oversight

Nationwide Implementation of Women, Infants, and Children Electronic Benefits Transfer

Published by the Department of Agriculture, Office of Inspector General on 2019-12-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States Department of Agriculture




Nationwide Implementation of Women,
Infants, and Children Electronic Benefits
Transfer




Audit Report 27601-0003-23
                                                OFFICE OF INSPECTOR GENERAL
December 2019
Nationwide Implementation of Women, Infants,
and Children Electronic Benefits Transfer

Audit Report 27601-0003-23
OIG reviewed FNS’ strategy to implement EBT for WIC nationwide to meet the
October 1, 2020, deadline.



OBJECTIVE                           WHAT OIG FOUND
Our objective was to evaluate       The Food and Nutrition Service (FNS) Special
FNS’ strategy to implement          Supplemental Nutrition Program for Women, Infants,
EBT for WIC nationwide to meet      and Children (WIC) is administered by 90 State agencies.
the October 1, 2020, deadline.
                                    WIC provides Federal grants for supplemental foods,
Specifically, we assessed the
adequacy of FNS’ guidance to the
                                    health care referrals, and nutrition education for low-
State agencies, determined how      income pregnant, breastfeeding, and postpartum women
FNS is monitoring the States’       and for infants and children up to the age of 5 who are
responsibilities for implementing   found to be at nutritional risk. State agencies issue
EBT for WIC, and evaluated if       benefits via either paper checks/vouchers or by electronic
the States were on schedule to      benefits transfer (EBT). However, all State agencies
implement EBT nationwide for        have been mandated to implement EBT for WIC by
WIC by the 2020 deadline.           October 1, 2020.

                                    We identified 25 State agencies that may not be able
                                    to implement EBT for WIC by the mandated October
REVIEWED                            1, 2020, deadline. This occurred because the State
We evaluated FNS’ strategy          agencies experienced various challenges and setbacks,
to implement EBT for WIC            such as difficulty and delays in obtaining contractor
nationwide to meet the October      support for implementing a management information
1, 2020, deadline, reviewed         system or EBT system. Although FNS officials provided
FNS policies, procedures, and       adequate monitoring and guidance, they relied on State
guidance for implementing of        agencies to implement EBT for WIC. FNS also has not
EBT for WIC, and visited three      developed guidance for State agencies that may not meet
FNS regional offices and six
                                    the deadline and will need to seek an exemption. As a
State agencies administering
WIC.
                                    result, WIC participants and vendors, and the integrity
                                    of the program, may be negatively impacted in the State
                                    agencies that have not implemented EBT. In addition,
                                    participants may have less flexibility regarding how
RECOMMENDS                          they may purchase WIC foods. FNS officials stated that
                                    based on current information provided, 13 of the 25 State
We recommend that FNS               agencies would likely meet the deadline to implement
develop: (1) a plan to assist       EBT for WIC, but they did not provide additional
State agencies that may not be      documentation to confirm the level of progress those
able to meet the deadline, and      States have achieved.
(2) an exemption application
and decision-making process for
                                    FNS agreed with our recommendations, and we accepted
State agencies that seek to apply
for an exemption.                   management decision on the two recommendations.
                           United States Department of Agriculture
                                  Office of Inspector General
                                    Washington, D.C. 20250



DATE:          December 26, 2019

AUDIT
NUMBER:        27601-0003-23

TO:            Pamilyn Miller
               Administrator
               Food and Nutrition Service

ATTN:          Mark Porter
               Director
               Office of Internal Controls, Audits and Investigations

FROM:          Gil H. Harden
               Assistant Inspector General for Audit

SUBJECT:       Nationwide Implementation of Women, Infants, and Children Electronic Benefits
               Transfer


This report presents the results of the subject review. Your written response to the official draft
is included in its entirety at the end of the report. We have incorporated excerpts from your
response, and the Office of Inspector General’s (OIG) position, into the relevant sections of the
report. Based on your written response, we are accepting management decision for the two audit
recommendations in the report, and no further response to this office is necessary. Please follow
your internal agency procedures in forwarding final action correspondence to the Office of the
Chief Financial Officer (OCFO).

In accordance with Departmental Regulation 1720-1, final action needs to be taken within 1 year of
each management decision to prevent being listed in the Department’s annual Agency Financial
Report.

Your written response to the official draft report mentions FNS does not concur with our
statement regarding lack of documentation to support additional State agencies abilities to meet
the EBT deadline. We concur that FNS provided the listing of documentation during the course
of our audit work which we used to conduct our analysis and draw our conclusions. However,
once our analysis was complete and we discussed our results with FNS officials in July 2019, the
written correspondence provided by FNS did not include additional documentation to support
their belief the overall number of State agencies not meeting the mandate would be less.
Pamilyn Miller                                                                                        2


We appreciate the courtesies and cooperation extended to us by members of your staff during our
audit fieldwork and subsequent discussions. This report contains publicly available information and
will be posted in its entirety to our website (http://www.usda.gov/oig) in the near future.
Table of Contents

Background and Objectives ................................................................................... 1
Finding 1: FNS Needs to Further Support State Agencies’ Implementation of
EBT for WIC ........................................................................................................... 4
         Recommendation 1 ........................................................................................7
         Recommendation 2 ........................................................................................8
Scope and Methodology .......................................................................................... 9
Abbreviations ........................................................................................................ 11
Exhibit A: Summary of State Agency Implementation Status ........................ 12
Agency’s Response ................................................................................................ 13
Background and Objectives 
Background
The Food and Nutrition Service (FNS) administers the Department of Agriculture’s (USDA)
nutrition assistance programs. FNS’ mission is to provide children and needy families better
access to food and a more healthful diet through food assistance programs and nutrition
education efforts. FNS works in partnership with State agencies in delivering its programs.
State agencies determine most administrative details regarding the distribution of food benefits
and eligibility of participants, in accordance with Federal regulations.

Congress established the Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC) under Section 17 of the Child Nutrition Act of 1966 (CNA).1 WIC provides
Federal grants and is administered by 90 State agencies for supplemental foods, health care
referrals, and nutrition education for low-income pregnant, breastfeeding, and postpartum
women, and for infants and children up to the age of 5 who are found to be at nutritional risk.2
The program is available in all 50 States, the District of Columbia, 34 Indian Tribal
Organizations, and 5 U.S. Territories.3,4

The Healthy, Hunger-Free Kids Act of 2010 (HHFKA) amended provisions of the CNA to
include electronic benefits transfer (EBT) capabilities for WIC.5 Regulations define EBT as a
benefit delivery method that allows WIC participants to access their benefits electronically.6
Prior to EBT, a majority of State agencies provided WIC participants with paper checks or
vouchers to purchase food, while others distributed food through centralized warehouses or
delivered food to participants’ homes. As a result of HHFKA, each State agency is required to
convert WIC paper food instruments to an EBT delivery method by October 1, 2020, unless the
Secretary grants an exemption for a State agency that is facing unusual barriers to implement an
EBT system.7, 8 Statewide EBT occurs when all WIC clinics have been converted to an EBT

1
    42 U.S.C. § 1786.
2
 A State agency is: (1) an education, health or human service department, or comparable agency responsible for
administration of the Federally aided nutrition assistance programs within any of the 50 States, the District of
Columbia, or the U.S. Territories; or (2) an Indian Tribe, band, or group recognized by the Department of the
Interior or an intertribal council or group.
3
 There were 90 State agencies during the scope of the audit from fiscal year 2016 through July 2019. In October
2019, we were informed that one Indian Tribal Organization no longer administers WIC, which reduced the number
of State agencies to 89, and reduced the number of Indian Tribal Organizations to 33.
4
 The five U.S. Territories are American Samoa, Commonwealth of the Northern Mariana Islands, Guam, Puerto
Rico, and the Virgin Islands.
5
    Healthy, Hunger-Free Kids Act of 2010, 42 U.S.C. 1751 § 352(d).
6
    7 C.F.R. § 246.2.
7
 If the Secretary grants a State agency an exemption, such an exemption will remain in effect until the State agency
no longer meets the conditions for which the exemption was based, the Secretary revokes the exemption, or 3 years
have passed from the date on which the exemption was granted—whichever occurs first.
8
  To be eligible for an exemption from the Statewide implementation requirements, a State agency shall demonstrate
to the satisfaction of the Secretary one or more of the following: (1) there are unusual technological barriers to

                                                                        AUDIT REPORT 27601-0003-23                 1
delivery method and all WIC authorized vendors are capable of transacting WIC purchases via
EBT.9 As of July 3, 2019, 49 of the 90 State agencies have implemented Statewide EBT for
WIC.10

The 2016 Appropriations Act appropriated $220 million to FNS for WIC, which is to remain
available until expended by the State agencies for management information systems, including
EBT activities.11 This money is intended to help States with their management information
systems and work towards implementation of EBT. State agencies may request Federal funding
to develop, acquire, and/or implement a management information system that supports the
operation of WIC programs. State agencies are required to submit an Advance Planning
Document (APD) to FNS in order to obtain prior approval to receive or utilize Federal funding
for a management information system supporting WIC programs.12

The APD explains the State agency’s intended activities and projected expenditures for planning
and implementing a management information system. The “APD process” is a process through
which APD-related documents are submitted to FNS for review and approval, beginning a period
of communication and cooperative oversight that continues until the project is complete. The
first phase of the APD process is planning, which includes identifying and defining procurement
efforts to support the project, resource determination, cost estimating, and budgeting. The
second phase of the process is implementation, which establishes schedules and milestones,
including applicable procurements. It sets forth budget expenditures for the grant, risk and
quality management plans, user acceptance testing, pilot, and Statewide rollout. The State
agency may decide to use contractor support to perform parts of the planning or implementation
activities through the procurement process. FNS will review the procurement and planning
documents in accordance with regulations and may require revisions or clarifications from the
State agency before approving. State agencies may neither execute contracts nor obligate funds
without FNS’ approval of the planning documents.

Within the APD process are two planning documents that indicate whether the State agency is in
the planning phase or the implementing phase:

       1. The Planning APD (PAPD) provides FNS and State agency officials with notification of
          the State agency’s intent to begin a formal planning process, describes the planning
          activities to be done, and explains how the State agency will manage the activities. This
          document sets forth the State agency’s approach to its management information system
          and/or EBT systems.

       2. The Implementation APD (IAPD) is the product of the State agency’s planning process

implementation, (2) operational costs are not affordable within the nutrition services and administration grant of the
State agency, and (3) it is in the best interest of the program to grant the exemption.
9
    A clinic is a facility where WIC applicants are certified.
10
     The term “Statewide” is used to represent the State agencies that have implemented Statewide EBT for WIC.
11
     Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, 129 Stat. 2283 (2015).
12
  An APD is made up of several documents, such as a budget, schedule, and management plan, produced by a State
agency.

2        AUDIT REPORT 27601-0003-23
       and addresses the details for the design, development, integration and testing,
       implementation, and maintenance and operations of a management information system.

Objectives
To evaluate FNS’ strategy to implement EBT for WIC nationwide to meet the October 1, 2020,
deadline. Specifically, our objectives were to: (1) assess the adequacy of FNS’ guidance to the
State agencies, (2) determine how FNS is monitoring the States’ responsibilities for
implementing EBT for WIC to ensure the State agencies are ready to process WIC benefits via
EBT by the 2020 deadline, and (3) determine if the States are on schedule to implement EBT
nationwide for WIC by the 2020 deadline.

Our audit did not identify any issues with FNS’ guidance provided to the State agencies or the
monitoring of the States’ responsibilities for implementing EBT for WIC.




                                                            AUDIT REPORT 27601-0003-23            3
Finding 1: FNS Needs to Further Support State Agencies’ Implementation of
EBT for WIC
We identified 25 State agencies that may not be able to implement EBT for WIC by the
mandated October 1, 2020, deadline (hereafter referred to as “deadline”).13 This occurred
because the State agencies experienced various challenges and setbacks, such as difficulty and
delays in obtaining contractor support in implementing a management information system or
EBT system. While FNS was aware of these challenges, it relied on State agencies to implement
EBT for WIC. As a result, WIC participants, vendors, and the integrity of the program may be
negatively impacted in the State agencies that have not implemented EBT for WIC. For
example, according to State agencies, WIC participants will be at a disadvantage, as they will
continue to have less flexibility regarding how to purchase WIC foods, which would also cause
them to remain at risk for experiencing the stigma of being identified as a WIC participant.

According to HHFKA,14 each State agency shall be required to implement EBT systems
throughout the State no later than October 1, 2020, unless the Secretary grants an exemption for
a State agency that is facing unusual barriers to implement EBT. To be eligible for an exemption
from the Statewide implementation requirements, a State agency shall demonstrate to the
satisfaction of the Secretary one or more of the following: (1) there are unusual technological
barriers to implementation, (2) operational costs are not affordable within the nutrition services
and administration grant of the State agency, and (3) it is in the best interest of the program to
grant the exemption.

We found that FNS provided adequate guidance and monitoring to the State agencies to
implement EBT for WIC. This guidance included monitoring State agency status through
frequent emails and phone conferences, status reports, APD updates, and internal tracking
spreadsheets. In addition, FNS provided guidance such as a handbook and other documentation
to State agencies illustrating how to implement EBT for WIC through the APD process. The
handbook has detailed step-by-step instructions on how to complete the APD process for
implementing EBT.15 This FNS handbook is the State agencies’ primary source for program
guidance while undergoing the implementation process. During initial conversations, FNS
officials stated that 45 of the 90 State agencies had implemented EBT, and while they
acknowledged some State agencies were experiencing diverse challenges, they were optimistic
that most of the remaining State agencies in the planning or implementing phases would meet the
deadline.16

As a means to better understand the timeframes for the implementation of EBT for WIC, we
analyzed the status of the 90 State agencies in implementing EBT, which included actual dates


13
   There were 90 State agencies during the scope of the audit from fiscal year 2016 through July 2019. In October
2019, we were informed that one Indian Tribal Organization no longer administers WIC, which reduced the number
of State agencies to 89. This also reduced the number of State agencies identified to 24.
14
     Healthy, Hunger-Free Kids Act of 2010, 42 U.S.C. 1751 § 352(d).
15
     USDA FNS, FNS Handbook 901 (Jan. 2017).
16
     FNS stated it was a low priority for one State agency, as it was dealing with the effects of a natural disaster.

4        AUDIT REPORT 27601-0003-23
for when States completed each phase of the process. Based on this information, we computed
an average time for State agencies to complete the implementation process based on when FNS
approved the the initial planning documents.

From our analysis, we identified 25 State agencies that may not be able to implement EBT for
WIC by the deadline.17 This number includes all 20 State agencies18 that are currently in the
planning phase.19 While FNS recognizes it can take 2 or 3 years to go from planning to
Statewide EBT, our analysis showed that, on average, it took State agencies approximately
5 years to complete this process.20 We determined that State agencies have a limited amount of
time to complete the necessary steps in order to achieve Statewide implementation. For
example, one State agency was hiring a project manager to assist in creating an IAPD in order to
obtain grant funds to proceed with procuring a management information system and EBT
system.21 The State agency did not anticipate the project manager to be on board until January
2020, which would likely result in the State agency not achieving Statewide EBT by the
deadline. In addition, another State agency was without an approved PAPD. Based on our
estimated completion averages, it takes approximately 5 years to implement EBT Statewide after
a PAPD is approved. According to this projection, the State agency would not achieve Statewide
implementation until after the deadline.

We identified the remaining five State agencies in the implementing phase that may not be able
to meet the deadline—based on their status and our analysis of the timelines contained within
their respective IAPDs. For example, one State agency initially projected it would not achieve
Statewide implementation until after the deadline; however, it had since drafted an IAPD
adjusting its target date to 1 day before the deadline. To meet this target date, the State agency
must complete several steps, such as contract approval, user acceptance testing, pilot testing the
system, and accomplishing full Statewide implementation rollout. As of June 2019, the State
agency was changing EBT contractors and was without a signed contract. State agency officials
also said they were not expecting to start the pilot testing until July 2020, which would give the
State agency only 3 months to complete all the remaining steps. However, according to our
analysis, on average, it takes a State agency 7 months to go from pilot testing to Statewide
implementation. Another State agency in the implementing phase anticipated it would take
20 months to achieve Statewide implementation from the time it secured a contract with the EBT
vendor. The State agency secured the contract with the vendor in May 2019 and based on its
estimated 20-month timeframe, it would then expect to achieve Statewide implementation in
January 2021.

17
     We reviewed three FNS regions and six State agencies to confirm the implementation status.
18
  In October 2019, we were informed that one Indian Tribal Organization no longer administers WIC, which
reduced the number of State agencies in planning to 19.
19
  The 25 State agencies in question included 20 in the planning phase and 5 in the implementing phase as of
July 3, 2019. Of the remaining 16 State agencies (90 - 49 - 25 = 16), we found that 3 may make the deadline based
on their current status, and the remaining 13 were in the implementation phase but not within the regions selected
for review.
20
  Special Supplemental Nutrition Program for Women, Infants, and Children: Implementation of Electronic Benefit
Transfer-Related Provisions, 81 Fed. Reg. 10,433 (Mar. 1, 2016).
21
  According to FNS, WIC technology procurement activities are the responsibility of the State agency, and State
agency procurements are often lengthy and complex.

                                                                         AUDIT REPORT 27601-0003-23               5
FNS has a limited role in the implementation of EBT for WIC, as the State agencies are
responsible for the coordination and management of EBT. State agencies’ inability to implement
EBT for WIC by the mandated deadline occurred because many of these State agencies
experienced various challenges and setbacks that hindered their ability to complete the necessary
steps for Statewide implementation. Examples of these challenges and setbacks included: (1)
difficulty and delays in obtaining EBT system or management information system contractors,
(2) lower-level priority on behalf of State procurement departments, and (3) limited staff and
resources for some of the smaller State agencies. One State agency in the planning phase had
unsuccessfully spent the last several years trying to join two other State agency contracts to
implement a management information system that would process EBT. Another State agency
put its project on hold for 18 months, starting in the summer of 2015, following concerns raised
by the State administration related to potential system abuse.

We discussed each of these State agencies with FNS officials, who explained that they are
working with a diverse group of State agencies with different challenges, which caused delays
for some State agencies. Further, FNS officials explained that while they have overall
responsibility for WIC and are to provide technical assistance to the State agencies, the State
agencies are responsible for the implementation of EBT.

During the course of our audit, FNS initiated efforts to establish alternate plans to assist State
agencies. Such assistance included incorporating shorter reviews for documentation, allowing
State agencies that do not have the in house expertise to hire a project manager to assist in
drafting PAPDs, and allowing shorter timeframes for requests for proposals.22 For example,
FNS acknowledged and recently established an alternate plan to assist one State agency that had
neither the staff nor technical expertise to timely implement EBT for WIC.

According to State agencies, WIC participants, vendors, and the integrity of the program may be
negatively impacted in the States without Statewide EBT. WIC participants from these
geographic areas will have less flexibility regarding how to purchase WIC foods, as current
paper food instrument redemption requires full redemption of all items on the food instrument.
The negative impact also causes participants to remain susceptible to experiencing the stigma of
being identified as a WIC participant. In addition, there may be a decreased assurance that
participants are purchasing allowable WIC foods. Lastly, State agencies that have not
implemented EBT for WIC would lack access to timely data on food purchases and would
therefore be less able to detect and prevent program abuse.

We discussed the results of our audit with FNS officials who believed, based on current
information provided by the State agencies, 13 of the 25 State agencies would likely meet the
deadline to implement EBT for WIC. FNS stated that several State agencies were making
significant progress towards meeting the mandate which included one State obtaining a project
management contract, and another State acquiring experienced contract support. However, no
additional documentation was provided by FNS to confirm the level of progress made by the
State agencies. Additionally, based on the amount of activities in the planning and implementing

22
     FNS allowed a 30-day request for proposal timeframes instead of the typical 90-day timeframes.

6        AUDIT REPORT 27601-0003-23
phases and the average time it takes to implement EBT, we determined there may not be enough
time to ensure the State agencies will make the deadline.

Although the agency has started developing a plan to assist those State agencies, FNS lacks
guidance for those State agencies that may not meet the deadline and will need to seek an
exemption. The HHFKA provides the option for the Secretary to grant an exemption, which is a
3-year extension of the deadline from the date the exemption was granted. If the Secretary
grants a State agency an exemption, such exemption will remain in effect until the State agency
no longer meets the conditions on which the exemption was based, the Secretary revokes the
exemption, or for 3 years have passed from the date on which the exemption was granted—
whichever occurs first. Currently, regulation states that the Secretary may grant exemptions;
however, FNS officials stated this authority has not been delegated down to anyone else in the
Department. FNS officials also stated that, although it is their responsibility to establish an
exemption process, they did not want to provide State agencies with this guidance too soon, as
the goal is to meet the deadline and they did not want to prompt State agencies to significantly
delay their projects.

Based on our review, we recommend that FNS develop a plan to assist the State agencies that
may not meet the deadline. In addition, FNS should develop an exemption application and
decision-making process for State agencies that may need to seek an exemption. By taking these
corrective actions, FNS could give the State agencies the best possible chance to implement EBT
for WIC by the deadline or receive an exemption.

Recommendation 1

Develop and implement a plan to assist State agencies that may not be able to meet the
October 1, 2020, deadline.

Agency Response
In its December 9, 2019 response, FNS agreed with the recommendation and stated that the FNS
Administrator recently approved a technical assistance plan for States that may be at risk of not
meeting the October 1, 2020 deadline. The plan includes a focused data collection for creating a
path forward in assisting States in meeting the statutory implementation deadline. In addition,
FNS will develop template correspondence Regional Administrators may use to communicate
project status to State Commissioners, statutory and regulatory requirements, and offer continued
FNS technical assistance. FNS will also develop a technical assistance question-and-answer
document to assist in answering questions about the statutory and regulatory requirements and
share lessons learned from successful projects. Finally this plan will include regular WIC
technology conference calls (i.e., at minimum monthly) aimed at providing technical assistance
necessary for successful EBT implementation. These calls will include applicable FNS National
Office, Regional Office, and State agency staff. FNS will continue to provide regular and ad hoc
technical assistance calls with WIC State agencies, depending on the needs of each project.

The estimated completion date is January 31, 2020.


                                                            AUDIT REPORT 27601-0003-23         7
OIG Position
We accept management decision on this recommendation.

Recommendation 2

Develop and implement an exemption application and decision-making process for State
agencies that may need to seek an exemption.

Agency Response
In its December 9, 2019 response, FNS agreed with this recommendation and stated:

       Statute permits WIC State agencies to request an exemption from the required statutory
       timeframe for EBT implementation (i.e., an extension request), not a wholesale
       exemption from EBT implementation.

       FNS will set forth a standard approach by which WIC State agencies may request an
       extension to the October 1, 2020 statutory deadline if needed. An exemption application
       and decision-making process, to be applied uniformly across applicable requesting State
       agencies, is currently in Agency clearance.

The estimated completion date is January 31, 2020.

OIG Position
We accept management decision on this recommendation.




8    AUDIT REPORT 27601-0003-23
Scope and Methodology 
To accomplish our audit objectives, we evaluated FNS’ strategy to implement EBT for WIC
nationwide to meet the deadline. We performed our audit work at FNS’ Headquarters in
Alexandria, Virginia; the Mid-Atlantic Regional office in Robbinsville, New Jersey; the
Mountain Plains Regional office in Denver, Colorado; and the Northeast Regional office in
Boston, Massachusetts. We also reviewed six State agencies’ activities and documentation
regarding the implementation status of EBT for WIC.23 We conducted our audit fieldwork from
September 2018 through July 2019. The scope of our audit was implementation of EBT for WIC
from FY 2016 through July 2019.24

Of the seven regional offices, we non-statistically selected three of the five regional offices with
the most State agencies in the planning and/or implementing phases.25 Based on discussions
with FNS officials, status of the State agencies, and our analysis of implementation status, we
selected a non-statistical sample of 6 from the 39 State agencies within the 3 regions.26 Our
selection included two State agencies from each of the three regions that were in different stages
of the implementation process.27

FNS did not use an information technology system to monitor the State agencies’
implementation status of EBT for WIC by the mandated October 1, 2020 deadline. Therefore,
we did not rely on an information technology system and make no representation regarding the
adequacy of any agency computer systems, or information generated by them. The EBT
implementation data for WIC were provided by FNS and corroborated by documentation and
discussions with agency officials.

To accomplish our audit objectives, we:

     ·   reviewed applicable laws, Federal regulations, and agency policies, procedures, and
         guidance pertaining to the implementation of EBT for WIC;
     ·   interviewed FNS Headquarters and regional officials regarding the implementation of
         EBT for WIC and their oversight of State agencies implementing EBT;
     ·   evaluated FNS’ controls for monitoring State agencies’ progress for the implementation
         of EBT for WIC;



23
  We visited three State agencies, which included two in Maine (Maine and Indian Township) and one in the
District of Columbia. We conducted phone conferences with the remaining three State agencies.
24
 Our initial scope for this audit was FY 2016 through July 2018; however, we expanded our scope to reflect the
most current information.
25
 The seven regional offices are: Mid-Atlantic, Midwest, Mountain Plains, Northeast, Southeast, Southwest, and
Western. We selected the Mid-Atlantic, Mountain Plains, and Northeast regional offices. The Midwest and
Western regional offices only had State agencies in the implementing phase.
26
  The six State agencies in our sample are the District of Columbia, Indian Township, Kansas, Maine, New Jersey,
and North Dakota.
27
  Three of the State agencies were in the planning phase, two were in the implementing phase, and one State agency
had implemented Statewide EBT successfully.

                                                                       AUDIT REPORT 27601-0003-23                9
     ·   evaluated FNS’ EBT implementation process to ensure the State agencies will be ready to
         process EBT for WIC by the deadline;
     ·   analyzed State agencies’ status in implementing EBT for WIC to determine if State
         agencies are on schedule to meet the deadline;
     ·   reviewed selected State agencies’ documentation to confirm their status in implementing
         EBT for WIC;
     ·   interviewed State agency officials to gain an understanding of their status in
         implementing EBT for WIC; and
     ·   analyzed State agencies’ timelines for implementing EBT for WIC in the selected regions
         to determine if each State agency will meet the deadline.

We conducted this performance audit in accordance with Generally Accepted Government
Auditing Standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe the evidence we obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.




10       AUDIT REPORT 27601-0003-23
Abbreviations 
APD................Advance Planning Document
CNA ...............Child Nutrition Act of 1966
EBT ................electronic benefits transfer
FNS ................Food and Nutrition Service
FY ..................fiscal year
HHFKA ..........Healthy, Hunger-Free Kids Act of 2010
IAPD ..............Implementation Advance Planning Document
OIG ................Office of Inspector General
PAPD .............Planning Advance Planning Document
U.S.C. .............U.S. Code
USDA.............Department of Agriculture
WIC ................Special Supplemental Nutrition Program for Women, Infants, and Children




                                                           AUDIT REPORT 27601-0003-23         11
Exhibit A:  Summary of State Agency Implementation Status 
This table represents the 25 State agencies28 we identified that may not meet the mandated
October 1, 2020 deadline, their status, and region.29

   Region                               State Agency                                         Status
 MARO              District of Columbia                                               Planning
 MARO              New Jersey                                                         Implementing
 MARO              Puerto Rico                                                        Implementing
 MPRO              Cheyenne River Sioux Tribe                                         Planning
 MPRO              Eastern Shoshone                                                   Planning
 MPRO              North Dakota                                                       Implementing
 MPRO              Northern Arapaho                                                   Planning
 MPRO              Omaha Nation                                                       Planning
 MPRO              Rosebud Sioux Tribe                                                Planning
 MPRO              Santee Sioux Nation                                                Planning
 MPRO              Standing Rock Sioux Tribe                                          Planning
 MPRO              Three Affiliated Tribes                                            Planning
 MPRO              Utah                                                               Implementing
 MPRO              Ute Mountain Ute Tribe                                             Planning
 MPRO              Winnebago                                                          Planning
 NERO              Indian Township Passamaquoddy Reservation                          Planning
 NERO              Maine                                                              Implementing
 NERO              Pleasant Point Passamaquoddy Reservation                           Planning
 NERO              Seneca Nation                                                      Planning
 SWRO              ACL - Acoma, Canoncito, and Laguna WIC Program                     Planning
 SWRO              Eight Northern Indian Pueblos, Inc.                                Planning
 SWRO              Five Sandoval Indian Pueblos                                       Planning
 SWRO              Pueblo of San Felipe                                               Planning
 SWRO              Pueblo of Zuni                                                     Planning
 SWRO              Santo Domingo                                                      Planning




28
   There were 90 State agencies during the scope of the audit from fiscal year 2016 through July 2019. In October
2019, we were informed that one Indian Tribal Organization no longer administers WIC, which reduced the number
of State agencies identified to 24.
29
  USDA-FNS, WIC EBT Activities (July 3, 2019), https://www.fns.usda.gov/wic/wic-ebt-activities (last accessed
July 29, 2019).

12      AUDIT REPORT 27601-0003-23
Agency’s Response 




                AGENCY’S
         RESPONSE TO AUDIT REPORT




                        AUDIT REPORT 27601-0003-23   13
United States
Department of    DATE:         December 9, 2019
Agriculture
                 AUDIT
                 NUMBER:       27601-0003-23
Food and
Nutrition
Service
                 TO:           Gil H. Harden
3101 Park                      Assistant Inspector General for Audit
Center Drive

Alexandria, VA   FROM:         Pamilyn Miller /s/
                               Administrator
22302-1500

                               Food and Nutrition Service

                 SUBJECT:      Nationwide Implementation of Women, Infants, and Children Electronic
                               Benefits Transfer

                 This letter responds to the official draft report for audit number 27601-0003-23,
                 Nationwide Implementation of Women, Infants, and Children Electronic Benefits
                 Transfer.

                 FNS Response to the Introduction section of the audit report, “What OIG
                 Found”:

                 USDA FNS supports WIC State agencies making the successful transition to EBT by
                 ensuring all federally funded State agency management information systems (MIS) and
                 EBT projects reflect sound design, contain internal management controls, and are
                 procured in a way that allows for fair and open competition. USDA FNS and OIG
                 share an interest in ensuring successful WIC EBT implementation across all WIC State
                 agencies, to the benefit of program stakeholders and most importantly, participants.
                 USDA FNS appreciates OIG’s willingness to gain an understanding of the challenges
                 WIC State agency partners and FNS face related to EBT implementation.

                 FNS expects most, but not all, WIC State agencies nationwide will meet the statutory
                 deadline. For those State agencies that have not implemented EBT, FNS is proactively
                 providing technical assistance to ensure their projects are a success.

                 In the draft report, USDA OIG identified “25 State agencies that may not be able to
                 implement EBT for WIC by the mandated October 1, 2020 deadline….” OIG later
                 noted “FNS officials stated that based on current information provided, 13 of the 25
                 State agencies would likely meet the deadline to implement EBT for WIC but did not
                 provide additional documentation to confirm the level of progress achieved.” In
                 reference to OIG’s assertion regarding lack of documentation, USDA FNS does not
                 concur.
Gil Harden
Page 2

FNS provided status-specific EBT documentation on multiple occasions to OIG over the
course of the audit, including but not limited to the following:

      Monthly WIC EBT Detail Status Reports, showing State-by-State implementation
       status, estimated pilot start date, estimated rollout start date, and estimated
       statewide date, as applicable (multiple rounds);
      Monthly WIC EBT National Activity Maps (multiple rounds);
      A report specifically developed for OIG showing Advance Planning Document
       (APD) submission and approval dates by consortium;
      All final, approved State-specific APDs requested, to include both Planning and
       Implementation APDs; and
      All requested financial status reports.

Furthermore, in July 2019, USDA FNS corresponded directly with OIG in writing,
clarifying why select State agencies deemed by OIG as “unlikely” to meet the October 1,
2020 statutory deadline or “significantly challenged” in meeting the deadline should not
be categorized as such. In that response, FNS provided information regarding the type of
project and status, to include the status of procurements and contracts. USDA FNS
emphasized similar information during the July audit close-out meeting.

Based on a written response from USDA OIG in July 2019, it did not accept FNS’
recommendations, due to OIG projections which were in large part based average EBT
implementation timeframes nationwide. The OIG projections did not reflect potential
implementation timeframes of select, State agency- or consortium-specific technology
projects.

OIG Recommendation 1:

Develop and implement a plan to assist State agencies that may not be able to meet the
October 1, 2020 deadline.

FNS Response:

FNS concurs with this recommendation.

Before enactment of the Healthy Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296),
FNS provided individualized EBT technical assistance to all WIC State agencies via the
Advance Planning Document (APD) process. FNS continues to provide technical
assistance to WIC State agencies via the APD process. Further, FNS engages in regular
technical assistance calls with WIC State agencies on technology projects. In addition,
FNS provides in-person technical assistance and training sessions to WIC State agencies
at multiple national conferences and meetings, including the biennial National WIC
Association’s Technology, Program Integrity, and Vendor Management Conference; the



                             AN EQUAL OPPORTUNITY EMPLOYER
Gil Harden
Page 3

annual Electronic Funds Transfer Association’s EBT—The Next Generation Education
and Training Conference; and the periodic, FNS-coordinated EBT User Group national
meeting.

In October 2016, FNS released WIC Policy Memorandum #2017-1, New MIS Guidelines
and Revised Procedures for EBT and MIS Grant Funding. The policy memorandum
acknowledged WIC State agencies were in different stages of EBT planning and
implementation. For those State agencies without an approved EBT implementation
plan, FNS would only approve plans which included an established Management
Information System (MIS) with WIC EBT functionality. FNS would not approve State
agency projects adopting a system that was currently in development, or a system that
only permitted issuance of paper checks.

FNS subsequently transmitted letters to the limited number of affected State agencies and
provided technical assistance to assist the State agencies in implementing statewide EBT
October 1, 2020. In 2017, FNS modified the policy to recommend, not require, State
agencies select an established or existing MIS with EBT functionality. FNS
communicated this policy preference to applicable State agencies via follow-up letters.

Because of this technical assistance, multiple WIC State agencies previously at-risk of
not meeting the statutory deadline have either completed statewide implementation of
EBT or have established an implementation date in advance of October 1, 2020.

Finally, the FNS Administrator recently approved a technical assistance plan for States
that may be at risk of not meeting the October 1, 2020 deadline. The plan includes the
following:

   1. The Administrator has initiated a focused data collection for the purpose of
      creating a path forward in assisting states in meeting the statutory implementation
      deadline. The Administrator expects to conclude that data collection and begin
      implementation by the end of January 2020.

   2. By the end of December 2019, FNS will develop template correspondence RAs
      may use to communicate project status to State Commissioners, statutory and
      regulatory requirements, and offer continued FNS technical assistance.

   3. By the end of January 2020, FNS will develop a technical assistance question-
      and-answer document to assist in answering questions about the statutory and
      regulatory requirements and share lessons learned from successful projects.




                             AN EQUAL OPPORTUNITY EMPLOYER
Gil Harden
Page 4

   4. Throughout FY 2020, FNS will facilitate and/or participate in regular WIC
      technology conference calls (i.e., at minimum monthly) aimed at providing
      technical assistance necessary for successful EBT implementation. These calls
      will include applicable FNS National Office, Regional Office, and State agency
      staff. FNS will continue to provide regular and ad hoc technical assistance calls
      with WIC State agencies, depending on the needs of each project.

The rollout of the technical assistance plan has begun, with internal FNS calls and
scheduled FNS-State agency technology calls. FNS will continue to provide proactive
technical assistance, including the above referenced monthly calls, to ensure WIC State
agencies have the resources to successfully implement EBT.

Estimated Completion Date:

January 31, 2020 (date by which FNS Administrator may make any final adjustments to
the technical assistance plan for States)

OIG Recommendation 2:

Develop and implement an exemption application and decision-making process for State
agencies that may need to seek an exemption.

FNS Response:

FNS concurs with this recommendation. Statute permits WIC State agencies to request
an exemption from the required statutory timeframe for EBT implementation (i.e., an
extension request), not a wholesale exemption from EBT implementation.

FNS will set forth a standard approach by which WIC State agencies may request an
extension to the October 1, 2020 statutory deadline if needed. An exemption application
and decision-making process, to be applied uniformly across applicable requesting State
agencies, is currently in Agency clearance.

Estimated Completion Date:

January 31, 2020




                             AN EQUAL OPPORTUNITY EMPLOYER
Learn more about USDA OIG
Visit our website: www.usda.gov/oig
Follow us on Twitter: @OIGUSDA

Report Suspected Wrongdoing in USDA Programs
OIG Hotline: www.usda.gov/oig/hotline.htm

Monday–Friday, 9:00 a.m.– 3:00 p.m. ET
In Washington, D.C. (202) 690-1622
Outside D.C. (800) 424-9121
TYY (Call Collect) (202) 690-1202

Bribery / Assault
(202) 720-7257 (24 hours)




In accordance with Federal civil rights law and U.S. Department of Agriculture             Relay Service at (800) 877-8339. Additionally, program information may be made
(USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and         available in languages other than English.
employees, and institutions participating in or administering USDA programs are
prohibited from discriminating based on race, color, national origin, religion, sex,       To file a program discrimination complaint, complete the USDA Program
gender identity (including gender expression), sexual orientation, disability, age,        Discrimination Complaint Form, AD-3027, found online at How to File a Program
marital status, family/parental status, income derived from a public                       Discrimination Complaint and at any USDA office or write a letter addressed to
assistance program, political beliefs, or reprisal or retaliation for prior civil rights   USDA and provide in the letter all of the information requested in the form. To
activity, in any program or activity conducted or funded by USDA (not all bases            request a copy of the complaint form, call (866) 632-9992. Submit your completed
apply to all programs). Remedies and complaint filing deadlines vary by                    form or letter to USDA by: (1) mail: U.S. Department of Agriculture, Office of the
program or incident.                                                                       Assistant Secretary for Civil Rights, 1400 Independence Avenue, SW, Washington,
                                                                                           D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: program.intake@usda.gov.
Persons with disabilities who require alternative means of communication for
program information (e.g., braille, large print, audiotape, American Sign                  USDA is an equal opportunity provider, employer, and lender.
Language, etc.) should contact the responsible Agency or USDA’s TARGET
Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal               All photographs on the front and back covers are from USDA’s Flickr site and are in
                                                                                           the public domain. They do not depict any particular audit or investigation.