January 9, 2015

Executive Summary
In December 2012, The State of Tennessee awarded Northrop Grumman Corporation (System Vendor) a
contract to provide and operate a new web based system to meet the requirements of The Patient
Protection and Affordable Care Act and determine eligibility for Medicaid and Childrens Health
Insurance Program benefits. For this project, called the Tennessee Eligibility Determination System
(TEDS), the System Vendor intended to use its Avance product, which has been implemented in another
state, to accelerate the implementation of TEDS.
The project has faced persistent schedule, quality, and resource challenges. In late 2014, KPMG was
engaged to perform an objective assessment of the project in order to assist the State in determining the
go forward options. The assessment was conducted under contract Assessment of the State's Tennessee
Eligibility Determination System (TEDS) Project, #31865-00381. Overall, this assessment was
intended to review the TEDS project as it existed, and identify project deficiencies as well as potential
risks, issues, and observations / go forward potential alternatives for consideration by executive
leadership. Preliminary observations of this assessment were verbally discussed with executive
leadership in an eight week Mid Assessment status meeting.
The Final Assessment Report delivered on January 9, 2015, contains a summary of key TEDS risks
(TEDS Risk Portfolio), Detailed Findings and go forward Potential Alternatives analysis. This
information is presented with consideration for the project schedule, costs, benefits, resources, and
contract implications. The following is a summary of the observations in the final assessment report, and
they are organized by the domains identified for review per the contract:
1. Project Management Office
a. The System Vendors management of the project has been unsuccessful in managing an
event-driven, milestone-based project schedule, resulting in significant project delays.
b. The System Vendors Integrated Master Schedule did not adequately account for
resource constraints, limited availability of key resources from both the State and the
System Vendor, and the significant level of customization for the solution (System
Vendor documents indicate 50-70% customization vs. System Vendor initial projections
of 17%). This resulted in an unreliable project schedule.
c. The System Vendors status reporting on the project schedule for approximately the first
10 months of the project did not properly reflect project schedule performance and
deviations. This has contributed to concerns about project schedule reliability.
d. The System Vendors risk and issue management processes are insufficient, contributing
to incomplete identification of risks and inadequate risk mitigation and issue remediation.
2. Software Development Life Cycle (SDLC)
a. The System Vendors process for managing TEDS requirements did not provide for
effective traceability of requirements, which could result in solution gaps.
b. To meet the States needs, the System Vendors Avance solution required significant and
complex customization beyond the System Vendors initial estimates. This, coupled with
the lack of Medicaid eligibility domain knowledge of the broader System Vendor
development team, contributed to quality issues with requirements definition, solution
design and overall project performance.

c. The execution of the System Vendors testing and quality management is insufficient,
raising concerns about solution quality and performance.
3. Architecture
a. The State has not developed a comprehensive, documented business operating model for
the future state of Medicaid Member Services. As a result, the State may not be able to
effectively align its new business processes with the TEDS solution.
b. The State and the System Vendor did not reach agreement on capacity requirements for
the solution. As a result, the solution could be prone to crashes or significant performance
degradation upon stress.
4. Operational & Organizational Readiness
a. The training approach developed by the System Vendor is inadequate in several respects.
Training was delivered using an incomplete TEDS solution; training was not always
delivered as specified in the training plan; and the training evaluation process does not
measure the effectiveness of training activities in relation to job responsibilities. As a
result, the State trainers may not be prepared to effectively train the State employees in
performing their respective job functions using the TEDS solution, which is yet to be
completed.
b. Due to incompleteness of the TEDS solution and uncertainty with the project schedule,
the State has not been in a position to complete an organizational change plan. As a
result, the State A cannot anticipate necessary changes in organizational structure or
develop and execute change communications related to the TEDS solution.
c. In its current draft form, the System Vendors TEDS Operating Procedure Guide
provided to support system operations and maintenance does not sufficiently document
industry standard service management activities, demand management processes, and IT
governance activities. As a result, the operations and maintenance activities may not
address the necessary service capabilities to support a Medicaid eligibility system.
Additionally, personnel may not be prepared to support the production system.
The TEDS Potential Alternatives analysis which identifies TEDS project go forward options and
alternatives includes pros and cons based upon project schedule, benefits, cost, resource and contract
implications. Potential alternatives identified were:
1. Restart with Northrop Grumman Corporation
2. Restart with procurement of a new system vendor and software under one of the
following procurement scenarios
i. Sole Source
ii. Competitive Negotiation
iii. Request for Proposal
3. Restart with new system vendor