Single Source Procurement: Institutional Cost Report

Pursuant to New York State Finance Law § 163.10(b), The New York State Department of Health is presenting the following summary of relevant circumstances, and material and substantial reasons why a competitive procurement was not feasible.

Under current Department of Health (DOH) regulation, (Part 86-1.6), the financial and statistical institutional cost reports (ICRs) submitted by both Article 28 and 31 hospitals are required to be certified by a Certified Public Accountant (CPA) by the due date established by DOH. The DOH's overall goal is to ensure that the hospitals are reporting appropriately on the ICR in accordance with state regulation. To do so, the DOH has contracted with an auditing firm, to review, analyze, test, and verify the hospitals' ICRs.

The current contract (#C027852) was awarded to KPMG LLP (KPMG), via an RFP for the period of April 16, 2012 through April 15, 2016. Approval of this Contract Reporter Exemption Request will allow DOH to amend the existing contract to add one additional year and increase the contract value to complete ICR audit years 2014 and 2015.

In the original four (4) year contract, we anticipated the audit reports of 2010-2013 would have been completed and finalized by the end of this contract. KPMG was not only able to produce these tasks on time, but managed to satisfy these deliverables one (1) year ahead of schedule. For the remaining term of the contract, DOH requests KPMG to perform audits on the ICRs for years 2014 and 2015. By using KPMG for this work, it would not only establish the importance of timely completion, but also save resources by using a vendor familiar with the specific details required for an efficient and successful audit. Waiting to audit 2014 and 2015 as part of the new procurement in 2016 would result in delays of 2014 and 2015 not being audited until 2017. This would also delay audits of all future years and will have a major impact on the rate setting process. Additionally and significantly, the 2014 audited ICRs are needed for the rates setting, upper payment limit calculations, and disproportionate share payments. A delay in audited ICR data will have a significant negative impact on these programs and result in late payments to providers.

At this time KPMG has a significant knowledge base on the performance audits of the ICR. Due to diminishing resources at DOH, it would be an enormous undertaking to hire a new contractor, establish an audit protocol, and train the new contractor for work that needs to be completed as soon as possible. This process would significantly hinder DOH's capability to complete this work, particularly with the goals to streamline the ICR exhibits and include KPMG within the adjustments process. Through this amendment, deliverables will remain the same while KPMG has agreed to remain consistent with the previous contract budget plan.

Procurement / Program Name	Institutional Cost Report
Contractor Name(s)	KPMG
Contract Period	4/16/2016 – 4/15/2017
Contract Number(s)	C027852