Clearly the intent of the legislation is to provide increased flexibility to the states to achieve the desired outcomes. Each state has the opportunity to perform services in-house or to contract out portions of these services. Responsibility for achieving outcomes remains with the state in all scenarios. Therefore they have the opportunity to design service offerings that are in their best interest. The use of technical and price based competition to meet the design service offering is one means states have of achieving their objectives.
Contractors compete technically and on price.
This competition ensures that the state and the clients receive quality service at a reasonable price. It should be noted that a contractor awarded a contract by a state in fulfillment of the aforementioned objectives, is not a recipient of a grant. A contractor is paid by one or more mechanisms, which may include milestone payments, performance based payments, incentive based payments, transaction based payments, etc. As such they are contracted to provide specific deliverable services that are set forth in the statement of work at negotiated competitive prices. The contract statement of work rarely requires the performance of administrative tasks and an administrative cap should not apply to their effort.