Request for Information: SNAP and WIC Seeking Input Regarding Procurement and Implementation of Electronic Benefit Transfer (EBT) Services; Extension of Comment Period, 48289-48292 [2015-19794]

Download as PDF Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices available for inspection in the FSIS Docket Room. DEPARTMENT OF AGRICULTURE mstockstill on DSK4VPTVN1PROD with NOTICES Additional Public Notification FSIS will announce this notice online through the FSIS Web page located at https://www.fsis.usda.gov/wps/portal/ fsis/topics/regulations/federal-register/ federal-register-notices. FSIS also will make copies of this Federal Register publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to constituents and stakeholders. The Update is communicated via Listserv, a free electronic mail subscription service for industry, trade groups, consumer interest groups, health professionals, and other individuals who have asked to be included. The Update also is available on the FSIS Web page. In addition, FSIS offers an electronic mail subscription service, which provides automatic and customized access to selected food safety news and information. This service is available at https://www.fsis.usda.gov/wps/portal/ fsis/programs-and-services/emailsubscription-service. Options range from recalls to export information to regulations, directives, and notices. Customers can add or delete subscriptions themselves and have the option to password protect their accounts. USDA Nondiscrimination Statement USDA prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (Braille, large print, and audiotape) should contact USDA’s Target Center at (202) 720–2600 (voice and TTY). To file a written complaint of discrimination, write USDA, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, DC 20250–9410 or call (202) 720–5964 (voice and TTY). USDA is an equal opportunity provider and employer. Done at Washington, DC on: August 6, 2015. Alfred V. Almanza, Acting Administrator. [FR Doc. 2015–19748 Filed 8–11–15; 8:45 am] BILLING CODE 3410–DM–P VerDate Sep<11>2014 18:16 Aug 11, 2015 Jkt 235001 Food and Nutrition Service [FNS–2015–0013] Request for Information: SNAP and WIC Seeking Input Regarding Procurement and Implementation of Electronic Benefit Transfer (EBT) Services; Extension of Comment Period Food and Nutrition Service (FNS), USDA. ACTION: Notice; Extension of Comment Period. AGENCY: The Food and Nutrition Service (FNS) is interested in identifying ways to stimulate increased competition in the Electronic Benefit Transfer (EBT) marketplace and identify procurement or systems features that are barriers to new entrants. FNS is also seeking suggestions which will improve procurement of the delivery of EBT transaction processing services through modifications to, or replacement of, the existing business model. The procurement and implementation of EBT systems by State agencies administering the Supplemental Nutrition Assistance Program (SNAP) and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) needs to be sustainable for all parties involved. The landscape of EBT is in a heightened state of change, due in part to the recent decision by one of three primary companies providing EBT transaction processing services for SNAP and WIC to no longer solicit or accept any new prepaid card business, including for SNAP and WIC EBT services. In addition, there are numerous EBT projects moving toward the October 1, 2020, statutorilymandated deadline for WIC Program implementation. This Request for Information (RFI) seeks to obtain input from EBT stakeholders and other financial payment industry members and interested parties, regarding options and alternatives available to improve the procurement and current operational aspects of EBT. In this document, FNS has posed various questions to prompt stakeholder responses. We intend to consider and follow up on the alternatives and suggestions that appear to be most viable from both a technical and a cost/benefit standpoint. Interested stakeholders are invited to respond to any or all of the questions that follow, and to identify issues which may not be listed. SUMMARY: PO 00000 Frm 00003 Fmt 4703 Sfmt 4703 48289 FNS is extending the comment period to provide additional time for interested parties to review this Request for Information. DATES: The comment period for the notice that was published on June 23, 2015 (80 FR 35932) has been extended from August 24, 2015 to October 24, 2015. To be assured of consideration, comments must be received on or before October 24, 2015. ADDRESSES: Comments may be submitted through the Federal eRulemaking Portal at www.regulations.gov. Follow the online instructions for submitting comments electronically. Comments can also be mailed or delivered to: Andrea Gold, Director, Retailer Policy and Management Division, Supplemental Nutrition Assistance Program, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room 424, Alexandria, Virginia 22302. All comments submitted in response to this notice will be included in the record and will be made available to the public at www.regulations.gov. Please be advised that the substance of the comments and the identity of the individuals or entities commenting will be subject to public disclosure. FOR FURTHER INFORMATION CONTACT: Andrea Gold, Director, Retailer Policy and Management Division, Supplemental Nutrition Assistance Program, (703) 305–2434, or via email at andrea.gold@fns.usda.gov. SUPPLEMENTARY INFORMATION: Background All SNAP State agencies and some WIC State agencies conduct EBT using magnetic stripe cards similar to debit or credit cards. Almost all EBT systems today are integrated such that all of the service requirements are provided within a single system to the relevant State agencies, often referred to as a turnkey system. Over the years, some States have obtained SNAP EBT services by contracting for individual EBT service components to one or more service providers (such as authorization platform, retailer management, transaction switching, client help desk services, and card production). A few State agencies have performed certain EBT services themselves, to control costs or meet the needs of State operations. These State-operated services may include such functions as transaction authorization, retailer training and management, EBT card distribution, and management and customer service. In the WIC Program, several of the State agencies use smart card or chip E:\FR\FM\12AUN1.SGM 12AUN1 mstockstill on DSK4VPTVN1PROD with NOTICES 48290 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices card systems, sometimes referred to as off-line systems, while others have chosen an on-line system using a magnetic stripe reader. The trend in WIC, for State agencies choosing both mag-stripe and smart card solutions, is toward contracted EBT services via a turnkey processor. Contractors compete for State EBT business in a comparatively small marketplace. FNS has long encouraged healthy competition in this marketplace because the Agency believes it helps to control costs, ensures a level playing field for businesses who are interested in supporting EBT delivery processes, and encourages innovation. Two of the biggest concerns for FNS and State agencies with the limited competition within the EBT market, are the increased risk for sustainability of the industry over time, and the impact limited competition could have on pricing. Up until most recently, in the SNAP EBT environment, there have been three dominant primary EBT contractors with State agency EBT contracts. In the WIC EBT environment, these same three online EBT SNAP contractors have also provided EBT on-line services for WIC. There are also two other off-line EBT contractors for WIC. In January 2014, one of the primary contractors announced that the firm would no longer solicit or accept any new prepaid card business, which includes their EBT services. The firm is in the process of fulfilling its existing contracts but is not pursuing any further business in this area. As a result, only two of those three active primary EBT contractors remain in the market. There has been a new entrant to the SNAP market, a company that has been active in the WIC market; however, at this time, it is unclear whether any other firms will choose to enter this market. State agencies have acquired EBT service through one of two major approaches: Procurements dedicated to a single State agency, and multi-state procurements. The latter approach leverages pricing through economies of scale and standardizes requirements and contract provisions in a way that can reduce the burden on contractors of responding to separate contract solicitations by many State agencies. Typical contracts have a base period such as 5 years with several optional extension years, but there are situations where State procurement rules dictate a shorter timeframe with limited renewals. Due to the burden to develop re-procurements and manage the potential transition to a new contractor when an incumbent does not win award, it is not unusual to see a State VerDate Sep<11>2014 18:16 Aug 11, 2015 Jkt 235001 agency choose to exercise the optional years, resulting in contract lengths of 7– 10 years. It is safe to say that FNS and State agencies are interested in the best value and service for EBT projects regardless of the size of a specific State agency. The Agricultural Act of 2014, Public Law 113–79 (the Act) has also brought important changes to the SNAP EBT landscape that impacts States and SNAP EBT contractors looking forward. That legislation removed the requirement for States and their contractors to provide no cost point-ofsale (POS) devices to all authorized SNAP retailers who were not already using a commercial payment provider. The Act also changed manual voucher processing used when retailer sales do not warrant the cost to receive a POS device from the government and for back up during system outages and disasters. On the WIC side, while there is no new legislation at play, most of the 90 WIC State agencies are beginning to convert to an EBT delivery model to meet the October 1, 2020, deadline mandated by the Healthy Hunger-Free Kids Act of 2010, Public Law 111–296. These State agencies are acquiring services from the on-line and off-line contractors. In sum, EBT services have developed a pricing model that has evolved since the early projects were initiated in the 1980s. Currently, contractors will bid to provide all the services, including cards, benefit account management, purchase authorization, customer service, retailer equipage and settlement to food retailers for a single cost for each household or case served in a month. Sometimes retailer equipage, pay-phone surcharges for toll-free calls and other fees have been separated from the case-month price. This pricing model allows for fluctuations in caseload related to economic changes or other growth factors. To the degree other pricing models exist, they have not taken root within either SNAP or WIC to date. Pricing can be, and often is, set up in tiers to reduce the case-month fee when certain caseload thresholds are reached either due to increases (or decreases) in household participation or if multiple State agencies have contracted together for economies of scale with the same requirements and contract standards. The major functional components of online EBT for SNAP and WIC are outlined in Appendix A, and off-line smart card WIC EBT is described in Appendix B. PO 00000 Frm 00004 Fmt 4703 Sfmt 4703 Request for Information This RFI seeks to obtain input from EBT stakeholders, other financial payments industry members and other interested parties regarding options and alternatives available to improve the procurement and operational aspects of EBT. FNS has posed various questions below to prompt stakeholder responses, and, before those, has also noted a few primary concerns and key objectives for this effort. Primary Concerns • Less available competition and potential that smaller State agencies may not receive affordable proposals, or even any proposals, in response to State agency solicitations. • An increase in procurement activity and system conversions by SNAP State agencies as those using the services of the departing company migrate to the remaining processors. • Significant increase in procurement activity and system implementation by WIC State agencies leading up to the October 1, 2020, deadline for WIC State agencies to convert to an EBT delivery system. • Management of risks associated with greater activity in a shorter period of time. Main Objectives FNS is inviting stakeholder input on how the opportunities and risks associated with these changes can best be recognized and managed. There are two main objectives: 1. Increased competition for EBT services, including that which can possibly be achieved through changes or alternatives to the current business model. 2. More stability and sustainability for this market, including that which can possibly be achieved through alternative pricing models and contract terms. Questions The Agency will consider all comments, and plans to follow up on alternatives and suggestions that appear to be most viable from both a technical and a cost/benefit standpoint. Responses will help inform any future actions or guidance issued by the Agency, including guidance to States on issuing EBT Requests for Proposals (RFPs). Interested stakeholders are invited to respond to any or all of the following questions, and to identify other issues which may not be listed. Responses which clearly reference the pertinent question below would facilitate FNS’ review of the stakeholder feedback. E:\FR\FM\12AUN1.SGM 12AUN1 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES Procurement 1. Do State agency procurements provide sufficient information about the operational characteristics of their EBT projects for new entrants to the EBT market? If not, are there alternatives for potential vendors to obtain the information needed? 2. How do State Agency requirements, (such as call center response standards, transaction processing requirements, card issuance timeframes and adjustment policies), compare to commercial practices? Would adjusting some of these requirements to closely resemble the commercial world increase the interest of potential new vendors, or impact contract costs or willingness of current vendors to bid? If so, what requirements or practices should be considered? 3. Are the amounts for liquated damages and penalty clauses currently required by State agencies reasonable? If not, what would be more reasonable amounts or ways for State agencies to safeguard against such problems as project delays, unscheduled system downtime, and below-standard processing times, etc.? 4. Can more economies of scale be realized without increasing complexity through any of the following: a. Multi-state shared services for commercial call center services, card production and delivery, training and other services? b. The inclusion of more agencies/ programs? 5. Are there requirements for vendor experience that are necessary to establish minimum qualifications to bid to provide EBT services? Are there requirements you have seen that should not be used because you believe that they unnecessarily limit competition? 6. Would any vendors be interested in providing select service components (i.e. call centers, transaction processing, training, etc.) if there were an option to offer proposals for one or some rather than all of the service components? What pricing model(s) would work best for separate services when not bundled into the cost per case month pricing (CPCM)? 7. What alternative procurement models might State Agencies consider to ensure they receive viable competitive bids? 8. Should State agencies pursue coalition procurements with the benefits they bring, such as economies of scale, or does it tend to limit competition or discourage new entrants into the marketplace? VerDate Sep<11>2014 18:16 Aug 11, 2015 Jkt 235001 Pricing 9. Does the impact of the EBT vendor assuming development and implementation costs before they begin processing transactions pose a major barrier to entering the market? 10. Are there ways to separate EBT system development/startup costs from operational costs to reduce risk for new entrants when bidding on a project? If so, what are they? 1 11. Are there other changes to the CPCM pricing model that would encourage potential vendors to enter the EBT market? 12. The tiered pricing model involves tiers within the CPCM pricing model, adjusted at smaller or larger intervals for different caseload levels. How can State consortia which want to procure together better realize economies of scale given their varying caseload sizes, and still benefit from a blended CPCM price based on their collective caseload volumes? 13. Are there pricing models other than the CPCM model that would be advantageous in reducing pricing risk to the vendor and still maintain sustainable prices for the State agencies? How can the disadvantages to State agencies in forecasting expenses be overcome, if costs are no longer tied to caseload levels? Managing Risk Several stakeholders have advised FNS that too many procurements occurring in close succession may increase the risk that smaller State Agencies may receive fewer or even no bids, as vendors will devote scarce resources to preparing proposals for the most potentially profitable customers. Similarly, if too many implementations or conversions are scheduled in close succession, it may mean that vendors will not have sufficient technical resources to assign their top team to each one. Both of these situations represent risks which FNS would like to help State Agencies manage and mitigate. 14. Besides sharing known and estimated RFP release dates and conversion dates, what can FNS do to help State Agencies manage these risks and ensure smooth transitions? Other Questions 15. Are there other areas or issues that we have not specifically asked for a 1 SNAP procurements involve acquiring an operational process with costs for start-up activities included in the monthly operational cost-per-casemonth. WIC procurements are conversions from paper to electronic delivery with deliverables and milestones for start-up that may be priced separately. PO 00000 Frm 00005 Fmt 4703 Sfmt 4703 48291 response on which you would like to offer comment related to the two main objectives of this RFI? Dated: August 6, 2015. Audrey Rowe, Administrator, Food and Nutrition Service. Attached: Appendix A: EBT Functions for Online SNAP and WIC EBT Appendix B: EBT Functions for Offline WIC EBT Cards (Smart Cards) Appendix C: Web sites to RFP and other EBT information: Appendix A—EBT Functions for OnLine SNAP and WIC EBT (1) Account setup and benefit authorization—support for on-line accounts for SNAP or WIC households authorized to receive benefits; (2) Card issuance and participant training—provide cards, equipment (PIN pads, card readers and training materials); (3) Participant account maintenance— receive daily and monthly benefit updates from State agency systems, aging benefits and reporting; (4) Transaction processing—approval or denial of food purchases made at authorized SNAP and WIC retailers/vendors; WIC processing includes, but is not limited to, matching of food item UPC, price and quantity; (5) Customer service—24 x 7 toll-free call support with help desk customer service representatives and Interactive Voice Response and web portal services inquiries related to purchase activities and balances from cardholders, merchants and State agency staff; (6) Retailer participation—support commercial third party switching services and installation and maintenance of payment terminals in smaller retail locations. Manual backup vouchers for authorizations during system interruptions or for low volume SNAP merchants; (7) EBT settlement—daily payment to authorized retailers for approved purchases; reconciliation via reports and data file exchanges, WIC also includes food item detail; (8) EBT reporting—administrative and batch data exchange for reporting card account activities by card number and retail location; daily financial settlement reporting and reconciliation; and, (9) Disaster Benefit Services (SNAP only)— providing card and benefit services for natural disasters. Appendix B—EBT Functions for Offline WIC EBT (Smart Cards) WIC off-line EBT processing relies on State agencies to load a smart card chip with WIC food balances that can be read in grocery store lanes. Card and Personal Identification Number (PIN) support is provided by the State agency using the clinic system that tracks and determines participant benefits. Purchases are authorized off-line in the grocery lane (without an on-line authorization) and a daily claim file is sent to the WIC EBT host for processing payment E:\FR\FM\12AUN1.SGM 12AUN1 48292 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices to the WIC vendors. A hot card file, reconciliation file and authorized product list (APL) (containing the list of approved Universal Product Codes (UPC) and price look-up (PLU) codes called the APL file) are provided to the WIC grocer via the EBT host (an FTP server). (1) EBT host processing—processing of daily WIC claim files containing WIC transaction purchases, editing for Not-toExceed price limits, and pick-up of hot card, APL and reconciliation files to authorized WIC retail vendors. (2) Retail vendor equipage & integrated support (State agency option) (3) Customer Service (State agency option)—toll-free call center support including customer service representatives, Interactive Voice Response (IVR) and/or web portal services for cardholder and retailer and State agency staff inquiries. (4) EBT Reporting—administrative and batch data to support all processing and authorization activities. (5) Settlement and Reconciliation—similar to SNAP settlement but also includes food product information. Appendix C—Web sites to RFP and Other EBT Information SNAP EBT Status—https://www.fns.usda.gov/ ebt/general-electronic-benefit-transfer-ebtinformation WIC EBT Status—https://www.fns.usda.gov/ wic/wic-ebt-activities WIC Technology Partners (Provides links to new and updated solicitations)—https:// www.wictechnologypartners.com/ solicitations/RFP-B2Z12017/index.php [FR Doc. 2015–19794 Filed 8–11–15; 8:45 am] BILLING CODE 3410–30–P DEPARTMENT OF AGRICULTURE Authority: 15 U.S.C. 3719. Rural Business-Cooperative Service Notice of Change to Announcement of Requirements and Registration for the U.S. Tall Wood Building Prize Competition mstockstill on DSK4VPTVN1PROD with NOTICES 18:16 Aug 11, 2015 Jkt 235001 [FR Doc. 2015–19820 Filed 8–11–15; 8:45 am] DEPARTMENT OF COMMERCE International Trade Administration The U.S. Department of Agriculture (USDA) in a cooperative partnership with the Softwood Lumber Board and the Binational Softwood Lumber Council is conducting a prize competition funding initiative to support the demonstration of tall wood buildings in the United States. The U.S. Tall Wood Building Prize Competition (the ‘‘Competition’’) is being conducted to showcase the architectural and commercial viability of advanced wood products in tall building construction in order to support employment VerDate Sep<11>2014 Dated: August 7, 2015. Lillian Salerno, Administrator, Rural Business-Cooperative Service. BILLING CODE 3410–XY–P Rural Business-Cooperative Service, USDA. ACTION: Notice of change to Announcement of Requirements and Registration for the U.S. Tall Wood Building Prize Competition. AGENCY: SUMMARY: opportunities in rural communities, maintain the health and resiliency of the Nation’s forests, and advance sustainability in the built environment. On October 10, 2014, USDA published official competition rules in the Federal Register in Notice 79 FR 61275. The competition rules note that the Prize Purse is a combined pool from the Competition Partners of $2 million and that the Prize Purse may increase, but will not decrease. The rules also state that any increases in the Prize Purse will be posted on the Competition Web site (www.tallwoodbuildingcompetition.org) and published in the Federal Register. The Softwood Lumber Board has committed an additional $1 million to support the competition. By way of this notice, USDA is informing the public that the combined competition prize purse is now $3 million in accordance with the competition’s official rules. The Prize Purse will be used to fund one or more awards; the number of awards made will depend on the estimated amount of Eligible Expenses proposed by the winning Project Proponent Team(s). Award(s) will be made to the winning Project Proponent Team(s) to cover incremental costs of transitioning their building from a traditional structure to a wood structure, i.e., those costs incurred only because of the Project Proponent Team’s innovative use of wood products in the demonstration structure. Additional details may be found in the original Federal Register Notice. [A–351–841] Polyethylene Terephthalate Film, Sheet and Strip From Brazil: Preliminary Results of Antidumping Duty Administrative Review; 2013–2014 Enforcement and Compliance, International Trade Administration, Department of Commerce. AGENCY: DATES: Effective Date: August 12, 2015. SUMMARY: In response to requests from DuPont Teijin Films, Mitsubishi Polyester Film, Inc., and SKC, Inc. (collectively, Petitioners), the PO 00000 Frm 00006 Fmt 4703 Sfmt 4703 Department of Commerce (the Department) initiated an administrative review of the antidumping duty order on polyethylene terephthalate film, sheet and strip (PET film) from Brazil.1 On February 6, 2015, the Department published, in the Federal Register, a notice of revocation of the antidumping duty order on PET film from Brazil, effective November 10, 2013.2 Accordingly, this administrative review covers Terphane Ltda. and Terphane Inc. (collectively, Terphane) for the period of review (POR) November 1, 2013, through November 9, 2013. As we currently have no evidence of any reviewable entries, shipments or sales of subject PET film by Terphane during the POR, we are issuing a preliminary no shipment determination.3 FOR FURTHER INFORMATION CONTACT: Tyler Weinhold or Robert James, AD/ CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–1121 or (202) 482– 0649, respectively. SUPPLEMENTARY INFORMATION: Scope of the Order The products covered by this order are all gauges of raw, pre-treated, or primed PET film, whether extruded or co-extruded. PET film is classifiable under subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the United States.4 Methodology The Department is conducting this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). For a full description of the methodology underlying our conclusions, see Preliminary Decision Memorandum. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and 1 See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 79 FR 76956 (December 23, 2014). 2 See Polyethylene Terephthalate Film, Sheet, and Strip From Brazil, the People’s Republic of China, and the United Arab Emirates: Continuation and Revocation of Antidumping Duty Orders, 80 FR 6689 (February 6, 2015) (Notice of Revocation). 3 Terphane is the only respondent in this review. 4 For a full description of the scope of the order, see ‘‘Decision Memorandum for the Preliminary Results of the Antidumping Duty Administrative Review of Polyethylene Terephthalate Film, Sheet and Strip from Brazil: 2013–2014,’’ from Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Paul Piquado, Assistant Secretary for Enforcement and Compliance (Preliminary Decision Memorandum), dated concurrently with these results and hereby adopted by this notice. E:\FR\FM\12AUN1.SGM 12AUN1

Agencies

[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)]
[Notices]
[Pages 48289-48292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19794]

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

[FNS-2015-0013]

Request for Information: SNAP and WIC Seeking Input Regarding
Procurement and Implementation of Electronic Benefit Transfer (EBT)
Services; Extension of Comment Period

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Notice; Extension of Comment Period.

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

SUMMARY: The Food and Nutrition Service (FNS) is interested in
identifying ways to stimulate increased competition in the Electronic
Benefit Transfer (EBT) marketplace and identify procurement or systems
features that are barriers to new entrants. FNS is also seeking
suggestions which will improve procurement of the delivery of EBT
transaction processing services through modifications to, or
replacement of, the existing business model. The procurement and
implementation of EBT systems by State agencies administering the
Supplemental Nutrition Assistance Program (SNAP) and Special
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
needs to be sustainable for all parties involved.
The landscape of EBT is in a heightened state of change, due in
part to the recent decision by one of three primary companies providing
EBT transaction processing services for SNAP and WIC to no longer
solicit or accept any new prepaid card business, including for SNAP and
WIC EBT services. In addition, there are numerous EBT projects moving
toward the October 1, 2020, statutorily-mandated deadline for WIC
Program implementation.
This Request for Information (RFI) seeks to obtain input from EBT
stakeholders and other financial payment industry members and
interested parties, regarding options and alternatives available to
improve the procurement and current operational aspects of EBT. In this
document, FNS has posed various questions to prompt stakeholder
responses. We intend to consider and follow up on the alternatives and
suggestions that appear to be most viable from both a technical and a
cost/benefit standpoint.
Interested stakeholders are invited to respond to any or all of the
questions that follow, and to identify issues which may not be listed.
FNS is extending the comment period to provide additional time for
interested parties to review this Request for Information.

DATES: The comment period for the notice that was published on June 23,
2015 (80 FR 35932) has been extended from August 24, 2015 to October
24, 2015. To be assured of consideration, comments must be received on
or before October 24, 2015.

ADDRESSES: Comments may be submitted through the Federal eRulemaking
Portal at www.regulations.gov. Follow the online instructions for
submitting comments electronically. Comments can also be mailed or
delivered to: Andrea Gold, Director, Retailer Policy and Management
Division, Supplemental Nutrition Assistance Program, Food and Nutrition
Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room
424, Alexandria, Virginia 22302.
All comments submitted in response to this notice will be included
in the record and will be made available to the public at
www.regulations.gov. Please be advised that the substance of the
comments and the identity of the individuals or entities commenting
will be subject to public disclosure.

FOR FURTHER INFORMATION CONTACT: Andrea Gold, Director, Retailer Policy
and Management Division, Supplemental Nutrition Assistance Program,
(703) 305-2434, or via email at andrea.gold@fns.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

All SNAP State agencies and some WIC State agencies conduct EBT
using magnetic stripe cards similar to debit or credit cards. Almost
all EBT systems today are integrated such that all of the service
requirements are provided within a single system to the relevant State
agencies, often referred to as a turnkey system. Over the years, some
States have obtained SNAP EBT services by contracting for individual
EBT service components to one or more service providers (such as
authorization platform, retailer management, transaction switching,
client help desk services, and card production). A few State agencies
have performed certain EBT services themselves, to control costs or
meet the needs of State operations. These State-operated services may
include such functions as transaction authorization, retailer training
and management, EBT card distribution, and management and customer
service.
In the WIC Program, several of the State agencies use smart card or
chip

[[Page 48290]]

card systems, sometimes referred to as off-line systems, while others
have chosen an on-line system using a magnetic stripe reader. The trend
in WIC, for State agencies choosing both mag-stripe and smart card
solutions, is toward contracted EBT services via a turnkey processor.
Contractors compete for State EBT business in a comparatively small
marketplace. FNS has long encouraged healthy competition in this
marketplace because the Agency believes it helps to control costs,
ensures a level playing field for businesses who are interested in
supporting EBT delivery processes, and encourages innovation. Two of
the biggest concerns for FNS and State agencies with the limited
competition within the EBT market, are the increased risk for
sustainability of the industry over time, and the impact limited
competition could have on pricing.
Up until most recently, in the SNAP EBT environment, there have
been three dominant primary EBT contractors with State agency EBT
contracts. In the WIC EBT environment, these same three on-line EBT
SNAP contractors have also provided EBT on-line services for WIC. There
are also two other off-line EBT contractors for WIC.
In January 2014, one of the primary contractors announced that the
firm would no longer solicit or accept any new prepaid card business,
which includes their EBT services. The firm is in the process of
fulfilling its existing contracts but is not pursuing any further
business in this area. As a result, only two of those three active
primary EBT contractors remain in the market. There has been a new
entrant to the SNAP market, a company that has been active in the WIC
market; however, at this time, it is unclear whether any other firms
will choose to enter this market. State agencies have acquired EBT
service through one of two major approaches: Procurements dedicated to
a single State agency, and multi-state procurements. The latter
approach leverages pricing through economies of scale and standardizes
requirements and contract provisions in a way that can reduce the
burden on contractors of responding to separate contract solicitations
by many State agencies. Typical contracts have a base period such as 5
years with several optional extension years, but there are situations
where State procurement rules dictate a shorter timeframe with limited
renewals. Due to the burden to develop re-procurements and manage the
potential transition to a new contractor when an incumbent does not win
award, it is not unusual to see a State agency choose to exercise the
optional years, resulting in contract lengths of 7-10 years. It is safe
to say that FNS and State agencies are interested in the best value and
service for EBT projects regardless of the size of a specific State
agency.
The Agricultural Act of 2014, Public Law 113-79 (the Act) has also
brought important changes to the SNAP EBT landscape that impacts States
and SNAP EBT contractors looking forward.
That legislation removed the requirement for States and their
contractors to provide no cost point-of-sale (POS) devices to all
authorized SNAP retailers who were not already using a commercial
payment provider. The Act also changed manual voucher processing used
when retailer sales do not warrant the cost to receive a POS device
from the government and for back up during system outages and
disasters.
On the WIC side, while there is no new legislation at play, most of
the 90 WIC State agencies are beginning to convert to an EBT delivery
model to meet the October 1, 2020, deadline mandated by the Healthy
Hunger-Free Kids Act of 2010, Public Law 111-296. These State agencies
are acquiring services from the on-line and off-line contractors.
In sum, EBT services have developed a pricing model that has
evolved since the early projects were initiated in the 1980s.
Currently, contractors will bid to provide all the services, including
cards, benefit account management, purchase authorization, customer
service, retailer equipage and settlement to food retailers for a
single cost for each household or case served in a month. Sometimes
retailer equipage, pay-phone surcharges for toll-free calls and other
fees have been separated from the case-month price. This pricing model
allows for fluctuations in caseload related to economic changes or
other growth factors. To the degree other pricing models exist, they
have not taken root within either SNAP or WIC to date. Pricing can be,
and often is, set up in tiers to reduce the case-month fee when certain
caseload thresholds are reached either due to increases (or decreases)
in household participation or if multiple State agencies have
contracted together for economies of scale with the same requirements
and contract standards. The major functional components of on-line EBT
for SNAP and WIC are outlined in Appendix A, and off-line smart card
WIC EBT is described in Appendix B.

Request for Information

This RFI seeks to obtain input from EBT stakeholders, other
financial payments industry members and other interested parties
regarding options and alternatives available to improve the procurement
and operational aspects of EBT. FNS has posed various questions below
to prompt stakeholder responses, and, before those, has also noted a
few primary concerns and key objectives for this effort.

Primary Concerns

Less available competition and potential that smaller
State agencies may not receive affordable proposals, or even any
proposals, in response to State agency solicitations.
An increase in procurement activity and system conversions
by SNAP State agencies as those using the services of the departing
company migrate to the remaining processors.
Significant increase in procurement activity and system
implementation by WIC State agencies leading up to the October 1, 2020,
deadline for WIC State agencies to convert to an EBT delivery system.
Management of risks associated with greater activity in a
shorter period of time.

Main Objectives

FNS is inviting stakeholder input on how the opportunities and
risks associated with these changes can best be recognized and managed.
There are two main objectives:
1. Increased competition for EBT services, including that which can
possibly be achieved through changes or alternatives to the current
business model.
2. More stability and sustainability for this market, including
that which can possibly be achieved through alternative pricing models
and contract terms.

Questions

The Agency will consider all comments, and plans to follow up on
alternatives and suggestions that appear to be most viable from both a
technical and a cost/benefit standpoint. Responses will help inform any
future actions or guidance issued by the Agency, including guidance to
States on issuing EBT Requests for Proposals (RFPs).
Interested stakeholders are invited to respond to any or all of the
following questions, and to identify other issues which may not be
listed. Responses which clearly reference the pertinent question below
would facilitate FNS' review of the stakeholder feedback.

[[Page 48291]]

Procurement

1. Do State agency procurements provide sufficient information
about the operational characteristics of their EBT projects for new
entrants to the EBT market? If not, are there alternatives for
potential vendors to obtain the information needed?
2. How do State Agency requirements, (such as call center response
standards, transaction processing requirements, card issuance
timeframes and adjustment policies), compare to commercial practices?
Would adjusting some of these requirements to closely resemble the
commercial world increase the interest of potential new vendors, or
impact contract costs or willingness of current vendors to bid? If so,
what requirements or practices should be considered?
3. Are the amounts for liquated damages and penalty clauses
currently required by State agencies reasonable? If not, what would be
more reasonable amounts or ways for State agencies to safeguard against
such problems as project delays, unscheduled system downtime, and
below-standard processing times, etc.?
4. Can more economies of scale be realized without increasing
complexity through any of the following:
a. Multi-state shared services for commercial call center services,
card production and delivery, training and other services?
b. The inclusion of more agencies/programs?
5. Are there requirements for vendor experience that are necessary
to establish minimum qualifications to bid to provide EBT services? Are
there requirements you have seen that should not be used because you
believe that they unnecessarily limit competition?
6. Would any vendors be interested in providing select service
components (i.e. call centers, transaction processing, training, etc.)
if there were an option to offer proposals for one or some rather than
all of the service components? What pricing model(s) would work best
for separate services when not bundled into the cost per case month
pricing (CPCM)?
7. What alternative procurement models might State Agencies
consider to ensure they receive viable competitive bids?
8. Should State agencies pursue coalition procurements with the
benefits they bring, such as economies of scale, or does it tend to
limit competition or discourage new entrants into the marketplace?

Pricing

9. Does the impact of the EBT vendor assuming development and
implementation costs before they begin processing transactions pose a
major barrier to entering the market?
10. Are there ways to separate EBT system development/startup costs
from operational costs to reduce risk for new entrants when bidding on
a project? If so, what are they? \1\
---------------------------------------------------------------------------

\1\ SNAP procurements involve acquiring an operational process
with costs for start-up activities included in the monthly
operational cost-per-case-month. WIC procurements are conversions
from paper to electronic delivery with deliverables and milestones
for start-up that may be priced separately.
---------------------------------------------------------------------------

11. Are there other changes to the CPCM pricing model that would
encourage potential vendors to enter the EBT market?
12. The tiered pricing model involves tiers within the CPCM pricing
model, adjusted at smaller or larger intervals for different caseload
levels. How can State consortia which want to procure together better
realize economies of scale given their varying caseload sizes, and
still benefit from a blended CPCM price based on their collective
caseload volumes?
13. Are there pricing models other than the CPCM model that would
be advantageous in reducing pricing risk to the vendor and still
maintain sustainable prices for the State agencies? How can the
disadvantages to State agencies in forecasting expenses be overcome, if
costs are no longer tied to caseload levels?

Managing Risk

Several stakeholders have advised FNS that too many procurements
occurring in close succession may increase the risk that smaller State
Agencies may receive fewer or even no bids, as vendors will devote
scarce resources to preparing proposals for the most potentially
profitable customers. Similarly, if too many implementations or
conversions are scheduled in close succession, it may mean that vendors
will not have sufficient technical resources to assign their top team
to each one. Both of these situations represent risks which FNS would
like to help State Agencies manage and mitigate.
14. Besides sharing known and estimated RFP release dates and
conversion dates, what can FNS do to help State Agencies manage these
risks and ensure smooth transitions?