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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 August 23, 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, (james.hammond@doh.wa.gov)
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
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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
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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.
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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.
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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
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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
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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.
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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
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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
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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.
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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
