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Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project INVESTMENT PLAN WA Contract Number: N15762 Task/Deliverable ID: Task 3 Version: 2.0 Date Submitted: September 30, 2007 Prepared for: Washington State Department of Health, WIC Program Submitted by: MAXIMUS Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 DOCUMENT INFORMATION Document Information Document Title Investment Plan Project Name WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Deliverable/Task ID 3 Submission Date September 30, 2007 Version 2.0 Author Ellen Simon (Project Manager), Jon Haught (EBT Subject Matter Expert) WA Contract Number N15762 GA Agreement 32100 GA Tracking 18588 MAXIMUS Project No 1040998 (Service Center Charges) 1040997 (Invoicing) Creation Date September 4, 2007 Last Saved Date June 26, 2011 Date Accepted by Client September 28, 2007 Document Information Page i Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 DOCUMENT REVISION HISTORY Version Date Description 1.0 9/12/2007 Draft 2.0 9/30/2007 Final Version Document Revision History Page ii Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 PURPOSE OF DOCUMENT This Investment Plan has been developed by MAXIMUS to provide the information necessary for the Washington WIC Program to obtain Information Services Board (ISB) or Department of Information Services (DIS) approval to move forward with a project to implement an Electronic Benefits Transfer (EBT) system for the delivery of WIC benefits in the State of Washington. This document contains the required information for investment plans as described in the DIS document Information Technology Investment Standards, Policy No: 201-S1, Effective December 2000, Revised January 2003. Greater detail related to the project is found in the WIC EBT Feasibility Study and Cost Benefit Analysis submitted to the State on September 4, 2007. Purpose of Document Page iii Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 TABLE OF CONTENTS Document Information ................................................................... i Document Revision History ......................................................... ii Purpose of Document .................................................................. iii Table of Contents ......................................................................... iv Table of Exhibits ........................................................................... v 1 Investment Approval Request Form..................................... 1 2 Purpose of the planned investment ..................................... 3 2.1 Business Problem to be Solved or Opportunity to be Gained ............ 3 2.2 Background Information and Objectives ............................................ 3 2.2.1 Program Metrics ..............................................................................4 2.2.2 WIC EBT Vision ...............................................................................4 2.2.3 WIC EBT Goals ...............................................................................5 2.2.4 Desired Outcomes for WIC EBT ......................................................5 3 Business justification ............................................................ 7 3.1 Investment Relationship to Agency IT Portfolio and Investment Support of Agency Business Plan ...................................................... 7 3.1.1 Investment Relationship to the State's Technology Infrastructure ...7 3.1.2 Alternatives Considered ..................................................................7 3.1.3 Selected Alternative and Rationale for that Selection ......................8 3.2 Risk ..................................................................................................... 9 3.2.1 Risk Assessment .............................................................................9 3.2.2 Quality Assurance Process............................................................ 14 3.2.3 Conformance to the Technical Policies and Standards of the ISB, DIS, and the Acquiring Agency ...................................................... 15 3.3 Costs and Benefits ........................................................................... 17 3.3.1 Description of Existing Agency IT resources to be Used ............... 17 3.3.2 Description of IT Resource(s) to be Acquired ................................ 20 3.3.3 Cost-Benefit Analysis .................................................................... 21 3.3.4 Estimated Investment Cost ............................................................ 22 4 Acquisition Process/Approach ........................................... 24 4.1 Acquisition Method(s) to be Used .................................................... 24 4.2 Acquisition and Investment Implementation Schedules ................... 24 Table of Contents Page iv Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 TABLE OF EXHIBITS Exhibit 3-1 Decision Criteria Matrix ................................................................ 8 Exhibit 3-2 Severity Level Assessment ........................................................ 11 Exhibit 3-3 Risk Level Assessment .............................................................. 12 Exhibit 3-4 Initial Risk Assessment .............................................................. 13 Exhibit 3-5: Recommended Project Organization ......................................... 18 Exhibit 3-6: Summary of Detailed Cost Analysis .......................................... 22 Exhibit 4-1: Preliminary Schedule of Milestones ........................................... 25 Table of Exhibits Page v Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 1 Investment Approval Request Form This space For DIS/MOSTD use only: Investment Approval Request Department of Information Services For Information Technology Resources Management & Oversight of Strategic Technologies Division 360/902-2975 MS: 42445 1 Agency: Division: CFH/CWP/WIC Department of Health Community and Family Health Phone No. and E-Mail: Community Wellness and Prevention (360) 236-3626 Special Supplement Nutrition Program for Women, (email@example.com) Infants and Children Contact: Jim Hammond 2 Description of Resources: WIC is seeking to procure technology as Resource to be Acquired necessary to support the delivery of WIC food benefits using Electronics Benefit Transfer (EBT) technology. As is discussed in Type of Resource: the Investment Plan and the Feasibility Study, there are multiple Equipment proven technology solutions available to the agency. Two of these Software are in-house build and operate and the third is a fully outsourced Purchased Services choice. Resources required will of course, vary depending on the Personal Services selection. EBT is a complex undertaking involving a public / private Telecommunications: partnership, real time distributed financial transaction processing, Voice customer service, payment processing (settlement and reconciliation) Data and administrative support functionality. The final product will make Video use of all of the resources identified to the right, either acquired individually or wholly as a service provided by a third party vendor. Acquisition Method(s): Request for Quotation (RFQ) Request for Proposal (RFP) 3 Request for Quotation and Master Contract Check All That Apply Qualification (RFQQ) Inter-Agency Transfer Inter-Agency Transfer DIS Technology Brokering Interlocal Coop. Private Sector Strategic Purchasing Partnership Agency # Sole Source Contract # 1 4 Investment Cost (see definitions on back): $ $863,000 to $7,090,000 1 System Life Cycle Cost (see definitions on back): $ $11,553,000 to $16,442,000 5 Agency Approval (Signature): Date: 6 ISB/DIS Approval (Signature): Date: 1 The wide variance results from the multiple options and the unknown degree of retailer participation. See plan for details Section 1: Investment Approval Request Form Page 1 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 7 (FOR DIS USE ONLY) Comments: Section 1: Investment Approval Request Form Page 2 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 2 PURPOSE OF THE PLANNED INVESTMENT WIC is seeking to upgrade its benefit delivery process from the current paper based check system to Electronic Benefit Transfer (EBT) technology such as has been implemented so successfully in support of the Food Stamp program. . 2.1 Business Problem to be Solved or Opportunity to be Gained The Federal administrative and oversight agency for WIC, the USDA Food and Nutrition Services (FNS), has been promoting the use of EBT for WIC benefit delivery and has a long term strategy for all States to migrate benefit delivery to this more efficient technology. Washington‟s (and FNS‟) interest in EBT is based on a fundamental improvement in the quality of service. The WIC food benefit redemption process, which is a purchase of groceries in a retail grocer‟s check-out lane, is time consuming and complex when using the current paper based benefit delivery product. More significantly though, it is stigmatizing to the 103,000 Washington households that rely upon WIC benefits as a vital source of nutrition for their infants and children. The WIC checks are plainly identifiable during the check-out process and immediately brand the shopper as a WIC recipient which, in some people‟s minds, equates to being on welfare (even though WIC is a health program). It is for this reason that many eligible households do not participate in the WIC program. Federal dollars not being spent in Washington and missed opportunities for improving the health and welfare of one of Washington‟s most vulnerable populations, its expectant mothers, infants, and young children, are a direct result. EBT is a major step forward is removing many of the negatives associated with food benefit delivery and it provides a much more efficient and error free payment process. The client uses a plastic card to complete the purchase, making it essentially indistinguishable from the payment process being used by many other shoppers in the store. An important expected outcome of the move to EBT is an increase in program participation. Further, it is believed that EBT will provide significant program improvements for the agency, participant, and retailer. 2.2 Background Information and Objectives WIC is a federally funded grant program operated and administered within the State as a part of the Washington State Department of Health, Office of Community Wellness & Prevention (CWP), which includes programs such as the State Cancer Registry, Breast & Cervical Health, Diabetes Section 2: Purpose of the planned investment Page 3 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Control, Heart Health, and the Tobacco Control & Prevention Program. Federal regulatory oversight and administration is provided by the USDA Food and Nutrition Services. 2.2.1 Program Metrics The program brings approximately $110 million in Federal grant funds into the State along with an additional $26 million in infant formula rebates; A monthly average of 163,000 participants living in 103,000 unique households receive services from WIC; The program provides services to over 265,000 individuals each year; Every WIC dollar used to serve pregnant women saves $1.92 to $4.21 in Medicaid costs; WIC reduces the rate of very low birth-weight babies by 44%. It costs between $30,000 and $70,000 to raise a low or very low birth-weight baby to normal weight; Half of all of Washington‟s infants receive services from WIC; WIC services are provided at approximately 240 clinic locations throughout the State; WIC food benefits are provided though a network of 706 authorized retail grocers located throughout the State. In January 2004, the Washington WIC Program was selected from among four volunteer states by the United States Department of Agriculture (USDA) to participate in an experimental project to explore the technical feasibility of providing benefits to WIC clients through online EBT. This “Demonstration” project was part of the USDA‟s five-year plan to promote nationwide EBT use by WIC. At its conclusion in November 2005 the USDA found that “the project successfully met the project’s goal of demonstrating that WIC EBT transactions can be completed in a retail environment2.” This project positioned Washington State to move forward in pursuing EBT as a means for significant program improvement for the clients, retailers, and the agency. The objectives for WIC EBT (from the FNS 5 Year Plan) are as follows: 2.2.2 WIC EBT Vision In line with current trends and the overall public acceptance and growing expectation of doing business and receiving services electronically, the 2 Exec Summary - FNS-WA Online WIC EBT Outcomes & Feedback Report.doc Section 2: Purpose of the planned investment Page 4 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Special Supplemental Nutrition Program for Women, Infants and Children (WIC) will continue its initiatives to successfully migrate from a paper- based food benefit delivery system to an electronic benefits transfer system. 2.2.3 WIC EBT Goals Include WIC as an integral part of the national strategy towards modernizing and streamlining business practices through electronic solutions. Deliver WIC benefits and reconcile payments through an EBT system that is affordable at the statewide operational level. Enhance client services by improving access to prescribed WIC foods and simplifying the retail point-of-sale transaction to reduce stigma and improve shopping convenience. Increase accountability and streamline program monitoring for WIC State agencies. Make WIC benefit redemption and payments more efficient for retailers. 2.2.4 Desired Outcomes for WIC EBT The USDA Food and Nutrition Service is committed to maintaining the integrity in nutrition benefit delivery while fostering positive outcomes for WIC stakeholder groups, including participants, retailers, and WIC State agencies. The following is a list of identified positive outcomes in WIC EBT system solutions: Participant Outcomes Ability to purchase full food benefits within valid period Unrestricted number of shopping trips Convenient, easy and quick transaction Single transaction for all items purchased Secure transaction Discreet and confidential transactions Accurate listing of entitled/remaining benefits prior to and after shopping Increased time for nutrition education in clinic Improved targeted nutrition education based on redemption patterns Retailer Outcomes Participant purchases only WIC authorized foods Section 2: Purpose of the planned investment Page 5 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Ensures foods are not improperly substituted Reduces cashier error and need for training Secure transaction Single transaction for all items purchased Timely claims and settlement Fast and easy operation Numerous activity reports for WIC EBT More trips to store by participant equals increased purchases Reduces paperwork by eliminating paper food instruments National standards for WIC EBT process WIC State Agency Outcomes Ensures participant receives prescribed foods Provides data on type and amount of foods purchased Allows for accurate rebate billing on infant formula purchased Ensures that retailer claims are no more than shelf price Secure transaction Timely and accurate claims Reduces the amount of time and effort spent on retailer compliance activities Reduces the amount of time and effort in monitoring and reconciling retailer overcharges Reduces forgery and fraud opportunities Increases accountability Reduces paperwork Enables numerous reports on EBT activity to improve administrative efficiencies Streamlines clinic operations; increases time for nutrition education Section 2: Purpose of the planned investment Page 6 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 3 BUSINESS JUSTIFICATION 3.1 Investment Relationship to Agency IT Portfolio and Investment Support of Agency Business Plan The implementation of an EBT system for the delivery of WIC benefits will enhance the Agency IT Portfolio. Delivering benefits using an electronic method, thereby streamlining issuance and redemption processes is in line with Agency and Department objectives and goals. 3.1.1 Investment Relationship to the State's Technology Infrastructure As discussed below, there are several different approaches to implementing EBT. However, regardless of the alternative selected, there should not be a significant impact on technological capabilities. The Department of Health already operates a major data center that serves many clients, including the current WIC MIS application. To add EBT, a few additional servers may be needed but it is not technology with which the State is unfamiliar. The State also boasts a significant telecommunications infrastructure that can be leveraged for this project. And finally, WIC has strong IT capabilities that can help manage, design, construct, and operate an EBT solution. One of the alternatives for EBT is an outsourced solution. It is believed this choice will have minimal effect on infrastructure since a contractor will be supplying, managing and maintaining the required technology at their offsite facility. The other alternatives are in-house solutions that, for the most part, will conform to the Department standards. The primary change, for an online WIC EBT solution, will be the increased service levels required for the 7x24 high availability processing needed for WIC EBT transactions from retailers. Consequently, to operate the WIC EBT system, WIC may require additional support and space from the Department Data center, including additional fail-over processes and equipment to ensure 100% availability. However the overall infrastructure should not be significantly altered. 3.1.2 Alternatives Considered Using EBT for the delivery of WIC food benefits is the purpose for this Investment Plan. There are multiple functionally similar and equally proven technical approaches by which this objective may be achieved. In the course of developing a feasibility study for EBT, three primary solutions were analyzed: Section 3: Business justification Page 7 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 1. Offline in-house: This is a “smart card” approach that would rely upon a working solution ported from New Mexico / Wyoming as its basis. The State would customize the solution to its needs and would provide the system processing in-house at the Department of Health (DOH) data center facility. Some specialized services may be contracted as needed such as “Smart Card” expertise. 2. Online in-house: This is a magnetic stripe card approach that would rely upon a system ported from Kentucky as its basis. The State would customize the solution to its needs and would provide the system processing in-house at the DOH data center facility. This solution does require the State to step up to being a 7x24 high availability online data center. 3. Online outsource: This is a magnetic stripe card approach that would be wholly outsourced to a third party vendor that has credentials and a working WIC EBT system in place. The State would still have to make some modifications to its WIC management information system (MIS) but generally, all work effort (and risk) would shift to the contracted vendor. 3.1.3 Selected Alternative and Rationale for that Selection A decision matrix was developed to support a comparison between the three EBT alternatives and the current paper based alternative. Twelve criteria were used for the evaluation. Exhibit 3-1 Decision Criteria Matrix Implementation Alternatives Criteria Weight Offline Online mag Online mag Baseline Paper smartcard stripe card stripe card Checks (in-house) (in-house) (outsourced) Raw Adj. Raw Adj. Raw Adj. Raw Adj. Start up cost 1 5 5 1 1 2 2 4 4 Operations costs 2 4 8 5 10 3 6 1 2 Program 3 1 3 4 12 4 12 4 12 objectives Participant 3 1 3 4 12 5 15 5 15 friendly Retailer 3 2 6 3 9 3 9 3 9 acceptance Client service & 3 1 3 3 9 5 15 4 12 convenience Technology 2 5 10 3 6 3 6 4 8 Section 3: Business justification Page 8 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Exhibit 3-1 Decision Criteria Matrix Implementation Alternatives Criteria Weight Offline Online mag Online mag Baseline Paper smartcard stripe card stripe card Checks (in-house) (in-house) (outsourced) Raw Adj. Raw Adj. Raw Adj. Raw Adj. compatibility Technology risk 2 4 8 2 4 3 6 4 8 Implementation 1 5 5 3 3 3 3 4 4 risk Clinic process 2 3 6 4 8 4 8 4 8 Program 2 2 4 5 10 5 10 5 10 management Growth & 2 1 2 5 10 4 8 3 6 enhancement Totals 36 63 42 94 46 100 47 98 A complete methodology including a rationale for the scoring is found in the WIC EBT Feasibility Study. As can be seen, based on evaluation of the full set of the objectives, all three of the EBT solutions scored significantly higher than the check process. Among the EBT alternatives, the results were close; there was no obvious choice. EBT is the preferred alternative. Which technical solution remains an open question. An important contributor to this decision is the WIC retail community. The State will be asking this important group of stakeholders to make significant financial and resource commitments to implement EBT in their stores and should consider seriously their preferred direction for the initiative. 3.2 Risk 3.2.1 Risk Assessment A risk assessment of the EBT implementation project was performed following the guidelines outlined in the Department of Information Services, Information Technology Portfolio Management Standards document. MAXIMUS, WIC and DIS staff met on August 15, 2007 and walked through the risk assessment process. The group determined based on the severity level and risk level selections that the EBT implementation project is categorized as a Level 2 project. The completed severity and risk criteria tables have been provided in the following section. Section 3: Business justification Page 9 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Levels are assigned to determine the appropriate level of oversight. Oversight for a Level 2 project is described as follows: DIS oversight of investments at this level is performed by DIS MOST staff, as appropriate. The specific activities required of an agency and the extent of DIS MOST staff involvement under Level 2 oversight are determined collaboratively between the two parties. These typically depend on several factors, including, but not limited to: the experience of the agency with similar investments; the effect of legislative or public opinion in the event of negative media coverage; the interest of specific ISB members (e.g., effect on an ISB legislative member’s district); essentially, the criteria contained in the severity/risk matrix. For all Level 2 investments, the agency shall develop the appropriate type and quality of project management documentation and materials commensurate with the project’s severity and risk. Should the agency and DIS MOST staff determine that the project requires DIS oversight, at a minimum, the agency shall provide copies of the project status reports, and key project documents and materials to its MOST consultant and invite the consultant to attend all steering committee and key project status meetings. The agency shall include all Level 2 investments in its IT portfolio, whether or not the projects are under DIS oversight. Severity and Risk Matrices Severity Level Criteria The severity matrix assesses the proposed project‟s impact on citizens and State operations, its visibility to stakeholders, and the consequences of project failure. The non-shaded cells identify the criteria the assessment group agreed was appropriate for this project. Section 3: Business justification Page 10 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Exhibit 3-2 Severity Level Assessment Categories Impact on Visibility Impact on State Failure or Nil Levels Clients Operations Consequences High Direct contact with Highly visible to Statewide or multiple Inability to meet citizens, political public, trading agency involvement / legislative mandate or subdivisions, and partners, political impact. agency mission. service providers – subdivisions and Initial mainframe Loss of significant including benefits Legislature. acquisitions or network federal funding. payments and Likely subject to acquisitions. transactions. hearings. System processes sensitive / confidential data (e.g. medical, SSN, credit card #’s). Medium Indirect impacts on Some visibility to the Multiple divisions or Potential failure of citizens through Legislature, trading programs within aging systems. management systems partners, or public the agency. that support decisions system / program that are viewed as supports. important by the May be subject to public. legislative hearing. Access by citizens for information and research purposes. Low Agency operations Internal agency only. Single division. Loss of opportunity only. Improve or expand for improved existing networks or service delivery or mainframes with efficiency. similar technology. Failure to resolve customer service complaints or requests. Risk Level Criteria The risk matrix measures the impact of the project on the organization, the effort needed to complete the project, the stability of the proposed technology, and agency preparedness. The non-shaded cells identify the criteria the assessment group agreed was appropriate for this project. Section 3: Business justification Page 11 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Exhibit 3-3 Risk Level Assessment Categories Functional Impact on Development Effort & Technology Capability & Business Processes or Resources Management Levels Rules High Significant change to Over $5 million. Emerging. Minimal executive business rules. Development and Unproven. sponsorship. Replacement of a implementation Two or more of the Agency uses ad-hoc mission critical system. exceeds 24 following are new processes. Multiple organizations months.* for agency Agency and/or vendor involved. Requires a second technology staff or track record suggests Requires extensive and decision package. integrator, or are inability to mitigate risk substantial job training new to the agency on project requiring a for work groups. architecture: given level of * Clock starts after programming development effort. feasibility study or language; operating project approval systems; database and release of products; funding. development tools; data communications technology. Requires PKI certificate. Complex architecture – greater than 2 tier. Medium Moderate change to Under $5 million but New in agency with Executive sponsor business rules. over agency delegated 3rd party expertise and knowledgeable but not Major enhancement authority. knowledge transfer. actively engaged. or moderate change 12 to 24 months for One of the System integrator of mission critical development and technologies listed under contract with system. implementation. * above is new for agency technical Medium complexity agency development participation. business staff. Agency and/or vendor process(es). * Clock starts after record indicates good Requires moderate feasibility study or level of success but job training. project approval and without the structure release of funding. for repeatability. Low Insignificant or no Within agency Standard, proven Strong executive change to business delegated authority. agency technology. sponsorship. rules. Under 12 months for Agency and vendor Low complexity development and have strong ability business process(es). implementation.* to mitigate risk on a Some job training development could be required. project. * Clock starts after Project staff uses feasibility study or documented and project approval and repeatable release of funding. processes for tracking status, problems, and change. Agency or vendor is CMM Level 3 equivalent or above. Section 3: Business justification Page 12 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Risk Analysis The following table describes the initial risks identified for this project. Risk management is an ongoing activity; as the State moves forward with future phases of this project, this initial risk analysis can be used as a baseline and updated as the project progresses. Exhibit 3-4 Initial Risk Assessment Impact # Risk Event or Assumption Mitigation Strategy Area(s) 1. Availability of DOH Resources Time, The number of resources is dependent on Successful completion of this project Cost, whether an in-house or outsourced solution will require support from DOH technical Quality is selected. Once that is known, the state and program staff. should begin to define the resources required to support the implementation and create a plan that identifies those needs and how best to fill that need (for example it might be better to contract for planning, quality assurance, or other project support). Regardless of the solution, the State will need resources for project management. Once the decision is made to move forward, a dedicated project manager should be assigned. 2. Retailer Buy-in Time, Once a decision has been made to move WIC EBT is a public / private sector Cost, forward with EBT, the State needs to begin endeavor. Without acceptance of the Quality, engaging the retailer community. This WIC EBT program by the vendor Scope project has made an initial step toward that community, it will be very difficult to goal through the retailer survey. The State implement. needs to continue that work through retailer forums and communication with retail associations and industry groups. 3. Emerging Industry Scope, This study is the first step in whittling down There is no established norm for how to Cost, the State’s alternatives. Out of this study implement WIC EBT. It is important Time three distinct alternatives have been that the State does not get lost in a identified. Additionally, regardless of the myriad of alternatives, service and solution there are two approaches to the implementation options and partnership retail implementation of WIC EBT. The arrangements. next step for the State is to begin engaging the retailer community in order to better identify the alternatives that will be best for all stakeholders. Section 3: Business justification Page 13 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Exhibit 3-4 Initial Risk Assessment Impact # Risk Event or Assumption Mitigation Strategy Area(s) 4. Competing Technologies Scope, The outcome of this project will be the There are strong proponents (and Cost, identification of three alternatives (two detractors) for the two major competing Time online and one offline). Again, the next technologies – online and offline. step for the State is to begin engaging the Currently, the choice is not clear. retailer community in order to better identify the alternatives that will be best for all stakeholders. 5. Program Policy Scope, The new food package regulations are FNS is in the process of some major Cost, expected to be released near the end of changes in WIC administration including Time this project. Adjustments to foods should new food packages, cost containment, not significantly impact EBT as the cat/sub fresh fruits and vegetables, and an cat can be adjusted to accommodate. It is update to the FReD to include EBT expected that FNS will begin to define Readiness. Shifts in Federal policy federal regulations or policy regarding WIC could impact Washington’s business EBT, but it is likely to be consistent with model. how states are currently operating their EBT systems. Washington should look to other states and follow an established model of operation. The State should continue to work closely with the FNS representatives at the region and headquarters and other state WIC agencies as well as stay active in forums such as the WIC EBT Users’ Group and the EBT Next Generation Conference to remain abreast of the latest activities in the WIC EBT arena. 7. Program Funding Cost, The State needs to stay abreast of funding There is no Federal mandate to move to Time, opportunities and continue to submit grant WIC EBT (although there may be a Scope requests to FNS to further EBT efforts. The desire) and consequently, no pot of State may also want to consider alternate money to fund these projects. It is funding sources or funding strategies. unclear at this time if EBT is less costly than paper. 3.2.2 Quality Assurance Process The project should have a quality management plan (which can be incorporated into an overall project management plan). The quality management plan should describe: Any standards that will be used or apply to the project What metrics and success criteria will be used How will quality will be measured Section 3: Business justification Page 14 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 What actions are taken to prevent quality issues What actions are taken to resolved identified quality issues Roles and responsibilities of the project team and/or quality assurance team that will be involved in quality management activities Schedule of quality management activities or milestones It is recommended that for this project an experienced EBT quality assurance contractor be hired to provide quality assurance oversight of the design, development and implementation phases of the project. Because WIC EBT is technology with its own particular nuances and its implementation affects a large number of stakeholders, it is important that the State contract with a firm experienced in not only providing quality assurance services, but has specifically provided these services for EBT projects and has a strong understanding of the WIC program, systems and operations. The responsibility of the quality assurance contractor will be to ensure that all product deliverables and services are complete and of the highest quality consistent with federal, industry, and State standards. Additionally they will monitor the project work plan; identify, and provide early warning of deviations from the expected activities. 3.2.3 Conformance to the Technical Policies and Standards of the ISB, DIS, and the Acquiring Agency Strategic Focus (Business and IT goals) The State has a strategic vision for its information technology platforms to: Foster improved program management; Provide for cost effective service delivery; Enhance user capabilities and experience; Allow for integration of information and services across program boundaries to create an environment for holistic client management. EBT for WIC fits very well into this vision. Capabilities for improved program management and an enhanced user experience are pervasive and include: Better management of food costs Improved tracking of program utilization Greatly enhanced redemption process Section 3: Business justification Page 15 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Significant cost efficiencies in retailer store By making the investment in EBT, the State can, for essentially the same ongoing dollars it is now spending, provide far superior service delivery. The WIC program is already vested in information and service sharing. Vital Statistics, CDC, Medicaid, Food Stamps, Head Start, EPSDT, CSFP, and Community Health are some of the partners with whom WIC routinely exchanges data. Adding EBT as the delivery platform for WIC even further opens the door for sharing. It has the potential to be a platform that could accommodate delivery needs for multiple programs (although this is outside the scope of the current concept for EBT). Further, it enhances the quantity and quality of data available for program management, a resource that may have possibilities for holistic management of client services across the Department of Health. Effect on Technology Infrastructure The following items highlight areas in which an EBT implementation project can take advantage of existing information, tools or standards within the Department.3 Processing and Balance Inquiry: Use of DIRMs lessons learned from production applications during the implementation of WIN-Server 2003, Internet Information Services 6 and the Microsoft .Net product lines. Software Version Control: DOH uses a software version control package and WIC also has a software version package called Visual Source Save (VSS) Testing or report of problems: The agency has Test Track Pro (TTP) to which WIC also has access. For tracking help desk calls, WIC uses a software program called HEAT. Migration of SQL Server 2005 to New Equipment. WIC currently uses Sybase 9.2 which is about to be moved to new equipment. A service can be built to access the necessary information regardless of the EBT alternative selected. Customer Service: With some enhancements the Call Center could take the 7/24 requests, this would be part of the Client Services/Help Desk. Training: To assist in the training of the retailers and clinics WIC can take advantage of DOH Satellite Distribution System where training can be done from the staff‟s desk or the recorded broadcasts can be for 3 The information in this section is based on the „Information Services Board Portfolio Management Policy, IT Security Policy, Disaster Recovery/Business Resumption Planning Policy and Geographic Information System standard‟ document. Section 3: Business justification Page 16 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 later distribution or creation of training programs on DVD for distribution. IT policies and procedures: The Department has an established policy and procedure on how IT projects are selected and includes procedures for IT plans, acquisition process, and the review process. Technical Standard: Information Technology proposal are reviewed for adherence to State and Agency technical standard during the initiation phase of a project. Exceptions to standard are reviewed by the program manager, division Chief Administrator the IT standard Coordinator and the agency Chief Information Officer. Disaster/Recovery Project: This project will need to be included in the D/R project. Also, included in the alternate feed to DIS for SGN/PGN connections in the event of a regional disaster and don‟t forget Business Continuity. Data Integration Initiative: Sharing of Technology Knowledge with other programs. 3.3 Costs and Benefits 3.3.1 Description of Existing Agency IT resources to be Used Technology Infrastructure EBT will be operated out of the existing department data center. It will leverage existing servers, operations capabilities, network services and data communications links to the fullest extent possible. Staffing During the design, development and implementation phases of the project there will be significant demands for experienced IT professionals in all categories. The in-house versus outsourced choice will have a large impact on the absolute level of staffing required. Washington WIC has strong IT capabilities made up of a combination of in-house and contracted staff. It is presumed that these resources would be used to support the EBT initiative and would be augmented as necessary. The following organization chart provides an overview of the recommend WIC EBT DDI project team organization. Section 3: Business justification Page 17 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Steering Oversight Committee Entities Subject Matter Project Experts Manager Quality Operations Technology Vendor Assurance Manager Manager Manager Policy Software Retail System Certification Training Network UPC Maintenance Customer System Service Operations Enabling Testing Exhibit 3-5: Recommended Project Organization The WIC EBT project team should include the following capabilities: Project Manager: Provides daily operations management and has accountability and responsibility for the success of the project. Subject Matter Experts: Individuals available to the project manager to consult on specific areas of expertise needed to support the project. General EBT expertise to provide guidance and technical support to the project Smart Card expertise (if needed) Point of Sale systems development (if needed) Payment system transaction processing Quality assurance: Ensure that all product deliverables and services are complete and of the highest quality consistent with Section 3: Business justification Page 18 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 federal, industry, and State standards. Monitor the project work plan; identify, and provide early warning of deviations from the expected activities. Operations Manager: Responsible for ensuring the clinics and the State are fully enabled to implement EBT. Policy: Modify and implement program policy and business process changes as necessary to for EBT. Training: Ensure all State, agency and clinic staff, as well as clients, are properly trained for EBT. Customer Service: Manage the card issuance process, coordinate a help desk solution, manage development and distribution of documentation Enabling: Direction and coordination of hardware deployment, network setup, and training as necessary to enable the clinics and the participants. Technology Manager: Oversee all aspects of the technical delivery of EBT. Manage the acceptance process and productive implementation. Software: Develop, test and implement modifications to the CIMS application to be EBT capable; develop, manage, and implement modifications to the ported EBT host solution (if this is the State‟s direction). Manage any conversion of data necessary to support EBT. Network: Design and implement a network solution to support interfaces between CIMS and the EBT host, communications between the EBT host and the retail groceries, and communications between the clinics and the EBT host. System Operations: Design and implementation of all central hardware (computers and peripherals) necessary for EBT, development of operations manuals and procedures. Testing: Development and implementation of test plans and scripts as necessary to ensure that the EBT product meets all system requirements and is fully capable of providing the service for which it was designed. Vendor Manager: Responsible for the management and coordination of all activities required to get the vendor community enabled for EBT, including vendor communications, assistance with integration (or deployment of stand-aside equipment), testing and training Certification: All systems being used by retailers to participate in the Washington EBT project will require a state certification Section 3: Business justification Page 19 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 to ensure they comply with program standards, requirements and transaction policy. UPC Maintenance: UPCs for authorized foods will need to be collected and added to the EBT database. The bulk of this effort occurs during implementation and rollout, but ongoing maintenance is required to add new UPCs when new items are approved or food packaging changes. Decisions as to the specific make up of the design, develop, and implement project team are somewhat dependent on the choice of solution and the time availability of the resources. However, it is believed that once EBT is implemented, it can be operated easily within the current WIC staffing levels. The content of some jobs may change but in general, the total level of work effort should remain constant or even decrease. 3.3.2 Description of IT Resource(s) to be Acquired Technology Infrastructure If an outsourced solution is chosen, there will be minimal new technology infrastructure required. However, for an in-house solution, additional computing capacity (servers) will be required. Depending on the technology used (online or offline), additional telecommunications capabilities will also be needed to support dial-up redemption transactions and help desk calls. Help desk infrastructure such as ARU and ACD capabilities may also be desirable and there may be considerations related to infrastructure in support of businesses continuity requirements. Technology in the form of stand aside POS systems and balance inquiry devices may have to be supplied to the authorized retailers. For the two in-house alternatives, it is assumed that an existing system will be ported from another State WIC program to Washington where it will be customized to meet Washington‟s needs. Staff A proposed project organization is provided above. It is unsure though at this point in the planning as to what extent new staff will be required to execute the project. However, regardless of approach, it is suggested that the State will contract for services in certain areas of expertise. Section 3: Business justification Page 20 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Quality assurance, independent verification/validation IV&V or implementation support that has experience and expertise in the design, development and implementation of EBT systems Project management during the DDI phase; this will be a full time job for someone with primarily good project management skills and secondarily (and optionally) with some WIC, EBT, and technology experience. Vendor relations: this will be a full time job for someone with a combination of public relations, marketing and technology skills to work with the vendor community in getting them on-board with the project and getting them EBT ready within the project timelines. Subject matter expertise (depending on solution) may be needed in areas such as Smart Card technology, online transaction processing, help desk configuration, or POS systems development and deployment. 3.3.3 Cost-Benefit Analysis A detailed Cost Benefit Analysis has been provided with the WIC EBT Feasibility Study. Based on purely financial incentives, an investment in WIC EBT would be marginally justifiable. Once it is implemented, it is believed that it can be sustained for about the same cost as the current check system. However, implementation of EBT is expected to cost between $2.5 and $7 million depending on the degree of retailer participation in the costs. EBT, as has been mentioned previously, is about process improvement and a greatly enhanced client experience. A major anticipated outcome would be to increase program participation; enable more of Washington‟s children to grow up healthy. There are, though, several elements where WIC may stand to benefit financially, but these are soft in nature and difficult to quantify. WIC vendors will benefit enormously from EBT. The cost savings to the vendor community as a whole is estimated to potentially exceed $150,000 per month. Unfortunately, these cost savings do not accrue to the State or the WIC program. EBT does offer a possibility for reduced food costs through improved and more granular food management. This in turn opens the door to greater program participation; more dollars would be available for additional clients. Unfortunately, there presently is not enough experience with EBT to know the full range of possibilities for enhanced food management and the Section 3: Business justification Page 21 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 extent to which food costs could be reduced. However, while it is anecdotal, Wyoming, the only State with a fully implemented EBT system, also has the lowest food costs in the country. Whether or not these two facts are related is unclear. The important point is that EBT, for about the same money that is being spent on checks, will offer a far superior benefit delivery process for all stakeholders involved. 3.3.4 Estimated Investment Cost Financial models were developed to estimate the expected costs for building and operating WIC EBT. In these models, the costs to enable the State for EBT were separated from those costs related to enabling the WIC Retailers for EBT. The reason for this approach is two fold. 1. There are multiple strategies by which the retailers may be enabled, each with a different cost; 2. Because the retailers stand to benefit financially from EBT, we felt it important to separate these costs so as to support any negotiation with the retailers related to financial participation in the cost of the project. The following table is a summary of the expected costs.. Exhibit 3-6: Summary of Detailed Cost Analysis On the left it provides the enabling costs, both start-up and on-going, for all three scenarios, for the State and under the two retail strategies. On the Section 3: Business justification Page 22 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 right, it sums the costs into a total for that alternative. The baseline cost for the paper solution is in the lower left. In the lower right are the estimated financial incentives for retailers. As an example, it is estimated that it would require $2.77 million to enable the State to implement an in-house offline EBT solution. The State may also have to spend an additional $3.18 to $4.33 million to enable the retailers. However, it is hoped that the retailers will participate in the cost of enabling their stores and consequently, this latter cost may be negotiable. So, given these variables, it is estimated the State may spend between $2.77 million (full retailer cost participation) and ($2.77 + $4.33) = $7.1 million (minimal retailer cost participation) to implement EBT. The lowest investment cost is for the outsourced solution. However, this is not really a fair comparison with the other two alternatives because the vendor is bearing the upfront costs and is passing them back to the state in the form of higher operating costs. Section 3: Business justification Page 23 Washington State Department of Health WIC Program WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 4 ACQUISITION PROCESS/APPROACH 4.1 Acquisition Method(s) to be Used The acquisition process will differ based on the alternative chosen. An outsourced approach for a full service EBT solution will result in a multi-million dollar contract to the selected service provider. Presently there are at least two providers of such a solution. Because of the size of the procurement, Washington will most likely want to use a procurement option such as an RFP that provides for competitive bidding, fully defines the expected product delivery, and offers check points for oversight and control. For the in-house solutions, the expectation is that working software will be ported to Washington and will be customized by the State to meet its needs. In this case, it is believed that there may be several smaller procurements for things like QA services and implementation support. There may also be personnel service contracts for project management and software development support. There are multiple organizations and individuals that can provide these services to the State. Consequently, the State should consider procurement options that are competitive and that will provide the needed expertise and experience yet are efficient based on the size of the procurement. Because WIC is a federally funded program, the USDA Food and Nutrition Services has, by statute, regulatory and oversight authority over State programs. FNS will usually defer procurement decisions to State rules and regulations, but does expect them to generally be open and competitive according to its published rules and regulations. 4.2 Acquisition and Investment Implementation Schedules Washington should realistically plan for a twenty-four to thirty month effort to implement EBT. The following table presents a preliminary set of milestone tasks that must be competed and it assigns a rough time line for the work effort. A start date of Jan. 2008 is assumed. Of course, the actual task list and time line will have some differences depending on the alternative selected. For example, a fully in-house solution may be able to eliminate some of the time allotted for development and execution of procurement documents. However, this table is representative of what the State can expect and should facilitate the feasibility discussion. Section 4: Acquisition Process/Approach Page 24 Washington Washington State Department of Health WIC Program WIC EBT WIC EBT Feasibility Study/ Cost Benefit Analysis & Investment Plan Project Investment Plan, Version 2.0 Planning Schedule and Work elements Oct. 2008 Apr. 2009 July 2009 Jan. 2008 Jan. 2008 Apr. 2008 July 2008 Jan. 2009 Jan. 2009 Oct. 2009 Oct. 2009 Jan. 2010 Apr. 2010 Planning Activities Concept dev’lp / alternative selection IAPD submission through approval RFP( s) Development RFP (s) WA. and FNS approval RFP (s) issuance through evaluation Vendor (s) selection through start work Implementation Activities Requirements validation Concept and Architecture design Detail system design and approval System development and unit testing Telecommunications design Hardware planning and design Test planning and development Card design and procurement Stand aside POS procurement Retailer integration Hardware Implementation Functional and Integration testing Telecommunications implementation Vendor certifications / readiness System and Acceptance testing Clinic installations Staff Training Conversion and Go live (Pilot) State wide rollout Exhibit 4-1: Preliminary Schedule of Milestones One of the longer lead time elements, regardless of alternative, is to get the retailers enabled for EBT. If retailers are going to integrate EBT into their store cash register environments, significant lead time is required. The retailer survey demonstrated that retailers would prefer 18 months to 2 years to prepare for EBT, but might be able to accommodate one year. The above schedule has this task starting as soon as an approval for the project is received. It is assumed that the retailers will be fully engaged during the planning stages of the project and can begin preparing their work efforts well before this time line so they can “hit the ground running” when project approval is received. Section 4: Acquisition Process/Approach Page 25
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