DPH Contract Reform

1
DPH Contract Reform

• Contractors Association
• February 27, 2003

2
Current Contract Process

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

3
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

4
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

5
Contract Reform Equation

• Base contract contingency
• Total not-to-exceed contract amount

6
Example Contract
7
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

8
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)

9
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

10
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

11
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

12
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