs for
Implementation Phase activities. For a large buy, this might include (but not be limited
to) system software and data conversion, software development, computer capacity
planning, contractor costs, supplies, training, maintenance, and operations.
Miscellaneous ADP expenses may also be included. Consideration of multiple funding
programs or source (cost allocation) is not necessary in the proposed budget. 9
Typically, the project budget details estimated expenditures by category, with cost
projections summarized annually and totaled for the project. In very large or complex
projects, budget data may be broken down by task or phase and category. (At times,
ACF may require this on an exception basis.)
The narrative of the Implementation APD provides the summary information by year and
project total for implementation costs. Detailed breakouts by category are included in
Tab 2. A sample budget format is shown in Exhibit III-2 on page III-8.
This section answers the question "How much will this investment cost?"
F.

PROSPECTI VE COST ALLOCATI ON

The prospective cost allocation plan is described, including procedures to identify record,
allocate, and report direct and indirect costs, partially and fully attributable to the system
project. The State also sets forth the methodology for cost distribution (such as cost
pools) and how it will fund its portion of the costs of implementing the system. See
Exhibit III-3 on page III-9.
For multi-program projects, please see the Cost Allocation Methodology Toolkit
This section answers the question "How will the costs be shared?
G.

ACTI VI TY SCHEDULE

The proposed activity schedule for the project is described.
This section answers the question “What steps are necessary to achieve success and what
is the proposed timetable for each phase of the project?”

9

Cost allocation breakdowns are addressed in the last section of the Implementation APD.

III - 26

HHS

State Systems APD Guide (October 2010)

EXHIBIT III-2
Implementation APD: Implementation Budget
Cost Category*

Enhanced

Regular

Total

Enhanced

Regular

Total

Cumulative

Year 1

Year 1

Year 1

Year 1

Year 1

Year 1

Totals

(by
quarter)

(by
quarter)

(by
quarter)

(by
quarter)

(by
quarter)

(by
quarter)

Direct Personnel
Contractor Services
System Hardware
System Software
Training
Overhead
Supplies
Other
Yearly and Grand Totals
* Actual State cost categories may differ

III-27

EXHIBIT III-3: Cost Allocation Plan Format
Estimated Implementation Phase Budget
Federal /
State
Program

Program
Share of
Cost

Amount ($)

FFP Rate

TOTAL

III - 28

Federal
Share ($)

State Share
($)

CHAPTER I V: APD UPDATES
There are three types of Advance Planning Document Updates (APDUs): Annual
APDU, As-Needed APDU and Operational APDU. These documents are reviewed in
conformance with the standards to the right. (Note that the last three standards apply to
post-implementation updates.)
Unlike APDs which require prior written approval, APDUs simply require written
approval. APDUs may be submitted after the incident requiring the update has occurred.
However, submission does not necessarily mean approval will be granted.
Standards for Approval

A.

•

Is the State's progress acceptable?

•

Is the investment still sound?

•

How do changes in cost allocation methodology affect HHS' programs?

•

Are projected program performance, cost, and benefit goals being
realized?

•

Has the State initiated corrective action to address cost overruns or
schedule slippages?

•

Has the State provided sufficient information on which to exempt
procurement from prior Federal approval?

ANNUAL APD UPDATE

Annual APD Updates are used to report annually on the status of the project, request
additional funding, and report post-implementation costs and benefits.
They are prepared by the State and submitted to HHS 60 days before the FFP authority
for the project is set to expire. A State may seek a no-cost extension of its submission
date for an Annual APD if it has not expended the funding previously authorized.
The purpose of the Annual APDU is to allow both the State and HHS to assess the status
of the project, in terms of past performance and future plans. Since HHS usually
provides funding on an annual basis, the APDU also serves as the State's request for
continued or additional funding.
IV - 29

EXHIBIT IV-1: Annual APD Updates: Written Approval Requirements
[45 CFR §95.611(b)]
Funding

Circumstance

Enhanced

Annual APD Updates

Regular

Annual APDUs for projects
with a total acquisition over
$6,000,000

Condition

When specifically required by
HHS.

The Annual APDU includes the following sections:
·
·
·
·
·
·

References to the approved APD and all approved changes,
Project status report,
Revised Project Management Plan,
Revised project budget,
Cost allocation/distribution changes, and
Actual costs

Note that the final rule eliminated the need for submitting annual cost benefit
information, and added an optional section for States who wish to seek exemption from
prior approval for acquisitions that are neither the initial acquisition nor a high risk
acquisition. If all required information in this acquisition summary section is submitted,
the State may assume that the APDU approval also constitutes approval of the exemption
request(s).
The requirements for these sections are described below.
1.

References to the Approved APD and All Approved Changes The State provides
a brief summary of the history of the APD process, summarizing the submission and
approval of the Planning APD (if applicable), Implementation APD, and APD
Updates (whether Annual As-Needed or Operational). HHS uses this information
to quickly become current with the State's project status and immediate needs.

2.

Project Status Report. The State reports on the status of the past year's project
tasks and milestones, addressing:
·
·
·

Task completion,
Task extension, and
New tasks, previously unanticipated.

In addition, if the State has encountered or anticipates problems or delays, an
explanation should be provided. Slippages should be discussed in terms of causes
and effect on the overall implementation schedule.
This section answers the question "Is the State's progress acceptable?"

IV - 30

3.

Revised Project Management PlanThe State provides an updated Project
Management Plan, reflecting the project changes summarized in the preceding
section and including an assessment of the impact of significant changes on the
projected system breakeven.
This section answers the question "Will schedule changes affect system breakeven?"

4.

Revised Project Budget. The State's revised project budget consists of:
·

An accounting of expenditures for project development over the past year,

·

An explanation of the differences between projected expenses in the last
approved APD or APDU and the actual expenditures for the past year, and

·

A revised projection of total project costs and an explanation of significant
(10% or greater) increases.

This section answers the questions "How do budget changes affect system breakeven
and HHS' programs?" and "Is the investment still sound?"
5. Cost Distribution Changes This section is only needed if the original IAPD
allocated costs among more than one program or activity. One example would be if the
costs were allocated among TANF and Medicaid or cost allocated between IV-D child
support activities and non-IVD child support activities.
If so, this section would
summarize any approved or anticipated changes to the cost allocation methodology.
This section answers the question “How do changes in cost allocation methodology
affect HHS programs?
6. Actual Costs Please note that the requirement for annual updates to the Cost Benefit
analysis was eliminated in the final rule. A functional cost benefit analysis is still a
requirement for the Initial Implementation APD. The APD is an estimate of projected
systems costs by phase or by year. Approval of the APD and associated FFP is usually
provided on an annual basis, to correspond to availability of State match. If your State
legislature appropriates IT expenditures on a biennial basis, this information should be
communicated in the APD, it may reduce the frequency of your APD Updates. Each
subsequent APD Updates should provide actual costs incurred during the preceding year
by quarter. This permits the Federal program offices to adjust the FFP authority either up
or down. We recognize that a full year of actual expenditures is unlikely to be available
when the next APD Update is due. We request that the State provide the actual
expenditures by quarter. Depending on the actual expenditures, it may result in a
downward or upward adjustment in the FFP authorized for the project.

One common error in State APD Update submissions is that the State fails to specify in
the cover letter or accompanying documentation, how much they are requesting for the
IV - 31

period covered in the APD Update. Please make it clear whether your request for
upcoming budget period already takes into consideration the difference (overspent or
underspent authority) from the FFP authority approved in previous update.
7. Acquisition Summary
States have the option of requesting an exemption from prior approval of the acquisitions
associated with the project for the upcoming year. To be eligible for an exemption, the
APD should include the following information:
A) Type and scope of project (e.g. firm fixed price, time and materials, labor hour,
best effort. M&O, services, license renewal, software development, hardware,
COTS)
B) Procurement strategy (e.g. Competitive, Master contract, sole source)
C) Estimated cost or not to exceed amount (e.g. $65 million over $5 million, $20
million in the timeframe covered by this APDU.)
D) Timeframe of contract (e.g. 5 years with three option years, Estimated start date)
E) A statement or certification that the proposed acquisition will comply with all
State and Federal requirements including the retention of software ownership
rights specified in Section 95.617. (IM 05-03 is a good source of Federal
requirements.)
Please note that Section 611(b)(iii) specifies that the exemption request included in the
APD Updates shall be assumed to be approved with the APD approval provided that:
(a) the acquisition summary provides sufficient detail to base an exemption
(b) the acquisition does not deviate from the terms of the exemption
(c) The acquisition is not the initial acquisition for a high risk activity, such as
software application development, Acquisitions, whether exempted from Federal
prior approval or not, must comply with the Federal provisions contained in
95.610(c)(1)(viii) or (c)(2)(vi)_or submit an Acquisition checklist (IM 05-03)

B.

AS-NEEDED APD UPDATES

As-Needed APD Updates are used to:
·

Report and receive HHS approval for additional funding,

·

Clarify project information requirements as an approval condition of the
Planning or Implementation APD, and/or

·

Report and receive HHS approval for significant project changes, 10

10

If the change occurs within 60 days of the due date of the Annual APDU, the change may be reported as part of
the annual submission.

IV - 32

In addition, As-Needed APD Updates are used when the project is being funded on a
phased implementation basis.
The format of the As-Needed APDU follows the format of the original APD which it is
modifying. For example, a State which has submitted an Implementation APD prior to
vendor selection must submit an As-Needed APDU to reflect such information as an
updated schedule of activities, an updated project management plan, and a revised budget
which incorporates contractual versus estimated vendor costs.
As-Needed APD Updates may also be required by HHS to evaluate projects at key
decision points and milestones projected to occur between annual APD Updates. If so,
the submission of an As-Needed APD Update at the decision point or milestone will be a
condition of an APD approval.
As-Needed APD Updates are submitted if changes occur in project schedule or costs
which exceed the thresholds set forth in 45 CFR §95.611(b). See Exhibit IV-2 on page
IV-7.
For example, the State should use an As-Needed APDU to:
·

Request approval when expenditures are anticipated to exceed regulatory
thresholds;

·

Request approval for additional funding below the regulatory threshold, but
above previously approved expenditure levels, when the State wants to be
reimbursed at the higher level;

·

Request authority for project continuation when significant project changes are
anticipated, such as a schedule extension that exceeds the regulatory limit;

·

Report major changes in the scope of the project, such as a change in the
procurement plan or activities, system concept, or development approach;

·

Report significant, anticipated changes to the cost distribution plan or
methodology or to projected system costs and benefits; or

·

Provide detailed information on project and/or budget activities if required as an
approval condition of a prior APD.

·

Provide additional information in 95.611 (2)(vi) to provide information on
which an exemption of RFP and contracts can be based.

The As-Needed APDU may be submitted at any time, following the format of the APD
being amended but including only those elements that have changed. The State must
include supporting documentation to justify the need for a change to project approvals.

IV - 33

EXHIBIT IV-2: As-Needed APD Updates: Written Approval Requirements
[45 CFR §95.611(b)]
Funding

Circumstance

Condition

Enhanced

As-Needed APDUs for:
·
Projected cost increases of
$1,000,000 or more
·
Over 120 day extension for major
milestones
·
Significant change in
procurement scope or approach
·
Change in system concept or
project scope
·
Change to approved cost
allocation methodology
·
Change exceeding 10% of
estimated cost benefits
·
When specifically required by
HHS

Submitted to HHS no
later than 60 days after
the occurrence of the
change being reported.

As-Needed APDUs for:
·
Projected cost increases of
$1,000,000 or more
·
Over 120 day extension for major
milestones
·
Significant change in
procurement scope or approach
·
Change in system concept or
project scope
·
Change to approved cost
allocation methodology
·
When specifically required by
HHS

Submitted to HHS no
later than 60 days after
the occurrence of the
change being reported.

Regular

IV - 34

States may want to
obtain prior approval,
since costs are incurred
at the State's risk.

States may want to
obtain prior approval,
since costs are incurred
at the State's risk.

C.

Operational APD Updates

The final rule created a new type of APD Update to be utilized for those States who
systems projects are in operational mode. This type of OAPDU should not be used by a
State who has any system development activities.
An OAPDU is an annual submission which provides basic information in three areas and
should not exceed 2 pages. The three areas are: (i) summary of activities, (ii) acquisitions
and (iii) annual budget by project/systems receiving funding by programs covered under
Part 95.
Summary of Activities: This section should provide sufficient description to determine if
the activities described are in fact operations and maintenance activities, and not
development. A new definition of software maintenance was provided in the final rule.
Software maintenance means routine support activities that normally include
corrective, adaptive, and perfective changes, without introducing additional
functional capabilities. Corrective changes are tasks to correct minor errors or
deficiencies in software. Adaptive changes are minor revisions to existing
software to meet changing requirements.
Perfective changes are minor
improvements to application software so it will perform in a more efficient,
economical, and/or effective manner. Software maintenance can include
activities such as revising/creating new reports, making limited data element/data
base changes, and making minor alterations to display screen images.
Summary of Acquisitions: This section should provide information on the type and scope
of the contract, procurement strategy, estimated costs, timeframe and certification that the
procurement meets Federal and State procurement standards. Since most State
operational contracts are multi-year, this section will be detailed in the year of
procurement but not applicable in other years. A statement that the acquisition is in the
2nd year of a 5 year contract would be sufficient.
Annual budget for operations; this section should provide sufficient information for the
Federal program office to approve FFP for operational activities.

IV - 35

[This page is deliberately blank.]

IV - 36

CHAPTER V: CONTRACTI NG DOCUM ENTS

The final rule published at XXX on XXX provided the most far reaching changes in this
area. In the past, HHS reviewed four types of contracting documents as part of its APD
process:
·
·
·
·

Sole source justifications,
Sollicitation documents,
Contracts, and
Contract amendments.

Standards for Approval
•

Has the State met its obligation to provide for maximum practicable
competition?

•

Has the State met its obligation to specify ACF's program requirements?

•

Are the relationships of the State and all contractors clear?

•

Does the State have primary responsibility for the project?

As indicated in the decision tables beginning on page 11 (and repeated in this chapter for
ease of reference), the recent regulatory changes substantially revised both the
submission thresholds and the use of exemption authority. Only high risk, large dollar
acquisitions (or lower dollar value noncompetitive buys) require review.
The final rule updated 95.613 Procurement Standards to clarify that procurements of
ADP equipment and services are subject to the procurement standards in Part 92. Part
92.36(a) specifies that a State will follow the same policies and procedures it uses for
procurements from its non-Federal funds. The Department retains the authority to
provide greater oversight including requiring a State to comply with 92.36c) if the
Department determines that the State procurement process is an impediment to
competition that could substantially impact project cost or risk of failure.
A.

SOLE SOURCE JUSTI FI CATI ONS

In certain situations, States are required to submit the sole source justification even
though an APD is not required. As the decision table on the next page indicates, this
V - 37

occurs when the State is seeking FFP at the regular matching rate for a noncompetitive
acquisition expected to cost between $1,000,000 and $6,000,000.
Noncompetitive acquisitions equal to or above $5,000,000 at the regular matching rate
and all acquisitions at the enhanced matching rate require an APD (rather than just the
sole source justification). Even though the Federal program office will give deference to
the State procurement laws, policies and procedures related to sole source justification,
the state must still provide their justification accompanied by documentation or
affirmative attestation by the requesting official that the sole source is justified under
State procurement policies.
If the State is
seeking:

and the total
acquisition cost
(Federal and State
funds) is:

and the
acquisition is:

then:

Regular Funding

$1,000,000 $6,000,000

Noncompetitive

Submission of the
sole source
justification is
required.*

* While the sole source justification is required to be submitted, the Federal program
office will defer to the State’s procurement laws, policies and procedures as to whether
this sole source acquisition is justified under the State’s procurement rules. The Federal
program office may request an affirmative attestation from the authorized requestor that
the acquisition complies with State procurement rules.
[This table is an excerpt of Decision Table 1 in Exhibit I-3 and is repeated here for ease
of reference.]

B.

SOLI CI TATI ON DOCUM ENTS

The term "solicitation documents" refers to documents that are used to solicit bids,
proposals, and information from contractors. Those that are used to solicit bids or
proposals can result in a contract — and may be subject to prior written approval if the
acquisition exceeds established thresholds. In such cases, the solicitation documents are
most frequently Requests for Proposals (RFPs) rather than Invitations for Bids (IFBs).
Unless exempted in the Annual or As-Needed APDU, States are required to obtain prior
written approval from HHS for solicitations of products and/or services when the
regulatory thresholds set forth in 45 CFR §95.611(b) are exceeded. See Table 4 on the
next page.

V - 38

Decision Table 4: HHS Approvals: RFPs 11 and Contracts
If an APD is
required
and funding
is:

and the total
acquisition cost
(Federal and State
funds) is:

and the
acquisition is:

then:

Regular

< $1,000,000

Competitive or
Noncompetitive

No submission is required.

Regular

$1,000,000 $6,000,000 for software
application
procurements

Competitive

No submission is required.

Noncompetitive

Submission of the RFP and
contract is required unless
exempted 12

Competitive or
Noncompetitive

Submission of the RFP and
contract is required unless
exempted

Regular

Regular

≥ $6,000,000
for software application
procurements

Regular

$20,000,000 for
hardware and COTS
procurements

Competitive or
Noncompetitive

Submission of the RFP and
contract is required unless
exempted

Regular

Maintenance and
operations
procurements

Competitive or
Noncompetitive

Exempt from submission
for prior Federal approval
if 1-2 page M&O APD is
submitted.

Regular

IV&V Procurements

Competitive or
Noncompetitive

Must be submitted for prior
Federal approval regardless
of cost

* Prior Federal approval of sole source contracts over $1 million is still required.
Submission of sole source justification is also still required, however the Federal program
office will defer to the State procurement policies and procedures. An affirmative
statement or certification that this sole source procurement is justified under the State’s
procurement procedures may be required.

11

Or other types of solicitation documents, such as Invitations for Bids (IFBs).
12

V - 39

Although the form of solicitations varies due to differing State procurement policies and
regulations, 13 there are common elements which are important to HHS' review. These
include:
•

A "specification" (for products) or a "statement of work" (for services)
describing what the State intends to buy;

•

The authorities and responsibilities of the State and contractor(s) under the
contract;

•

The rules for contractor evaluation and selection, 14 including an indication of the
relative importance of the evaluation factors; and

•

"Acceptance criteria" which describe how the State will review and "accept" (as
a precursor to final payment) products and services delivered under the contract.

In addition, the solicitation should be clear about what constitutes acceptable
performance under the contract.
Acquisitions under the submission threshold or exempt from prior Federal approval are
still required to meet Federal standards, including a provision retaining software
ownership rights. 92.36 states “The State will ensure that every purchase order or other
contract includes any clauses required by Federal statutes and executive orders and their
implementing regulations. These include but are not limited to:
These Federal requirements include, but are not limited to:
•
•
•
•
•
•
•
•
•

Equal Employment Opportunity, Executive Order 11246 of September 24, 1965
Anti-Kickback Law 18 USC 874
Davis Bacon Act 40 USC 276a to 276a-7
Contract Work Hours and Safety Standards Sections 103 and 107 40 USC 327330
Clean Air Act 42 USC 1827(h)
Clean Water Act 33 USC 1368
Energy Policy and Conservation Act 89 Stat. 87
Does the acquisition, if funded in whole or in part by HHS meet the standards and
functional requirements set forth in the Federal program regulations?
Does the acquisition document contain a clause that provides HHS and/or their
representatives access to State or Territorial agency documents, papers or other

13

State procurements must adhere not only to Federal requirements, but also to State law, procurement
regulations, and practices.
14

Cost must always be a significant factor in selection.

V - 40

•
•

•

•
•
•

C.

records pertinent to the procurement in order to make audits, examinations,
excepts and transcripts?
Does the acquisition comply with Federal rules relative to State or Territorial
ownership rights to all software products, documentation and intellectual property
created under this acquisition?
Does the statement of work in the acquisition document convey expectations to be
met by the successful contractor including items such as required tasks,
deliverables and their scheduled of delivery, technical requirements, security,
privacy and confidentiality requirements, roles and responsibilities, and project
reporting requirements?
Does the acquisition document include clauses covering mandatory contract terms
and conditions, order of precedence, compliance with laws, liability, period of
performance, Force Majeure, availability of funds, notices, disputes, and failure of
performance, damages and termination?
Does the acquisition document include information about the evaluation and
selection process such as technical and cost scoring and weighting, and proposal
ranking and selection?:
Has the evaluation and selection process been finalized relative to technical and
cost scoring prior to the release of the acquisition document?
Does the acquisition document delineate responsibilities relative to key staff, the
change order process and documentation requirements?
CONTRACTS AND CONTRACT AM ENDM ENTS

States are required to obtain prior written approval from HHS for prospective contracts
for products and/or services when the regulatory thresholds set forth in 45 CFR
§95.611(b) is exceeded. In addition, certain contract modifications or amendments must
also be submitted for prior written approval. These thresholds, described in Table 5A-D
on the following page, apply to single contract amendments or modifications. However,
requirements may not be fragmented to avoid submission requirements.
Contracts should not be submitted for HHS' review until the State has determined that the
offer meets all the mandatory requirements of the solicitation, conforms with the
approved APD, has been selected in accordance with the evaluation and selection criteria,
is within projected expenditures or is otherwise justifiable, and is signed by the vendor
but not the State.
Contracts are reviewed by HHS to meet the broad standards of review established at the
beginning of this chapter.
Under the final rule, contract amendments need not be submitted for prior Federal
approval or sole source justification until they cumulatively exceed 20 percent of the base
contract. The base contract is defined as the initial contract activity, including all option
years, allowed during a defined unit of time, for example, 2 years. The base contract
includes option years but does not include amendments.
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Acquisitions for Independent Validation and Verification contracts must be submitted for
prior Federal approval regardless of the amount of the contract. We encourage States and
Territories to use the IV&V assessment report as a starting point for the IV&V statement
of work.
Decision Table 5A: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
cost increase is:

then:

Regular

≤ the contract amendments
cumulatively are under 20% of
the base contract

No submission is required.

Regular

> the contract amendments
cumulatively exceed 20% of the
base contract

If not exempted in the
Annual or As-Needed
APDU, submission of the
contract amendment and
APDU is required.

Decision Table 5B: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
time extension is:

then:

Regular

≤ 120 days

No submission is required.

Regular

> 120 days

Submission of the contract
amendment and APDU is
required.

Decision Table 5C: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
cost increase is:

then:

Enhanced

≤ $300,000

No submission is required.

Enhanced

> $300,000

Submission of the contract
amendment and APDU is
required.

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Decision Table 5D: HHS Approvals: Contract Amendments
If APD is required
and Funding is:

and the contract amendment's
time extension is:

then:

Enhanced

≤ 60 days

No submission is required.

Enhanced

> 60 days

Submission of the contract
amendment and APDU is
required.

D.

Exemptions

Section 95.611 (b)(iii) of the regulations has always permitted the Federal program
offices to exempt acquisitions from prior Federal approval, but the final rule significantly
expands this authority. The content of the Annual and As-Needed APDU’s have been
modified to specify the information that must be provided by the State seeking such an
exemption.
The acquisition summary for the upcoming year or development phase should provide
the following information on proposed acquisitions:
(a) Type and scope of contract - Examples of type of contract are: firm fixed
price, labor hours, and time and materials. Examples of scope of contract are:
maintenance and operation, COTS software, application software development,
service contract, and licenses.
(b) Procurement strategy - Examples of procurement strategy are: full and open
competition, limited competition (e.g. master service contract) and sole source
procurement. If the procurement is sole source, the State needs to provide a
sole source justification, either separately or as part of the APDU. That
justification should make reference to the procurement policies and procedures
used by the State for procurement from non-Federal funds.
(c) Estimated cost or not to exceed amount - Describes the total cost of the
acquisition and annual cost if applicable, or the specified number of labor hours
not to be exceeded for all project categories.
(d) Timeframe of contract - Examples of the timeframe of a contract should
include the years in the initial contract with the number of options for additional
years. This should include the estimated begin and end dates of the contract.
(e) A signed certification from the authorized State official that the proposed
acquisition will comply with all State and Federal requirements including the
retention of software ownership rights specified in §95.617. The Acquisition
V - 43

Checklist issued in OCSE Information Memorandum 05-03 provides a summary
of Federal requirements that should be included in the acquisition solicitation
documents. A statement in the APD that the acquisitions summarized will
comply with all applicable State procurement requirements and the Federal
requirement specified in the Acquisition Checklist will be sufficient.
If this information is contained in the Annual or As-Needed APDU, the approval of those
documents will also constitute approval of the exemption request. The Federal program
office(s) retain the authority to deny the exemption request but must specify which
exemption requests are denied and provide the reason why those procurements must be
submitted for prior Federal approval. IV&V acquisitions must be submitted for prior
Federal approval regardless of cost and initial acquisitions for a high risk activity are also
unlikely to be exempted.

V - 44

CHAPTER VI : HI GH RI SK PROJECTS
A. Independent Verification and Validation (IV&V)
The final rule provides for IV&V assessments if certain events are triggered:
•
•
•
•
•
•
•

Are at risk of missing statutory or regulatory deadlines for automation that is
intended to meet program requirements.
Are at risk of failing to meet a critical milestone
Indicate the need for a new project or total system redesign
Are developing systems under waivers pursuant to sections 452(d)(3) or 627 of
the Social Security Act.
Are at risk of failure, major delay, or cost overrun in their system development
efforts or fail to timely and completely submit APD updates or other required
systems documentation
States procurement policies put the program at risk, including a pattern of failing
to pursue competition to the maximum extent feasible
State’s failure to adequately involve State program offices in the development and
implementation of the project

The events specified above may trigger a Federal IV&V assessment review, but the
results of that review will determine if the State must acquire IV&V services. The
Federal IV&V assessment report will recommend the areas and the frequency of the
IV&V review to be procured. The Federal IV&V assessment report should serve as the
requirements document or statement of work for the State’s RFP.
All RFP and contracts related to IV&V which is required by the Department must be
submitted for prior Federal approval regardless of the cost of the contract. The
submission thresholds do not apply to IV&V acquisitions.
B. Request for reconsideration of Denied FFP for failure to obtain prior approval
The revisions in the final rule related to increased submission thresholds and expanded
authority for exempting RFP and contracts from prior approval should significantly
reduce the number of instances where a State fails to seek prior Federal approval.
However, the final rule provides at 95.623 a process by which a State may seek
reconsideration of the denial of FFP related to failure to seek prior Federal approval.
If such reconsideration is needed, the State must address the following:
•
•
•

The acquisitions must be reasonable, useful and necessary
The State’s failure to obtain prior approval, must have been inadvertent,
The request was not previously denied by HHS
VI - 45

•
•

The acquisition otherwise meets all applicable Federal and State requirements
The State must not have a record of recurrent failures to seek prior Federal
approval

C. Recoupment of FFP for Failed projects

VI - 46

Appendix A: Submission Requirements for APDs
Effective immediately, it is no longer necessary to provide the Director, Regional
Administrative Support Center (RASC), with copies of requests for Federal financial
participation for automatic data processing (ADP) equipment or services acquisitions.
1. States should address ADP funding requests involving multiple programs to:
Assistant Secretary for Administration
Administration for Children and Families
370 L'Enfant Promenade, S.W.
Washington, D.C. 20447
ATTN: Jim Blackie- Mail Stop OA 6th floor Aerospace
Funding requests for Medicaid Management Information Systems should continue to be
sent directly to the Associate Regional Administrator, Division of Medicaid of the
appropriate Health Care Financing Administration (HCFA) regional office.
Funding requests for Office of Child Support Enforcement should be handled as below:
Hard copies should be addressed to:
Commissioner
Office of Child Support Enforcement
370 L’Enfant Promenade S.W.
Mail Stop: 4th Floor West.
Washington D.C. 20447
Attn: Director, Division of State and Tribal Systems
Materials sent by courier should be addressed to the following street address:
901 D Street S.W.
Washington DC
Tribes may submit electronically to their analyst:
http://www.acf.hhs.gov/programs/cse/stsys/OCSE_Analysts_by_Tribe.pdf
States may submit electronically to their analyst:
http://www.acf.hhs.gov/programs/cse/stsys/OCSE_analysts_by_State.pdf

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Funding requests for Child Welfare projects should be handled as below:
Submissions sent to the Division via the U.S. Postal Service should be addressed
as follows:
Associate Commissioner
Children's Bureau
370 L'Enfant Promenade, S.W.
Washington, DC 20024
Attn:
Director
Division of State Systems
Room 8136, 1250 Maryland Avenue SW
Submissions sent to the Division via alternative couriers (FedEx, UPS, etc.)
should be addressed as follows:
Associate Commissioner
Children's Bureau
8th Floor
1250 Maryland Avenue SW
Washington, DC 20024
Attn:
Director
Division of State Systems
Room 8136
As the Portals Office Building at 1250 Maryland Avenue is a privately owned
building, there may not be anyone available to receive a Saturday delivery.
In addition, a copy of all submissions should be sent to the appropriate AFC
Office of Regional Operations, Regional Office Program Manager.
Regional Offices of the Administration for Children and Families serve as the first
point of contact for information and assistance for States and Tribes operating
child welfare programs. For more information about contacting ACF Regional
Offices visit: http://www.acf.hhs.gov/programs/oro/index.html.
2. We encourage electronic submissions of APD’s and related procurement documents.
Currently, our email exchange has some size limitations; please contact the appropriate
Federal program office for alternative methods of submitting electronic versions of these
documents. The cover letter signed by the authorized requestor can be faxed to the
appropriate program office or sent as a scanned PDF file.
Because electronic submissions may be rejected by our Office mail system, the
A - 48

importance of receiving an acknowledgement letter is underscored. The goal is to
provide an acknowledgement letter within days of receipt. If you do not receive an
acknowledgment letter, please follow up by telephone or email.
The Federal program office(s) are willing to send scanned versions of the Federal
approval letters to the authorized requestor and/or designated individual. Please keep the
appropriate Federal offices appraised of the correct emails to send electronic versions of
the approval letters.
3. If there has been a change to the official(s) authorized in your Department to submit
requests for prior systems approval on behalf of the State agency for Titles IV-A, IV-B,
IV-D, IV-E, or XIX, please notify us in writing of the newly designated individual(s).

A - 49

Appendix B: Authorities
The origin of many of the programs overseen and financed by HHS is the Social Security
Act. Included under HHS' scope of review authority are:
Title IV-A:
Title IV-B:
Title IV-D:
Title IV-E:

Temporary Assistance to Needy Families (TANF)
Child Welfare Services
Child Support Enforcement
Foster Care and Adoptive Services

The State systems activities for these programs are managed and reviewed in accordance
with rules codified in the Code of Federal Regulations (CFR). Regulations generally
applicable across programs 15 include:
45 CFR Part 92: Establishes procurement standards, reports, records retention and
reporting program performance for all DHHS grants, including entitlement grants.
45 CFR Part 95, Subpart A: Sets a two-year limit (15 months in some cases) for a State
to claim Federal financial participation (FFP) in expenditures under State plans approved
for certain titles of the Social Security Act.
45 CFR Part 95, Subpart E: Establishes requirements for preparation, submission,
approval of — and adherence to — State cost allocation plans for public assistance
programs.
45 CFR Part 95, Subpart F: Specifies the conditions for FFP in the cost of acquiring data
processing equipment and services under an approved State plan; sets forth the approval
and reporting processes of the Advance Planning Document (APD) and Advance
Planning Document Updates (APDUs); and requires access by HHS to all aspects of
State systems. Authorizes under section §95.621 the Department to conduct "periodic
on-site surveys and reviews of State and local agency ADP methods and practices."
45 CFR Part 95, Subpart G: Prescribes requirements concerning the computation of
claims for FFP in the cost of equipment under public assistance programs and identifies
requirements for the management and disposition of equipment. Applies to equipment
purchased by State agencies and equipment purchased under service agreements with
other State agencies and under cost-type contracts. Allows an exemption under §95.641
to the capitalization and depreciation provisions for ADP equipment if previously
approved by HHS.
Program-specific rules codified in the CFR, but not addressed in this guide, include:
15

Regulations specific to programs, such as IV-A and IV-D, are outside the scope of this document.

B - 51

45 CFR Parts 300 to 305: Sets forth operational procedures, reporting requirements, and
standards for audit for the Title IV-D program.
45 CFR Part 307: Governs enhanced funding for the acquisition and operation of
comprehensive, statewide Child Support Enforcement systems. Includes the
programmatic conditions and functional requirements required for States to qualify for
funding of systems acquisitions. Sets forth HHS' oversight responsibilities.
45 CFR Part 1355: Sets forth requirements for Statewide Automated Child Welfare
Information Systems (SACWIS).
In addition to the law, regulations, and this document, the following guidelines apply:
·

Action Transmittals issued by HHS;

·

OMB Circular A-87, which establishes principles and standards for determining
costs applicable to grants, contracts, and other agreements with State and local
governments; 16

·

OMB Circular A-102, which sets consistent and uniform Federal policy in the
management of grants and cooperative agreements with State and local
governments;

·

OMB Circular A-128, which establishes uniform Federal audit requirements for
State and local governments that receive Federal aid — codified in 45 CFR Part
74, Appendix J;

·

ACF's Information Systems Review Guide;

·

ACF's guide, Feasibility, Alternatives, and Cost/Benefit Analysis;

·

ACF's Companion Guide: Cost/Benefit Analysis Illustrated; and

·

Program-specific guides as applicable.

Because guidance is regularly released by HHS, State and Federal personnel must
routinely update their guidance files. In order to obtain information about currently
effective Action Transmittals and other ACF guidance, reviewers may contact the
Child Support Data Standards Registry - http://www.acf.hhs.gov/cse/dsr/
Federal Child Support website - http://www.acf.hhs.gov/programs/cse/stsys/!cse.html
16

OMB Circulars can be obtained by calling the Office of Management and Budget on 202-395-3000 and asking
for publications.

B - 52

Federal SACWIS website http://www.acf.hhs.gov/programs/cb/systems/sacwis/about.htm

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