[Federal Register Volume 85, Number 122 (Wednesday, June 24, 2020)]
[Rules and Regulations]
[Pages 37753-37756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11915]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 21
RIN 2900-AP72
Veterans Employment Pay for Success Grant Program
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Veterans Affairs (VA) established a grant
program (Veterans Employment Pay for Success (VEPFS)) to award grants
to eligible entities to fund projects that are successful in
accomplishing employment rehabilitation for Veterans with service-
connected disabilities. VA will award grants on the basis of an
eligible entity's proposed use of a Pay for Success (PFS) strategy to
achieve goals. This final rule adopts with changes an interim final
rule that established regulations for awarding a VEPFS grant, including
the general process for awarding the grant, criteria and parameters for
evaluating grant applications, priorities related to the award of a
grant, and general requirements and guidance for administering a VEPFS
grant program.
DATES: This rule is effective on June 24, 2020.
FOR FURTHER INFORMATION CONTACT: Mike Frueh, Deputy Assistant
Secretary, Planning and Performance Management, (008A), Department of
Veterans Affairs, 810 Vermont Ave. NW, Washington, DC, (202) 632-8784.
(This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: Section 3119 of title 38, United States
Code, authorizes the Secretary of Veterans Affairs (Secretary) to make
grants to or contract with public or nonprofit agencies, including
institutions of higher learning, to advance ``the knowledge, methods,
techniques, and resources available for use in rehabilitation programs
for veterans.'' Section 3119 specifically authorizes the Secretary to
make grants to such agencies to conduct or provide support for projects
which are ``designed to increase the resources and potential for
accomplishing the rehabilitation of disabled veterans.'' (See also
implementing regulation at 38 CFR 21.390.)
On August 10, 2016, VA published an interim final rule in the
Federal Register, 81 FR 52770, under the authority of sec. 3119
establishing regulations for administering a VEPFS grant program to
award grants to eligible entities to fund projects that are successful
in accomplishing employment rehabilitation for Veterans with service-
connected disabilities. In general, a PFS model is a strategy for
successfully attaining positive social or environmental outcomes by
paying for an intervention to achieve such outcomes only after the
intervention produces these outcomes. The interim final rule included
the general process for awarding the grant, criteria and parameters for
evaluating grant applications, priorities related to the award of a
grant, and general requirements and guidance for administering a VEPFS
grant program. VA provided a 60-day public comment period that ended on
October 11, 2016, and received nine comments from a single entity.
The first comment recommended amending the definition of
``Employment outcome'' to include outcomes that occur ``during'' as
well as following the service period so that the PFS agreement reflects
the benefits of the selected intervention while services are provided.
In addition, this comment and the third comment recommended amending
the definitions of ``Employment outcome'' and ``Outcomes payments'' to
allow a PFS project evaluation to be based on a ``comparison'' group in
addition to a ``control'' group so there is greater flexibility when
structuring valid evaluation methodologies. VA agrees that if
employment outcomes can be measured during the service period, an
evaluator may be able to obtain useful information that could assist
with determining whether employment outcomes have improved across the
lifecycle of the project. It is feasible to assume that some outcomes
may be achievable and measurable at any point during the lifecycle of
the service period. VA believes measuring outcomes during the service
period may allow for greater flexibility in transaction structuring for
outcomes payments. In addition, VA agrees that basing a project
evaluation on a comparison group or a control group will allow for
greater flexibility in structuring evaluation methodologies. Having
greater flexibility in this regard may allow for greater statistical
power when measuring outcomes and benefit the VA program office when
evaluating the impact of the outcomes on future rehabilitation policy
and programming. Therefore, we are amending the definition of
``Employment outcome'' to reflect that it means the employment or
earnings of a participant in an intervention group or a control or
comparison group either during or after a service period. We are
further amending this definition and the definition of ``Outcomes
payments'' to indicate that comparison groups, in addition to control
groups, may be used when structuring evaluation methodologies.
The second comment proposed adding a definition of ``Outcome
metrics'' and additional comments, including the sixth comment,
[[Page 37754]]
recommended adding the language, ``outcomes metrics or'' before
``target levels'' in a number of the regulatory sections in this
rulemaking. ``Outcomes metrics or target levels'' as a phrase does not
make sense. Outcomes are a kind of result of interventional or non-
interventional activities. Targets are a hoped-for level of achievement
for various outcomes, or a characteristic of outcomes, and are not part
of an ``either/or'' option. Therefore, we will not add the language
``outcomes metrics or'' to any of the regulatory provisions in this
rulemaking. Because we are not adding this proposed language, there is
no need to add a definition for ``Outcome metrics.''
The fourth comment recommended clarifying that the project
partnership may be memorialized in more than one agreement. We are
amending the definition of project partnership to reflect that it may
consist of multiple agreements because allowing for multiple agreements
will provide the project partnership with greater flexibility.
The fifth comment recommended allowing each VEPFS grant to
establish the minimum and maximum number of years rather than requiring
a minimum 5-year period for all VEPFS grants. VA's original vision for
pay for success programming did not account for projects that may have
a shorter duration, such as feasibility studies or studies that may
require long-term evaluation of certain employment outcomes. To
accommodate a broader range of PFS projects with the increased
potential for better outcomes, VA agrees that performance period
minimums or maximums should be established on a per grant program
basis. Thus, we are amending Sec. 21.442(c) to allow each VEPFS grant
agreement to establish the project duration instead of setting a
required minimum period.
The seventh comment proposed to eliminate the requirement that
grantees procure investors in a government acquisition process
following procurement standards set forth in 2 CFR 200.317-200.326. The
commenter explained that, in typical PFS arrangements to which it has
been a party, investors are not ``procured'' and are not a party to the
PFS agreement. Typically, the government is not a party to the investor
financing agreements and does not negotiate directly with investors.
The commenter explained that investors do not provide services to the
government, but fund services to be provided by the service provider
and bear the risk that the intervention will not achieve the agreed
upon outcomes metrics. Thus, investors are recruited or engaged in a
manner that befits their role as risk-bearing entities in the PFS
model.
We agree to eliminate the requirement that grant recipients
``procure'' investors and follow procurement standards set forth in 2
CFR 200.317-200.326. Although the uniform grant regulations at 2 CFR
part 200 apply to recipients (and subrecipients) of the PFS grants,
they do not contemplate investors as playing a part in the grant
agreement or carrying out the purposes of the grant. The procurement of
goods and services by way of contract is a key factor in creating a
procurement relationship. See 2 CFR 200.330(b). The Federal Acquisition
Regulations defining ``procurement'' and ``acquisition'' support the
position that investors and investments of capital are not
``procured.'' As the commenter explained, because investors supply
money/funding, and do not provide goods or services, obtaining
investments is not an acquisition or procurement as contemplated by the
uniform grant regulations. While the funding investors provide is used
to procure goods or services necessary to carry out the grant's
purpose, neither the investor nor the funding is a good or service that
is procured. Therefore, the uniform grant regulations at 2 CFR part 200
should not apply, and we agree to exclude ``investors'' from the
requirement in Sec. 21.445(b) that partner entities be procured
following procurement standards set forth in 2 CFR 200.317-200.326.
The eighth comment proposed to not require grantees to identify
investors at the time of application. We see no reason why grantees
should not be able to identify investors at the time of application and
the commenter has provided no convincing reason. We do not believe that
excluding investors from the procurement requirement supports the
argument that investors should be identified later in the grant
process. Furthermore, identifying investors later in the process would
introduce uncertainty into the overall viability of the applicant's
proposed project. Accordingly, we will not make any changes based on
this comment.
The ninth comment proposed to allow VA and an applicant to
negotiate a cooperative agreement or a grant agreement to provide
flexibility in finalizing the terms of the VEPFS grant. As stated
above, sec. 3119 provides the authority for the Secretary to make these
VEPFS grants. It also provides authority for the Secretary to contract
with entities to fund projects that are successful in accomplishing
rehabilitation for Veterans with service-connected disabilities.
However, there is no authority for the Secretary to enter into
cooperative agreements to fund such projects. As VA has no authority to
enter cooperative agreements for this purpose, we must decline to
change the regulations to allow for the negotiation of cooperative
agreements between an applicant and VA.
Based on the rationale set forth in the interim final rule and in
this document, VA is adopting the provisions of the interim final rule
as a final rule with changes, as noted above.
Administrative Procedure Act
The Secretary is issuing this rule because there is a need to find
new methods for rehabilitating Veterans with service-connected
disabilities to become employable and obtain and maintain suitable
employment. This rulemaking serves an important Veterans' need in an
economical way because it provides the opportunity for discovering such
new methods using a strategy that will save taxpayer money. However,
funding for a grant awarded under these regulations was available to be
obligated within a limited timeframe. Therefore, it was impracticable
and contrary to the public interest to delay the rule for the purpose
of soliciting advance public comment or to have a delayed effective
date. Accordingly, VA issued an interim final rule with an immediate
effective date and is now issuing this final rule after having
considered the comments submitted.
Executive Orders 12866, 13563 and 13771
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Information and Regulatory Affairs has determined that
this rule is not a significant regulatory action under Executive Order
12866.
VA's impact analysis can be found as a supporting document at
http://www.regulations.gov, usually within 48 hours after the
rulemaking document is published. Additionally, a copy of the
rulemaking and its impact analysis are available on VA's website at
http://
[[Page 37755]]
www.va.gov/orpm/, by following the link for ``VA Regulations Published
From FY 2004 Through Fiscal Year to Date.''
This final rule is considered an E.O. 13771 regulatory action.
Details on the estimated costs of this final rule can be found in the
rule's economic analysis.
Paperwork Reduction Act
Although this action contains provisions constituting collections
of information at 38 CFR 21.445, 21.447, and 21.448, under the
provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521), no new or proposed revised collections of information are
associated with this final rule. The information collection
requirements for Sec. Sec. 21.445, 21.447, and 21.448 are currently
approved by OMB and have been assigned OMB control number 2900-0847.
Regulatory Flexibility Act
The Secretary hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The Secretary estimates that, for any VEPFS grant program, no
more than ten non-renewable grants will be awarded. For each grant
awarded, usually one of each, but no more than a few, outcomes payors,
project coordinators, evaluators, investors, and service providers will
be involved with the grant program. The goal of these grants is to
rehabilitate Veterans with service-connected disabilities with regard
to employment. Thus, an insubstantial number of small entities will be
affected by this final rule and, accordingly, there will not be a
significant economic impact on such affected entities. Therefore,
pursuant to 5 U.S.C. 605(b), the initial and final regulatory
flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This final rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number and title for the
program affected by this document is 64.116, Vocational Rehabilitation
for Disabled Veterans.
List of Subjects in 38 CFR Part 21
Administrative practice and procedure, Armed forces, Civil rights,
Claims, Colleges and universities, Conflict of interests, Defense
Department, Education, Employment, Grant programs--education, Grant
programs--veterans, Health care, Loan programs--education, Loan
programs--veterans, Manpower training programs, Reporting and
recordkeeping requirements, Schools, Travel and transportation
expenses, Veterans, Vocational education, Vocational rehabilitation.
Signing Authority
The Secretary of Veterans Affairs approved this document and
authorized the undersigned to sign and submit the document to the
Office of the Federal Register for publication electronically as an
official document of the Department of Veterans Affairs. Pamela Powers,
Chief of Staff, Performing the Delegable Duties of the Deputy
Secretary, Department of Veterans Affairs, approved this document on
April 13, 2020, for publication.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of
the Secretary, Department of Veterans Affairs.
Accordingly, the interim final rule amending 38 CFR part 21, which
published at 81 FR 52770 on August 10, 2016, is adopted as final with
the following changes:
PART 21--VOCATIONAL REHABILITATION AND EDUCATION
Subpart A--Vocational Rehabilitation and Employment Under 38 U.S.C.
Chapter 31
0
1. The authority citation for part 21, subpart A, continues to read as
follows:
Authority: 38 U.S.C. 501(a), chs. 18, 31, and as noted in
specific sections.
0
2. In Sec. 21.441, revise the definitions of ``Employment outcome''
and ``Outcomes payments'' and the introductory text of the definition
of ``Project partnership'' to read as follows:
Sec. 21.441 Definitions.
* * * * *
Employment outcome is the employment or earnings of a participant
in an intervention group or control or comparison group during or after
the service period. Improving employment outcomes means creating
positive impact in terms of these outcomes, where the results for
individuals that receive the intervention are better than the results
for a valid control or comparison group that did not receive the
intervention.
* * * * *
Outcomes payments are funds that are paid to an investor or service
provider and that are released only for the achievement of outcomes, as
compared to those of a control or comparison group, that meet target
levels that have been agreed to in advance of the provision of
intervention (i.e., if positive impact has been created by the
intervention in terms of these outcomes). When investors have provided
the upfront capital for the project, these payments generally cover
repayment of the principal investment and provide a modest return on
investment for any associated risks of paying for the intervention
upfront.
* * * * *
Project partnership is a collaboration among entities that
negotiate one or more agreements and execute a project to improve
employment outcomes for Veterans with service-connected disabilities.
The entities that may be involved in a project partnership include:
* * * * *
0
3. In Sec. 21.442, revise paragraph (c) to read as follows:
Sec. 21.442 VEPFS grants--general.
* * * * *
(c) A VEPFS grant will be awarded for a minimum and maximum number
of years that is specified in the VEPFS grant agreement, beginning on
the date on which the VEPFS grant is awarded, with the availability of
no-cost extensions.
* * * * *
0
4. In Sec. 21.445, revise paragraph (b) to read as follows:
Sec. 21.445 Application.
* * * * *
(b) Description of anticipated project partnership(s), including
the responsibilities of each of the partner entities, the experience of
any involved entities with serving Veteran populations, and other
qualifications of the involved entities that may be relevant in
carrying out responsibilities of the project partnership. In
[[Page 37756]]
establishing the project partnership, entities, including the project
coordinator, evaluator, and service provider, but excluding investors,
must be procured following procurement standards set forth in 2 CFR
200.317 through 200.326.
* * * * *
[FR Doc. 2020-11915 Filed 6-23-20; 8:45 am]
BILLING CODE 8320-01-P