45 C.F.R. Subpart F—Automatic Data Processing Equipment and Services—Conditions for Federal Financial Participation (FFP)
Title 45 - Public Welfare
Authority: Secs. 402(a)(5), 452(a)(1), 1102 and 1902(a)(4) of the Social Security Act, 42 U.S.C. 602(a)(5), 652(a)(1), 1302, 1396a(a)(4); 5 U.S.C. 301 and 8 U.S.C. 1521.
Source: 51 FR 45326, Dec. 18, 1986, unless otherwise noted.
This subpart prescribes part of the conditions under which the Department of Health and Human Services will approve Federal financial participation (FFP) at the applicable rates for the costs of automatic data processing incurred under an approved State plan for titles I, IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, or XXI of the Social Security Act and title IV chapter 2 of the Immigration and Nationality Act. The conditions of approval of this subpart add to the statutory and regulatory requirements for acquisition of ADP equipment and services under the specified titles of the Social Security Act. [65 FR 33633, May 24, 2000] 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. 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; (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, (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 was prevented from following the prior approval requirements of §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, 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]
Title 45: Public Welfare
PART 95—GENERAL ADMINISTRATION—GRANT PROGRAMS (PUBLIC ASSISTANCE, MEDICAL ASSISTANCE AND STATE CHILDREN'S HEALTH INSURANCE PROGRAMS)
Subpart F—Automatic Data Processing Equipment and Services—Conditions for Federal Financial Participation (FFP)
General
§ 95.601 Scope and applicability.
§ 95.605 Definitions.
Specific Conditions for FFP
§ 95.611 Prior approval conditions.
(a) General acquisition requirements. (1) A State shall obtain prior written approval from the Department as specified in paragraph (b) of this section, when the State plans to acquire ADP equipment or services with proposed FFP at the regular matching rate that it anticipates will have total acquisition costs of $5,000,000 or more in Federal and State funds.
(2) A State shall obtain prior written approval from the Department as specified in paragraph (b) of this section, when the State plans to acquire ADP equipment or services with proposed FFP at the enhanced matching rate authorized by 45 CFR 205.35, 45 CFR part 307 or 42 CFR part 433, subpart C, regardless of the acquisition cost.
(3) A State shall obtain prior written approval from the Department of its justification for a sole source acquisition, when it plans to acquire noncompetitively from a nongovernmental source ADP equipment or services, with proposed FFP at the regular matching rate, that has a total State and Federal acquisition cost of more than $1,000,000 but no more than $5,000,000. Noncompetitive acquisitions of more than $5,000,000 are subject to the provisions of paragraph (b) of this section.
(4) Except as provided for in paragraph (a)(5) of this section, the State shall submit requests for Department approval, signed by the appropriate State official, to the Director, Administration for Children and Families, Office of State Systems. The State shall send to ACF one copy of the request for each HHS component, from which the State is requesting funding, and one for the State Systems Policy Staff, the coordinating staff for these requests. The State must also send one copy of the request directly to each Regional program component and one copy to the Regional Director.
(5) States shall submit requests for approval which involve solely Title XIX funding (i.e., State Medicaid Systems), to CMS for action.
(6) The Department will not approve any Planning or Implementation APD that does not include all information required as defined in §95.605.
(b) Specific prior approval requirements. The State agency shall obtain written approval of the Department prior to the initiation of project activity.
(1) For regular FFP requests.
(i) For the Planning APD subject to the dollar thresholds specified in paragraph (a) of this section.
(ii) For the Implementation APD subject to the dollar thresholds specified in paragraph (a) of this section.
(iii) For the Request for Proposal and Contract, unless specifically exempted by the Department, prior to release of the RFP or prior to the execution of the contract when the contract is anticipated to or will exceed $5,000,000 for competitive procurement and $1,000,000 for noncompetitive acquisitions from nongovernmental sources. States will be required to submit RFPs and contracts under these threshold amounts on an exception basis or if the procurement strategy is not adequately described and justified in an APD.
(iv) For contract amendments, unless specifically exempted by the Department, prior to execution of the contract amendment involving contract cost increases exceeding $1,000,000 or contract time extensions of more than 120 days. States will be required to submit contract amendments under these threshold amounts on an exception basis or if the contract amendment is not adequately described and justified in an APD.
(2) For enhanced FFP requests.
(i) For the Planning APD.
(ii) For the Implementation APD.
(iii) For the Request for Proposal and contract, unless specifically exempted by the Department, prior to release of the RFP or prior to execution of the contract when the contract is anticipated to or will exceed $100,000.
(iv) For contract amendments, unless specifically exempted by the Department, prior to execution of the contract amendment, involving contract cost increases exceeding $100,000 or contract time extensions of more than 60 days.
(3) Failure to submit any of the above to the satisfaction of the Department may result in disapproval or suspension of project funding.
(c) Specific approval requirements. The State agency shall obtain written approval from the Department:
(1) For regular FFP requests.
(i) For an annual APDU for projects with a total acquisition cost of more than $5,000,000, when specifically required by the Department.
(ii) For an “As Needed APDU” when changes cause any of the following:
(A) A projected cost increase of $1,000,000 or more.
(B) A schedule extension of more than 60 days for major milestones;
(C) A significant change in procurement approach, and/or scope of procurement activities beyond that approved in the APD;
(D) A change in system concept, or a change to the scope of the project;
(E) A change to the approved cost allocation methodology.
The State shall submit the “As Needed APDU” to the Department, no later than 60 days after the occurrence of the project changes to be reported in the “As Needed APDU”.
(2) For enhanced FFP requests.
(i) For an Annual APDU.
(ii) For an “As needed” APDU when changes cause any of the following:
(A) A projected cost increase of $100,000 or 10 percent of the project cost, whichever is less;
(B) 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,
(2) Change imposed by Federal judicial decisions, or by Federal legislation or regulations;
(C) A significant change in procurement approach, and/or a scope of procurement activities beyond that approved in the APD;
(D) A change in system concept or scope of the project;
(E) A change to the approved cost methodology;
(F) A change of more than 10% of estimated cost benefits.
The State shall submit the “As Needed APDU” to the Department, no later than 60 days after the occurrence of the project changes to be reported in the “As Needed APDU”.
(3) Failure to submit any of the above to the satisfaction of the Department may result in disapproval or suspension of project funding.
(d) Prompt action on requests for prior approval. The ACF will promptly send to the approving components the items specified in paragraph (b) of this section. If the Department has not provided written approval, disapproval, or a request for information within 60 days of the date of the Departmental letter acknowledging receipt of a State's request, the request will automatically be deemed to have provisionally met the prior approval conditions of paragraph (b) of this section.
[51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4377, Feb. 7, 1990; 56 FR 12356, Mar. 25, 1991; 59 FR 30708, June 15, 1994; 61 FR 39897, July 31, 1996]
§ 95.612 Disallowance of Federal Financial Participation (FFP).
If the Department finds that any ADP acquisition approved or modified under the provisions of §95.611 fails to comply with the criteria, requirements, and other undertakings described in the approved advance planning document to the detriment of the proper and efficient operation of the affected program, payment of FFP may be disallowed. In the case of a suspension of approval of an APD for enhanced funding, see 45 CFR 205.37(c), 307.40(a) and 307.35(d).
[55 FR 4378, Feb. 7, 1990]
§ 95.613 Procurement standards.
(a) Procurements of ADP equipment and services are subject to the procurement standards prescribed by subpart P of 45 CFR part 74 regardless of any conditions for prior approval. Those standards include a requirement for maximum practical open and free competition regardless of whether the procurement is formally advertised or negotiated.
(b) Those standards, as well as the requirement for prior approval, apply to ADP services and equipment acquired by a State or local agency, and the ADP services and equipment acquired by a State or local Central Data Processing facility primarily to support the Social Security Act programs covered by this subpart. Service agreements are exempt from these procurement standards.
§ 95.615 Access to systems and records.
In accordance with 45 CFR part 74, the State agency must allow the Department access to the system in all of its aspects, including design developments, operation, and cost records of contractors and subcontractors at such intervals as are deemed necessary by the Department to determine whether the conditions for approval are being met and to determine the efficiency, economy and effectiveness of the system.
[43 FR 44853, Sept. 29, 1978, as amended at 45 FR 10794, Feb. 19, 1980]
§ 95.617 Software and ownership rights.
(a) General. The State or local government must include a clause in all procurement instruments that provides that the State or local government will have all ownership rights in software or modifications thereof and associated documentation designed, developed or installed with Federal financial participation under this subpart.
(b) Federal license. The Department reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use and to authorize others to use for Federal Government purposes, such software, modifications, and documentation.
(c) Proprietary software. Proprietary operating/vendor software packages (e.g., ADABAS or TOTAL) which are provided at established catalog or market prices and sold or leased to the general public shall not be subject to the ownership provisions in paragraphs (a) and (b) of this section. FFP is not available for proprietary applications software developed specifically for the public assistance programs covered under this subpart.
§ 95.619 Use of ADP systems.
ADP systems designed, developed, or installed with FFP shall be used for a period of time specified in the advance planning document, unless the Department determines that a shorter period is justified.
§ 95.621 ADP reviews.
The Department will conduct periodic onsite surveys and reviews of State and local agency ADP methods and practices to determine the adequacy of such methods and practices and to assure that ADP equipment and services are utilized for the purposes consistent with proper and efficient administration under the Act. Where practical, the Department will develop a mutually acceptable schedule between the Department and State or local agencies prior to conducting such surveys or reviews, which may include but are not limited to:
(a) Pre-installation readiness. A pre-installation survey including an onsite evaluation of the physical site and the agency's readiness to productively use the proposed ADP services, equipment or system when installed and operational.
(b) Post-installation. A review conducted after installation of ADP equipment or systems to assure that the objectives for which FFP was approved are being accomplished.
(c) Utilization. A continuing review of ADP facilities to determine whether or not the ADP equipment or services are being efficiently utilized in support of approved programs or projects.
(d) Acquisitions not subject to prior approval. Reviews will be conducted on an audit basis to assure that system and equipment acquisitions costing less the $200,000 were made in accordance with 45 CFR part 74 and the conditions of this subpart and to determine the efficiency, economy and effectiveness of the equipment or system.
(e) State Agency Maintenance of Service Agreements. (1) The State agency will maintain a copy of each service agreement in its files for Federal review.
(2) A State agency that did not obtain prior approval of a service agreement, as required by §95.611(b)(2) as it was in effect from December 28, 1978 (unless a State chose to exercise the option to make it effective as early as September 29, 1978) through January 19, 1987, is eligible for FFP claimed for services furnished by other State or local agencies under that agreement if:
(i) The State agency has a copy of it in its files for Federal review;
(ii) It meets the definition of a service agreement as it was defined in section 95.605 from December 28, 1978 through January 19, 1987;
(iii) The claim conforms to the timely claim provisions of 45 CFR part 95, subpart A; and
(iv) The service agreement was not previously disapproved by HHS.
(f) ADP System Security Requirements and Review Process—(1) ADP System Security Requirement. State agencies are responsible for the security of all ADP projects under development, and operational systems involved in the administration of HHS programs. State agencies shall determine the appropriate ADP security requirements based on recognized industry standards or standards governing security of Federal ADP systems and information processing.
(2) ADP Security Program. State ADP Security requirements shall include the following components:
(i) Determination and implementation of appropriate security requirements as specified in paragraph (f)(1) of this section.
(ii) Establishment of a security plan and, as appropriate, policies and procedures to address the following area of ADP security:
(A) Physical security of ADP resources;
(B) Equipment security to protect equipment from theft and unauthorized use;
(C) Software and data security;
(D) Telecommunications security;
(E) Personnel security;
(F) Contingency plans to meet critical processing needs in the event of short or long-term interruption of service;
(G) Emergency preparedness; and,
(H) Designation of an Agency ADP Security Manager.
(iii) Periodic risk analyses. State agencies must establish and maintain a program for conducting periodic risk analyses to ensure that appropriate, cost effective safeguards are incorporated into new and existing systems. State agencies must perform risk analyses whenever significant system changes occur.
(3) ADP System Security Reviews. State agencies shall review the ADP system security of installations involved in the administration of HHS programs on a biennial basis. At a minimum, the reviews shall include an evaluation of physical and data security operating procedures, and personnel practices.
(4) Costs incurred in complying with provisions of paragraphs (f)(1)–(3) of this section are considered regular administrative costs which are funded at the regular match rate.
(5) The security requirements of this section apply to all ADP systems used by State and local governments to administer programs covered under 45 CFR part 95, subpart F.
(6) The State agency shall maintain reports of their biennial ADP system security reviews, together with pertinent supporting documentation, for HHS on-site review.
[43 FR 44853, Sept. 29, 1978, as amended at 51 FR 45329, Dec. 18, 1986; 53 FR 27, Jan. 4, 1988; 55 FR 4378, Feb. 7, 1990; 61 FR 39898, July 31, 1996]
§ 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.
[51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990]
§ 95.624 Consideration for FFP in emergency situations.
For ADP equipment and services acquired 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 costs;
(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 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.
(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.
[51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990]
§ 95.625 Increased FFP for certain ADP systems.
(a) General. FFP is available at enhanced matching rates for the development of individual or integrated systems and the associated computer equipment that support the administration of State plans for Titles IV-D, IV-E, and/or XIX provided the systems meet the specifically applicable provisions referenced in paragraph (b) of the section.
(b) Specific reference to other regulations. The applicable regulations for the Title IV-D program are contained in 45 CFR Part 307. The applicable regulations for the Title IV-E program are contained in 45 CFR 1355.55. The applicable regulations for the Title XIX program are contained in 42 CFR Part 433, Subpart C.
[59 FR 30708, June 15, 1994]
Federal Financial Participation in Costs of ADP Acquisitions
§ 95.631 Cost identification for purpose of FFP claims.
The conditions of this subpart apply notwithstanding the existence of an approved cost allocation plan. State agencies shall assign and claim the costs incurred under an approved APD in accordance with the following criteria:
(a) Development costs. (1) Using its normal departmental accounting system, the State agency shall specifically identify what items of costs constitute development costs, assign these costs to specific project cost centers, and distribute these costs to funding sources based on the specific identification, assignment and distribution outlined in the approved APD; (2) the methods for distributing costs set forth in the APD should provide for assigning identifiable costs, to the extent practicable, directly to program/functions. The State agency shall amend the cost allocation plan required by Subpart E of this part to include the approved APD methodology for the identification, assignment and distribution of the development costs.
(b) Operational costs. Costs incurred for the operation of an ADP system shall be identified and assigned by the State agency to funding sources in accordance with the approved cost allocation plan required by Subpart E of this part.
(c) Service agreement costs. States that operate a central data processing facility shall use their approved central service cost allocation plan required by OMB Circular A–87 to identify and assign costs incurred under service agreements with the State agency. The State agency will then distribute these costs to funding sources in accordance with paragraphs (a) and (b) of this section.
§ 95.633 Nondiscrimination requirements.
State agencies that acquire ADP equipment and services are subject to the nondiscrimination requirements in Parts 80, 84, and 90.
[45 FR 10794, Feb. 19, 1980]
Exemptions
§ 95.641 Applicability of rules for charging equipment in Subpart G of this part.
ADP equipment, as well as other equipment acquired under public assistance programs, is subject to Subpart G of this part. Among other things, Subpart G provides that a State may charge only depreciation or use allowances for equipment with unit acquisition cost of over $25,000. However, for ADP equipment HHS will consider requests for waivers of that restriction. If the acquisition of the equipment is part of an APD that is subject to the prior approval requirements of Subpart F, the State may submit the request for a waiver as part of the APD.
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