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Chapter III: Implementation APD

Implementation APDs are written plans of action that States use to request Federal financial participation (FFP) in the costs of designing, developing, and implementing the system. Implementation activities eligible for matching funds from HHS include:

• Developing detailed system designs,
• Preparing solicitations for system hardware, software, and services,
• Converting data and software,
• Developing and testing software,
• Preparing sites,
• Training users, and
• Installing systems.

States are required to submit an Implementation APD prior to incurring costs for system design and development, when the total project costs (including planning) are estimated to exceed the thresholds in 45 CFR 95.611(b). See Exhibit III-1 on the next page. Implementation APDs that meet the standards for approval shown in the box to the right will be approved within 60 days.

EXHIBIT III-1: Prior Written Approval Required:
Implementation APD [45 CFR 95.611(b)]

Unlike the Planning APD, the Implementation APD is a comprehensive and thorough document which sets forth specific, detailed information and summarizes or provides key documents prepared during the Planning Phase.

The detail in the Implementation APD should be commensurate with the complexity and scope of the acquisition. For example, States can set forth the need, costs, and benefits for a mainframe upgrade in significantly fewer pages than required for a new, multi-program, multimillion dollar, system development project. It is the State's responsibility to determine how much text and graphics are required to explain with clarity its plan of action. However, as a rule of thumb, HHS does not expect submissions that are too large to fit in a two- or three-inch binder. In general, less is better, provided clarity is not sacrificed.

As described in 45 CFR 95.605, the Implementation APD should have six sections, organized and categorized as follows:

In addition, the Implementation APD has two enclosures:

To support HHS' timely review, States should prepare the Implementation APD in the format and order described in this chapter. The key components of the APD are described in the following paragraphs.

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A. Statement of Needs and Objectives

The State should summarize the current environment and the new system needs, objectives, and anticipated benefits. Needs may be expressed in terms of deficiencies in existing capabilities, new or changed program requirements, or opportunities for economies or efficiencies.

This section should serve as an executive summary to the project. It should answer the questions "What will this investment buy?" and "Is the need for the investment clear?"

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B. Summary of Requirements Analysis, Feasibility Study, and Alternatives Analysis

The regulation at 45 CFR 95.605(2) requires that the Implementation APD include a summary of the results of the requirements analysis, feasibility study, and alternatives analysis. Note that copies of these documents are not required; their submission may delay action on the APD due to increased review time.

The requirements section should describe the functional and technical needs, including system interface requirements. System interface requirements may relate to IV-A, IV-D, IV-E, Medicaid, Federal Parent Locator Service (FPLS), Child Care, State Labor and Employment, IRS, and others as needed.

This section should also identify each of the alternatives analyzed for the system project and the considerations and conclusions reached regarding each one. It should also identify which alternatives were selected for evaluation of costs and benefits and provide the rationale for selection of the chosen alternative. If applicable, system transfer is addressed, summarizing which State systems were assessed for possible transfer and the results of the assessment.

Unless specifically requested by HHS, States are not required to enclose copies of the requirements analysis, feasibility study, or alternatives analysis.

This section answers the questions "Did the State analyze requirements, feasibility, and alternatives?," "Were at least two alternatives to the status quo evaluated for costs and benefits?," and "Is the basis for selection of the chosen alternative reasonable?"

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C. Cost/Benefit Analysis

To meet this requirement, the State provides in the Implementation APD a summary of the results of the cost/benefit analysis. The purpose of the summary is to set forth succinctly the program performance improvements, projected costs, and anticipated benefits that the system is expected to deliver. This is the baseline against which the State will measure and report actual costs and benefits.

The narrative should address the basis, assumptions, calculations, and measurement plan related to performance, cost, and benefit goals. The summary should also include a comparison of alternatives,⁸ cost/benefit profile⁹ of the chosen alternative, and systems life benefits spreadsheet¹⁰ for the chosen alternative.

In addition, the State encloses a copy of the cost/benefit analysis (Tab 1) developed during the Planning Phase.

This section is one of the most important in the Implementation APD because it establishes the projected costs and benefits against which the State will measure and report its performance during implementation and operation.

This section answers the question "Is there a clear set of costs and benefits as a baseline for measurement?"

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D. Project Management Plan

The Project Management Plan summarizes the project activities, deliverables, and products; project organization; State and contractor resource needs; and anticipated system life. Any significant differences from the Project Management Plan submitted with the Planning APD should be explained.

1. Nature, Scope, Methods, Activities, Schedule, and Deliverables. This section of the Project Management Plan describes in narrative and graphics how and when the project activities will be conducted and sets forth the resulting project documentation and contractor deliverables.

   To support timely review, this section should provide a workflow (Gantt) chart addressing project activities, documentation, and contractor deliverables. Relationships between activities (sequential and parallel) are established in the plan, responsibilities identified, and provisions included to check progress. The schedule describes each activity and sets milestones for beginning and ending significant tasks.

   Among the most critical activities of the Implementation Phase for a large system acquisition are:

   • Developing the General¹¹ and/or Detailed System Designs;

   • Preparing solicitations and awarding contracts for contractor support services, hardware, and software;

   • Developing the conversion plan, test management plan, installation plan, facilities management plan, training plan, users' manuals, and security and contingency plans;

   • Converting and testing data;

   • Developing, modifying, or converting software;

   • Testing software;

   • Training staff for systems testing and operation; and

   • Installing, testing, and accepting systems.

   If applicable with regard to procurement activities, this section should describe how and when contractor services to support the project will be acquired. Specifically, the State's overall strategy is established the number of contractors, the products and services they will provide (such as hardware, software, and quality assurance), and their relationships to each other and to the State.¹²

2. Project Organization and Personnel Resources. The State's project organization is described in overview in terms of staff, responsibility, and relationships. The project organization, preferably shown by organization chart:

   • Identifies the project manager and other key staff by name and title;

   • Identifies the relationship of the project team to the project steering committee (if applicable); and

   • Identifies interrelationships with user groups and contractors.

3. State and Contractor Resource Needs. This section succinctly describes in narrative form the resource needs for which funding support may be requested by the State. These needs may relate to State and contractor staff costs, computer time, hardware and commercially available software, depreciation, travel, space, supplies, telephones, photocopying, office equipment, furniture, and so forth. This information serves as a narrative explanation of the budget (which is addressed in the next section of the Implementation APD).

4. System Life. This section describes the anticipated system life for the required resources, inclusive of planning, implementation, and operational phases.

The Project Management Plan answers the question "Is the acquisition well planned?"

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E. Proposed Budget

The State's proposed budget, summarized in the APD, considers all costs for Implementation Phase activities. For a large buy, this might include (but not be limited to) system software and data conversion, software development, computer capacity planning, contractor costs, supplies, training, maintenance, and operations. Miscellaneous ADP expenses may also be included. Consideration of multiple funding programs or source (cost allocation) is not necessary in the proposed budget.¹³

Typically, the project budget details estimated expenditures by category, with cost projections summarized annually and totaled for the project. In very large or complex projects, budget data may be broken down by task or phase and category. (At times, ACF may require this on an exception basis.)

The narrative of the Implementation APD provides the summary information by year and project total for implementation costs. Detailed breakouts by category are included in Tab 2. A sample budget format is shown in Exhibit III-2 on page III-8.

This section answers the question "How much will this investment cost?"

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F. Prospective Cost Allocation

The prospective cost allocation plan is described, including procedures to identify, record, allocate, and report direct and indirect costs, partially and fully attributable to the system project. The State also sets forth the methodology for cost distribution (such as cost pools) and how it will fund its portion of the costs of implementing the system. See Exhibit III-3 on page III-9.

This section answers the question "How will the costs be shared?

Exhibit III-2

* Actual State cost categories may differ back

Exhibit III-3: Cost Allocation Plan Format

⁷ For noncompetitive acquisitions of ADP equipment or services from a nongovernmental source with total acquisition costs between $1,000,000 and $5,000,000, States must submit the sole source justification for prior approval. See Exhibit I-3 on page I-7 and Chapter V, Section A, for further information. back
⁸ See, for example, page 3-27 of ACF's Feasibility, Alternatives, and Cost/Benefit Analysis Guide. back
⁹ See, for example, page 3-26 of ACF's Feasibility, Alternatives, and Cost/Benefit Analysis Guide. back
¹⁰ See, for example, page 3-20 of ACF's Feasibility, Alternatives, and Cost/Benefit Analysis Guide. back
¹¹ For a system transfer project, a new General System Design may not be necessary. back
¹² Note that Planning Phase contractors must be barred from competing for or participating as a prime contractor or subcontractor on follow-on Implementation Phase activities and/or any resulting procurements. back
¹³ Cost allocation breakdowns are addressed in the last section of the Implementation APD. back

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