Child Care Administrator’s Improper Payments Information Technology Guide

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B. Preparing for a Procurement (continued)

3. Deciding on the Most Appropriate Procurement Method

After identifying business/service needs and potential technical solutions, a State must decide how to proceed with acquiring a solution. Keeping the advantages and challenges of different investment approaches discussed in the previous chapter may be helpful for State administrators as they make this important decision. Options include:

• Continue the current business process and maintain operations in the same technical environment, making modest adjustments to business processes and small, incremental changes to the existing system. For example, a State may wish to place additional edits or custom fields in the child care subsidy payment system to ensure that the vendor is still on an approved vendor list or ensure that no payments went to a different vendor for services to the same child during the same time period. Another example is matching data from existing data sources, such as payment data and enrollment data, to identify improper payments made to vendors after a case is closed or a family switched child care providers. States can usually make these types of system modifications to an existing system and do not require the acquisition of new software. Chapter II, Section B-1 discusses the in-house approach in more depth.
• Implement a new technical solution to meet the business objectives through a contract modification or license upgrade from current vendor(s). For example, if a State developed and maintained its benefits eligibility determination and case management system for Food Stamps and/or TANF, by a third-party vendor, the Agency could do a contract modification for the vendor to add subsidized child care eligibility determination to the system. If a State acquires a software license upgrade from the current vendor to implement a new technical solution and the software requires a license for each user, then the State would need to purchase additional licenses for all child care staff using the system.
• Purchase a COTS product through a State-approved vendor/product list or RFP process. For example, an Agency may purchase a data warehousing and business intelligence product to run reports that match data from different sources, such as enrollment data and payment data. Chapter II, Section B-2 discusses the COTS approach in more depth.
• Acquire and use internal or contract resources to implement system functionality available in the public domain as open-source software. Any system developed with Federal funds would be available in the public domain for use, without charge, by a State or other entity. For example, if one State developed (in house) an online training program for child care staff or providers, another State could use and modify this system at no cost for its own purposes. This approach makes sense when implementation can occur without significant modifications and the Agency or State has internal staff with the skills to support it. Chapter II, Section B-1 discusses the in-house approach in more depth.
• Proceed with a RFP planning process, accounting for the previously identified business/service needs, solution options, and financial and technical constraints. For example, a State may go out to bid for a system that uses a swipe card to track time and attendance and trigger payment to vendors.
• Pursue another procurement process allowable under State law. For example, the Commonwealth of Virginia has purchased IT services through their Public-Private Education Facilities and Infrastructure Act (PPEA), which allows for unsolicited bids and ongoing discovery and negotiation with vendors to provide services, including IT services. If a State decides to enter into a contract with a third party, States need to consider those RFP elements that can affect the number of prospective bidders. In general, the more bidders, the better in a competitive procurement. If the dollar amount of the request is small, then fewer contractors are likely to bid. Additionally, the State may receive fewer bids if the request includes a high performance bond in the range of a million dollars or more. Smaller companies may not have the resources for a performance bond this high, while larger companies may have to pick and choose among active procurements because they may not be able to support multiple million dollar or more performance bonds. Lengthening the time period for the contract can increase its value and thus the total number of bidders. Additionally, a longer-term contract or one with multiyear renewal options provides the opportunity for a partnership to develop between the Agency and vendor.

States must balance product or service commodities purchased from State-approved lists (as opposed to a RFP) and offers of discounts based on multiyear commitments against the pace of innovation in the sector. For example, telecommunications costs continue to drop, making long-term contracts at fixed rates less attractive.