APD - Non-Testing FAQs

On 01/02/2014, a Final Rule was published in the Federal Register entitled “Automated Data Processing and Information Retrieval System Requirements: System Testing”. This rule amends the Supplemental Nutrition Assistance Program (SNAP) regulations to implement provisions of the Food, Conservation, and Energy Act of 2008 (the Farm Bill). The primary purpose of the rule was to make changes relating to adequate system testing. The rule also made changes to the SNAP regulations to provide clarifications and revisions since the last update which occurred in 1996.

Copies of this Final Rule and the Proposed Rule which preceded it, as well as copies of all regulations applicable to the Advance Planning Document (APD) process, may be found here: Statutes and Regulations.

Revisions to reflect changes from the Final Rule have been made to FNS Handbook 901 - Advance Planning Documents, which provides guidance to facilitate successful approval of state agency information system projects. A copy of the handbook can be found here: Handbook 901.

Answers to Frequently Asked Questions (FAQs) have been developed to help explain this Final Rule. Following are FAQS regarding the non-testing provisions, and additional FAQs on the testing provisions may be found at: Testing FAQs.

The last changes made to § 277.18 were in 1996. Since then, FNS identified provisions in this section of the regulations that needed clarification and enhancement to improve the public’s understanding of the process. Some subsections have been moved and renumbered to improve the flow and clarity of the entire section and improve its usefulness as a reference for regulatory authority.

FNS’ intent is to stress the importance of project management and risk management in the system planning process. These are not new concepts, but this renewed emphasis is to assist state agencies’ focus on these areas in order to increase the likelihood of positive outcomes in systems projects. See Chapter 7 (Project Management) in FNS Handbook 901.

There are two terminology changes made in § 277.18. All instances of the use of the ‘‘Food Stamp Program’’ or ‘‘FSP’’ have been changed to the ‘‘Supplemental Nutrition Assistance Program’’ or ‘‘SNAP,’’ the name made effective by the Food, Conservation, and Energy Act of 2008 on October 1, 2008. In addition, all instances of the use of ‘‘Automated Data Processing’’ (ADP) have been changed to ‘‘Information System’’ (IS) or to ‘‘Information Technology’’ (IT), as appropriate given the context of their use.

This paragraph previously provided definitions for 18 terms commonly used in the remainder of this section. Some definitions were antiquated and therefore have either been removed, globally replaced or renamed. Others have been incorporated in the subsection that specifically addresses that topic, such as Feasibility Study. Four definitions have been added to this section which are not related to new requirements, but intended to provide a ready reference summary for terms used in this section: acquisition, project, Commercial Off-the-Shelf software, and enhancements. See Appendix 1 in FNS Handbook 901.

The definition has been expanded to delineate the major activities of the System Development Life Cycle (SDLC) that are expected to occur during the Implementation Phase, which the Implementation APD encompasses. These major activities are defined as design, development, testing, and implementation. The intent is to provide clarification to state agencies that the APD process follows the SDLC and mirrors state government and industry standards. See Chapter 3, Section 3.3.2 in FNS Handbook 901.

In paragraph 277.18(b) (Definitions), FNS clarifies that the APDU is more than an annual report as the current definition states. The APDU is an annual or as needed report of activities, and a request for continuation of funding either at the current or an updated funding amount. The APDU reports the status of activities as well as changes to the project’s scope, schedule, budget, cost allocation or procurement strategy. As previously defined, it may have been implied this was simply a report and did not emphasize the importance of this update as a requirement for continuing funding for the project. FNS often approves funding or project approval for a specified period of time during the project. The mechanism to ensure that funding and project approval continues for future development through project completion is the APDU, either annual or as needed, whichever is appropriate for the conditions of a specific project. The phrase ‘‘self-certification’’ has been removed, as this is not the intent of the APDU. See Chapter 3, Section 3.3.3 in FNS Handbook 901.

In paragraph 277.18(b) (Definitions), the terms ‘‘acquisition’’ and ‘‘project’’ have been changed to clarify the difference between the two. FNS added these definitions to assist the reader in noting that projects and acquisitions are separate events and while they may be related in the holistic view of the project, the review requirements and submission thresholds vary as discussed in paragraph 277.18(c).

In paragraph 277.18(b) (Definitions), FNS added the definition of Commercial Off-the-Shelf (COTS) products which are beginning to find a place in the Human Services sector. A definition is added to specify FNS’ criteria for software to be considered COTS, and clarify where Federal ownership rules do and do not apply to COTS products.

State agencies often make corrective and adaptive changes in the course of normal maintenance and operations of a system. For extensive renovation or replacement of a system, a state agency would undertake a detailed planning process. Enhancements to a system often fall somewhere in between. By providing a definition of ‘‘enhancement’’ this regulation will help state agencies understand the distinctions, and know when an enhancement may represent a substantial enough change in system functionality to require FNS approval. See Chapter3, Section 3.4 of FNS Handbook 901.

In paragraph 277.18(c)(3)(i)(C), FNS has realigned the due date for the annual APDU to be consistent with the current Department of Health and Human Services (DHHS) requirement of 60 days prior to the expiration of the last approval. Since the previous FNS requirement for submission was within 90 days after the anniversary date of the original APD approval, this new due date shortens the timeframe provided to state agencies for submission of annual updates. However, because most APDs are submitted to both USDA and DHHS, FNS believes creating consistency on this due date will simplify the process for state agencies and increase the likelihood that the document will be submitted timely to both Departments. For the initial APD, the anniversary date is based on the first date of approval received by the state. For APDUs, the anniversary date is also based on the first approval date, again to promote consistency. As an example, if the initial approval of an APD is provided on July 1, 2014, the first APDU is due on May 1, 2015. The next APDU would be due May 1, 2016. See Chapter 3, Section 3.3.3 in FNS Handbook 901.

In paragraph 277.18(c)(3)(i)(C), a provision has been added to allow FNS to waive the annual APDU or reset the APD anniversary date to coincide with the As Needed APDU, if appropriate. Recognizing that many state agencies which submit As Needed APDUs may be duplicating their efforts when submitting annual APDUs, FNS hopes to lessen this reporting burden by waiving the submission of the Annual APDU until the following year or modifying the Annual APDU due date to be one year from the approval of the As Needed APDU. FNS may also waive an annual update if a state agency is submitting quarterly reports to FNS, which may be duplicative of the APDU which would subsequently be submitted. See Chapter 3, Section 3.3.3 in FNS Handbook 901.

In 277.18(c)(1) and 277.18(c)(2), FNS has aligned the dollar thresholds for prior approval for IS procurements to the current Department of Health and Human Services (DHHS) requirement of $6 million versus the prior FNS requirement of $5 million. Also, FNS has aligned the dollar thresholds for prior approval of contract amendments to the current DHHS requirement of 20 percent (cumulatively) of base contract costs. FNS believes creating consistency on these dollar thresholds will simplify the process for state agencies. See Chapter 4, Section 4.2.4.3 in FNS Handbook 901.

The policies and procedures for disposing of personal property have not changed. The only change made by this regulation is to the thresholds-- from $100 to $500, and from $1,000 to $5,000, where applicable. These increased limits are intended to provide states more flexibility in their disposition activities. See Chapter 4, Section 4.2.4.5 in FNS Handbook 901.

Service agreements are used when Information Technology (IT) services are to be provided by a centralized state facility or another state or local agency. The prior regulatory language at paragraph 277.18(f)(6) referenced the need to obtain FNS approval when these equipment and services primarily support SNAP by billing it for more than 50 percent of the total charges made to all users. FNS has modified this language at paragraph 277.18(e)(6) to clarify that the 50 percent threshold for service agreements applies to the sum total of all Federal public assistance programs and not just the SNAP portion. This modification will make the FNS language more consistent with that of Department of Health and Human Services, which does not identify any specific programs in its regulatory language relating to service agreements. As a reminder, although WIC generally pays 100 percent for state IT support which it receives, if this support involves the sharing of a service with another program, WIC should only pay for its allocated share. See Chapter 4, Section 4.8.1.3 in FNS Handbook 901.

In paragraph 277.18(c)(4) (Approval by the state agency) FNS has revised the language to allow the state agency to delegate approval authority to any subordinate entity for those acquisitions of IS equipment and services not requiring prior approval by FNS. The state agency is free to set its own pre-approval thresholds so long as those thresholds do not exceed the FNS pre-approval thresholds. See Chapter 4, Section 4.4 in FNS Handbook 901.

Language on content requirements for a Planning APD, Implementation APD, Annual APD Update and As Needed APD Update have been revised to allow FNS to be more responsive to states that are implementing Information Systems and to revise requirements in the future by policy rather than regulation if circumstances warrant. See Chapter 3 of FNS Handbook 901.

The requirements for the cost benefits analysis in paragraph 277.18(d)(2)(vii) previously included a statement indicating the period of time the state agency intended to use the proposed equipment or system. Paragraph 277.18(m) required that systems designed, developed or installed with Federal Financial Participation be used for the period of time specified in the cost benefit analysis. These were determined to be unnecessary and therefore have been removed. These provisions were originally meant to assure that a system was kept in use long enough to reach the ‘‘break even’’ date determined in the cost benefit analysis. However, experience has shown that many facts and assumptions used in that analysis change significantly over the life of the system, likely making the break even date, and therefore the anticipated lifespan inaccurate.

Furthermore, state agencies often keep systems in use long past the anticipated lifespan due to budget pressures, and consider system replacement only when driven by technological necessity, such as unsupportable platforms, outdated programming languages, or the excessive cost of maintaining antiquated systems. Finally, the advance planning period and System Development Life Cycle associated with a large-scale, complex project require that state agencies begin the process of system replacement years before their legacy systems reach the true end of their lifespan and become insupportable. See Chapter 3, Section 3.5.12 in FNS Handbook 901.

No, the changes in paragraph 277.18(h) regarding EARs, as in paragraph 277.18(i), only clarify the relationship of emergency acquisition requirements to general acquisition requirements. The previous language might have been interpreted to mean that FNS may recognize the need for a state agency to act quickly, but does not actually approve anything until after the receipt of an approvable Implementation Advance Planning Document (IAPD) following the emergency action. The revised language is intended to clarify that FNS does provide formal conditional approval of EARs, assuring financial support for up to 90 days, until an approvable IAPD is submitted. If complete documentation is not received within that timeframe, costs may be disallowed. See Chapter 3, Section 3.3.5 in FNS Handbook 901.

In paragraph 277.18(i)(Cost determination and claiming costs), FNS has renamed the paragraph as ‘‘General cost requirements’’ to increase consistency within the section. In the paragraph on Development costs, FNS has inserted a reference to the cost principles set forth in OMB Circular A– 87 (7 CFR Part 225). This Circular establishes principles and standards for determining costs for Federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments and federally-recognized Indian tribal governments (governmental units). The paragraph on Budget authority, clarifies that an As Needed APDU report, as well as an amended budget, will be required for FNS approval. See Chapter 8, Section 8.1.2 in FNS Handbook 901.

In paragraph 277.18(l) (Ownership rights), FNS has clarified that software packages which meet the definition of COTS at paragraph 277.18(b) are not subject to the ownership provisions of this paragraph. Along with long-established licensed COTS products such as operating systems, database software and desktop/office software, FNS has recognized the potential of COTS software in the Human Services sector to provide a proprietary framework and/or tool set which can be used to standardize, simplify and speed the process of building public domain modules, objects or processes within it. The addition of language about COTS products recognizes exceptions to the overarching ownership provisions in the rule. However, a clarification in the language emphasizes that FFP will not be available for COTS products developed specifically for the SNAP program, as these cannot, by definition, have a commercial market among the “general public”.

In addition, FNS has issued policy guidance to SNAP state agencies which allows a software vendor which is not positioned as the sole implementer or integrator of the COTS product, and allows third parties to independently sell, integrate, operate and maintain the COTS product, that vendor can bid both to provide its own product and to provide the integration services necessary to develop a fully functional system.

Previous regulatory language at paragraph 277.18(o) stated that FFP in a project could be disallowed for failure to comply with the criteria, requirements, and other undertakings described in the approved or modified Advance Planning Document. The revised language makes it more consistent with Department of Health and Human Services’ regulations and allows FNS flexibility in dealing with these occurrences by giving FNS the options of suspending or disallowing a part of the funding.

FNS has removed Appendix A to Part 277 (Principles for Determining Costs Applicable to Administration of the SNAP by state agencies) because it is now obsolete and has been replaced by an updated version of OMB Circular A– 87 Cost Principals for state, local, and Indian Tribal Governments, as found at 7 CFR 225. As a result of this removal, FNS has also relocated two provisions and updated references to Appendix A in other sections.

FNS has relocated one provision from Appendix A to another section to enhance the information provided in that section. The enhanced section includes: paragraph 277.13(b) (nonexpendable personal property) to increase the $1,000 threshold for capital expenditures to $5,000, as currently provided for in Appendix A.

References to Appendix A which were included in eight other regulatory sections have been changed to refer to OMB Circular A–87 (7 CFR 225). These sections include:

In addition, although § 277.4 did not previously contain a reference to Appendix A, FNS has added a reference to OMB Circular A–87 (7 CFR 225) as this section relates to funding and allowable costs.

FNS has developed additional guidance material to assist states in their implementation of the provisions in the Final Rule. These may be found on the FNS website under the Advance Planning Documents (APD) homepage. Besides copies of the 8/23/11 Proposed Rule and the 01/02/2014 Final Rule, states may find an updated version of the FNS Handbook 901 – Advance Planning Documents. Other APD training and technical assistance materials will be made available in the future. States may also contact their FNS State Systems Office representative should they have further questions.