Establishment of an International Central Disbursement Unit (ICDU) for International Child Support Payments for ACF-OCSE

RFI ACF240560 - Establishment of an International Central Disbursement Unit (ICDU) for International Child Support Payments for Administration for Children and Families (ACF), Office of Child Support Enforcement (OCSE) THIS REQUEST FOR INFORMATION (RFI) IS NOT A REQUEST FOR PROPOSAL (RFP) OR AN OBLIGATION ON THE PART OF THE FEDERAL GOVERNMENT AND OCSE. THE GOVERNMENT DOES NOT INTEND TO AWARD A CONTRACT BASED ON THIS RFI OR TO OTHERWISE PAY FOR THE INFORMATION SOLICITED. Purpose: This RFI is for market research only to formulate a procurement strategy to establish an International Central Disbursement Unit (ICDU) for international child support payments processed by U.S. child support agencies. OCSE wishes to develop an efficient and low-cost service for managing incoming and outgoing child support payments between U.S. and foreign child support agencies. Instead of having each child support agency develop systems and procedures for electronic payments to currently 57 foreign treaty and reciprocal countries (and growing), the ICDU will reduce burdens on child support agencies by having one central unit that will develop secure, electronic transmission payment methods and manage the payment transfer process. Background: The Office of Child Support Enforcement's (OCSE) mission is to assure that assistance in obtaining support (both financial and medical) is available to children through locating parents, establishing paternity and support obligations, and enforcing those obligations. In 1996, P.L. 104-193 required the Secretary of Health and Human Services to serve as the U.S. Central Authority for International Child Support. The Secretary then designated OCSE to carry out the statutory functions of the International Child Support Central Authority (see section 459A of the Social Security Act). In 2016, the U.S. ratified the multilateral 2007 Hague Child Support Convention. Under the Convention and other bilateral agreements, OCSE and state child support agencies (including Puerto Rico, Virgin Islands, Guam and Washington, D.C.) currently provide reciprocal child support services to 57 foreign Convention and foreign reciprocating countries and Canadian provinces. In providing reciprocal services, federal law requires that international cases receive the same level of child support services provided in domestic cases. For more information, OCSE's website, https://www.acf.hhs.gov/css, provides information, laws, and procedures on the child support program, including international child support, which can be located at https://www.acf.hhs.gov/css/partners/international. Federal law requires each state to have a State Disbursement Unit (SDU) for the collection and disbursement of all child support payments for title IV-D cases and for income withholding payments in non-IV-D cases. These cases include international cases. The SDU must be operated by the child support agency or a vendor responsible directly to the child support agency, and it must be operated in coordination with the Child Support Enforcement (CSE) automated system. The domestic Automated Clearing House (ACH) electronic funds transfer system used in the U.S. to transmit funds domestically cannot transmit funds to other countries. While states have been required to transfer domestic interstate payments electronically for many years, checks were the sole mechanism for countries, including the U.S., to send international child support payments. With the increasing availability of electronic payment methods, checks are disappearing as a means for disbursing payments both within and between many countries. The process for clearing checks internationally has become more expensive and the clearing process can often take many weeks or, in some cases, months. These check-clearing costs are especially onerous given that international child support payment amounts are relatively small. This has led to increasing pressure to replace checks in the international child support world with electronic forms of payment. In 2017, five European countries advised OCSE and U.S. child support agencies that they will no longer process U.S. dollar checks that SDUs send in international cases. The countries are Austria, Hungary, Netherlands, Slovakia, and Switzerland. Each of these countries requested electronic payments. Since that time, the Czech Republic has also requested electronic payments and many other countries have inquired as to when the U.S. will move to electronic payments. As a result of this change, in some cases, payments from the U.S. have been held-up or returned entirely. The transition away from checks in international cases is complex. For every state to make this change, the state must standardize electronic payments for international cases, which will require programming changes to child support SDUs and financial systems. The effort and resources required for each state to implement alternatives to checks may be disproportionate to the size of the international caseload. For many states, therefore, the low number of cases makes it difficult to justify investing resources in complex solutions, particularly where system re-programming is required. In 2017 OCSE's Commissioner convened an internal study to examine capacity to process international child support payments electronically. During this study, child support directors requested strongly that OCSE take over the function of international child support payment processing, to reduce the extensive costs necessary to process low volume payments with the increasing number of foreign child support partners. Based on the study, the Commissioner approved a recommendation to conduct an internal feasibility study of a centralized solution for the management of all incoming and outgoing international payments. OCSE estimates that international cases make up less than one-quarter of one percent of the child support caseload in the U.S., although we expect this number to grow in the coming years. OCSE's preliminary estimates are that, once operational with the majority of reciprocating countries, the ICDU may handle between 175,000-245,000 payment transactions per year, most likely at the lower end of the range in the early years. This transaction calculation is based on an assumption of approximately eight to ten payments per case per year. OCSE completed the feasibility study in February 2019. OCSE's research found that the most cost-effective method for transmitting payments may likely be international ACH transactions (IAT). Based on the study examining child support agencies' capabilities for electronic payments, and the subsequent feasibility study for a centralized solution, OCSE has determined that a centralized model for international payments (ICDU) will reduce substantially federal and state costs, as well as state burdens, under the title IV-D program. Most importantly, the ICDU will ensure that children in international child support cases receive child support payments faster, more cost-effectively, and more securely than under the current check-based system of international payment transfers. We are seeking comments on how to proceed in the development and operation of an ICDU. The ICDU would manage incoming and outgoing payments on international cases on behalf of title IV-D child support agencies in the United States. States, territories, and tribes with IV-D programs may, but would not be required to, use the ICDU for international payments. The ICDU needs to include the following services. Scope: The ICDU needs to have the capacity to receive, disburse, and track electronic child support payments from/to SDUs, and from/to foreign countries. Domestically, payments between SDUs and the ICDU will be sent by ACH using the child support specific National Automated Clearing House Association (NACHA) format, the same process used for interstate electronic payment transfers. The ICDU should also have the capacity to manage payments from/to tribal IV-D agencies, to the extent the procedures are automated. Initially, the ICDU will prioritize payment processing services with foreign treaty countries and foreign reciprocating countries. Currently, there are 57 such countries and provinces (see the list on OCSE's international webpage, https://www.acf.hhs.gov/css/partners/international). Later, the ICDU may provide payment processing services to individuals or agencies in non-reciprocating countries. Services: 1. The ICDU will be responsible for the disbursement and receipt of international child support payments between child support agencies and foreign countries. In the start-up phase, the ICDU will need to communicate and work closely with foreign Central Authorities to establish arrangements for outgoing and incoming payment transfers. 2. Based on our research, the following description is an example of how the ICDU could operate for outgoing payments. Upon receipt of payments from SDUs, the ICDU will deposit all funds received into the ICDU bank account. Data for payments received from SDUs will be entered in the ICDU and the destination for the payment verified. Once sufficient information has been obtained to permit disbursement, the ICDU will generate a payment disbursement file and send the file to the federal oversight authority (to be determined by OCSE) for approval. All deposits will be swept from the ICDU bank account to a federal bank account each day to permit disbursement. After the federal authority has approved the disbursement and account reconciliation has taken place, the ICDU will disburse the funds from the federal bank account to the foreign Central Authority. 3. The ICDU will disburse to, and receive payments from, each foreign Central Authority using the most cost-effective and efficient means available. The ICDU may send and receive payments individually by case or combined into a single payment for several cases. To determine the best approach for each country, the ICDU will consider the capacity of the foreign country to receive and disburse electronic payments or payments in other formats, and the requirement to provide payment data. The secure data provided with the payment or separately should enable the receiving Central Authority and U.S. agency to maintain an accurate payment record for the case, update the account balance, and disburse the payment to the custodial parent using that country's domestic payment processes. 4. Based on our research, the ICDU's transmission options could include, but are not limited to, the following methods: 1) IAT; 2) SWIFT wire payments; 3) electronic payment cards; and, 4) additional methods as appropriate. OCSE also intends to explore the viability of the ICDU using the Treasury Department's International Treasury Services (ITS.) 5. On an ongoing basis, the ICDU will need to communicate and provide customer service to child support agencies and foreign Central Authorities about the payment transmissions. For example, a child support agency may require additional information concerning the disbursement, such as the converted amount of the payment or the date the payment was sent to the foreign country. 6. The ICDU will comply with applicable federal laws, regulations, and policy guidance. For example, the ICDU will comply with the same requirements, including for data security, as SDUs. (See Part F of Automated Systems for Child Support Enforcement: A Guide for States.) In addition, international child support payments will need to comply with procedures set by the Treasury Department's Office of Foreign Assets Control. 7. The ICDU is expected to leverage the volume of payments flowing through the ICDU to obtain lower overall costs for payment disbursement. We are seeking comments for suggested approaches for how the ICDU could efficiently and effectively provide payment processing services in international cases. Information Requested: This RFI seeks to obtain public comments regarding a future contract. OCSE seeks comments on any or all of, but not limited to, the following topics: 1. The availability and capability of any sources qualified to develop and operate the ICDU described above; 2. Suggested descriptions of strategies or methods for providing centralized international payment processing services, including, but not limited to: 1) the structure of the ICDU (i.e. stand-alone service, add-on to an existing payment processing service, or other approach); 2) anticipated time necessary to establish an operational ICDU; 3) the types or methods for electronic payment transmissions; 3) operational procedures; 4) cost and fees for the ICDU, including development, maintenance, payment transactions, etc.; and, 5) procedures for financial and security oversight. 3. The availability and capability of qualified small business sources, including HUBzone small businesses, woman-owned small businesses, veteran-owned small businesses, service-disabled, veteran-owned small businesses, 8(a) small businesses, or small disadvantaged businesses; 4. DUNS number, organization name, address, point of contact, and size and type of business (e.g. 8(a), HUBZone, Small Business, etc.); 5. Description of organization, including information on staff expertise, availability, and experience; 6. Description of similar projects completed for both Government and commercial entities; 7. Suggested NAICS code and Product Service Code; 8. Recommendation of contract type (i.e. Fixed Price, Cost-Reimbursement, etc.-see FAR Part 16 for a complete list of contract types); 9. Brief description of any procedures to manage conflict of interest issues, whether personal or organizational, and timeframe to complete conflict of interest checks; and 10. Additional services, skill sets, or feedback that may complement tasks not described above. Response Format: One copy of the response is required and must be in Microsoft Word or Adobe PDF format and using 11-point or 12-point font. The response is limited to ten pages. The ten-page limit does not include any applicable executive summary or references.