[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR95.605]

[Page 476-481]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 95_GENERAL ADMINISTRATION_GRANT PROGRAMS (PUBLIC ASSISTANCE,
MEDICAL ASSISTANCE AND STATE CHILDREN'S HEALTH
 
 Subpart F_Automatic Data Processing Equipment and Services_Conditions 
                for Federal Financial Participation (FFP)
 
Sec. 95.605  Definitions.

    As used in this part, the term:
    Acceptance documents means written evidence of satisfactory 
completion of an approved phase of work or contract, and acceptance 
thereof by the State agency.
    Acquisition means acquiring ADP equipment or services from 
commercial sources or from State or local government resources.

[[Page 477]]

    Advance Planning Document (APD), Initial advance automatic data 
processing planning document or Initial APD means a written plan of 
action to request funding approval for a project which will require the 
use of ADP services or equipment. The term APD refers to a Planning APD, 
or to a planning and/or, development and implementation action document, 
i.e., Implementation APD, or to an Advance Planning Document Update.
    (1) Planning APD means a written plan of action which requests FFP 
to determine the need for, feasibility, and cost factors of an APD 
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 APD; prepare a request for 
proposal (RFP) or develop a General Systems Design (GSD).
    A separate planning effort and Planning APD is generally applicable 
to large enhanced funded 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 do better planning and to submit a Planning APD 
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 APD as a separate document to HHS 
or whether to combine the two phases of planning and implementation into 
one APD covering both the Planning APD and the Implementation APD 
requirements.
    The Planning APD is a relatively brief document, usually not more 
than 6-10 pages, which must contain:
    (i) A statement of the problem/need in terms of deficiencies in 
existing capabilities, new or changed program requirements or 
opportunities for economies and efficiencies;
    (ii) A project management plan which 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 of the project;
    (iv) An estimated total project cost and a prospective State and 
Federal cost distribution, including planning and implementation;
    (v) A commitment to conduct/prepare the needs assessment, 
feasibility study, alternatives analysis, cost benefit analysis, and to 
develop a Functional Requirements Specification and/or a General Systems 
Design (GSD); and,
    (vi) A commitment to define the State's functional requirements for 
the purpose of evaluating the transfer of an existing system, including 
the transfer of another State's General System Design, which the State 
may adapt to meet State specific requirements.

Additional Planning APD content requirements, for enhanced funding 
projects are contained in 45 CFR 205.37(a)(1)-(8) and CFR 307.15.
    (2) Implementation APD means a written plan of action to acquire the 
proposed APD services or equipment.
    The Implementation APD shall include:
    (i) The results of the activities conducted under a Planning APD, if 
any;
    (ii) A statement of needs and objectives;
    (iii) A requirements analysis, feasibility study and a statement of 
alternative considerations including, where appropriate, a transfer of 
an existing system and an explanation of why such a transfer is not 
feasible if another alternative is identified;
    (iv) A cost benefit analysis;
    (v) A personnel resource statement indicating availability of 
qualified and adequate staff, including a project director to accomplish 
the project objectives;
    (vi) A detailed description of the nature and scope of the 
activities to be undertaken and the methods to be used to accomplish the 
project;
    (vii) The proposed activity schedule for the project;
    (viii) A proposed budget (including a consideration of all possible 
Implementation APD activity costs, e.g., system conversion, computer 
capacity planning, supplies, training, and miscellaneous ADP expenses) 
for the project;

[[Page 478]]

    (ix) A statement indicating the period of time the State expects to 
use the equipment or system;
    (x) An estimate of prospective cost distribution to the various 
State and Federal funding sources and the proposed procedures for 
distributing costs; and
    (xi) A statement setting forth the security and interface 
requirements to be employed and the system failure and disaster recovery 
procedures available.

Additional requirements, for acquisitions for which the State is 
requesting enhanced funding, are contained at 45 CFR 205.37(a)(1)-(8), 
45 CFR 307.15 and 42 CFR part 433 subpart C.
    (3) Advance Planning Document Update (APDU) means a document 
submitted annually (Annual APDU) to report project status and/or post 
implementation cost-savings, or on an as needed (As Needed APDU) basis 
to request funding approval for project continuation when significant 
project changes are anticipated; for incremental funding authority and 
project continuation when approval is being granted by phase; or to 
provide detailed information on project and/or budget activities.
    (a) The Annual APDU is due 60 days from the Planning APD or 
Implementation APD approved anniversary and includes:
    (i) A reference to the approved APD and all approved changes;
    (ii) A project activity status which reports the status of the past 
year's major project tasks and milestones, addressing the degree of 
completion and tasks/milestones remaining to be completed and discusses 
past and anticipated problems or delays in meeting target dates in the 
approved APD and approved changes to it;
    (iii) A report of all project deliverables completed in the past 
year and degree of completion for unfinished products;
    (iv) A project activity schedule for the remainder of the project;
    (v) A project expenditures status which consists of a detailed 
accounting of all expenditures for project development over the past 
year and an explanation of the differences between projected expenses in 
the approved APD and actual expenditures for the past year;
    (vi) A report of any approved or anticipated changes to the 
allocation basis in the APD's approved cost methodology;
    (vii) A report which compares the estimated cost-savings from the 
State's approved APD to actual cost-benefits to date (in the development 
phase of a project, this may be reported as non-applicable). The 
proportion of costs to savings must remain as projected in the APD. Once 
the State begins operation, either on a pilot basis or under a phased 
approval, the cost-savings shall be submitted 2-5 years after statewide 
operation until the Department determines projected cost savings have 
been achieved.
    (b) The As Needed APDU is defined as a document which requests 
approval for additional funding and/or authority for project 
continuation when significant changes are anticipated; when the project 
is being funded on a phased implementation basis; to clarify project 
information requested as an approval condition of the Planning APD or 
Implementation APD. The As Needed APDU may be submitted anytime as a 
stand-alone funding or project continuation request, or may be submitted 
with the Annual APDU:
    (i) When the State anticipates incremental project expenditures 
(exceeding specified thresholds);
    (ii) When the State anticipates a schedule extension of more than 60 
days for major milestones. For Aid to Families with Dependent Children 
(AFDC) Family Assistance Management Information System (FAMIS)-type 
projects, in accordance with section 402(e)(2)(C) of the Social Security 
Act, any schedule change which affects the State's implementation date 
as specified in the approved APD requires that the Department recover 40 
percent of the amount expended. The Secretary may extend the 
implementation date, if the implementation date is not met because of 
circumstances beyond the State's control. Examples of circumstances 
beyond the State's control are:
    (1) Equipment failure due to physical damage or destruction; or,

[[Page 479]]

    (2) Change imposed by Federal judicial decisions, or by Federal 
legislation or regulations;
    (iii) When the State anticipates major changes in the scope of its 
project, e.g., a change in its procurement plan, procurement activities, 
system concept or development approach;
    (iv) When the State anticipates significant changes to its cost 
distribution methodology or distribution of costs among Federal 
programs; and/or,
    (v) When the State anticipates significant changes to its cost-
benefit projections.

The As needed APDU shall provide supporting documentation to justify the 
need for a change to the approved budget.
    Approving component means an organization within the Department that 
is authorized to approve requests for the acquisition of ADP equipment 
or ADP services. Family Support Administration (FSA) for cash assistance 
for titles I, IV-A, X, XIV, and XVI(AABD); Office of Human Development 
Services (OHDS) for social services for titles IV-B (child welfare 
services) and IV-E (foster care and adoption assistance); Family Support 
Administration (FSA) for title IV-D; and Centers for Medicare & Medicaid 
Services (CMS) for titles XIX and XXI of the Social Security Act.
    Automatic data processing or ADP means data processing performed by 
a system of electronic or electrical machines so interconnected and 
interacting as to minimize the need for human assistance or 
intervention.
    Automatic data processing equipment or ADP equipment or Hardware 
means automatic equipment that accepts and stores data, performs 
calculations and other processing steps, and produces information. This 
includes:
    (a) Electronic digital computers;
    (b) Peripheral or auxiliary equipment used in support of electronic 
computers;
    (c) Data transmission or communications equipment, and
    (d) Data input equipment.
    Automatic Data Processing Services or ADP Services means:
    (a) Services to operate ADP equipment, either by agency, or by State 
or local organizations other than the State agency; and/or
    (b) Services provided by private sources or by employees of the 
State agency or by State and local organizations other than the State 
agency to perform such tasks as feasibility studies, system studies, 
system design efforts, development of system specifications, system 
analysis, programming, system conversion and system implementation and 
include, for example, the following:
    (1) Systems Training,
    (2) Systems Development,
    (3) Site Preparation,
    (4) Data Entry, and
    (5) Personal services related to automated systems development and 
operations that are specifically identified as part of a Planning ADP or 
Implementation ADP. As an example, a personal service would be the 
service of an expert individual to provide advice on the use of ADP 
software or hardware in developing a State automated management 
information system.
    Data processing means the preparation of source media containing 
data or basic elements of information and the use of such source media 
according to precise rules or procedures to accomplish such operations 
as classifying, sorting, calculating, summarizing, recording and 
transmitting.
    Department means the Department of Health and Human Service.
    Design or system design means a combination of narrative and 
diagrams describing the structure of a new or more efficient automatic 
data processing system. This includes the use of hardware to the extent 
necessary for the design phase.
    Development means the definition of system requirements, detailing 
of system and program specifications, programming and testing. This 
includes the use of hardware to the extent necessary for the development 
phase.
    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

[[Page 480]]

was prevented from following the prior approval requirements of Sec. 
95.611.
    Enhanced matching rate means the higher than regular rate of FFP 
authorized by Title IV-D, IV-E, and XIX of the Social Security Act for 
acquisition of services and equipment that conform to specific 
requirements designed to improve administration of the Child Support 
Enforcement, Foster Care and Adoption Assistance, and Medicaid programs.
    Enhancement means modifications which change the functions of 
software and hardware beyond their original purposes, not just to 
correct errors or deficiencies which may have been present in the 
software or hardware, or to improve the operational performance of the 
software or hardware.
    Feasibility study means a preliminary study to determine whether it 
is sufficiently probable that effective and efficient use of ADP 
equipment or systems can be made to warrant a substantial investment of 
staff, time, and money being requested and whether the plan is capable 
of being accomplished successfully.
    FFP means Federal financial participation.
    Functional Requirements Specification is defined as an initial 
definition of the proposed system, which documents the goals, 
objectives, user or programmatic requirements, management requirements, 
the operating environment, and the proposed design methodology, e.g., 
centralized or distributed. This document details what the new system 
and or hardware should do, not how it is to do it. The Specifications 
document shall be based upon a clear and accurate description of the 
functional requirements for the project, and shall not, in competitive 
procurements, lead to requirements which unduly restrict competition. 
The Specification document is the user's definition of the requirements 
the system must meet.
    General Systems Design means a combination of narrative and graphic 
description of the generic architecture of a system as opposed to the 
detailed architecture of the system. A general systems design would 
include a systems diagram and narrative identifying overall logic flow 
and systems functions; a description of equipment needed (including 
processing data transmission and storage requirements); a description of 
other resource requirements which will be necessary to operate the 
system; a description of system performance requirements; and a 
description of the physical and organizational environment in which the 
system will operate including how the system will function within that 
environment (e.g. how workers will interface with the system).
    Project means an automated systems effort undertaken by the State to 
improve the administration and/or operation of one or more of its public 
assistance programs. For example, a State may undertake a comprehensive, 
integrated initiative in support of its AFDC 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.
    Implementation means design, development and installation and does 
not include operation.
    Medicaid Management Information System (MMIS) is a commonly accepted 
term for Mechanized Claim Processing and Information Retrieval System as 
provided by Section 1903(a)(3) and 1903(r) of the Social Security Act 
and at 42 CFR 433.110 et seq.
    Total Acquisition Cost means all anticipated expenditures (including 
State staff costs) for planning and implementation for the project. For 
purposes of this regulation total acquisition cost and project cost are 
synonymous.
    Installation means the integrated testing of programs and 
subsystems, system conversion, and turnover to operation status. This 
includes the use of hardware to the extent necessary for the 
installation phase.
    Operation means the automated processing of data used in the 
administration of State plans for titles I, IV-A, IV-B, IV-D, IV-E, X, 
XIV, XVI(AABD), XIX, and XXI of the Social Security Act. Operation 
includes the use of supplies, software, hardware, and personnel directly 
associated with the functioning of the mechanized system. See 45 CFR 
205.38 and 307.10 for specific requirements for titles IV-A and IV-D,

[[Page 481]]

and 42 CFR 433.112 and 42 CFR 433.113 for specific requirements for 
title XIX.
    Regular matching rate means the normal rate of FFP authorized by 
titles IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, and XXI of the 
Social Security Act for State and local agency administration of 
programs authorized by those titles.
    Requirements Analysis means determining and documenting the 
information needs and the functional and technical requirements the 
proposed computerized system must meet.
    Service agreement means the document signed by the State or local 
agency and the State or local Central Data Processing facility whenever 
the latter provides data processing services to the former and:
    (a) Identifies those ADP services the Central Data Processing 
facility will provide;
    (b) Includes, preferably as an amendable attachment, a schedule of 
charges for each identified ADP service, and a certification that these 
charges apply equally to all users;
    (c) Includes a description of the method(s) of accounting for the 
services rendered under the agreement and computing services charges;
    (d) Includes assurances that services provided will be timely and 
satisfactory;
    (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 45 CFR 205.50 and 303.21;
    (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 Part 74, Subpart P 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 these titles 
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;
    (g) Includes the beginning and ending dates of the period of time 
covered by the service agreement; and
    (h) Includes a schedule of expected total charges to the title 
covered by this subpart for the period of the service agreement.
    Software means a set of computer programs, procedures, and 
associated documentation used to operate the hardware.
    State agency means the State agency administering or supervising the 
administration of the State plan under titles I, IV, X, XIV, XVI(AABD), 
XIX or XXI of the Social Security Act.
    System specifications means information about the new ADP system--
such as workload descriptions, input data, information to be maintained 
and processed, data processing techniques, and output data--which is 
required to determine the ADP equipment and software necessary to 
implement the system design.
    System study means the examination of existing information flow and 
operational procedures within an organization. The study essentially 
consists of three basic phases: Data gathering investigation of the 
present system and new information requirements; analysis of the data 
gathered in the investigation; and synthesis, or refitting of the parts 
and relationships uncovered through the analysis into an efficient 
system.

[51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4375, Feb. 7, 1990, 59 
FR 30708, June 15, 1994; 65 FR 33633, May 24, 2000]

                       Specific Conditions for FFP