Interim Final Rule: Automatic Data Processing Equipment and Services; Conditions for FFP

ACTION TRANSMITTAL

OCSE-AT-86-03

DATE: February 12, 1986

TO: State agencies administering child support enforcement plans under title IV-D of the Social Security Act and other interested individuals

SUBJECT: Automatic Data Processing Equipment and Services; Conditions for Federal Financial Participation

ATTACHMENT:  Attached are interim final regulations issued by the Department of Health and Human Services which establish the conditions and the procedures under which a State can obtain consideration for Federal funding emergency and certain other circumstances for the acquisition of automatic data processing equipment or services in affected programs (including title IV-D).

REGULATION REFERENCE: 45 CFR Part 95, Subpart F

RELATED REFERENCES: OCSE-AT-84-12, dated November 23,1984; OCSE-AT-80-07, dated April 8, 1980; and OCSE-AT-78-22, dated November 17, 1978.

EFFECTIVE DATE: January 27, 1986

COMMENT PERIOD: Consideration will be given to written suggestions received by the Deputy Assistant Secretary for Management Analysis and Systems, Hubert H. Humphrey Building, Room 514E, 200 Independence Avenue, S.W., Washington, D.C. 20201 on or before March 28, 1986.

Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Part 95

Automatic Data Processing Equipment and Services; Conditions for Federal Financial Participation

AGENCY: Office of the Secretary, HHS.

ACTION: Interim Final Rule With Comment Period

SUMMARY: On November 19, 1984 the Department of Health and Human Services published a Notice of Proposed Rule Making (NPRM) on Automatic Data Processing-Conditions for Federal Financial Participation in the Federal Register (49 FR 45617). Those proposed regulations are applicable to the administration of Public Assistance programs under Titles I, IVA, B, C, D, and E, X, XIV, XVI (AABD), XIX of the Social Security Act.

This Interim Final Rule establishes the conditions and the procedures under which a State can obtain consideration for Federal Financial Participation (FFP) in emergency and certain other circumstances for the acquisition of Automatic Data Processing (ADP) equipment or services in affected programs. It does not deal with all provisions contained in the NPRM.

The remaining provisions of the NPRM that are not published as part of the Interim Final Rule will be published by DHHS at a later date.

DATES: Effective Date: These Interim Final Regulations are effective January 27, 1986. The comment period for these regulations, extends for 60 days after their publication in the Federal Register.

ADDRESS: Comments should be forwarded to: K. Jacqueline Holz, Deputy Assistant Secretary for Management Analysis and Systems. Hubert H. Humphrey Building, Room 5l4E, 200 Independence Avenue. SW., Washington, DC 20201.

FOR FURTHER lNFORMATION C0NTACT: Ron Lentz, (202) 245-7354.

SUPPLEMENTARY INFORMATION: This Interim Final Rule revises

§95.605 to add the definition of the term "emergency situation", revises §95.623 governing waiver of the prior approval requirement and adds a new section, 95.624, that provides for DHHS consideration of State requests for FFP in emergency situations. No comments were received relating to §95.623 of the NPRM.

Regulatory Provisions

Section 95.623 is revised to permit waiving the prior approval requirements contained in §95.611 for those State requests for funding ADP system developments and acquisitions which were postmarked and received by the Department prior to December 1,1985, for which a State did not receive prior approval. The intent of this revision is to give the Department the authority to waive the prior approval requirements of §95.611 in situations where a State undertook an ADP systems development or acquisition in anticipation of the Department retroactively approving the development or acquisition (in affect waiving the prior approval requirement). Until recently, the Department has on several occasions retroactively approved systems developments and acquisitions of merit and led some States to believe erroneously that prior approval was not a pre-condition for ADP funding. For this reason, a number of States have not sought prior approval in situations that call for it. Because such after the fact approval has not been authorized by existing regulations the Department believes it must provide a mechanism, by regulation, to allow for waiver of the prior approval requirement and not unfairly penalize States that have relied on a Departmental practice not authorized by its regulations.

The Department has chosen to limit the waiver of prior approval provisions contained in §95.623 to only those State requests for FFP in acquiring ADP equipment or services, postmarked and received by the Department and undertaken without prior approval before December 1, 1985 because:

1. The Department's policy is to require prior approval as a means of assuring its early participation in State system developments and acquisitions. To establish a broad waiver of the prior approval requirement would defeat this purpose.

2. The Department wishes to provide only a brief transition period which allows it to waive prior approval instances where States acted without prior approval based on their perception of the Department's past practice of retroactively approving State ADP initiatives of merit.

By letter dated August 13, 1985, the Assistant Secretary for Management and Budget advised heads of all State public assistance agencies of the requirements for prior approval contained in 45 CFR 95.601 et seq. He informed them that "if a State does submit a request for retroactive approval and funding of the design, development and installation of an automatic data processing system, or the acquisition of automatic data processing equipment or services, the Department will deny the request."

We believe that this was sufficient notice to States of the Department's prior approval requirements, and that establishing December 1, 1985 as the cut-off date for permitting the waiver of the Department's prior approval requirements provides sufficient time for States to adjust to long-standing regulatory requirements. Accordingly, for State requests for the acquisition of ADP equipment or services postmarked and received by the Department after December 1, 1985, the Department will no longer waive the prior approval requirements contained in §95.611.

Section 95.623(a) provides a mechanism for waiving the Department's prior approval requirements contained in §95.611 for State systems initiatives which the Department has previously approved retroactively in a formal approval letter. The intent of this Section is to ratify those instances where the Department has previously issued (prior to December 1,1985) a letter retroactively approving State agency initiatives, although the Department was not permitted to do so under 45 CFR 95.601 et seq. This section applies only to the past actions described in this paragraph. The provisions of this section are effective December 1, 1985 with no further action required on the part of the States.

Section 93.623(b) is intended to provide a transition period which permits States to adjust to the Department's change in practice from one of having approved a number of State system initiative retroactively, albeit contrary to regulatory requirements, to one of strict adherence to the prior approval requirements in §95.611. This transition period extends to December 1, 1985 and applies only to requests, which were postmarked and received by the Department prior to December 1, 1985 for which a State did not receive prior approval. The Department will retroactively approve these actions if the request would have received prior approval had a request for such approval been made by the State agency.

Section 95.605 has been revised to include the definition of the term "emergency situation." Under 45 CFR 95.611 we require States to seek and receive prior approval for ADP equipment and services acquisitions that meet certain expenditure thresholds that are set forth in the regulation. While this long-standing requirement has enabled the Department to have needed involvement in States' program planning the requirement for prior approval may become counter-productive in emergency situations where ADP materials have to be replaced immediately in order to maintain program operations and still satisfy program requirements. For this reason, we are revising §95.605 to include a definition of emergency situations and are adding a new §95.624 to provide a procedure for States to follow in such situations.

The Department will consider as "emergency situations" those situations which could not reasonably have been anticipated and for which a State could not have planned. The following are examples of situations that the Department considers to be "emergency situations."

(a) Equipment failure due to physical damage or destruction caused by natural or other disaster; or,

(b) Changes imposed by Federal legislative requirements which necessitate the immediate acquisition of ADP equipment or services.

The Department will not consider as emergency situations, instances which arise because of poor planning on the part of a State. Examples of situations that the Department does not consider "emergency situations" are:

(a) ADP equipment or software systems becoming obsolete through the rapid development of new technology or software techniques;

(b) The expiration of a contract that provides equipment or services support;

(c) Oversight or administrative inadequacy on the part of a requesting State or local government in obtaining prior approval; or

(d) Changes imposed by Federal legislative requirements which allow the State agency time to comply with the prior approval requirements of §95.611.

The Department, in reaching a decision as to whether or not a situation should be accepted as an emergency, will require a State to demonstrate that its need to immediately acquire ADP equipment or services was unexpected and could not have been anticipated or planned.

Section 95.624 describes the procedure to be followed by State agencies when requesting approval of FFP for emergency situations as defined in §95.605. Under this procedure if a State encounters an "emergency situation" as defined in §95.605, it must submit a written request to the Department to proceed with the ADP acquisition immediately in order to meet the State's emergency need. The written request must be sent by registered mail and include:

(1) A brief description of the ADP equipment and/or services to be acquired;

(2) A brief description of the circumstances which result in the State's need to proceed prior to obtaining approval from the Department; and,

(3) A description of the harm which will be caused if the State does not acquire immediately the ADP equipment and services.

Upon receipt of the information, the Department will within 14 days take one of the following actions:

(1) Inform the State in writing that the request has been disapproved and the reason for disapproval; or,

(2) Inform the State in writing that the Department recognizes that an emergency exists and that within 90 days from the date of the State's initial written request, the State must submit a formal request for approval which includes the information specified at §95.611 in order for the ADP equipment or services acquisition to be considered for the Department's approval.

The Department is establishing this emergency procedure in recognition of the fact that situations may arise which preclude a State from taking the time to follow the full prior approval procedures contained in §95.611 before acting to correct the emergency situation in order to meet program requirements. States will be required to meet the requirements of §95.611, except for the requirement of prior approval, within 90 days from the date of their written emergency request. The granting of FFP by the Department for the emergency acquisition will rest on the Department's determining whether or not the acquisition was necessary and satisfies all requirements of 45 CFR 95.601 et seq. except, the requirement of prior approval. In such cases, where those requirements are met, we will approve FFP retroactive to the date of the emergency acquisition.

Interim Final Regulations

These regulations, 45 CFR 95.605, 95.623 and 95.624, are being published in interim final form with an immediate effective date. At the same time, we encourage interested parties to comment upon these new rules so that we may have the full benefit of public participation before the rules are published in final form. We are disposing with prior notice and comment procedures because we believe there is good cause to do so.

Specifically, we find that publication of these regulations in proposed form would be unnecessary, impractical and contrary to the public interest for the following reasons:

1. The Department presently has pending a number of requests from States for retroactive approval of system developments and acquisitions initiated before the Department's approval was requested. The Department believes that the States submitting these late requests acted in good faith based on their perception of the Department's practice until recently, and should not be penalized. While it is important to the efficient operation of affected Public Assistance programs that a number of these requests be approved promptly, the Department has no current authority to provide approval for the ADP equipment and services acquisitions at issue.

The Department wishes to immediately put in place a procedure by which States can act to acquire automatic data processing equipment or services in emergency situations without risking the loss of FFP from the Department because the prior approval requirements of §95.611 were not followed. The Department believes that since it does not have the authority under existing regulations and does not seek the authority to waive its prior approval requirements contained in §95.611, it must immediately establish procedures for handling emergency situations, so that in the event an emergency arises, a State will have a basis for quickly acting to correct the emergency situation without jeopardizing its eligibility for FFP.

3. We believe that since both the emergency situation and waiver provisions constitute relief and exemption from the pre-existing requirements for prior approval, the immediate effective date we are providing is justified and reasonable.

Regulatory Impact Analysis

The Secretary has determined, in accordance with Executive Order 12291, that this rule does not constitute a major rule because it will not have an annual impact on the economy of $100 million or more, result in a major increase in costs or prices for consumers, any industries, any governmental agencies or any geographic regions, or otherwise meet the thresholds of the Executive Order.

Regulatory Flexibility Analysis

Regulatory Flexibility Act (Pub. L. 96-354) requires the Federal Government to anticipate and reduce the impact of rules and paperwork requirements on small businesses and other small entities in appropriate cases. This rule has no significant effect on a substantial number of small entities. Therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-611), the Department has previously obtained OMB clearance of the paperwork requirements contained in §95.611, referenced under §95.623 of this interim final rule. The OMB number is 0990-0058.

The emergency processing paperwork requirements contained in Section 95.624 of this interim final rule have been approved by OMB. The OMB approval number is 0990-0160.

(Catalog of Federal Domestic Assistance Program Numbers 13.645 Child Welfare Services-State Grants, 13.658, Foster Care Maintenance, 13.659, Adoption Assistance; 13.679, Child Support Enforcement Program; 13.714. Medical Assistance Program; 13.808, Assistance Payments-Maintenance Assistance; 13.810, Assistance Payments-State and Local Training)

List of Subjects in 45 CFR Part 95

Claims. Computer technology, Grant programs-health, Grant programs-social programs, Social Security.

PART 95-[AMENDED]

45 CFR Part 95, Subpart F, is amended as set forth below: The authority citation for 45 CFR Part 95, Subpart F is added to read as follows:

Authority: Sec. 1102, 49 Stat. 647, 42 U.S.C. 1302.

1. Section 95.605 is amended to add the definition for "emergency situation" as follows:

§95.605 Definitions.

* * * * *

Emergency situation is defined as a situation where:

(a) A State can demonstrate to the Department an immediate need to acquire ADP equipment or services in order to continue the operation of one or more of the Social Security Act programs covered by Subpart F, and

(b) The State can clearly document that the need could not have been anticipated or planned for and the State was prevented from following the prior approval requirements of §95.611.

* * * * *

2. Section 95.623 is revised to read as follows:

§95.623 Waiver of prior approval requirements.

For ADP equipment and services acquired by a State without prior written approval, the Department may waive the prior approval requirement if prior to December 1,1985:

(a) The State submitted to the Department all information required under §95.611, satisfactorily responded to all concerns raised by the Department and received a final letter of approval from the Department; or,

(b) The State has a request pending with the Department for retroactive approval which the Department received before December 1, 1985 and the Department determines that the request would have received prior approval had a timely request for such approval been made by the State agency.

(Approved by the Office of Management and Budget under control No. 0990-0058.)

3. A new §95.624 is added to read follows:

§95.624 Consideration for FFP in emergency situations.

For ADP equipment and services required by a State after December 1, 1985 to meet emergency situations, which preclude the State from following the requirements of §95.611, the Department will consider providing FFP upon receipt of a written request from the State. In order for the Department to consider providing FFP in emergency situations, the following conditions must be met:

(a) The State must submit a written request to the Department, prior to the acquisition of any ADP equipment or services. The written request must be sent by registered mail and include:

(1) A brief description of the ADP equipment and/or services to be acquired and an estimate of their cost.

(2) A brief description of the circumstances which result in the State's need to proceed prior to obtaining approval from the Department; and.

(3) A description of the harm which will be caused if the State does not acquire immediately the ADP equipment and services.

(b) Upon receipt of the information, the Department will within 14 days take one of the following actions:

(1) Inform the State in writing that the request has been disapproved and the reason for disapproval; or,

(2) Inform the State in writing that the Department recognizes that an emergency exists and that within 90 days from the date of the State's initial written request, the State must submit formal request for approval which includes the information specified at §95.611 in order for the ADP equipment or services acquisition to be considered for the Department's approval.

(c) If the Department approves the request submitted under paragraph (b) of this Section, FFP will be available from the date the State acquires the ADP equipment and services.

(Approved by the Office of Management and Budget under control number 0990-0160.)

* * * * *

Dated: November 13, 1985.

Margaret M. Heckler,

Secretary

[FR Doc. 86-1717 Filed 1-24-86; 8:45 am]

BILLING CODE 4150-04-M