DPH Contract Reform

Contractors AssociationFebruary 27, 2003

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Current Contract Process

April – Continuing resolution July – Board appropriates budget Fall/Winter – Contract certified Spring – Contract modified

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Goals of Contract Reform Streamline contract process Eliminate multiple contract certifications Build in financial flexibility into contract Anticipate foreseeable cost increases Align contract certification to coincide

with fiscal year Avoid interruptions in payments

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Contract Reform Proposal Base contract

Example: current level of service Contingency for routine increases

COLA Annual budget appropriations Add back funding Change in service level

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Contract Reform Equation

Base contract + contingency =

Total “not-to-exceed” contract amount

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Example ContractBudget Actual

Base Contract $100,000

$100,000

Contingency

• COLA $2,000 $1,000

• Service Level $10,000 $5,000

Total Contract Amount

$112,000

$106,000

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Mechanics

Base contract $100,000 – budget documented in Exhibit B

Contingency COLA & other FY appropriations

Revise Exhibit B to $101,000 based on FY 03-04 budget as approved by Board of Supervisors

Change in Service Level Revise Exhibit B to $106,000 based on change in

service level

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Proposed Contract Cycle• Spring 2003 – award letter for base budget ($100,000)

•Award will not include FY 03-04 appropriated amounts since these are not yet approved by the the Board of Supervisors

• June 2003 – prepare contract for certification

• September 2003 – revise Exhibit B to include FY 03-04

appropriations ($101,000)

• Spring 2004 – revise Exhibit B for service level changes

as needed ($106,000)

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Contract Reform Principles Contract is a legal document Contracts are currently used as fiscal

document Total contract is “not-to-exceed”

amount Actual payments may be less than

“not-to-exceed”

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Contract Policy Changes

• Goal to complete contract before fiscal year starts

• Eliminate need for continuing resolution

• Eliminate need for initial payment

• Assure cash flow for entire year

• Reduce reconciliation problems

• Streamline end of year settlement process

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Key Assumptions Timely preparation of documents Monthly invoicing to assure cash flow Accurate documentation of increases

Exhibit B (& other exhibits as necessary) must be revised each time a change has been made in compensation or service level

This will serve as the source documentation of contract changes

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Implementation Plan• Review proposal with DPH & contractors

• Pilot proposal on a limited number of CMHS & CSAS contracts for FY 03-04

• Review progress of pilot for operational issues

• Determine if pilot has benefited DPH & contractors

• Expand implementation in FY 04-05 if pilot has been successful