HFS B440894 2025_55_003 SDU Sole Source Justification Form signed.pdf

Sole Source Justification Form

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Requesting Agency/University Healthcare and Family Services

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: Illinois Healthcare and Family Services / Department of Child Support Services

Need Identified Date: Sep 1, 2024 Supply/Service Need By Date: Jan 1, 2025

Project Title: Illinois State Disbursement Unit

Vendor: Conduent State & Local Solutions, Inc.

Provide a description of the supplies or services required:

The Vendor shall continue to operate the State Disbursement Unit (SDU).

The federal government, through the Administration for Children and Families (ACF) Office of Child Support Services (OCSS), and Title IV-D of the Social Security Act require that each state operate a single central location for the receipt and disbursement of child support. State statute (305 ILCS 5/10-26) also requires HFS to establish an SDU in accordance with requirements of Title IV-D of the Social Security Act and enter into an agreement to perform the functions of the SDU to collect and disburse support payments made under court and administrative support orders.

Services include child support payment processing, customer service and payment disbursement. Conduent State & Local Solutions, Inc. is the Vendor who currently provides these services.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 20,601,538

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Economically Feasible Source

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Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: Jan 1, 2025

Estimated Contract End Date: Dec 31, 2027

Number of Potential Renewals: 0

Length of Each Renewal in Months: 0

Total Value of All Renewals: 0

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

The Illinois SDU contract contains two (2) pricing mechanisms:

1) Per Disbursement, which includes all operational costs associated with the processing of child support payments in accordance the respective orders (court or administrative) within the confines of Federal CFR 42 U.S.C. 654(27) and State Statute 305 ILCS 5/10-26. The cost is inclusive of all mailing equipment/supplies/software/hardware/phone lines/real property lease/payment cards, etc (Refer to Question 2 for additional details). The contract is solely based on the number of child support payments processed on a monthly basis, this number was anticipated to increase over the last contract, however, the actual quantities decreased by roughly 1/3 of the anticipated quantities. Due to the decrease in the number of payments processed and the increase in equipment cost, as several pieces of equipment are either at the end of life or will be soon. The transaction cost is increasing from $1.03 to $1.23 for a three year term, however, the rate will increase to $1.38 if a longer term is not permitted. Which would result in an overall increase in cost in the amount of $2,291942.40.

2) Hourly Rate, which includes "general technical assistance", currently CSS is utilizing these hours to assist with the design, development and eventually testing of the interfaces/connections between the SDU and the new Child Support System, referred to as "EPIC". The vendor is requesting an increase in these rates to align with current market standards, as the contracted rates have remained unchanged since their initial proposal in 2014, despite a decade passing. HFS has determined this increase to be reasonable (please refer to question 7).

The Illinois SDU has numerous unique requirements and/or constraints (such as specialized technology, management of external agencies , and regulatory/statutory compliance), as such, the current SDU Vendor is the only Vendor which can effectively deliver the required services without incurring excessive costs.

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Critical Changes to the Existing Contract are Necessary and Best Accomplished by the Contract Holder

Are there secondary justification(s) for this sole source? Yes No

Another justification that this purchase is only available from a sole source is because it is:

Potential Loss of Federal Financial Participation (FFP)

Another justification that this purchase is only available from a sole source is because it is:

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Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 Jan 1, 2015 Jun 30, 2019 34,355,379

Contract with Xerox State and Local Solutions, Inc. to manage and operate a State Disbursement Unit (SDU) in accordance with requirements of Title IV-D of the Social Security Act to collect and disburse support payments made under court and administrative support orders.

2016-55-003 RFP

2 Apr 1, 2015 Jun 30, 2019 0

Amended Contract to reduce costs by eliminating the interactive chat feature in Section 1.1.4.E.2 and generator requirement in Section 1.1.5.L.

2016-55-003 Amendment

3 May 25, 2016 Jun 30, 2019 0

Amended Contract to eliminate the automatic nightly sweep of the main concentration account into an overnight investment account requirement in Sections 1.1.3.B.5, 1.1.3.B.7, and 1.1.3.B.10.

2016-55-003 Amendment

4 Jul 1, 2019 Jun 30, 2022 23,959,440

In 2017 Xerox separated into two publicly traded companies. The Business Process Outsourcing company with whom the Contract would remain was Conduent State & Local Solutions, Inc. 1st Renewal of Contract.

2016-55-003 Renewal

5 Jul 1, 2022 Jun 30, 2024 16,920,840 2nd Renewal of Contract. 2016-55-003 Renewal

6 Feb 15, 2023 Jun 30, 2024 0

Amendment needed in order to expand the utilization of the Pool Hours included within the contract to accommodate programmatic changes between EPIC and the SDU. $0 amendment, value $552,000.00.

2016-55-003 Amendment

7 Jul 1, 2024 Dec 31, 2024 4,214,760 Change Order Amendment to extend the contract in order to maximize the 10 year maximum term.

2016-55-003 Amendment

If more than 10, or if other comments, explain:

Section VI - Business Rationale

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1. Provide a detailed explanation of the need for the supplies or services:

Healthcare and Family Services (HFS) has both a Federal and State statutory obligation to establish and operate a State Disbursement Unit (SDU) for the collection and disbursement of payments under child support orders. The federal government, through the Administration for Children and Families (ACF) Office of Child Support Services (OCSS) and Title IV-D of the Social Security Act requires that each state operate a single central location for the receipt and disbursement of child support, 42 U.S.C. 654(27). Additionally, State Statute, 305 ILCS 5/10-26, requires HFS to establish a State Disbursement Unit (SDU) in accordance with requirements of Title IV-D of the Social Security Act and enter into an agreement to perform the functions of the SDU to collect and disburse child support payments made under court and administrative support orders.

The SDU is also federally mandated to work in coordination with the State automated child support system, which is undergoing a complete replacement from the current KIDS system to the EPIC system (contract executed by HFS 03/2022). Child Support Services (CSS) is currently in the design and development process of the EPIC project, implementation is expected to occur the first quarter of calendar year 2026, with Federal certification occurring one year thereafter. The current SDU contact will expire on 12/31/2024, it is imperative that HFS retain the current SDU Vendor throughout this design and development process in order to provide the required technical expertise regarding the SDU interfaces/connections during the replacement of the State automated child support system.

The SDU Vendor is assisting with the interface designs which will be required once the EPIC system goes live. Once the EPIC system is stable and all connections between the two systems are identified and established, HFS will resume the construction of the Request for Proposals (RFP) for the SDU, the goal is to have a release date in early 2026.

All Title IV-D child support payments along with Non-IV-D payments made through income withholding move through the SDU, resulting in approximately $1,500,000,000.00 annually. Due to the timing of the automated child support system implementation and the impending termination of the SDU contract, there could be serious harm done to Illinois families, including those who are most vulnerable, who rely on regular, uninterrupted receipt of child support payments. HFS is working toward implementation of proactive measures with all stakeholders in order to avoid a potential catastrophic crisis.

2. Provide a list and describe in detail the specifications required to satisfy the need:

Federal CFR, 42 U.S.C. 654(27) requires States to establish and operate a State Disbursement Unit (SDU) for the collection and disbursement of payments under child support orders, and State Statute 305 ILCS 5/10-26 mandates the establishment and operation of an SDU for the collection and disbursement of payments under court orders and administrative support orders.

See Attachment 1 for SDU contract requirements.

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3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

The current Vendor was procured through the competitive Request for Proposal (RFP) process. They have been a reliable business partner, providing consistency for our program participants and staff members alike. The Vendor has and continues to successfully provide SDU services in Illinois. The current vendor is operating within the child support system environment, so there would be no initial set-up costs (facility leasing, equipment leasing/purchase, staffing, etc.), or development costs to maintain the current child support system.

In January 2024, the current contract was amended to increase the general technical assistance hours for the Vendor to assist HFS with the design and development of the interplay between the EPIC & SDU systems, as failure to have the same would have halted EPIC development. The current vendor continues to work in this capacity, it is imperative that HFS retain the current SDU Vendor throughout this design and development process in order to provide the required technical expertise regarding the SDU interfaces/ connections during the replacement of the State automated child support system.

Replacing the current Vendor at this point in time would result in schedule delays and increased expenses in order to bring new developers, technicians, business analysts and programmers up to speed with the KIDS, EPIC and their business processes & interfaces with the SDU system. Using the current vendor allows CSS and the Agency to avoid disrupting child support payment processing and maintain operations while the development, testing, implementation, and certification of EPIC is being conducted. Approximately $1,500,000,000.00 is processed through the SDU annually. Due to the timing of the automated child support system implementation and the impending expiration of the SDU contract, there could be serious harm done to Illinois families, including those who are most vulnerable, who rely on regular, uninterrupted receipt of child support. CSS and the Agency need to avoid this potential catastrophic crisis.

Once the EPIC system is stable and all connections between the two systems are identified and established, HFS will resume the construction of the Request for Proposals (RFP) for the SDU, the goal is to have a release date in early 2026.

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4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

Although there are other Vendors who can provide SDU services, below are some of the unique features required solely in the State of Illinois:

1. The IL SDU is the hub between the 102 Illinois Clerks of the Circuit Court (CCC) and Child Support Services. Information flows through the SDU as opposed to CSS or CCC. Many other States CCC's manage the records for case information and payments.

themselves and do not rely upon their SDU. However, the Illinois CCC's enter information directly into the SDU’s system and obtain reports they require directly out of Illinois’ SDU. All 102 Illinois CCC's rely on Illinois’ SDU for child support account balances which they use in court. A disruption to this process has the potential to cause significant issues between the Department, customers, and courts.

The Illinois SDU manages the following items:

a. Court order information

b. Payment information

c. Demographic information

d. IVD status information

e. Account balances

2. The IL SDU manages the bank account and banking relationship(s) for the HFS SDU bank accounts. Again, other States manage their accounts internally. The Illinois SDU oversees the following:

a. SDU vendor pays all the fees

b. Reconciles accounts

c. Manages the relationship – the vendor sets the account up in the name of HFS and has the contract with the bank

3. The IL SDU purchases and manages the electronic payment cards for child support disbursements and direct deposit accounts that thousands of households rely on to receive their monthly child support payments. Most States have contracted separately for this service.

4. The IL SDU operates a customer service call center for Illinois, in Illinois. Many States have have the ability to provide this service in house, Illinois does not. Illinois does not have the manpower or capacity for a full service call center.

Trying to convert the data for all of these accounts and cards, while still developing requirements based on the new child support system, to a new vendor will take significant resources from the EPIC project, Finance, and CSS Operations. There are no other competing supplies or services as the SDU is statutorily defined.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

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5a. If no, why weren't alternatives evaluated?

Statutory Requirement for Competitive Bidding - HFS/CSS is required by both federal and state law to competitively procure SDU services, which it has done since 2003. The current contract was awarded after a competitive RFP process in August 2014, where HFS/ CSS outlined specific milestones and deliverables at a competitive price. The vendor was selected as the highest-scoring offeror at a reasonable cost and has continued to provide satisfactory SDU services. HFS is legally prohibited from providing SDU services directly and must contract out for these services.

Inability to Develop RFP - Criteria HFS/CSS is currently unable to develop a complete scope of work, milestones, and deliverables for a new RFP, as we are still in the design and development stage of EPIC, which includes defining interactions and interfaces with the SDU.

The current contract’s milestones and deliverables are tied to the KIDS system, which is being replaced by EPIC. EPIC operates on a completely different platform, requiring new SDU interfaces and processes that are still being designed. The full scope of SDU requirements will not be clear until after EPIC system testing, expected in early 2026. The financial, technical, and business requirements for SDU integration with EPIC are being developed in JAD sessions, with the participation of our current SDU vendor. The new interfaces and processes must be tested and operational to achieve federal child support system certification, which is anticipated in early 2027.

Federal certification is necessary for the State to receive Federal Financial Participation (FFP) funds. Since testing will occur in phases before full certification, using a different vendor would be problematic, as there would be no contractual obligation for them to provide test demonstrations. Refer to the attached 45 CFR 307 for certification requirements, with SDU-related sections highlighted.

Temporary Nature of Sole Source Request - HFS/CSS intends to release the SDU RFP in early 2026. By that time, the interfaces and processes between HFS and an SDU vendor will have been thoroughly tested and operational. At that point, CSS will be able to clearly define the milestones and deliverables necessary for a competitive bid process, and we fully intend to move forward with that.

Impact of Law Changes/Public Act & Comptroller - Additionally, Public Act 102-1115, which becomes effective on July 1, 2024. This law requires CSS to pass through all child support payments received on behalf of TANF recipients, a major shift in current processes. This will require a redesign of CSS’s financial processes and their integration with SDU functions. HFS/CSS, alongside the current SDU vendor, is developing new financial interfaces as part of EPIC's design. The IL Comptroller’s Office currently processes certain payments, including TANF pass-through, intergovernmental, and tax payments. These responsibilities are expected to shift to the SDU vendor under EPIC. The current SDU vendor is actively assisting with the development and testing of these new processes.

Why Alternatives Were Not Considered - Due to the nature of SDU services, switching to a new vendor for the short term is neither practical nor cost-effective. It would require a new vendor to enter into a temporary lease in Illinois, purchase or lease equipment (costing over $1 million), switch bank accounts, and establish relationships with the Circuit Court Clerks (CCCs) while continuing to meet all operational requirements outlined in Section 2. The current vendor has the necessary experience, knowledge, facilities, and external relationships to maintain continuity and provide quality service.

Once the EPIC system stabilizes and all connections between EPIC and the SDU are finalized, HFS will resume the process of constructing the SDU RFP. The goal is to release the RFP in early 2026, allowing HFS sufficient time to ensure all system connections function as intended and to incorporate them into the RFP. This will help ensure successful outcomes for both projects. The intent is to award the contract to a new vendor by early 2027, with a transition from the current SDU vendor occurring around July 1, 2027.

6. Are there resellers or distributors?

Yes No N/A

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7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

The current SDU services were competitively procured through a formal Request for Proposal (RFP) process. This ensured that the most responsive and responsible vendor was selected based on a combination of technical capabilities and pricing, guaranteeing a fair rate in line with market standards at that time (2024). The competitive nature of the RFP process allowed the Agency to evaluate offers, ensuring that the awarded vendor provided the best value for the services required.

The SDU Vendor has requested a cost increase for their technical assistance hours to bring their rates into alignment with current market rates, the final contracted rate in the last renewal was $85.00 per hour, they are requesting an escalating increase over a three year term; $173.23 year one, $176.96 year two and $180.76 for year three, which is a modest increase of 2% per year.

HFS reviewed several recently awarded RFP's and a JPMC within our own Agency to assist in the determination of receipt of fair pricing.

Following are a just a few of the contracts which consist of the same/similar services: Deloittte Consulting LLP $203.00/hour blended rate for DDI for the Child Support System, currently working in coordination with the SDU; Health Management Associates, Inc. $325.00/ hour rate for Health Care Transformation Consulting; Guidehouse, Inc. $255.00/hour rate for Health Care Transformation Consulting;

Gartner, Inc. $223.00 blended rate for PBMS procurement support.

The Vendor is also requesting a modest increase in the "per disbursement" rate, which includes all operational costs associated with the processing of child support payments in accordance the respective orders (court or administrative) within the confines of Federal CFR 42 U.S.C. 654(27) and State Statute 305 ILCS 5/10-26. The cost is inclusive of all mailing equipment/supplies/software/hardware/phone lines/real property lease/payment cards, etc (Refer to Question 2 for additional details). The contract is solely based on the number of child support payments processed on a monthly basis, this number was anticipated to increase over the last contract, however, the actual quantities decreased by roughly 1/3 of the anticipated quantities. Due to the decrease in the number of payments processed and the increase in equipment cost, as several pieces of equipment are either at the end of life or will be soon. The transaction cost is increasing from $1.03 to $1.23 for a three year term, however, the rate will increase to $1.38 if a longer term is not permitted. Which would result in an overall increase in cost in the amount of $2,291942.40.

The timing of the contract end date is critical, as it directly affects the design, development, and implementation of the new child support system. Selecting a new vendor at this stage would result in significant delays, requiring rework of system integration efforts.

This would not only increase costs substantially but also put federal funding at risk. Continuing with the current vendor enables the Agency to maintain the integration between the SDU and the new EPIC system without disrupting services to families. This continuity ensures that HFS can meet statutory requirements and maintain uninterrupted service, all while avoiding the additional expenses associated with on-boarding a new vendor.

Moreover, the Agency has ensured that the vendor continues to meet the previously agreed-upon 7% Business Enterprise Program (BEP) goal, contributing to economic feasibility by promoting diversity and inclusion in state contracts. This goal helps ensure that a portion of the contract supports underrepresented businesses, adding further value to the procurement beyond just the cost of services.

In summary, the combination of competitive procurement, market research, and careful consideration of the risks associated with changing vendors ensures that the current pricing is fair, reasonable, and economically feasible for the state.

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

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9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

The timing of the child support system's design, development, and implementation is crucial. Any change in the SDU vendor will significantly delay the implementation of the EPIC system, require rework in the design phase, and ultimately increase the overall costs associated with EPIC. There are currently five other vendor contracts that support the new system, along with four personal services contracts. The cost implications of changing the SDU vendor must also account for the expected 12-month delay in implementing the EPIC system if a new vendor is selected.

The estimated cost of this one-year delay is $11,043,733.00, which is twice the cost of the current annual SDU contract. This figure does not include unforeseen system changes that may arise. The estimated breakdown of additional costs due to this delay includes:

- Design, Development, and Implementation Vendor: $3,836,700.00

- Quality Assurance Vendor: $3,134,117.00

- Training and Implementation Support Vendor: $778,000.00

- Independent Verification and Validation Vendor: $450,000.00

- Project Management Vendor: $2,444,916.00 (contract will expire prior to implementation)

- Four Personal Services Contracts: $400,000.00 (these contracts will expire prior to implementation)

Additionally, the current KIDS system is a 25+ year-old legacy system written in COBOL. It is highly complex, difficult to support, and prone to frequent outages due to its fragile nature. Delaying its replacement increases the risk of a catastrophic system failure. Further delays may also jeopardize federal funding for the EPIC project if we extend beyond the approved Advanced Planning Document Update (APDU) implementation schedule, particularly due to SDU integration issues.

The SDU is not a standalone system in the sense that it requires integration with EPIC to transmit and receive information. However, having an SDU is statutorily required, and without approval, all SDU operations would cease. This would have devastating consequences for Illinois' most vulnerable families, who rely on approximately $1.5 billion in child support and administrative order payments annually. Additionally, the 102 Circuit Court Clerks (CCCs) would not have the necessary information to make informed decisions regarding support and administrative orders.

The cessation of SDU operations would be catastrophic for the families and individuals who depend on this financial support for their day-to-day lives. It is also important to note that HFS does not have the federal or state statutory authority to operate an SDU in-house.

The SDU must function as a separate, fully operational entity. Failure to approve the SDU would violate these statutory requirements, resulting in severe disruptions to child support services and impacting the lives of thousands of Illinois residents.

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10. Is there any additional information you would like to add to justify this sole source?

Two critical, state & federally required, and interdependent systems and operational needs of Healthcare and Family Services (HFS), the Automated Statewide Child Support Enforcement System (current system known as KIDS, new system to be known as EPIC) and the State Disbursement Unit (SDU), are facing a significant upcoming risk. The timing and execution of contracts and requirements pertaining to the implementation of the new statewide child support system pose the potential for HFS to be unable to fulfill its statutory obligations to provide child support services. More importantly, as this risk has the potential to create issues at similar levels as were experienced in 1999 when the existing Automated Statewide Child Support Enforcement System (KIDS) and the new SDU were being designed, developed, and implemented. The intersection of points in the timelines of both projects indicates a real potential for history to repeat itself unless preventative measures are taken. HFS (child support, system programming, and fiscal operations) resources will be stretched incredibly thin just maintaining operations in the current child support system environment while implementing the requirements set forth in Public Act 102-1115. Based on the current project schedule, a new SDU vendor would have to develop concurrently for KIDS and EPIC, all while the current vendor is closing out their current contract and transitioning operational, technical, and financial services to the new vendor. The Department has been mindful of the events of 1999 in its approach to the new child support system project to avoid repeating mistakes of the past where hundreds of thousands of families were adversely impacted. Nevertheless, every indication points to the possibility of a significant service disruption like that which was experienced by Illinoisans when the Department implemented the current system followed closely by the original SDU implementation in 1999. In State Fiscal Year 2021 the SDU served 243,203 families. In serving those families, the SDU processed 5,404,131 disbursements totaling over a billion dollars. If a new SDU Vendor is selected through the competitive procurement process, this Vendor will have to develop processes for SDU integration with KIDS contemporaneous with developing processes for the SDU integration with EPIC, while maintaining current operations for the 243,203+ families the SDU serves. Parents and caretakers who receive child support will be in the throes of major system changes twice in a 12–18-month period; once for current KIDS operations with a new vendor and a second time for EPIC implementation. With these major changes all happening concurrently, there is the significant potential for service failure resulting in financial hardship to these 243,203+ families, which is unacceptable. Along with potential disruptions to families, a failure of the SDU and the new statewide child support system could cause a repeat of issues when implementing KIDS, the Department received a qualified audit opinion on its annual financial statements for 4 years. The financial impact of the Child Support issue grew to a point where the Auditor General was considering lowering the audit opinion on the Annual Comprehensive Financial Report (ACFR) (formerly, the Comprehensive Annual Financial Report) for the State of Illinois. This could have impacted the State’s ability to borrow and increased the interest costs on any borrowing to the citizens of Illinois and it could have put the federal funding of the Child Support Program at risk. Fortunately, after many years of hard work, the Department was able to correct the Child Support financial data, and this did not come to fruition.

Please see the Illinois Auditor General's report from 2000 regarding the service failure that we are trying to avoid.

http://www.auditor.illinois.gov/audit-reports/performance-special-multi/performance-audits/fy00-idpa-sdu-mgmt-digest.htm

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Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Oct 9, 2024

Printed Name Christine Towles E-mail Address christine.towles@illinois.gov

Phone Number 630-743-9340

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address Monique.N.Wantland@Illinois.gov

Phone Number (217)558-3059 Date Oct 9, 2024

Printed Name Monique Wantland

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-993-1719 Date 10/9/2024

Printed Name Jennifer Klein E-mail Address jennifer.klein@illinois.gov

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Sole Source Justification Form - Part II Section I - General Information

Project Title Illinois State Disbursement Unit

Vendor Conduent State & Local Solutions, Inc.

Initial Date of Procurement Bulletin Posting 10/9/2024

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone 217-558-2231

Printed Name Ellen H. Daley Date

CPO E-mail ellen.h.daley@illinois.gov

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229 ellen.h.daley@illinois.gov

1) Per Disbursement, which includes all operational costs associated with the processing of child support payments in accordance the respective orders (court or administrative) within the confines of Federal CFR 42 U.S.C. 654(27) and State Statute 305 ILCS 5/10-26. The cost is inclusive of all mailing equipment/supplies/software/hardware/phone lines/real property lease/payment cards, etc (Refer to Question 2 for additional details). The contract is solely based on the number of child support payments processed on a monthly basis, this number was anticipated to increase over the last contract, however, the actual quantities decreased by roughly 1/3 of the anticipated quantities. Due to the decrease in the number of payments processed and the increase in equipment cost, as several pieces of equipment are either at the end of life or will be soon. The transaction cost is increasing from $1.03 to $1.23 for a three year term, however, the rate will increase to $1.38 if a longer term is not permitted. Which would result in an overall increase in cost in the amount of $2,291942.40.

2) Hourly Rate, which includes "general technical assistance", currently CSS is utilizing these hours to assist with the design, development and eventually testing of the interfaces/connections between the SDU and the new Child Support System, referred to as "EPIC". The vendor is requesting an increase in these rates to align with current market standards, as the contracted rates have remained unchanged since their initial proposal in 2014, despite a decade passing. HFS has determined this increase to be reasonable (please refer to question 7).

The Illinois SDU has numerous unique requirements and/or constraints (such as specialized technology, management of external agencies , and regulatory/statutory compliance), as such, the current SDU Vendor is the only Vendor which can effectively deliver the required services without incurring excessive costs.

The SDU is also federally mandated to work in coordination with the State automated child support system, which is undergoing a complete replacement from the current KIDS system to the EPIC system (contract executed by HFS 03/2022). Child Support Services (CSS) is currently in the design and development process of the EPIC project, implementation is expected to occur the first quarter of calendar year 2026, with Federal certification occurring one year thereafter. The current SDU contact will expire on 12/31/2024, it is imperative that HFS retain the current SDU Vendor throughout this design and development process in order to provide the required technical expertise regarding the SDU interfaces/connections during the replacement of the State automated child support system. The SDU Vendor is assisting with the interface designs which will be required once the EPIC system goes live. Once the EPIC system is stable and all connections between the two systems are identified and established, HFS will resume the construction of the Request for Proposals (RFP) for the SDU, the goal is to have a release date in early 2026.

All Title IV-D child support payments along with Non-IV-D payments made through income withholding move through the SDU, resulting in approximately $1,500,000,000.00 annually. Due to the timing of the automated child support system implementation and the impending termination of the SDU contract, there could be serious harm done to Illinois families, including those who are most vulnerable, who rely on regular, uninterrupted receipt of child support payments. HFS is working toward implementation of proactive measures with all stakeholders in order to avoid a potential catastrophic crisis.

Q2Answer: Federal CFR, 42 U.S.C. 654(27) requires States to establish and operate a State Disbursement Unit (SDU) for the collection and disbursement of payments under child support orders, and State Statute 305 ILCS 5/10-26 mandates the establishment and operation of an SDU for the collection and disbursement of payments under court orders and administrative support orders.

See Attachment 1 for SDU contract requirements.

Q3Answer: The current Vendor was procured through the competitive Request for Proposal (RFP) process. They have been a reliable business partner, providing consistency for our program participants and staff members alike. The Vendor has and continues to successfully provide SDU services in Illinois. The current vendor is operating within the child support system environment, so there would be no initial set-up costs (facility leasing, equipment leasing/purchase, staffing, etc.), or development costs to maintain the current child support system.

In January 2024, the current contract was amended to increase the general technical assistance hours for the Vendor to assist HFS with the design and development of the interplay between the EPIC & SDU systems, as failure to have the same would have halted EPIC development. The current vendor continues to work in this capacity, it is imperative that HFS retain the current SDU Vendor throughout this design and development process in order to provide the required technical expertise regarding the SDU interfaces/connections during the replacement of the State automated child support system.

Replacing the current Vendor at this point in time would result in schedule delays and increased expenses in order to bring new developers, technicians, business analysts and programmers up to speed with the KIDS, EPIC and their business processes & interfaces with the SDU system. Using the current vendor allows CSS and the Agency to avoid disrupting child support payment processing and maintain operations while the development, testing, implementation, and certification of EPIC is being conducted. Approximately $1,500,000,000.00 is processed through the SDU annually.