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 BudgetActual Base Contract$100,000 Contingency COLA$2,000$1,000 Service Level$10,000$5,000 Total Contract Amount$112,000$106,000

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 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 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 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 Review progress of pilot for operational issues Determine if pilot has benefited DPH & contractors Expand implementation in FY if pilot has been successful