AG-3198-S-11-0034 RFP.pdf

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AG-3198-S-11-0034

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72 2 of

RFP: AG-3198-S-11-0034 Page 3

i. This is a combined synopsis/solicitation for commercial items prepared in accordance with the format in Subpart 12.6, as supplemented with additional information included in this notice. This announcement constitutes the only solicitation; proposals are being requested and a written solicitation will not be used.

This requirement is being procured in conjunction with FAR Part 15.

ii. The solicitation number for this acquisition is RFP AG-3198-S-11-0034. This solicitation is issued as a Request for Proposals.

iii. The solicitation document and incorporated provisions and clauses are those in effect through Federal Acquisition Circular 2005-50.

iv. Only one contract will be awarded under this solicitation.

v. The attached solicitation provides the description of the requirement being procured.

RFP: AG-3198-S-11-0034 Page 4

SECTION B – SUPPLIES OR SERVICES AND PRICES/COSTS

This is commercial item, performance based firm fixed-price indefinite quantity contract

(FFP/IDIQ).

The contractor shall provide all management, supervision, labor and equipment, and shall plan, schedule, coordinate and assure effective performance of all services/tasks as described in the RFP.

The ordering period for this IDIQ contract is a base plus 4-12 month option periods for a total of five years. Period of performance for each task order shall be established at the task order level. Completion dates for orders placed during the ordering period shall not extend beyond the IDIQ Ordering Period.

The Government will issue delivery orders in accordance with the Ordering clause 52.216-18 and the Indefinite Quantity clause 52.216-22.

B.1 MINIMUM AND MAXIMUM ORDERS

Minimum Order: $100,000.00 (The guaranteed minimum that the Government is obligated to purchase under this contract)

Maximum Order: $8,000,000.00 (The contractor is not obligated to honor in excess of)

Additional purchases over the minimum up to the maximum will be ordered if and as needed by the Government, but no guarantee exists beyond the minimum.

B.2 IDIQ’S CLIN PRICING

(a) Insert the total fixed price for each CLIN. The Government anticipates awarding

CLIN 001 at the time of the IDIQ award.

RFP: AG-3198-S-11-0034 Page 5

CLIN

# DESCRIPTION

Total

Firm

Fixed

Price

001 National Estimates of NSLP and SBP Erroneous

Payments

(This shall cover Objectives 1, 2, and 3, page 19 of the RFP)

002 Explore alternatives to generate State-level estimates of erroneous payments

003 Conduct On-site Data Collection and Produce State-level Estimates of Erroneous Payments for One State

004 Create and Validate Estimation Models for

Generating Annual Estimates of Erroneous Payments at the State-level

005 Produce Separate Estimates of Erroneous Payments for LEAs Participating in the Community Eligibility

Option.

006 NTE Travel Costs $

Insert Total Price for CLINs $

Travel Costs:

When applicable, travel costs shall be proposed within the per diem rate schedule established by GSA.

(b) For price evaluation purpose, please insert the price breakdown for tasks used to complete the CLIN 001 thru 006; the price shall be inclusive of all ―fully burdened‖ costs

(e.g., travel, other direct costs, labor) associated with completing each task.

RFP: AG-3198-S-11-0034 Page 6

Relate d

Tasks

DESCRIPTION

Total

Firm

Fixed

Price

Initial Study Design Review Discussions with

FNS

Develop the Final Study Design Document

Develop Data Collection Instruments and OMB

Clearance Package

Assemble Sampling Frame and Draw a National

Sample of SFAs and Recruit SFAs to Participate in the Study

Teleconferences With the Selected School Districts

Prepare Data Collection Training Package and Data

Collection Manuals

7 Select and Train Data Collectors $

8 Select the Student/Household Sample $

Collect Onsite Data Related to School Year 2012-13 from School Districts and Selected Households

Create Study Database and Analyze Data

11 Presentation of Preliminary Findings from Onsite Data Collection

RFP: AG-3198-S-11-0034 Page 7

12 Prepare Final Report $

13 Prepare and Submit Data Files $

14 Dissemination of Study Findings $

15 Administrative Reporting Requirements $

16 Creating and Validating Estimation Models for Generating Annual Estimates of Erroneous Payments

Prepare a White Paper Exploring Alternatives to

Develop State-Level Estimates of Erroneous

Payments (Underpayments, Overpayments, and

Total Erroneous Payments)

Produce State-Level Estimates of Erroneous

Payments for One State using On-site Primary Data

Collection

Creating and Validating Estimation Models for

Generating Annual Estimates of Erroneous Payments at the State-level

Produce Separate Estimates of Erroneous Payments for LEAs Participating in the Community Eligibility

Option

(c) For Price evaluation purpose, please insert the labor category, rate, total number of labor hours used to complete the task orders in table (b)

Overall Percentage discount is: _____ %

RFP: AG-3198-S-11-0034 Page 8

Labor Category Rate Number of Hours

Total Dollar

(d) For Price evaluation purpose, please insert the materials and the other direct costs used to complete the tasks in table (b)

Description Quantity Units Price Total

The Government will issue task orders in accordance with the ordering clause 52.216- 18 and the Indefinite Quantity clause 52.216-22.

SECTION C – STATEMENT OF WORK (SOW)

C.1 INTRODUCTION

Under ―The Improper Payment Information Act of 2002 (Public Law 107-300),‖ the Department of Agriculture (USDA) is required to identify and reduce erroneous payments including overpayments and underpayments in various programs including the National School Lunch Program (NSLP) and the School Breakfast Program. Both programs have an extremely complicated administrative and operational structure, with risk of improper payments present at multiple stages in the benefit determination, benefit delivery, reimbursement claiming, payment, and program oversight process.

Erroneous payments in the NSLP and SBP can result as a result of misclassification of the school meal eligibility status of participating students or improper meal counting and

RFP: AG-3198-S-11-0034 Page 9 claiming of reimbursable meals. Misclassification of eligibility status can occur in several ways: (1) School district staff may make administrative errors during the approval or verification processing of applications, the processing of direct certification information, or the recording or updating of student‘s meal ticket status in the meal counting system;

or (2) Households can provide incorrect information (either unintentional or intentional) with respect to household size, household income, or participation in other means-tested programs at the time of application or verification. An over- or under-payment results when a misclassified student receives a reimbursable meal that is claimed for reimbursement that does not correctly reflect the student‘s true eligibility status.

Improper meal counting and claiming can occur when: (1) a school records the meal served to a properly classified student in an incorrect meal reimbursement classification;

(2) the school or district incorrectly consolidates recorded meal counts; and (3) the district claims and receives reimbursement for meals that were not served.

The Food and Nutrition Service (FNS) seeks a qualified contractor to (1) produce national estimates of overpayment, underpayment and overall erroneous payments made under NSLP and SBP resulting from certification error and meal counting and claiming error for School Year (SY) 2012-2013; and (2) develop and validate estimation models to be used by USDA‘s FNS staff for updating the erroneous payment estimate annually with NSLP and SBP administrative records and extant data (i.e. without extensive collection of new data between national studies). FNS does not have the resources to conduct large nationally representative data collection effort to measure improper payments comprehensively on an annual basis. The development of an estimation model to produce updated annual estimates using available extant data is a pragmatic approach to meeting the intent of the Improper Payments Information Act of 2002. In addition, this procurement includes an optional task to examine alternatives to develop estimates of erroneous payment estimates at the State level and the resources required to develop these estimates.

This statement of work consists of four parts. Part I provides background information on the study. Part II presents the study objectives and research questions of interest to the FNS. Part III provides an overview of the work to be performed. Part IV details the study tasks and deliverables.

C.2 BACKGROUND

Need for the Study

On November 26, 2002, Congress enacted the Improper Payments Information Act of 2002, P.L. 107-300 (http://www.dol.gov/ocfo/media/regs/IPIA.pdf). This Act requires the Department of Agriculture (USDA) to report annually on the extent of erroneous payments in various programs, including the National School Lunch Program (NSLP) and School Breakfast Program (SBP), that may be susceptible to significant erroneous payments (exceeding $10 million and 2.5 percent of benefits paid) and report annually on the actions they are taking to reduce these erroneous payments. An OMB directive, http://www.dol.gov/ocfo/media/regs/IPIA.pdf

RFP: AG-3198-S-11-0034 Page 10 issued May 21, 2003, provides specific guidance for Agencies to implement the provisions of this Act (http://www.whitehouse.gov/omb/memoranda_m03-13/). This directive states that annual erroneous payment estimate is the gross (not net) total of both overpayments and underpayments i.e. it is the sum of the absolute value of overpayments and underpayments.

On November 20, 2009 President Obama issued Executive Order 13520 aimed at reducing improper payments (http://edocket.access.gpo.gov/2009/pdf/E9-28493.pdf).

The purpose is ―to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal Programs serve and provide access to their intended beneficiaries.‖

To comply with the Improper Payments Information Act of 2002, USDA needs a reliable measure to estimate erroneous payments on an annual basis. A large-scale data collection for a nationally representative study for estimating erroneous payments could be conducted periodically but it would be cost-prohibitive to conduct such a study annually. Thus USDA also needs reliable estimation models that could be used by USDA staff for updating erroneous payment estimates annually. These estimation models would rely on extant data sources for the annual updates.

Definition of Erroneous Payment Error

For this study ―erroneous payment‖ is defined as the gross of overpayments and underpayments of the differential payments for reimbursable meals served to students incorrectly certified as free or reduced price eligible. All NSLP and SBP reimbursable meals served to enrolled students at participating schools are eligible for reimbursement at the ―paid eligible‖ rate (the rate which applies for meals served to students who are not certified as eligible for free or reduced price meals.) However, the differential payment for free and reduced price meals is determined differently for the NSLP and the SBP.

In the NSLP, the ‗paid‘ rate is established in Section 4 of the National School Lunch Act (NSLA); the Section 4 rate is paid for all meals served. Section 11 of the NSLA establishes additional reimbursement (‗special assistance payment‘) for meals served to students certified eligible for free and reduced price meals. The Section 11 payment is paid in addition to the Section 4 for payment for those meals served to children certified eligible for free or reduced price meals. For the NSLP, we are interested in determining the error rate related to payments under Section 11 of the NSLP.

In the SBP, payment rates for paid, reduced price, and free meals are established in Section 4 of the Child Nutrition Act of 1966 (CNA). For the SBP, we are interested in determining the error rate related to the difference between the reimbursement rate for paid meals and the reimbursement rates for reduced price and free meals (including the additional payments for ‗severe need‘ free and reduced price meals.)

http://www.whitehouse.gov/omb/memoranda_m03-13/ http://edocket.access.gpo.gov/2009/pdf/E9-28493.pdf

RFP: AG-3198-S-11-0034 Page 11

The purpose of this study is to determine the annual estimated amount of erroneous payments as defined above (overpayments, underpayments, and gross total of overpayments and underpayments) made under NSLP and SBP as a result of misclassification of student eligibility status. Examples of over and underpayments are provided in the table below.

Certification Status on File

Actual Eligibility

Program Participant

Type of Payment Error

Free Reduced Price Yes Overpayment Free Paid Yes Overpayment Reduced Price Paid Yes Overpayment Reduced Price Free Yes Underpayment

Estimates of payments that would have been made for those ―paid‖ participating students, had they not been incorrectly denied free or reduced price benefits, will not be included in the underpayment error as it is not possible to ascertain what their actual participation in NSLP and/or SBP would have been had they been accurately certified to receive free or reduced price meals. These errors will be used for determining case error rate i.e. for computing what percentage of denied applications is incorrectly denied and what percentage of eligible applications are correctly classified.

The computation of erroneous payments to schools/school districts should include errors associated with certification status, verification of eligibility, and recording and updating of student status in the meal counting system, and also factor in participation in NSLP and SBP.

Additional Considerations in Determining Erroneous Payments

Erroneous payments also result when schools/school districts submit improper meal counts and claims for reimbursable meals. A meal count may be incorrect because a meal is not counted and claimed in the category which reflects the students eligibility, because meals counts are improperly totaled or transmitted, or because reimbursement is claimed for meals which are not served or which are served to ineligible participants (e.g. adults). Therefore, improper meal counts can result in an erroneous payment for either the free/reduced price component of the reimbursement (if the meal is claimed in the improper category) or for the entire amount of the reimbursement (if a claim is paid for a meal which was not served or served to an ineligible participant.)

FNS believes that determining how the interaction between misclassification and improper counting and claiming may affect the overall level of erroneous payments in the NSLP and SBP presents difficult technical and methodological issues. Therefore, for this study, FNS is requesting separate national estimates for NSLP and SBP of the erroneous payments associated with improper meal counting and claiming by schools and school districts. We are also requesting an evaluation of the feasibility of adjusting the estimate for erroneous payments based on misclassification (see ―Definition of

RFP: AG-3198-S-11-0034 Page 12

Erroneous Payment‖ above) to create a combined erroneous payments rate that would reflect the overall effect of misclassification and counting/claiming errors in the NSLP and SBP.

Overview of the National School Lunch Program

The NSLP is a federally assisted meal program operating in more than 100,000 public and non-profit private schools and residential child care institutions. It provides nutritionally balanced, low-cost or free lunches to more than 31 million children each school day. A fact sheet on the NSLP is provided at:

(http://www.fns.usda.gov/cnd/lunch/AboutLunch/NSLPFactSheet.pdf)

FNS, an agency of USDA, administers the program at the Federal level. At the State level, the NSLP is usually administered by State education agencies, which operate the program through agreements with School Food Service Authorities (SFAs). Any student at a participating school may obtain a meal through the NSLP. Students from families with incomes at or below 130 percent of the federal poverty level (FPL) receive free meals upon certification as free-eligible. Students from families who receive benefits under the Supplemental Nutrition Assistance Program (SNAP - Formerly the Food Stamp Program), Temporary Assistance to Needy Families (TANF) or the Food Distribution Program on Indian Reservations (FDPIR) are also eligible to receive free meals. Students from families with incomes between 130 percent and 185 percent of the FPL are eligible for reduced-price meals, for which they can be charged no more than 40 cents once they are certified as reduced-price eligible. (For the period July 1, 2011 through June 30, 2012, 130 percent of the FPL is $29,055 for a family of four; 185 percent is $41,348) Students from families with incomes over 185 percent of the FPL must pay full price (paid) as determined by SFAs, though SFAs receive a subsidy for full price meals as well.

A student may be certified as eligible for free or reduced price meals in one of two ways:

Certification Based on Applications: Most students that are approved to receive free or reduced price meals are approved each school year on the basis of self-reported information on application that their households submit to the school or school district. Households are required to self-report either a) information on household size and monthly income or b) for ―categorical eligibility‖ a case number indicating participation in the SNAP, TANF, or FDPIR.

Direct Certification: Students from household that receives Supplemental Nutrition Assistance Program (SNAP) benefits, Temporary Assistance to Needy Families (TANF) benefits, or Food Distribution Program for Indian Reservation (FDPIR) commodities can be ―directly certified‖ for free meals through processes by which State SNAP/ TANF/ FDPIR Agencies and State Child Nutrition Agencies and school districts share eligibility information. These children are considered ―categorically eligible‖ and can be directly certified to receive free meal benefits without requiring the household to submit an application.

http://www.fns.usda.gov/cnd/lunch/AboutLunch/NSLPFactSheet.pdf

RFP: AG-3198-S-11-0034 Page 13

Information on current federal requirements regarding determination and verification of eligibility for free and reduced price meals in the NSLP and SBP can be found in the Eligibility Manual for School Meals (http://www.fns.usda.gov/cnd/guidance/eligibility_guidance.pdf).

School districts may also claim free, reduced price, and paid reimbursement under one of three special provisions (Provision I/II/III), which do not involve annual eligibility determinations for individual students or, under two of the three provisions, daily meal counts by eligibility category at the point of service. Congress authorized these provisions in an effort to reduce paperwork at the local level and simplify meal counting and claiming procedures.

Provision I: Under Provision I, schools with 80% or more of enrollment eligible for free or reduced price meals can use approved free applications for 2 consecutive years.

Provision II: Under Provision II, schools operate a ‗base year‘ in which they serve all meals at no charge, but take applications and count meals by eligibility category using normal program procedures. The schools then may continue to serve all meals at no charge and take only a daily aggregate count of meals served for up to 4 additional years, during which time they claim reimbursement based on the percentage of free, reduced price, and paid meals served during the base year.

The schools may be able to extend the use of the base claiming percentages for additional 4 year periods if they can establish that economic conditions in the schools attendance area are not significantly changed from the base year;

otherwise, they must conduct a new full or streamlined base year if they wish to continue operating under Provision II.

Provision III: Under Provision III, schools serve all meals free for a period of up to 4 years, and reimbursement is based on the total dollar reimbursement, which a school received during a base year in which applications were taken and meals were counted and claimed by category. It is not necessary that all meals be served free during a Provision III base year. The reimbursement is adjusted each year for inflation and enrollment, and the Provision may be renewed for successive 4-year periods if a district can establish that economic conditions in the school‘s attendance area are not significantly changed from the base year.

Additional information concerning these provisions can be found on the FNS website at:

http://www.fns.usda.gov/cnd/Governance/prov-1-2-3/provision1_2_3.htm

Section 104(a) of the Healthy Hunger-Free Kids Act of 2010 (Public Law No. 111-296) amended section 11(a) (1) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1759a(a)(1)(the law) to provide an alternative to household applications for free and reduced price meals in high poverty local education agencies (LEAs) and schools.

This alternative is referred to as the Community Eligibility option. The option is being http://www.fns.usda.gov/cnd/guidance/eligibility_guidance.pdf http://www.fns.usda.gov/cnd/Governance/prov-1-2-3/provision1_2_3.htm

RFP: AG-3198-S-11-0034 Page 14 phased in with three States participating in the option in SY 2011/12; four additional States participating in SY 2012/13; four more States participating in SY 2013/14, and finally being implemented nationwide in SY 2014/15.

To be eligible, LEAs and schools must meet a minimum level of students directly certified for free meals in the year prior to implementing the option; agree to serve free lunches and breakfasts to all students; and agree to cover with non-Federal funds any costs of providing free meals to all students above amounts provided in Federal reimbursement. Reimbursement is based on claiming percentages derived from the percentage of students directly certified. The claiming percentages established for a school for the First Year are guaranteed for a period of four school years and may be increased if direct certification percentages rise in that school.

Overview of the School Breakfast Program

The School Breakfast Program (SBP) operates in more than 88,000 schools and institutions. In Fiscal Year 2010, SBP served 11.7 million students per day. Of those,

9.7 million received their meals free or at a reduced-price. A fact sheet on the SBP is provided at: (http://www.fns.usda.gov/cnd/breakfast/AboutBFast/SBPFactSheet.pdf).

Although, occasionally a school or institution may operate the SBP and not the NSLP, for the most part SBP schools are also NSLP schools, and local school food authorities operate the programs jointly under a single agreement with the State education agency, which in turn has a single agreement with FNS for administering the program. Any student at a participating school may receive a meal through the SBP. The same income-eligibility guidelines for determining free and reduced price meal eligibility in the NSLP apply to the SBP (see Overview of NSLP) and, in schools which operate both programs, only one eligibility determination is made for each student, covering both programs.

Information on current reimbursement rates for SBP by reimbursement category is available at the FNS website. As previously stated, schools may qualify for higher "severe need" reimbursements if 40 percent or more of their reimbursable NSLP lunches are served free or at a reduced price in the second preceding year, and if their cost of producing the free and reduced price breakfasts exceeds the regular SBP reimbursement level for these breakfasts. Severe need payments are up to 23 cents higher than the normal reimbursements for free and reduced-price breakfasts. About 91 percent of the breakfasts served in the School Breakfast Program receive severe need payments. In addition, schools also have the option of using the alternate counting/claiming procedures (Provisions I, II and III) for SBP meals and more schools participate under Provisions II and III for SBP than NSLP.

Previous Studies of Improper Payments in NSLP and SBP

FNS has long recognized that addressing improper payments and other program integrity problems are integral to meeting the ongoing mission of the school meals and other nutrition assistance programs. Erroneous payments draw scare program resources away from the children who need them the most. Just as importantly, these http://www.fns.usda.gov/cnd/breakfast/AboutBFast/SBPFactSheet.pdf

RFP: AG-3198-S-11-0034 Page 15 programs are ultimately not sustainable without continued public confidence that their benefits go to those who qualify for them, are used appropriately, and achieve the purposes for which they are intended.

Access, Participation, Eligibility and Certification (APEC) Study: The APEC study, released in November 2007, provided the first reliable national estimates of erroneous payments made to school districts for the NSLP and SBP. These findings apply to school year (SY) 2005-06, and were reported to the public in November 2007 as part of the USDA Performance and Accountability Report (PAR), and thereafter updated and reported annually.

Key Findings:

In the school meals programs in SY 2005-06, the study estimated about $940 million in payment errors related to certification error, and about $860 million in payment errors related to non-certification operational errors. These figures represent a combination of overpayments and underpayments, rather than net costs to the government related to these errors.

Certification Error

Erroneous payments (overpayments and underpayments) due to certification error represented $759 million for NSLP and $177 million for SBP during SY 2005-06. This represents 9.4 percent of $8.06 billion in NSLP spending (cash reimbursements and commodity foods), and about 9.1 percent of the $1.94 billion in SBP reimbursements in that year. More than three-quarters of certification-related erroneous payments in both NSLP and SBP were overpayments.

The net cost to the government (overpayments minus underpayments) of erroneous payments due to certification error was $387 million for NSLP (5 percent of total NSLP spending) and $97 million for SBP (5 percent of total SBP reimbursements).

Slightly more than one in five students was certified inaccurately or erroneously denied meal benefits. Among all certified students and denied applicants, 22 percent were certified in error, with 15 percent receiving an improperly high benefit level (overcertification) and 7 percent receiving an improperly low benefit level (undercertification).

The certification process was most accurate among students certified for free meals. Most students receiving free meals were certified correctly; 14 percent receiving free meals were overcertified. Certification errors were much more common among students certified for reduced-price meals, with about one-third undercertified—receiving reduced-price meals but eligible for free meals—and one-

RFP: AG-3198-S-11-0034 Page 16 fourth overcertified—receiving reduced-price meals but not eligible for either free or reduced-price meals. The household circumstances of one-third of applicants denied both free and reduced-price meals suggested that they should have been certified, with about 17 percent eligible for reduced-price meals and 19 percent eligible for free meals. However, because few applications are denied, these errors represent a small proportion of all certification errors.

Errors by applicants in reporting their household circumstances (income and size) were substantially more common than administrative errors by schools.

Household misreporting (23 percent of applicants) was nearly three times more likely than school district administrative error (8 percent of applicants). Among students with any certification error, 70 percent had household misreporting error alone, 11 percent had administrative error alone, and 19 percent had both types of error present. Household misreporting occurred for 15 percent of students certified for free meals, 57 percent for students certified for reduced-price meals, and 32 percent of denied applicants. Administrative error occurred for 6 percent of students certified for free meals, 14 percent of students certified for reduced-price meals, and 16 percent for denied applicants.

Non-Certification Error

Erroneous payments (overpayments and underpayments) due to causes other than certification error represented $555 million for NSLP (7 percent of total NSLP spending) and $306 million for SBP (16 percent of SBP reimbursements). Cashier error (e.g., counting non-reimbursable meals as reimbursable) represented more than one-third of non-certification error in NSLP and nearly two-thirds of non-certification error in SBP. Aggregation errors (e.g., mistakes in adding meal counts from individual points of sale, and/or individual schools, or claiming incorrect district meal totals) accounted for the remainder of non-certification error.

The net cost to the government of non-certification error was $292 million for NSLP (4 percent of total NSLP reimbursements) and $254 million for SBP (13 percent of SBP reimbursements).

The Summary of Findings of the Access, Participation, Eligibility, and Certification Study can be found at:

http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/APECSummaryofFind.pdf.

Volumes I (Study Findings) and Volume II (Sampling and Data Analysis Appendices can be found at: http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol1.pdf and http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol2.pdf .

Regional Office Review of Applications (RORA) for School Meals: Beginning in SY 2004/05, FNS initiated an annual review of applications to examine the administrative error incurred during the local education agency‘s (LEAs) approval process of http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/APECSummaryofFind.pdf http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol1.pdf http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol2.pdf

RFP: AG-3198-S-11-0034 Page 17 applications for free and reduced-price meals in the NSLP and SBP. The percent of all students with errors in the processing of their applications for meal benefits dropped significantly in school year 2008/09 compared to the previous 4-year period, when administrative errors ranged between 3 and 4 percent. The most recent annual report can be found at:

http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/RORA2010.pdf

Analysis of Summary Verification Data: FNS published a final rule ―Determining Eligibility for Free and Reduced Price Meals in Schools-Verification Reporting and Recordkeeping Activities‖ (Federal Register Vol. 68, No. 176, September 11, 2003) which amends the reporting and recordkeeping requirements under the NSLP and SBP relating to the verification of applications for free and reduced price meal benefits.

Beginning with School-Year 2004-2005, this rule required school food authorities (SFAs) to report verification activity and results to their State agency. State agencies are in turn required to analyze and act on these reports and provide SFA level data to FNS. Local Educational Agencies (LEAs) selected nearly 279,000 applications for verification review from among 8.6 million applications approved for free or reduced-price school meals at the start of SY 2008-2009. LEAs confirmed the free or reduced-price status of 46 percent of applications selected for review. Nearly 22 percent of applicants selected were found to have been incorrectly certified. A small number of those applicants (10 percent) were undercertified (initially certified for reduced price meals but found eligible for free meals); the rest (90 percent) were overcertified. The free or reduced-price status of the remaining 32 percent of applications selected for review was terminated for household failure to respond to LEA requests for documentation. The report summarizing the results of the analysis of verification summary data for School Year 2008-2009 can be found on the FNS website at:

http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/VerificationSummaryReport.

pdf

Study of Income Verification in the National School Lunch Program: Although income verification was part of the NSLP since 1982, it wasn‘t until this study was released in 1990 that the Department of Agriculture had systematic information on the implementation or effectiveness of verification activities. This study was designed to provide information in several areas: (1) a description of verification procedures; (2) a description of the characteristics of households that did and did not apply for meal benefits; (3) a determination of the magnitude of misreporting detected through school verification activities, reasons for errors, and the Federal cost savings achieved through verification; (4) a determination of the amount of misreporting that is deterred by verification and the extent to which verification provides a barrier to program participation by eligible households; and (5) a determination of the costs and benefit-cost ration of verification activities. The executive summary of this report can be found on the FNS website at:

http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/NSLPIncomeVerExSum.pdf

Efforts to Reduce Improper Payments:

http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/RORA2010.pdf http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/VerificationSummaryReport.pdf http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/VerificationSummaryReport.pdf http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/NSLPIncomeVerExSum.pdf

RFP: AG-3198-S-11-0034 Page 18

In response to the APEC Study released in FY 2007, FNS has executed several measures to improve Federal and State oversight and technical assistance to identify and recover improper payments in the NSLP. Proactive measures that FNS has taken to strengthen program integrity include:

Required annual training for schools on certification and accountability issues;

Secured funding from Congress for FNS to provide technical assistance and training materials to help State and local partners reduce administrative errors and improve program integrity (FNS operates a $5.8 million budget for oversight and support efforts referred to as the Coordinated Review Effort (CRE);

Provided in-person technical assistance to over 30 State Agencies from 2005 to 2008, to strengthen compliance with program nutrition and meal planning standards, leading to improved accuracy of reimbursable meal counting;

Issued a revised Eligibility Manual which contains information on determining students‘ eligibility for free and reduced price meals for NSLP and SBP;

Trained over 500 State and Federal reviewers on the CRE process and forms to ensure that performance standards related to meal counting and claiming and serving reimbursable meals are met.

FNS has set aside $4 million, beginning in FY 2005 and for each fiscal year thereafter, for funding to State Agencies for Administrative Reviews and Training (ART) grants. This funding is made available to perform administrative reviews and training of selected local education agencies (LEAs) identified by the States as having demonstrated a high level of, or high risk or administrative error in the

NSLP.

In addition, the 2004 CN Reauthorization strengthened the certification process by:

Requiring direct certification for free meals using SNAP data in all school districts, and continuing authority for optional direct certification using data from the Temporary Assistance for Needy Families (TANF) and the Food Distribution Program on Indian Reservations (FDPIR);

Simplifying the certification process by requiring single application for all eligible children in the household;

Requiring eligibility determinations to be in effect for the entire school year;

Modifying verification requirements, and adding authority for optional direct verification of children‘s eligibility, thus expanding authority for the use of public records for verification of applications;

Required increased efforts to obtain household response to application verification requests;

Requiring districts with high rates on non-response to verification to target subsequent year verification activity toward error-prone applications;

Requiring State Agencies to conduct additional administrative reviews of school districts with higher rates of error;

The recently enacted Healthy, Hunger-Free Kids Act of 2010 requires that FNS take additional actions that will help with reducing improper payments:

RFP: AG-3198-S-11-0034 Page 19

Increase the frequency of the administrative oversight reviews of the NSLP and the SBP from once every five years to once every three years;

Further strengthen direct certification for school meals by encouraging improvement in direct certification rates. The Act directs the Secretary to provide performance awards to States for ―outstanding performance‖ and ―substantial improvement.‖ This will encourage States to endure that all children in households receiving SNAP benefits are automatically enrolled for free school meals, with no need for an application.

Provide alternatives to the paper application systems in low-income areas, i.e., non application alternatives to the standard Program application process to reduce the number of paper applications that are processed manually; and

Establish criteria and procedures for local education agencies that demonstrate high levels of administrative error. Have an individual or an entity independently review the initial eligibility determinations for free and reduced-price school meals for accuracy prior to sending out household notifications of eligibility or ineligibility.

C.3 STUDY OBJECTIVES AND RESEARCH QUESTIONS

Given the increased attention to erroneous payments in recent years, it is now time to conduct a replication of the study that produced the first national estimates of erroneous payments in the NSLP and SBP. This study shall provide national estimates for overpayments, underpayments and overall erroneous payments made under NSLP and SBP based on onsite data collection in School Year 2012-2013. (Note:

Overpayments, underpayments and overall erroneous payments estimates shall be provided for NSLP and SBP separately). Separate estimates shall be made for certification error and meal counting and claiming errors. It shall also provide refined estimation models for use by FNS Staff for annually updating erroneous payment estimates for NSLP and SBP using available extant data (routine administrative records etc.), i.e. without the need for any additional data collection. In addition, as an option, the study could examine alternatives to produce State-level estimates of erroneous payments.

The study objectives and research questions presented below are intended to meet the Congressional requirements under ―The Improper Payments Information Act of 2002 (P.L. 107-300)” for estimating the extent of overpayments, underpayments and overall erroneous payments made under the NSLP and SBP.

Objective 1: Generate national estimates of the extent of overpayments, underpayments and overall erroneous payments made under the National School Lunch Program (NSLP) and the School Breakfast Program (SBP) as result of the misclassification of school meal eligibility status of students that participate in these programs (Certification Error). Separate estimates are required for NSLP and SBP.

RFP: AG-3198-S-11-0034 Page 20

What is the national estimates of certification error rates for students certified for free or reduced-price meals and denied applicants?

What is the annual national estimated amount of overpayments, underpayments and overall erroneous payments (gross total of both the overpayments and underpayments) made under NSLP and SBP due to certification error?

What proportion of overpayment, underpayment and overall erroneous payment errors attributable to certification error are due to administrative errors made by the school district at various points in time of the administrative process (initial certification, verification, reapplication, etc.)?

What proportion of overpayment, underpayment and overall erroneous payment errors attributable to certification error are due to households misreporting of income, household size, or SNAP/TANF/FDPIR status at the time of application, verification, or reapplication?

What is the certification-related error rate associated with direct certification? To what extent does it vary by method of implementation?

What is the payment error rate associated with meal counting and claiming errors for NSLP and for SBP (accuracy of meal counting and claiming)?

Objective 2: Generate national estimates of the extent of overpayments, underpayments and overall erroneous payments made under the National School Lunch Program (NSLP) and the School Breakfast Program (SBP) as result of non-certification errors. Separate estimates are required for NSLP and SBP.

What is the incidence and annual national estimated amount of overpayments, underpayments, overall erroneous payments (gross total and net total of both the overpayments and underpayments) resulting when cafeteria staff members make errors in assessing and recording whether a specific meal selection (the tray) meets the criteria for a reimbursable meal under the NSLP and SBP?

What is the incidence and annual national estimated amount of overpayments, underpayments, overall erroneous payments (gross total and net total of both the overpayments and underpayments) resulting from three types of aggregation error in the NSLP and SBP in total and separately?

1. Erroneous payments associated with combining daily meal counts from individual school points of sale (point-of-sale error)

2. Erroneous payments associated with communication between the school and the school district office (school-to-district office error)

3. Erroneous payments associated with reporting totals to the State Agency, either directly or through consolidation (district office-to-State Agency error)

What is the total annual national estimated amount of overpayments, underpayments, overall erroneous payments (gross total and net total of both the overpayments and underpayments) associated with cashier and aggregation error?

Objective 3: Refine the existing estimation models used by FNS staff for updating annual national estimates of overpayments, underpayments and overall

RFP: AG-3198-S-11-0034 Page 21 erroneous payments in NSLP and SBP. (Separate estimates and confidence intervals are required for NSLP and SBP)

What modeling strategy will maximize accuracy in predicting errors?

What are the potential problems and issues surrounding the use of existing data sources on the existing methodology? How does the proposed methodology for the refined models address these concerns?

How do changes in the verification system (such as changes in verification requirements, shifts in the proportion of applications selected for random and focused sampling) affect the erroneous payment estimates?

How do changes in the number of students directly certified affect the erroneous payment estimates?

How do the overpayment, underpayment and overall erroneous payment estimates for NSLP and SBP that were generated by the current estimation models compare with the estimates based on the onsite data collected in School Year 2012/13?

How do the overpayment, underpayment and overall erroneous payment estimates for NSLP and SBP that were generated by the refined estimation models compare with the estimates based on the onsite data collected in School Year 2012/13?

What are the standard errors and confidence intervals associated with these erroneous payment estimates?

How reliable will the estimation model-generated annual estimates be in future years?

What additional data could help improve the estimates generated by the estimation models?

Objective 4: Explore alternatives to generate State-level estimates of erroneous payments (Optional)

What resources would be needed to conduct on-site data collection to produce State-level estimates of erroneous payments (underpayments, overpayments, total gross payments) due to administrative error? Due to household misreporting? Due to meal counting and claiming? Due to the combination of administrative error and meal counting and claiming?

Can econometric models similar to those used to update annual national estimates of underpayments, overpayments, and total erroneous payments be developed at the State-level with existing administrative data? What administrative data would be used

If so, what resources would be needed to validate State-level models?

C.4 STUDY DESCRIPTION

The major focus of this study is to estimate the amount of erroneous reimbursements for free and reduced-price meals, in aggregate (absolute dollar value of all reimbursement errors for the nation for a full school year) and the rate (annual erroneous payments divided by total reimbursements for free and reduced-price meals).

Separate estimates are needed for the NSLP and the SBP. Private schools, as well as

RFP: AG-3198-S-11-0034 Page 22 public ones, are to be included, as are schools using special assistance alternatives (Provision 2 or 3, Community Eligibility Option).

FNS is interested in replicating the parts of the NSLP/SBP Access, Participation, Eligibility, and Certification Study that focuses on error rates and erroneous payments in the National School Lunch Program and School Breakfast Program. APEC‘s Final Study Design Plan (http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/APECStudyDesign.pdf ) should serve as the conceptual framework for this study with some minor modifications.

While LEAs using special assistance alternatives (e.g., Provision 2/3) should be included in the nationally representative sample, FNS no longer requires separate estimates of erroneous payments for this subgroup. In addition, because eligibility determinations are now in effect for the entire school year, FNS no longer needs to devote resources examining how changes in household circumstances during the school year, affect the eligibility status. Thus the longitudinal panel survey of certified students is no longer required.

This nationally representative study will require primary data…