2012 funding opportunity for a UI Integrity Center

UIPL 28-12 (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2012/UIPL_28_12_Acc.pdf)

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                 Unemployment Insurance
               ADVISORY SYSTEM                            CORRESPONDENCE SYMBOL
                                                          OUI
          U.S. DEPARTMENT OF LABOR
                                                          DATE
             Washington, D.C. 20210                                August 20, 2012

ADVISORY:         UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 28-12

TO:               STATE WORKFORCE AGENCIES

FROM:             JANE OATES /s/
                  Assistant Secretary

SUBJECT:          Supplemental Funding Opportunity for the Establishment of an
                  Unemployment Insurance (UI) Integrity Center of Excellence

1. Purpose. To notify State Workforce Agencies of the opportunity to apply for Fiscal Year
   (FY) 2012 funds as the lead state to establish, via a cooperative agreement with the U.S.
   Department of Labor’s (Department) Employment and Training Administration (ETA), a
   national UI Integrity Center of Excellence (Center). The Center will develop and promote
   innovative UI program integrity strategies to reduce improper payments and prevent and
   detect fraud.

2. References.
   • Improper Payment Information Act of 2002 (IPIA), 31 U.S.C. 3321 note;
   • Improper Payments Elimination and Recovery Act of 2010 (IPERA), 31 U.S.C. 3301
      note;
   • Executive Order (E.O.) 13520, Reducing Improper Payments (November 20, 2009);
   • Presidential Memorandum, Enhancing Payment Accuracy Through a “Do Not Pay List”
      (June 18, 2010);
   • Office of Management and Budget (OMB) Memorandum M-12-11, Reducing Improper
      Payments through the Do Not Pay List (April 12, 2012);
   • Unemployment Insurance Program Letter (UIPL) No. 19-11, National Effort to Reduce
      Improper Payments in the Unemployment Insurance (UI) Program;
   • UIPL No. 26-11, Unemployment Insurance (UI) Supplemental Funding Opportunity for
      Program Integrity and Performance and System Improvements;
   • UIPL No. 12-12, Guidelines for Fiscal Year (FY) 2012 State Agency Unemployment
      Insurance (UI) Resource Allocations and Above-Base Funding; and
   • UIPL No. 18-12, Unemployment Insurance (UI) Supplemental Funding Opportunity for
      Program Integrity and Performance and System Improvements.

3. Background. As part of its effort to reduce improper payments in the federal-state
   unemployment compensation program, ETA plans to fund a UI Integrity Center of
   Excellence that, while funded competitively through a single state, will be administered by a
 RESCISSIONS                                             EXPIRATION DATE
                 None                                       December 31, 2014

state consortium. This UIPL sets forth the requirements for grant applications, general
design and activities of the Center, and mechanism for administering funds.

On November 20, 2009, President Obama signed E.O. 13520, Reducing Improper Payments.
This Executive Order emphasized the need to eliminate payment error, waste, fraud, and
abuse in federally administered programs while protecting access to these programs by their
intended beneficiaries. Among other things, E.O. 13520, consistent with its broad-based
approach, sought to improve incentives and accountability for state and local governments
for reducing improper payments. In compliance with this Executive Order, OMB designated
Unemployment Insurance and another 13 programs government-wide as “high
priority”/”high error” programs required to take certain remedial and reporting actions due to
their high improper payment rates.

In 2010, the IPERA amended the IPIA and instituted additional requirements to clarify and
enhance the responsibilities of Federal agencies. Under the IPERA and governing OMB
guidance, each covered agency must comply with a number of obligations, among them:
conducting “periodic” reviews (at least once every three fiscal years) of programs and
activities susceptible to “significant” improper payments (as defined by the statute);
estimating and reporting improper payments; and, developing and implementing corrective
action. Among its corrective actions, an agency must ensure, where appropriate, that states
and localities are held accountable for reducing improper payments.

The IPERA requires, in relevant part, that the Inspector General of each agency report
annually on whether the agency is in compliance with the statute. To be “in compliance,” for
purposes of this requirement, the IPERA and OMB guidance establish—and the
Department’s Office of Inspector General makes a determination on—seven separate
elements. Among these elements, an agency will be in compliance if any program it
administers that is susceptible to “significant” improper payments nonetheless keeps its
annual improper payment rate to less than 10 percent of its outlays. An agency which reports
an improper payment rate of 10 percent or above for a program will be out of compliance and
will trigger additional oversight by Congress, OMB, and the Department’s Office of
Inspector General.

The UI program is currently out of compliance. The UI Benefit Accuracy Measurement
(BAM) program, which provides the basis for assessing the accuracy of UI payments,
estimated the UI national improper payment rate to be 12.0 percent for the 2011 reporting
period (11.35 percent overpayment rate plus a 0.65 percent underpayment rate). This
translates to approximately $13.6 billion in improper payments nationally.

In 2011, ETA issued UIPL No. 19-11, National Effort to Reduce Improper Payments in the
Unemployment Insurance (UI) Program, to stress that UI integrity remains a top priority and
to provide information regarding a national strategic plan to aggressively target UI
overpayment prevention and detection. UIPL No. 19-11 also requested that states participate
in a federal-state collaboration to reduce UI improper payments by implementing new
strategies aimed at addressing root causes of overpayments. Later, UIPL Nos. 26-11 and 18-
12 announced supplemental funding opportunities to help states develop their own state-specific strategies to reduce the improper payment rate. States have demonstrated
   tremendous leadership in implementing these strategies, while balancing extraordinary
   workloads.

   In addition to state-specific integrity strategies funded through these previous supplemental
   funding opportunities, the Department continues to explore new and innovative strategies and
   tools to support the prevention, detection, and recovery of UI improper benefit payments.
   Most recently, in collaboration with OMB, including the Partnership Fund for Program
   Integrity Innovation, and with advice from the President’s Management Advisory Board, the
   Department has examined new approaches to address UI fraud and other integrity challenges
   for the UI program, centralized at the Federal level. A promising strategy the Department is
   interested in replicating is the use of predictive anti-fraud modeling techniques, such as the
   fraud prevention and automated screening systems employed by the U.S. Department of
   Health and Human Services’ Centers for Medicare and Medicaid Services (CMS). These
   data analytics techniques supplement existing CMS fraud detection tools with a more
   advanced, customized analysis to identify trends, risks, and patterns of behavior and target
   agency resources for further review. Based on the initial success of these techniques, the
   Department believes that data analytics services such as these can benefit states’ fraud
   prevention efforts in the UI program.

   A June 2010 Presidential Memorandum, Enhancing Payment Accuracy Through a “Do Not
   Pay List,” stressed the importance of preventing improper payments before they occur;
   instructed Federal agencies to thoroughly review relevant databases before issuing payments
   or awards; and required agencies, at a minimum, to review a new network of databases to be
   known as the “Do Not Pay List.” The Memorandum required agencies to access this
   information through a single web-based portal, which OMB and the U.S. Department of the
   Treasury (Treasury) have since established and are enhancing. OMB Memorandum M-12-11, published in April 2012, directed each Federal agency to develop a plan for using this
   solution for program benefit eligibility reviews in order to reduce and eliminate improper
   payment errors before they occur. The Department is finalizing its plan to apply the
   centralized tools offered through the Do Not Pay (DNP) solution to the UI program. One of
   the components of the DNP solution is a data analytics service. ETA seeks to leverage this
   service to support the implementation of a new UI Integrity Center of Excellence.

4. Funding Opportunity. This competitive funding opportunity is designed to establish, via a
   cooperative agreement between ETA and a lead state, a UI Integrity Center of Excellence.
   The Center’s mission will be to develop, implement, and promote innovative integrity
   strategies, including the prevention and detection of fraud, in the UI program. The activities
   of this Center will supplement and support, not duplicate, the activities that states are already
   implementing to reduce improper payments.

   ETA will award the supplemental funds to a single lead state. However, we intend for the
   Center, once up and running, to be operated by a Steering Committee (as described in
   Section 5) that will serve all states in the UI program and will include representation from
   multiple states. We plan to use a cooperative agreement as the vehicle for administering the
   grant funds, outlining authorized activities, and defining the respective responsibilities of

   ETA and the lead state. A key goal for the Center will be to actively explore the use of new
   technologies and new data sources to enable sophisticated data analysis and predictive
   modeling to improve prevention and detection of improper payments.

   ETA plans to award up to $15 million in supplemental funding for a lead state to establish
   and operate the Center in collaboration with a formal Steering Committee, ETA, and the
   National Association of State Workforce Agencies (NASWA) for a minimum of two years.
   However, applicants are encouraged to propose a level of funding sufficient to implement
   their proposed Center design. ETA will consider applications that propose funding requests
   above the planned $15 million award amount with proper justification, and based on the
   availability of funds. By applying for supplemental funds, the lead state is agreeing that the
   proposed project will be completed with no additional Federal funding. However, ETA may
   elect to extend the grant for the Center beyond the original two-year term, contingent on
   availability of Federal funds to support Center operations.

   The grant application will be expected to address the six key requirements identified below:

    • The grantee will establish the UI Center led by a Steering Committee structure as
      described in Section 5 of this UIPL;

    • The Center will work with Treasury, through the DNP initiative, to develop data analytics
      and predictive modeling methodologies and tools that are transferable and expandable
      for all states to improve UI fraud prevention and detection;

    • The Center will develop a secure method to rapidly alert states to new fraud schemes, as
      they are identified;

    • The Center will serve as a laboratory for innovation by supporting the development and
      piloting of new strategies and tools to combat improper payments and fraud, building on
      the work of states, other Federal government agencies and the private sector;

   •   The Center will support knowledge sharing among states by identifying and
       disseminating promising practices for state fraud prevention across the UI program; and

   •   The Center will increase staff capacity by developing and delivering training on fraud
       solutions and integrity strategies to all states.

5. Allowable Activities. The application must include a description of costs for this project and
   identify projected outcomes. Supplemental funding awarded through this solicitation may be
   used to finance the following activities:

    • Merit staffing and securing contract support to support Center operations through
      September 30, 2014. The state selected as the lead state will identify a merit-staffed
      senior project manager and will either identify or hire two to four state merit staff to
      carry out the work of the Center. The lead state must agree that the additional staff will
      be limited to this activity and that resources will supplement, not supplant, current levels

       of staff and resources (maintenance of effort). In addition, with the concurrence of the
       Steering Committee, the lead state may procure the services of outside experts for the
       purpose of developing a predictive modeling methodology, in collaboration with
       Treasury’s DNP solution. (NOTE: Consistent with ETA’s previous guidance, contract
       staff funded under Federal UI administrative grants may only perform work that is
       “commercial” in nature; “inherently governmental” functions must be performed only by
       merit staff.)

    • Developing methodology and identifying new data sources and tools for use in the
      detection and prevention of fraudulent UI claims, as well as non-fraudulent improper
      payments.

    • Communicating and disseminating information on identified fraud schemes and
      promising practices across the UI program, leveraging open source technology.

6. Project Organization. Applicants must propose a Steering Committee structure that
   includes representation from at least three permanent partner states identified by NASWA,
   with ETA having voting membership, and describe how the Steering Committee’s decision-making process will work. NASWA will be an ad hoc member to enable collaboration with
   related NASWA Center for Employment Security Education and Research projects,
   including those of the Information Technology Support Center. Each partner state will
   contribute program and technical expertise to the design and implementation of the Center.
   The Center will develop and implement a project management plan based on the direction of
   the Steering Committee.

   The proposal must identify a Center Director, or describe how one will be identified, selected
   through the lead state’s merit staffing system. Within six weeks after the grant award, the
   applicant must select the Center Director (this may be an interim appointment pending hiring
   a permanent Director) and convene the first meeting of the Steering Committee to begin
   implementation of the project.

   The project design also may require the assistance of one or more contractors. The applicant
   must be willing to act as the lead contracting party for the Center for any contracts. The lead
   state will be responsible for developing, competing, and awarding a contract with the support
   and participation of the Steering Committee. The Steering Committee will work with the
   contract staff, as necessary, to provide information that the contractor needs to develop and
   plan an approach to implement the proposed project design.

   The Steering Committee will seek input from other interested states and ETA’s regional and
   national office staff. The Steering Committee will be responsible for providing input on and
   reviewing the Request for Proposal(s) for any contract(s) and participating in or providing
   input on the vendor selection, helping to define appropriate activities for the contractor(s),
   and providing UI program and technical experts to support the Center’s efforts.

   The Steering Committee will also identify project metrics and milestones to be included in
   the project plan for each Center activity. For example, the Center may choose to establish a

   project outcome that specifies a certain number of states that will have the capacity to use
   data analytics to improve UI fraud prevention and detection due to the Center activities.

   Examples of the lead state responsibilities:

   •   Coordinate all activities related to this effort with the partner states and NASWA;

   •   Develop and provide to ETA a detailed project management plan no later than December
       31, 2012;

   •   Provide staff for the project management team, to support the overall effort, and to
       respond to requests for information; and

   •   Develop system(s), share products, and provide technical assistance, as appropriate,
       working together with other members of the Steering Committee.

   Examples of the participating state responsibilities:

   •   Attend meetings/conferences with lead and participating states; and

   •   Assist in development and testing of deliverables for the project.

7. Project Timeline and Deliverables. Grant applications must include a timeline for the
   achievement of the Requirements in Section 4. Applicants are strongly encouraged to follow
   the tentative timeline for the achievement of specific milestones and identified deliverables
   provided below. The final timeline will be subject to negotiation with the Steering
   Committee.

   Requirement 1: Establish the UI Center led by a Steering Committee structure
                            Key Deliverables                    Target Completion Date
                                                              • No later than October 31,
   Senior Project Manager assigned as Center Director

    Two to three additional merit staff, as well as one
                                                              • All positions filled no later
   administrative staff, assigned or hired and dedicated
                                                                than March 31, 2013
   solely to the project
   Steering Committee members identified in partnership       • No later than October 31,
   with NASWA and DOL                                           2012
   First Steering Committee meeting to establish detailed     • Convened within first six
   project plan responsibilities and regular meeting schedule   weeks of grant award
   Detailed Project Management Plan that identifies           • No later than December 31,
   outcomes and metrics for each activity of the Center         2012

Requirement 2: Work with Treasury and Do Not Pay solution to develop data analytics and
predictive modeling methodologies
                         Key Deliverables                    Target Completion Date
Establish an agreement with Treasury to support the Do
Not Pay solution’s data analytics capabilities through the • No later than December 31,
sharing of data and development of predictive modeling       2012
methodologies
Select contractor to support development of data analytic
                                                           • No later than July 31, 2013
and predictive modeling methodologies
Develop a business requirements framework that states
can use to incorporate new Do Not Pay data analytics       • No later than July 31, 2014
into their existing business practices
Requirement 3: Develop secure method to communicate fraud schemes with states
                         Key Deliverables                    Target Completion Date
Secure contract support for development of secure portal • No later than April 30, 2013
                                                           • Available to all states by
Portal in operation for the entire UI program
                                                             December 31, 2013
Requirement 4: Develop and pilot strategies and tools to combat improper payments and
fraud
                          Key Deliverable                    Target Completion Date
                                                           • As proposed by the applicant
Secure contract support to assist with development of
                                                             and later, as determined by
products and tools
                                                             the Steering Committee
Requirement 5: Identify and disseminate promising practices across the UI program
                         Key Deliverables                    Target Completion Date
Develop plan to identify and disseminate best practices
                                                           • Beginning no later than
using tools such as the UI Community of Practice and the
                                                             March 31, 2013, and ongoing
UI Improper Payments Web page at www.dol.gov
Conduct webinars to highlight best practices identified    • Beginning no later than
through the Center                                           September 30, 2013
Support planning and content for DOL’s bi-annual           • Conference to be held in
Integrity Conference                                         spring 2014
Requirement 6: Develop and deliver training on fraud solutions and integrity strategies to
all states
                         Key Deliverables                    Target Completion Date
                                                           • Beginning no later than
Develp plan to identify state training needs
                                                             March 31, 2013 and ongoing
Comprehensive training plan developed                      • No later than June 30, 2013
Secure contract support, as needed, to assist with         • No later than September 30,
development of training                                      2013
                                                           • Beginning no later than
Provision of training to states
                                                             December 31, 2013

8. Cooperative Agreement. The grantee will be required, upon award of the supplemental
   funding, to enter into a cooperative agreement with ETA for the joint management of the
   Center. ETA’s active engagement with the Center’s work will be critical to enable the
   Center to connect to and leverage advances made by other Federal agencies and the work of
   Treasury’s Do Not PayDNP Solution. The proposal must be structured to ensure that ETA
   will:

   •   Participate in the governance structure for the UI Center with ad hoc voting membership
       of the Steering Committee;

   •   Support connections to Federal resources, such as the CMS’s anti-fraud screening system
       and Treasury’s Do Not Pay solution;

   •   Leverage the UI Community of Practice in support of the Center’s communication and
       dissemination activities; and

   •   Provide oversight of the Center’s use of the grant funds.

9. Application Instructions. To apply for supplemental funds, the lead state must submit an
   application package according to the formatting guidelines provided in Attachment A to this
   UIPL.
   Upon making its selection, ETA will issue a Letter of Award to the state agency listing the
   proposal and the total funding level under this solicitation. Upon receipt of the Letter of
   Award, the state agency must submit forms SF-424 (OMB No. 4040-0004) and SF-424A
   (OMB No. 4040-0006) covering the approved project.

10. Availability of Funds. These funds are available for obligation by the Department through
    September 30, 2012. A state awarded a grant under this solicitation must agree to fully
    obligate those funds as soon as practical, but no later than September 30, 2014. Upon written
    request, the Grant Officer may modify the grant to allow the state additional time to spend
    remaining funds.

11. Project Modifications. If, during the performance period, the lead state wishes to reallocate
    funds among categories within its SBR, it must submit a new SF-424A (OMB No. 4040-0006) to the regional office for approval, with a copy to the national office, if the amount to
    be moved exceeds 20 percent of any category of the initially awarded amount for the grant.
    The lead state must also submit a request for modification of the grant signed and dated by
    the state’s signatory authority. This information will be submitted to the Grant Officer with a
    request for modification of the SBR grant to reflect the requested changes. The lead state
    may not elect to abandon an approved project and move funds to a different project. If the
    state fails to complete a project, funds for that project must be returned to the Department.

12. Action Requested. We request that State Administrators:

   a) Review the funding opportunity and determine whether the state will apply for funds
      under this solicitation;
   b) Work with the appropriate regional office to develop an application that will best serve
      the needs of the Center;
   c) Submit the proposal by e-mail to [email protected] by 11:59 p.m. EDT on
      Friday, September 7, 2012. The subject line of the e-mail should include the name of
      the lead state and the title “Integrity Center SBR 2012”; and
   d) Submit an electronic copy of the proposal to the appropriate regional office(s).

13. Inquiries. Questions should be directed to the appropriate regional office(s).

14. Attachments.

   Attachment A: Supplemental Funding Application Guidelines

Attachment A (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2012/UIPL_28_12_Att.pdf)

Attachment A

                        Supplemental Funding Application Guidelines

Instructions: The state agency submitting an application must use this format to describe
the activities for which it seeks funding. This document is to be combined into a single SBR
with a SF-424 and an SF-424A.

Name of Project: Unemployment Insurance Integrity Center of Excellence

Amount of Funding Request for this Project: Provide the total amount of funds requested for
the project.

State Contact: Provide name, telephone number, and e-mail address of the individual who can
answer any questions relating to the proposal.

Project Description: Provide a description of the project for which the state is seeking funding
and explain how the project will address each of the 6 requirements identified in Section 4.

The weight of this element is 20 percent of the total score.

Project Organization: Provide an explanation of how the state will implement the project
organization and cooperative agreement described in Sections 5 and 7.

The weight of this element is 20 percent of the total score.

Project Timeline and Deliverables: Provide a timeline for completion of the deliverables for
the project. This description should convey how the Center will achieve the deliverables
included in Section 6.

The weight of this element is 20 percent of the total score.

Description of Costs: Provide an explanation of all costs included in the project.

     Staff Costs for Agency and Contract Staff: Use the table format below to request state
     or contract staff. The application must clearly explain which costs are for state staff and
     which costs are for contract staff.

      Type of     Total Hours      Cost Per        Total
      Position                     Hour

     Hardware, Software, and Telecommunications Equipment: Provide an itemized list of
     hardware, software, and telecommunications equipment including the estimated cost per
     item and the number of each item required. A description of each item must provide any

     information needed to identify the specific item and a description of the size and capacity
     of each item if applicable.

     Other: Identify each item and provide the estimated cost per item. The need for each item
     must be explained.

The weight of this element is 20 percent of the total score.

Measurable Improvements Expected in UI Operations: Identify the areas in which fraud
detection and prevention will be improved and improper payments reduced through
implementation of the proposed project. All improvements must be explained in detail rather
than generalized, and quantified where possible. For example, the development of a new secure
method to communicate with states about fraud schemes when they are identified may require
the identification of the number of states that will have access to this tool by what date for the
prevention of UI fraud overpayments.

The weight of this element is 20 percent of the total score.