State Systems Advance Planning Document (APD) Process, 12341-12354 [E8-4009]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Children and Families Administration

[Federal Register Volume 73, Number 46 (Friday, March 7, 2008)]
[Proposed Rules]
[Pages 12341-12354]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-4009]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 95

RIN 0970-AC33


State Systems Advance Planning Document (APD) Process

AGENCY: Administration for Children and Families, HHS.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Advance Planning Document (APD) process governs the 
procedure by which States obtain approval for Federal financial 
participation in the cost of acquiring automated data processing 
equipment and services. This NPRM reduces the submission requirements 
for lower-risk information technology (IT) projects and procurements 
and increases oversight over higher-risk IT projects and procurements 
by making technical changes, conforming changes and substantive 
revisions in the documentation required to be submitted by States, 
counties, and territories for approval of their Information Technology 
plans and acquisition documents.

DATES: Consideration will be given to comments received by May 6, 2008.

ADDRESSES: Send comments to: Office of Child Support Enforcement, 
Administration for Children and Families, 370 L'Enfant Promenade, SW., 
4th floor, Washington, DC 20447. Attention: Director, Division of State 
and Tribal Systems; Mail Stop: ACF/OCSE/DSTS 4th floor West. Comments 
will be available for public inspection Monday through Friday from 8:30 
a.m. to 5 p.m. on the 4th floor of the Department's offices at the 
above address.
    In addition, a copy of this regulation may be downloaded from 
www.regulations.gov. You may transmit written comments electronically 
via the Internet. To transmit comments electronically, via the Internet 
go to https://regulations.acf.hhs.gov and follow any instructions 
provided.

FOR FURTHER INFORMATION CONTACT: Robin Rushton, Director, Division of 
State and Tribal Systems, Office of Child Support Enforcement, (202) 
690-1244. E-mail: Robin.Rushton@acf.hhs.gov. Do not e-mail comments on 
the Proposed Rule to this address.

SUPPLEMENTARY INFORMATION: 

I. Statutory Authority

    This notice of proposed rulemaking (NPRM) is published under the 
general authority of 5 U.S.C. 301, 42 U.S.C. 622(b), 629b(a), 652(a), 
652(d) 654A, 671(a), 1302, and 1396a(a) of the Act. The notice of 
proposed rulemaking is published under the authority granted to the 
Secretary of the U.S. Department of Health and Human Services, (the 
Secretary) by Section 1102 of the Social Security Act (the Act), 42 
U.S.C. 1302. This section authorizes the Secretary to publish 
regulations that may be necessary for the efficient administration of 
the functions for which he is responsible under the Act.

II. Background

    State public assistance agencies acquire automated data processing 
(ADP) equipment and services for computer operations that support the 
Child Support Enforcement, Medicaid, Child Welfare, Foster Care and 
Adoption Assistance programs. Prior to the enactment of the Personal 
Responsibility and Work Opportunity Act of 1996 (PRWORA), the Aid to 
Families with Dependent Children (AFDC) and Job Opportunities and Basic 
Skills (JOBS) programs were also covered by these rules. The references 
to these programs are being deleted from the rules. Additionally, the 
reference to the Office of Refugee Resettlement is no longer necessary, 
since the State Legalization Impact Assistance Grants program, which 
was subject to these regulations, was a time-limited program that has 
expired. The Department of Health and Human Services (HHS) provides 
national leadership and direction in planning, managing, and 
coordinating the nationwide administration and financing of these 
comprehensive State systems to support programs for children and 
families--to

[[Page 12342]]

ensure that they are being operated as intended by law and regulation 
and that the expenditure of Federal funds is made in accordance with 
Federal regulation.
    The APD process was designed to mitigate financial risks, avoid 
incompatibilities among systems, and ensure that the system supports 
the program goals and objectives.
    The regulations at 45 CFR part 95 require the States to submit 
three different types of documents for Federal approval. These three 
types of documents are Implementation Advance Planning Documents (APD), 
updates to these APDs, and acquisition documents.
    Implementation Advance Planning Documents can include a statement 
of needs and objectives; a requirements analysis, feasibility study, a 
cost-benefit analysis; a statement of the alternatives considered; a 
project management plan, a proposed budget, and prospective cost 
allocations (if applicable). There are two major types of APD 
submissions, planning and implementation, which are used at different 
stages in the State development and acquisition process.
    APD updates to the planning and implementation document are used to 
keep the agency informed of the project status and to request funding 
approval for the system development. There are two types of APD 
Updates, an Annual APD Update and an As-needed APD Update. The As-
needed APD Update is required if there is a project cost increase of $1 
million or more for regular funded projects and $100,000 or more for 
enhanced funded projects, a schedule extension of 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.
    Prior approval of Information Technology (IT) acquisition documents 
is required. States, counties, and territories must request prior 
approval of specific procurement documents related to IT system 
projects that exceed defined cost parameters. Contracts and contract 
amendments must be submitted to the Federal government for prior 
approval. Failure to obtain prior approval results in denial of the 
Federal match for that acquisition.

Need for Regulatory Revisions

    The NPRM groups the discussion of the proposed revisions in the 
following manner:
     Part 1--Technical revisions that delete or update obsolete 
references,
     Part 2--Conforming revisions to regulations that 
previously cross-referenced grant provisions in 45 CFR part 74, and
     Part 3--New or modified revisions that eliminate or reduce 
the documentation required to be submitted for Federal approval.
    Technical revisions listed in part 1 of the Summary of Regulatory 
Revisions are prompted in part by changes made by the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, which 
eliminated the JOBS program and replaced the AFDC program with a 
Temporary Assistance for Needy Families (TANF) block grant that is not 
subject to 45 CFR part 95. Other technical amendments are due to the 
name change from Health Care Financing Administration to Centers for 
Medicare & Medicaid Services.
    The conforming revisions that are listed in part 2 were required by 
the transfer of HHS entitlement programs from 45 CFR part 74 to part 
92. The final rule relating to the transfer was published in the 
Federal Register (68 FR 52843) and became effective on September 8, 
2003. The affected programs must comply with part 95, which addresses 
program-specific rules that large State public assistance programs must 
follow. However, the current regulations at 45 CFR part 95 contain six 
references to part 74 that must be updated.
    Part 3 provides substantive revisions prompted by a variety of 
studies and recommendations from a wide range of State, Federal and 
private organizations over the last decade. They include the following 
sources:
    In March 1998, the U.S. General Accounting Office, now known as the 
Government Accountability Office (GAO), and the Nelson A. Rockefeller 
Institute of Government jointly established the GAO/Rockefeller 
Institute Working Seminar on Social Program Information Systems. The 
working seminar had about 30 members, including congressional staff, 
Federal and State program and information technology managers, and 
welfare researchers. The working seminar met eight times and discussed 
how shifting human services landscape had transformed States automated 
systems needs. The three key challenges identified by participants at 
this conference were: (1) Simplifying the approval process for 
obtaining Federal funding for information systems, (2) enhancing 
strategic collaboration among different levels of government and (3) 
obtaining staff expertise in project management and information 
technology.
    On July 9, 2002, the Subcommittee on Technology and Procurement 
Policy, House Government Reform Committee, held a congressional hearing 
on State and Local Information Technology Management. The hearing 
included testimony from State and Federal IT officials, the National 
Association of State Information Resource Executives (NASIRE), 
representatives from the IT vendor community, and GAO.
    The National Association of State Chief Information Officers 
(NASCIO) and the American Public Human Services Association (APHSA) 
have also been actively involved in this issue and submitted proposals 
on how to reform the Federal oversight of State IT projects and 
procurement approval process.
    In 2002, GAO reviewed the statutory and regulatory requirements for 
Federal approval and funding of State IT development and acquisition 
projects. The review examined how Agency processes for reviewing, 
approving, and funding State IT development acquisition projects for 
these programs hinder or delay States' efforts to obtain approval for 
these projects, and how Food and Nutrition Service (FNS), ACF and 
Centers for Medicare & Medicaid Services (CMS) ensure that they 
consistently apply the OMB Circular A-87 to fund IT development and 
acquisition projects. The GAO found that in fiscal years 2000 and 2001 
States had submitted 866 planning and acquisition documents.
    In their analysis of these submissions, GAO determined that 92 to 
96 percent of the State requests submitted to child support 
enforcement, child welfare, and CMS were responded to within the 
required 60 days but only 74 percent of the State requests involving 
multiple programs were responded to within the 60 days.
    The Office of Management and Budget (OMB) has also raised concerns 
about the information paperwork burden imposed on States by the APD 
prior approval process. Normally the renewal of the OMB Information 
Collection authority is granted for a three-year period, but in 2003 
and 2004 OMB limited the renewal to one year increments and has asked 
to be kept informed of the Agencies' efforts to reduce or streamline 
the APD process. In April 2005, OMB approved the current APD process 
for an additional three years based partially on the progress that has 
been made on this reform effort.
    The revisions to the regulations in Part 3 are designed to address 
the concerns of States and other parties that the APD regulations have 
not kept pace with advances in technology by redefining submission 
requirements to be based on risk, to develop risk criteria

[[Page 12343]]

other than just financial, and to revise the submission thresholds so 
they are based on the type of services or, in the case of acquisition 
documents, the risk associated with the type of procurement. For 
example, a project that has been developed and implemented and is 
currently in Operations and Software Maintenance mode is inherently 
less risky than a project in planning or implementation of new software 
application development. A procurement of IT hardware services involves 
less risk than a procurement of new software application development. 
Sole source procurement involves higher risk than a competitive 
procurement for the same IT services. The exercise of an option year on 
a multi-year contract involves less risk and needs less oversight than 
a contract amendment. A contract amendment that is within the initial 
scope and within a certain percentage of the costs associated with the 
base contract involves less risk than a contract that exceeds the scope 
of the original contract or substantially exceeds the initial contract 
amount.
    These proposed regulations are intended to be consistent with OMB 
Circular A-87. However, if there is any inconsistency between the 
provisions and OMB A-87, the OMB A-87 would take precedent.

III. Summary of Regulatory Revisions

Part 1--Technical Updates

    Many of the proposed revisions simply update terminology, such as 
replacing ``Health Care Financing Administration (HCFA)'' with 
``Centers for Medicare & Medicaid Services (CMS),'' or deleting 
references to AFDC and JOBS. These revisions include:
     Section 95.4 Definitions--delete references to obsolete 
``Office of Human Development Services'' and to the ``Office of Child 
Support Enforcement'' and replace with ``Administration for Children 
and Families.''
     Section 95.31 Waiver for good cause--update names of 
components. Update reference from Health Care Financing Administration 
to ``.'' Delete references to ``Office of Human Development Services'', 
``Social Security Administration'', ``Office of Refugee Resettlement'' 
and ``Office of Child Support Enforcement'' and replace with 
``Administration for Children and Families.''
     Section 95.505 Definition of Operating Division--update 
references to obsolete ``Office of Human Development Services'' and 
replace with ``Administration for Children and Families.''
     Section 95.601 Scope and applicability--eliminate title 
IV-A, and title IV chapter 2 of the Immigration and Nationality Act as 
these programs are no longer subject to subpart F.
     Section 95.605 Definitions--replace the definition of 
``Advance Planning Document'' in all its permutations with 
``Information Technology Document.'' Therefore, ``Planning Advance 
Planning Document'' is now called ``Planning Information Technology 
Document''; the ``Implementation Advance Planning Document'' is now 
called ``Implementation Information Technology Document''; the ``Annual 
and As-Needed Advance Planning Document Updates'' are now called 
``Annual and As-Needed Information Technology Document Updates.'' 
(These new terms now are addressed in a separate regulatory section, 
rather than in the Definitions section.) This change is proposed for 
the purpose of consistency with terminology used in the State approval 
process for information technology services and also to avoid any 
confusion with the abbreviation, ADP, which refers to Automated Data 
Processing.
     Section 95.605 Definition of Automated Data Processing--
replace the word ``Automatic'' with ``Automated,'' so the phrase reads 
``Automated Data Processing.'' The definition of ADP does not change.
     Section 95.605 Definition of Approving components--revise 
references in definition of approving components to remove obsolete 
terms.
     Section 95.605 Definition of Project--revise to eliminate 
reference to ``AFDC.''
     Section 95.611(a)(3) Prior approval conditions--no change 
in intent, but reword section for better clarity.
     Section 95.611(a)(4) Prior approval conditions--replace 
reference to ``Office of State Systems'' with ``Department's Secretary 
and his/her designee,'' and clarify how many copies should be sent to 
which offices.
     Section 95.611(a)(5) Prior approval conditions, request 
submission--explain that requests that affect the program of only one 
entity (CMS, OCSE, Children's Bureau) should be sent to that applicable 
entity's office and regional office.
     Section 95.611(a)(6) Prior approval conditions, 
Information prior to approval--replace the term ``APD'' with ``ITD'' 
and refer to the new section on the submission of the ITD.
     Sections 95.611(b)(1)(i), (b)(1)(ii), (b)(2)(i), and 
(b)(2)(ii) Prior approval conditions, Specific prior approval 
requirements--replace the term ``APD'' with ``ITD.''
     Section 95.611(b)(1)(iii) Prior approval conditions, 
Specific prior approval requirements--replace the terminology ``RFP'' 
with the broader term, ``acquisition solicitation documents,'' and move 
last sentence to a separate section. Delete language from paragraph 
(iii) and (iv) related to the threshold amounts for submitting 
acquisition documents and move to new Sec.  95.611(b)(1)(v).
     Section 95.611(c)(2)(ii)(B) Prior approval conditions, 
Specific approval requirements--eliminate the ``AFDC'' reference.
     Section 95.611 (c)(2)(ii)(B) Disallowance of Federal 
Financial participation (FFP)--delete reference to suspension of APD 
for enhanced funding for AFDC, which is no longer applicable now that 
the AFDC program has been replaced with TANF, a block grant.
     Section 95.621(e)(2) ADP review, service agreement--delete 
all of paragraph (2) as it is no longer applicable.
     Section 95.612 Disallowance of Federal Financial 
Participation (FFP)--update terminology: ``advance planning document'' 
is changed to ``information technology document''; ``APD'' is changed 
to ``ITD''. Revise the last sentence of 95.612 related to suspension of 
approval of an APD to update the citations under child support and 
child welfare regulations related to enhanced funding for systems. 
Eliminate the reference to 45 CFR 205.37(c), which is no longer 
applicable because TANF systems are funded through a block grant and no 
longer subject to the Part 95. Eliminate the child support reference to 
45 CFR 307.35(d), which is no longer valid. Add a reference to 45 CFR 
1355.56, to reflect the authority under the child welfare regulations.
     Section 95.623 Waiver of prior approval requirements--
remove the provisions of this section on waiver of prior approval 
requirements, which referred to a situation occurring prior to December 
1, 1985. Create a new Sec.  95.623 related to reconsideration of denied 
FFP for failure to obtain prior approval, described in Part 3 of this 
preamble summary of regulatory revisions.
     Section 95.631 Cost identification for purpose of FFP 
claims--replace the term ``APD'' with ``ITD.''
     Section 95.641 Applicability of rules for charging 
equipment in Subpart G of this part--In the final sentence, replace the 
term ``APD'' with ``ITD.''

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Part 2--Conforming Amendments

    These proposed changes reflect transfer of HHS grant authority from 
45 CFR part 74 to part 92. Specifically:
     Section 95.605 Definition of Service agreement--in Sec.  
95.605(f) eliminate the phrase ``and requires the provider to comply 
with 45 CFR part 74 Subpart P for procurements related to service 
agreement.'' Subpart P was eliminated in 1996. This notice of proposed 
rulemaking revises the reference to make service agreements subject to 
45 CFR 95.613.
     Section 95.613 Procurement standards--revise to 
incorporate much of the procurement language currently in 45 CFR part 
74. Maintain the long-standing procurement standards for State 
information technology contracts, specifically for the definition of 
sole source justification, requiring all procurement transactions to be 
conducted in a manner to provide, to the maximum extent practical, open 
and free competition. Address grantee responsibilities, codes of 
conduct, competition, procurement procedures, and access to records.
     Section 95.615 Access to systems and records--eliminate 
the reference to 45 CFR part 74.
     Section 95.621(d) ADP reviews (authority to conduct 
reviews on procurements under the submission threshold)--eliminate the 
phrase ``were made in accordance with 45 CFR part 74.'' This notice of 
proposed rulemaking would replace reference to 45 CFR part 74 with 45 
CFR 95.613.
     Section 95.705 Equipment costs--FFP, General rule--
eliminate the references to cost principles in subpart Q of 45 CFR part 
74. Substitutes the cost principles in 45 CFR part 92.
     Section 95.707 Equipment management and disposition--
eliminate the reference to the property rules in subpart O of 45 CFR 
part 74. Substitutes the property rules in 45 CFR part 92.32.

Part 3--Revisions to the Current Requirements and New Regulatory 
Provisions Designed To Reduce the Amount of Federal Oversight and 
Monitoring Based on Risk

     Section 95.605 Definitions--
    We add new definitions for Acquisition checklist, Alternative 
Approach to IT requirements, Base contract, Commercial off the shelf 
software (COTS), Grantee, Noncompetitive, Service Oriented 
Architecture, and Software maintenance, which are necessitated by 
proposed revisions to Sec. Sec.  95.610 and 95.611.
    The revision in 95.611(b)(1)(iii) to permit exemption from prior 
approval of certain acquisition solicitation documents requires a 
definition of Acquisition checklist, which can be utilized in lieu of 
State's submittal of a competitive RFP. The revisions in Sec.  
95.611(a) and Sec.  95.611(b)(1)(v)(B) to base submission thresholds on 
the type of information technology services requires a definition of 
Software maintenance and COTS software.
    The revision to Sec.  95.611(b)(1)(iv) to exempt contract 
amendments that cumulatively do not exceed 20 percent of the base 
contract requires a definition of Base contract.
    The elimination of the cross reference to Part 74 in Sec.  95.613 
procurement standards requires a definition of Noncompetitive 
acquisitions.
    The creation of a new section Sec.  95.610(c)(3) on Operations and 
Software Maintenance ITDU requires a definition of Software 
maintenance.
     Section 95.610 New section on Advance Planning Document 
requirements--
    Under the current regulations, the requirements of the Advance 
Planning Document, including Annual and As-Needed Updates, are 
contained in the Definition section, Sec.  95.605. This notice of 
proposed rulemaking would move this regulatory authority to a newly 
created section, Sec.  95.610, specifying the requirements for 
Planning, Implementation, Annual and As-Needed Information Technology 
Documents. In addition to moving the language on Advance Planning 
Documents from the definitions in Sec.  95.605 to its own new section, 
there is a global change to replace Advance Planning Document with 
Information Technology Document, throughout the regulation. This change 
is proposed to make the terminology more consistent with the 
terminology used in the State Information Technology approval process. 
Almost all States called their similar State approval process, 
Information Technology review or Information Systems approval. No State 
or territory had an approval process called APD approval. In addition, 
the States indicated that APD was often confused with ADP or Automated 
Data Processing. Therefore, this notice of proposed rulemaking amends 
every section to replace the term ``Advance Planning'' with the term 
``Information Technology.''
    We propose to change ``Planning Advance Planning Document (PAPD)'' 
at Sec.  95.605 under Advance Planning Document (1) to a ``Planning 
Information Technology Document (PITD)'' at Sec.  95.610(a).
    We proposed to change ``Implementation Advance Planning Document 
(IAPD)'' at Sec.  95.605 under Advance Planning Document (2) to an 
``Implementation Information Technology Document (IITD)'' at Sec.  
95.610(b). We propose to insert the phrase ``the use of service 
oriented architecture'' into the description of a Feasibility Study to 
reflect Information Memorandum 05-04 which clarified that States and 
Territories are free to consider, along with new application 
development and system transfer, the use of service oriented 
architecture software in the development of automated human services 
systems.
    We propose to change ``Annual Advance Planning Document Update 
(AAPDU)'' at Sec.  95.605 under Advance Planning Document (3)(a) to an 
``Annual Information Technology Document Update (AITDU)'' at Sec.  
95.610(c)(1).
    We propose to change ``As-Needed Advance Planning Document Update 
(AN-APDU)'' at Sec.  95.605(3)(b) under Advance Planning Document to 
``As-Needed Information Technology Document Update (AN-ITDU)'' at Sec.  
95.610(3)(c)(2).
    This notice of proposed rulemaking would transfer the requirements 
for Information Technology Document Updates (ITDU) from the definitions 
section and create a new Sec.  95.610(c) that provides the requirements 
for ITD Updates. In keeping with the intent to base the degree of 
Federal oversight on the risk of the IT services, we propose to 
establish a new type of Annual Information Technology Document Update 
for Operations and Software Maintenance (O&SM). Instead of the detail 
required in an Annual or As-Needed ITD, if the project has transitioned 
to Operations and Software Maintenance mode with no system development, 
then the lower risk justifies a reduced level of Federal oversight and 
the requirements for submission would be limited to an annual report of 
as few as two pages, depending on the scope of the activities, which 
includes a summary of O&SM activities, acquisitions, and budget. This 
limited information is required to authorize funding in the 
Department's financial system and track activities that may be of 
interest to other states or entities. This limited annual submission 
will also allow the identification of potential problems that could 
have an impact on the funding a state receives.
    This NPRM proposes under Sec.  95.610(c)(1)(viii) to amend current 
requirements for an annual report on cost benefits in the Annual ITD 
update and to change the requirement for an annual cost benefit 
analysis report. The

[[Page 12345]]

current regulations under Advance Planning Document Update at Sec.  
95.605(3)(a)(vii) require the submittal of an annual cost benefit 
analysis update. This notice of proposed rulemaking revises the 
requirements of an Annual ITD Update to eliminate the need for an 
annual cost benefit analysis report to be provided in the annual ITD 
update report. Consistent with other provisions designed to focus on 
high risk IT projects and procurements, we believe that the Independent 
Validation and Verification requirements in Sec.  95.626 and 
disallowance of FFP provisions in Sec.  95.612 provide the needed 
information and authority to encourage States to select the most cost 
effective methods for automating a program requirement. Nevertheless, 
we also propose to revise the requirements of the Annual ITD Update to 
require a close-out cost benefit report to be submitted no later than 
two years after full implementation and at three-year intervals until 
the cost benefit is achieved.
     Section 95.611 Prior approval conditions--
    We propose adding a sentence to Sec.  95.611(a)(1), General 
acquisition requirements, to clarify that acquisitions that are limited 
to only operations and software maintenance are exempt from prior 
approval.
    This notice of proposed rulemaking would revise the language in 
Sec.  95.611(b)(1)(iii) to make the technical amendments noted in Part 
I of this preamble. The current regulations at Sec.  95.611(b)(1)(iii) 
contain language that requires Requests for Proposals (RFPs) and 
contracts to be submitted for prior approval, unless ``specifically 
exempted by the Department.'' However, during discussions with State 
systems representatives in 2003 and 2004, the State staff stated that 
this exemption authority is not well publicized, and different analysts 
in the different Federal programs often had different and sometimes 
conflicting interpretations of those requirements. Therefore, the 
agencies subject to 45 CFR part 95 and the Food and Nutrition Service, 
which has separate regulations regarding the Food Stamp automation, 
jointly developed an acquisition checklist that would standardize the 
type of information that needs to be submitted by the States seeking an 
exemption from prior approval of the RFP. While Sec.  95.611(b)(1)(iii) 
retains authority for exemption from prior approval for contracts and 
contract amendments, the workgroup agreed to limit the initial use of 
the checklist to a competitively procured Request for Proposal (RFP) or 
Invitation for Bid (IFB). This acquisition checklist enables the States 
to self-certify that they are in compliance with the Federal and State 
procurement requirements. The States retain the option of submitting 
the RFP or IFB to the Federal government for Federal review, analysis 
and prior approval. The information in the acquisition checklist in 
Information Memorandum 05-03 dated May 2, 2005, provides the Federal 
agency with essential information including the type of the 
procurement, estimated cost, and the competitive nature of the 
procurement, and the time frame for vendors to respond to the 
solicitation.
    Although Sec.  95.611 already provides the Federal agencies with 
discretion to exempt a RFP, contract or contract amendment from prior 
approval, we propose to add a new definition of ``Acquisition 
checklist'' to the definitions in Sec.  95.605. Furthermore, we propose 
to modify Sec.  95.611 to improve clarity and to move the last sentence 
about submission of acquisition documents under the submission 
threshold in Sec.  95.611(b)(1)(iii) to a new Sec.  95.611(b)(1)(v) to 
clarify that this provision applies to all acquisitions not otherwise 
subject to prior approval.
    We propose to amend Sec.  95.611(a)(1), General acquisition 
requirements, to eliminate the need to submit competitive acquisitions 
for Operations and Software Maintenance RFPs, contracts and contract 
amendments.
    Current regulations at Sec.  95.611(b)(1) base submission 
thresholds for IT acquisitions on only one risk category, the size of 
the acquisition, regardless of the type of IT service being acquired. 
This notice of proposed rulemaking would establish different dollar 
submission thresholds based on the different types of competitive 
procurements. The threshold in the current regulation is $5 million for 
all types of acquisitions, and the proposed change would retain the $5 
million threshold for software application development, which continues 
to be the highest risk type. However it would establish a $20 million 
threshold for hardware procurements and eliminate the requirement that 
competitively procured contracts limited to Operations and Software 
Maintenance be submitted for prior approval. If the procurement 
combines different types of activities, for example, hardware 
acquisition with software application development, then the lower 
threshold applies.
    In addition, the current requirement for submission of contract 
amendments for prior Federal approval is $1,000,000. We propose to 
amend Sec.  95.611(b)(1)(vi) to permit contract amendments to a 
competitively procured contract that do not exceed 20 percent of the 
base contract and are within the scope of the initial contract to be 
exempt from prior approval and sole source justification. We propose to 
add a new definition of ``Base contract'' to Sec.  95.605. A Base 
contract is defined as the initial contract activity that is allowed 
during a defined period of time. The base contract does include option 
years but does not include amendments. This flexibility of 20 percent 
over the base contract applies to all types of IT services being 
procured such as hardware, software application development, additional 
Commercial off the Shelf (COTS) software licenses, but does not extend 
to situations where the amendment expands the scope of the contract nor 
does it permit a fragmentation of the amendments to circumvent the 
percentage threshold. The 20 percent over base contract is a cumulative 
amount. Whenever the cumulative amount of contract amendments exceeds 
20 percent of the base contract, then we propose that submission to the 
Federal agency for prior approval is required. As specified earlier, 
competitively procured O&M contracts and contract amendments are 
exempted from prior approval.
    We propose to amend Sec.  95.611(b)(2)(iii) and (iv) to increase 
prior submission acquisition requirements for enhanced funded projects 
for RFPs, contracts, and contract amendments from $100,000 to $300,000. 
Section 95.611(c)(2) regarding enhanced funded As-Needed, would be 
changed from the current $100,000 submission threshold to $300,000.
    We propose to amend Sec.  96.611(c), Specific approval requirements 
for enhanced funded projects, the threshold for submitting an As-Needed 
APD Update, by raising the threshold from $100,000 to $300,000.
    Both Sec.  95.611(b)(1)(iii) Request for Proposal and Contract and 
Sec.  95.611(b)(iv) Contract Amendments of the current regulations 
contain language that requires the State to submit RFP, contract and 
contract amendments under these threshold amounts on an exception basis 
or if the acquisition strategy is not adequately described and 
justified in an ITD. This NPRM proposes a new regulatory section to 
specify that this authority addresses not just acquisitions under the 
threshold, but ITD submissions including the new Operations and 
Software Maintenance ITDU. States will be required to submit 
acquisition documents, and ITDUs that were otherwise under the 
submission threshold amount if requested to do so in writing by the 
Department.

[[Page 12346]]

     Section 95.623 New Section on Reconsideration of denied 
FFP for failure to obtain plan approval--
    Section 95.623, waiver of prior approval requirements, of the 
current regulations is limited to situations prior to December 1, 1985. 
We propose deleting this language and replacing it with new regulatory 
language that specifies the conditions for requesting reconsideration 
of FFP denial for failure to request prior approval. This codifies in 
regulation, the process and procedure that was outlined in Action 
Transmittal OSSP-00-01 dated March 13, 2000. Under proposed Sec.  
95.623, for ADP equipment and services acquired by a State without 
prior written approval, the Department may waive the prior approval 
requirement if the State requests reconsideration of a denial by 
request to the head of the grantor agency within 30 days of the initial 
written disallowance determination.
     Section 95.626 New Section on Independent Validation and 
Verification--
    This notice of proposed rulemaking would also create a new Sec.  
95.626 to require Independent Validation and Verification (IV&V) 
Services for certain ITD projects. This regulatory provision is derived 
from existing authority and language in 45 CFR 307.15(b)(10) of the 
child support automation regulations. In addition to Sec.  
307.15(b)(10), other Federal programs have required IV&V services for 
troubled ITD projects based on the authority granted to them under 45 
CFR 92.12.
     Section 95.627 New Section on waiver authority--
    This notice of proposed rulemaking would create a new Sec.  95.627 
that permits a waiver of any ITD requirement in 45 CFR part 95 by 
presenting an alternative approach. This authority currently exists in 
the child support automation regulations in 45 CFR 307.5(b) and is 
intended to give the Secretary increased authority to grant waivers of 
ITD and acquisition prior approvals beyond the authority specified in 
part 95.
    Under the proposed rule, a State may apply for a waiver of any 
requirement in 45 CFR Subpart F by presenting an alternative approach. 
Waiver requests must be submitted and approved as part of a State's ITD 
or ITD Update. The Secretary may grant a State a waiver if the State 
demonstrates that it has an alternative approach to a requirement in 
this chapter that will safeguard the State and Federal governments' 
interest and that enables the State to be in substantial compliance 
with the other requirements of this chapter.
    Under this proposed new section, the State's requests for approval 
of an alternative approach or waiver of a requirement in this chapter 
must demonstrate why meeting the condition is unnecessary, diminishes 
the State's ability to meet program requirements, or that the 
alternative approach leads to a more efficient, economical, and 
effective administration of the programs for which federal financial 
participation is provided, benefiting both the State and Federal 
Governments.
    The Secretary, or his or her designee, will review waiver requests 
to assure that all necessary information is provided, that all 
processes provide for effective economical and effective program 
operation, and that the conditions for waiver in this section are met. 
When a waiver is approved by an agency, it becomes part of the State's 
approved ITD and is applicable to the approving agency. A waiver is 
subject to the ITD suspension provisions in Sec.  95.611(c)(3). When a 
waiver is disapproved, the entire ITD will be disapproved. The ITD 
disapproval is a final administrative decision and is not subject to 
administrative appeal.
     Section 95.635 New Section on Disallowance of Federal 
Financial participation in automated systems that fail to comply 
substantially with program regulations--
    We propose to create a new section that permits the Federal agency 
to disallow all or part of any costs in systems projects that fail to 
comply substantially with applicable regulations for the applicable 
programs.

IV. Impact Analysis

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), HHS 
is required to submit to the Office of Management and Budget (OMB) for 
review and approval any reporting or record keeping requirements in a 
proposed or final rule. In April 2005, OMB approved the current APD 
process for three years based partially on the progress that has been 
made on this reform effort. The proposed revisions in this NPRM to the 
requirements at 45 CFR part 95 reduce the documentation required to be 
submitted by States and territories to the Federal government. The 
current information collection burden, before this proposed rule is 
implemented is as follows:

----------------------------------------------------------------------------------------------------------------
                                                   Estimated       Proposed
                  Instrument                       number of     frequency of    Average burden    Total annual
                                                  respondents      response       per response        burden
----------------------------------------------------------------------------------------------------------------
Advance Planning Document.....................              50            1.84             60            5,520
RFP and Contract..............................              50            1.54              1.5            115.5
Emergency Funding Request.....................              27            1                 1               27
Service Agreements............................              14            1                 1               14
Biennial Security reports.....................              50            1                 1.5             75
----------------------------------------------------------------------------------------------------------------

    The NPRM will result in the following reductions:
    In Advance Planning Documents--a reduction in the average burden 
hours for projects that are implemented and in Operations and Software 
Maintenance mode. Instead of having to submit a full Annual or As-
Needed ITDU, States with projects in maintenance and operation mode 
will only have to submit a one- to two-page document. The Department 
also plans to develop a process for the states to submit this O&SM IT 
document update electronically. Since the majority of States and 
territories appear to be continuing to do ongoing software enhancements 
as part of continuing performance, we are estimating only a small 
reduction in the average burden hours associated with reducing the 
documentation required for annual O&SM IT submissions. We estimate a 
reduction from 60 hours to 58 or 5,336 total burden hours for 
information technology Documents. The proposal to require a close-out 
cost benefit report also is factored into this net burden reduction.
    In RFP and contracts--a reduction is made in the average burden 
hours per RFP due to several revisions including: An increased use of 
the Acquisition Checklist, an elimination of maintenance and operation 
RFPs, higher submission thresholds for contracts and contract 
amendments, elimination of the need to submit hardware and commercial 
software acquisition documents under $20 million if

[[Page 12347]]

competitively procured and an elimination of the need to submit 
contract amendments if within scope and cumulatively the amendments do 
not exceed 20 percent of the base contract. We believe that this will 
reduce the average frequency of responses by half, from 1.54 to .75 and 
reduce the total burden hours to 56.25 hours.
    The revised annual burden estimates based on this NPRM is as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                    Estimated       Proposed
                   Instrument                       number of     frequency of    Average burden   Total annual
                                                   respondents      response       per response       burden
----------------------------------------------------------------------------------------------------------------
Advance Planning Document......................              50            1.84             58          5,336
RFP and Contract...............................              50             .75              1.5           56.25
Emergency Funding Request......................              27            1                 1             27
Service Agreements.............................              14            1                 1             14
Biennial Security reports......................              50            1                 1.5           75
----------------------------------------------------------------------------------------------------------------

    The respondents affected by this information collection are State 
agencies and territories.
    The Department will consider comments by the public on this 
proposed collection of information in the following areas:
     Evaluating whether the proposed collection activity is 
necessary for the proper performance and function of the Department, 
including whether the information will have a practical utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used,
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical or other technology, e.g. permitting 
electronic submission of responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment to the Department of the proposed 
regulations. Written comments may be sent to OMB for the proposed 
information collection either by FAX to 202 395-6974 or by e-mail to 
OIRA_submission@omb.eop.gov. Please mark all comments ``Attn: Desk 
Officer for ACF.''
    We are submitting this information collection to OMB for approval. 
Copies of the proposed collection may be obtained by writing to the 
Administration for Children and Families, Office of Administration, 
Office of Information Services, 370 L'Enfant Promenade, SW., 
Washington, DC 20447 ATTN: ACF Reports Clearance Officer. All requests 
should be identified by the title of the information collection. The e-
mail address is Robert.Sargis@acf.hhs.gov.

Regulatory Flexibility Analysis

    The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the 
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not 
result in a significant impact on a substantial number of small 
entities. The primary impact is on State and Territorial governments. 
State and Territorial governments are not considered small entities 
under the Act. The intent of these proposed rules is to reduce the 
submission requirements for lower-risk information technology (IT) 
projects and procurements and increase oversight over higher-risk IT 
projects and procurements by making technical changes, conforming 
changes and substantive revisions in the documentation required to be 
submitted by States, counties, and territories for approval of their 
Information Technology plans and acquisition documents.

Regulatory Impact Analysis

    Executive Order 12866 requires that regulations be reviewed to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
proposed rule is consistent with these priorities and principles. Since 
it significantly reduces the documentation required to be submitted by 
the States and Territories related to lower risk Information Technology 
projects and procurement, costs are reduced. Examples of documentation 
that is no longer required to be submitted for prior approval under 
this proposed rule are competitive hardware acquisitions under $20 
million instead of the current $5 million threshold and instead of 
having to submit a full annual or As-Needed ITDU, States with projects 
in maintenance and operation mode will only have to submit a document 
with as few as 2 pages, depending on the scope of activities. The 
current information collection burden is reduced to reflect these 
reduced costs to States and Territories. To estimate the savings we are 
utilizing the same methodology and State and contractor average annual 
rate as we recommend to the States to use for their costs estimates in 
our Planning Advance Planning Document training. In those training 
documents we recommend an average standard hourly rate of $100 for 
state systems staff and $175 for contractor state staff. So the 
reduction of 59.25 hours for APD's would translate to a cost savings of 
$5,925 for State staff or $10,368, if the RFP is prepared by a Quality 
Assurance contractor. The reduction of 184 hours for submission of 
RFP's would translate to a cost savings of $18,400 if prepared by State 
staff and $32,000 if prepared by contractor staff. So the estimate of 
cost savings related to the reduction in information collection budget 
would be $24,325 to $49,493.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal agencies to determine whether a proposed 
policy or regulation may affect family well-being. If the agency's 
determination is affirmative, then the agency must prepare an impact 
assessment addressing seven criteria specified in the law. These 
regulations will not have an impact on family well-being as defined in 
the legislation.

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that a covered agency prepare a budgetary impact statement before 
promulgating a rule that includes any Federal mandate that may result 
in the expenditure by State, local, and Tribal governments in the 
aggregate, or by the private sector, of $100 million adjusted for 
inflation, or more in any one year.

[[Page 12348]]

    If a covered agency must prepare a budgetary impact statement, 
section 205 further requires that it select the most cost-effective and 
least burdensome alternative that achieves the objectives of the rule 
and is consistent with the statutory requirements. In addition, section 
203 requires a plan for informing and advising any small governments 
that may be significantly or uniquely impacted by the rule.
    We have determined that this rule will not result in the 
expenditure by State, local, and Tribal governments in the aggregate, 
or by the private sector, of more than $100 million in any one year. 
Accordingly, we have not prepared a budgetary impact statement, 
specifically addressed the regulatory alternatives considered, or 
prepared a plan for informing and advising any significantly or 
uniquely impacted small governments.

Congressional Review

    This rule is not a major rule as defined in 5 U.S.C. chapter 8.

Executive Order 13132

    Executive Order 13132 prohibits an agency from publishing any rule 
that has federalism implications if the rule either imposes substantial 
direct compliance costs on State and local governments and is not 
required by statute, or the rule preempts State law, unless the agency 
meets the consultation and funding requirements of section 6 of the 
Executive Order. We do not believe the regulation has federalism impact 
as defined in the Executive Order. Consistent with Executive Order 
13132, the Department specifically solicits comments from State and 
local government officials on this proposed rule.

List of Subjects in 45 CFR Part 95

    Administrative practice and procedure, Claims, Computer Technology, 
Grant programs--health, Grant programs, Social programs.

    Approved: November 29, 2007.
Michael O. Leavitt,
Secretary of Health and Human Services.
    For the reasons set forth above, HHS proposes to amend title 45 CFR 
part 95 as follows:

PART 95--GENERAL ADMINISTRATION--GRANT PROGRAMS (PUBLIC ASSISTANCE, 
MEDICAL ASSISTANCE AND STATE CHILDREN'S HEALTH INSURANCE PROGRAMS)

    1. The authority citation for 45 CFR part 95 is revised to read as 
follows:

    Authority: 5 U.S.C. 301, 42 U.S.C. 622(b), 629b(a), 652(a), 
652(d), 654A, 671(a), 1302, and 1396a(a).

Subpart A--Time Limits for States to File Claims

    2. In Sec.  95.4 revise the definition of ``We, our and us'' to 
read as follows:


Sec.  95.4  Definitions.

* * * * *
    We, our, and us refer to HHS' Centers for Medicare & Medicaid 
Services and the Administration for Children and Families, depending on 
the program involved.
    3. In Sec.  95.31 revise paragraph (a) to read as follows:


Sec.  95.31  Where to send a waiver request for good cause.

    (a) A request which affects the program(s) of only one HHS agency 
[(CMS), or the Administration for Children and Families (ACF)] and does 
not affect the programs of any other agency or Federal Department 
should be sent to the appropriate HHS agency.
* * * * *

Subpart E--Cost Allocation Plans

    4. In Sec.  95.505 revise the definition of ``Operating Divisions'' 
to read as follows:


Sec.  95.505  Definitions.

* * * * *
    Operating Divisions means the Department of Health and Human 
Services (HHS) organizational components responsible for administering 
public assistance programs. These components are the Administration for 
Children and Families (ACF) and the Centers for Medicare & Medicaid 
Services (CMS).
* * * * *

Subpart F--Automated Data Processing Equipment and Services--
Conditions for Federal Financial Participation (FFP)

    5. Remove the authority citation for subpart F.
    6. Revise Sec.  95.601 to read as follows:


Sec.  95.601  Scope and applicability.

    This subpart prescribes part of the conditions under which the 
Department of Health and Human Services will approve the Federal 
Financial Participation (FFP) at the applicable rates for the costs of 
automated data processing incurred under an approved State plan for 
titles IV-B, IV-D, IV-E, or XIX of the Social Security Act. The 
conditions of approval of this subpart add to the statutory and 
regulatory requirements for acquisition of Automated Data Processing 
(ADP) equipment and services under the specified titles of the Social 
Security Act.
    7. Amend Sec.  95.605 to:
    a. Remove the definitions of ``Advance Planning Document,'' 
including its sub-definitions ``Planning APD,'' ``Implementation APD,'' 
``Advance Planning Document Update.''
    b. Add the definitions ``Acquisition checklist,'' ``Alternative 
approach to IT requirements,'' ``Base contract,'' ``Commercial off the 
shelf software,'' ``Grantee,'' ``Noncompetitive,'' ``Service Oriented 
Architecture,'' and ``Software maintenance.''
    c. Revise the definition of ``Approving component.''
    d. Remove the definition heading ``Automatic data processing'' and 
add in its place ``Automated data processing.''
    e. Remove the definition heading ``Automatic data processing 
equipment'' and add in its place ``Automated data processing 
equipment.''
    f. Remove the definition heading ``Automatic data processing 
services'' and add in its place ``Automated data processing services.''
    g. Revise the definition of ``Project.''
    h. Revise paragraphs (d), (e), and (f) under the definition of 
``Service agreement.''


Sec.  95.605  Definitions.

* * * * *
    Acquisition checklist means the standard Department checklist that 
States can submit to meet prior written approval requirements instead 
of submitting the actual Request for Proposal (RFP). The Acquisition 
Checklist allows States to self-certify that their RFPs, or similar 
document, meet State and Federal procurement requirements, are 
competitive, contain appropriate language about software ownership and 
licensing rights in compliance with Sec.  95.617, and provide access to 
documentation in compliance with Sec.  95.615.
* * * * *
    Alternative approach to IT requirements means that the State has 
developed an ITD that does not meet all conditions for ITD approval in 
Sec.  95.610 resulting in the need for a waiver under Sec.  95.627(a).
    Approving component means an organization within the Department 
that is authorized to approve requests for the acquisition of ADP 
equipment or ADP services. The approving component is the 
Administration for Children and Families (ACF) for titles IV-B (child 
welfare services), IV-E (foster care and adoption assistance), and IV-D 
(child

[[Page 12349]]

support enforcement), and the Centers for Medicare & Medicaid Services 
(CMS) for title XIX (Medicaid) of the Social Security Act.
    Base contract means the initial contractual 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.
    Commercial off the shelf (COTS) software means proprietary software 
products that are ready-made and available for sale to the general 
public at established catalog or market prices. Examples of COTS 
include: Standard word processing, database, and statistical packages.
    Grantee means an organization receiving financial assistance 
directly from an HHS awarding agency to carry out a project or program.
* * * * *
    Noncompetitive means solicitation of a proposal from only one 
source, or after solicitation of a number of sources, negotiation with 
selected sources based on a finding that competition is inadequate. 
Procurement by noncompetitive proposals may be used only when 
competitive award of a contract is infeasible and one of the following 
circumstances applies:
    (i) The item is available only from a single source;
    (ii) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (iii) The federal awarding agency authorizes noncompetitive 
proposals; or
    (iv) After solicitation of a number of sources, competition is 
determined inadequate.
    Project means a defined set of information technology related 
tasks, undertaken by the State to improve the efficiency, economy and 
effectiveness of administration and/or operation of one or more of its 
human services programs. For example, a State may undertake a 
comprehensive, integrated initiative in support of its Child Support, 
Child Welfare and Medicaid programs' intake, eligibility and case 
management functions. A project may also be a less comprehensive 
activity such as office automation, enhancements to an existing system 
or an upgrade of computer hardware.
* * * * *
    Service agreement * * *
    (d) Includes assurances that services provided will be timely and 
satisfactory; preferably through a service level agreement;
    (e) Includes assurances that information in the computer system as 
well as access, use and disposal of ADP data will be safeguarded in 
accordance with provisions of all applicable federal statutes and 
regulations, including 45 CFR 205.50 and 307.13;
    (f) Requires the provider to obtain prior approval pursuant to 45 
CFR 95.611(a) from the Department for ADP equipment and ADP services 
that are acquired from commercial sources primarily to support the 
titles covered by this subpart and requires the provider to comply with 
45 CFR 95.613 for procurements related to the service agreement. ADP 
equipment and services are considered to be primarily acquired to 
support the titles covered by this subpart when the human service 
programs may reasonably be expected to either: be billed for more than 
50 percent of the total charges made to all users of the ADP equipment 
and services during the time period covered by the service agreement, 
or directly charged for the total cost of the purchase or lease of ADP 
equipment or services;
* * * * *
    Service Oriented Architecture (SOA), also referred to as Service 
Component Based Architecture, describes a means of organizing and 
developing Information Technology capabilities as collaborating 
services that interact with each other based on open standards. Agency 
SOA artifacts may include models, approach documents, inventories of 
services or other descriptive documents.
    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 data input and display screen 
designs. Software maintenance that substantially increases risk or cost 
or functionality will require an as-needed ITD.
* * * * *
    8. Add a new Sec.  95.610 to read as follows:


Sec.  95.610  Submission of information technology documents.

    Initial Information Technology document or Initial ITD is a written 
plan of action to request funding approval for a project which will 
require the use of ADP services or equipment. The term ITD refers to a 
Planning ITD, or to a planning and/or development and implementation 
action document, i.e., Implementation ITD, or Information Technology 
Document Update. Requirements are detailed in paragraphs (a), (b), and 
(c) of this section.
    (a) Planning ITD.
    (1) A Planning ITD is a written plan of action which requests FFP 
to determine the need for, feasibility, and cost factors of an ADP 
equipment or services acquisition and to perform one or more of the 
following: Prepare a Functional Requirements Specification; assess 
other States' systems for transfer, to the maximum extent possible, of 
an existing system; prepare an Implementation ITD; prepare a request 
for proposal (RFP) and/or develop a General Systems Design (GSD).
    (2) A separate planning effort and Planning ITD is optional, but 
highly recommended, and generally applies to large Statewide system 
developments and/or major hardware acquisitions. States with large, 
independent counties requesting funding at the regular match rate for 
county systems are strongly encouraged to engage in planning activities 
commensurate with the complexity of the projected IT project and to 
submit a Planning ITD to allow for time and to provide funding for its 
planning activities. Therefore, states must consider the scope and 
complexity of a project to determine whether to submit a Planning ITD 
as a separate document to HHS or whether to combine the two phases of 
planning and implementation into one ITD covering both the Planning ITD 
and the Implementation ITD requirements.
    (3) The Planning ITD is a relatively brief document, usually not 
more than 6-10 pages, which must contain:
    (i) A statement of the problem/need that the existing capabilities 
can not resolve, new or changed program requirements or opportunities 
for improved economies and efficiencies and effectiveness of program 
and administration and operations;
    (ii) A project management plan that addresses the planning project 
organization, planning activities/deliverables, State and contractor 
resource needs, planning project procurement activities and schedule;
    (iii) A specific budget for the planning phase of the project;
    (iv) An estimated total project cost and a prospective State and 
Federal cost allocation/distribution, including planning and 
implementation;
    (v) A commitment to conduct/prepare the problem(s) needs 
assessment,

[[Page 12350]]

feasibility study, alternatives analysis, cost benefit analysis, and to 
develop a Functional Requirements Specification and/or a General 
Systems Design (GSD);
    (vi) A commitment to define the State's functional requirements, 
based on the state's business needs which may be used for the purpose 
of evaluating the transfer of an existing system, including the 
transfer of another State's General System Design that the State may 
adapt to meet State specific requirements; and
    (vii) Additional Planning ITD content requirements, for enhanced 
funding projects as contained in 45 CFR 307.15 and 1355.50 through 
1355.57.
    (b) Implementation ITD. The Implementation ITD is a written plan of 
action to acquire the proposed ITD services or equipment. The 
Implementation ITD shall include:
    (1) The results of the activities conducted under a Planning ITD, 
if any;
    (2) A statement of problems/needs and outcomes/objectives;
    (3) A requirements analysis, feasibility study and a statement of 
alternative considerations including, where appropriate, the use of 
service oriented architecture and a transfer of an existing system and 
an explanation of why such a transfer is not feasible if another 
alternative is identified;
    (4) A cost benefit analysis;
    (5) A personnel resource statement indicating availability of 
qualified and adequate numbers of staff, including a project director 
to accomplish the project objectives;
    (6) A detailed description of the nature and scope of the 
activities to be undertaken and the methods to be used to accomplish 
the project;
    (7) The proposed activity schedule for the project;
    (8) A proposed budget (including an accounting of all possible 
Implementation ITD activity costs, e.g., system conversion, vendor and 
state personnel, computer capacity planning, supplies, training, 
hardware, software and miscellaneous ADP expenses) for the project;
    (9) A statement indicating the duration the State expects to use 
the equipment and/or system;
    (10) An estimate of the prospective cost allocation/distribution to 
the various State and Federal funding sources and the proposed 
procedures for distributing costs;
    (11) A statement setting forth the security and interface 
requirements to be employed and the system failure and disaster 
recovery/business continuity procedures available or to be implemented; 
and
    (12) Additional requirements, for acquisitions for which the State 
is requesting enhanced funding, as contained at 45 CFR 1355.54 through 
1355.57, 45 CFR 307.15 and 42 CFR subchapter C, part 433.
    (c) Information Technology Document Update (ITDU). The Information 
Technology Document Update (ITDU)