Effective Dates: 09/10/2025 - Present Previous | Next

TN 32 (09-25)

DI 39542.001 Contracting Out DDS Functions -- General

A. Introduction

This subchapter provides guidelines for States contracting out DDS functions to the private sector. It describes:

  • •

    SSA's position on States contracting out DDS functions;

  • •

    The basic standards that must be followed in the development and award of these contracts;

  • •

    The need to clear certain contracting plans with SSA;

  • •

    The need to report contract items for budget purposes; and

  • •

    The need to report other contracting information to SSA.

B. Operating policy

1. SSA position

  1. a. 

    The State may contract out most DDS functions to the private sector.

  2. b. 

    The State may not contract out:

    • •

      the disability determination authority (the Social Security Act requires that only the State or the Secretary may determine whether or not a person is disabled or the disability continues);

    • •

      management control over DDS funds, personnel, or equipment; or

    • •

      the authority to make administrative decisions.

  3. c. 

    The contract must comply with applicable Federal laws, regulations, these and other written guidelines.

  4. d. 

    The costs of such contracts are necessary DDS costs within the meaning of Section 221(e) of the Social Security Act.

  5. e. 

    SSA approval of proposed contracts is required if:

    • •

      the contract involves sensitive DDS functions (see DI 39542.010); or

    • •

      the DDS is receiving technical and management assistance (TMA).

2. Contracting for photocopy service

  1. a. 

    Sources of medical evidence such as mental health clinics, VA hospitals, and similar institutions may be unable to provide the evidence promptly because of a lack of resources or other reasons.

  2. b. 

    When this occurs, DDSs may consider other alternatives for obtaining the evidence including contracting with a private photocopying service.

  3. c. 

    When contracting for photocopying services, DDSs must ensure that:

    • •

      provisions for assuring the confidentiality of SSA records are included in the contract and are in place before the operation begins;

    • •

      a certification system assures that copies of evidence the DDS receives are true and exact copies of the original document. (This may be accomplished by a letter from the source's records librarian, a certification stamp on the back of the copy, etc.)

3. State responsibilities

  1. a. 

    Meet performance standards regardless of whether or not a portion of its functions is contracted out.

  2. b. 

    Ensure that the contractor maintains the same level of standards and ethics in dealing with the public that the State must meet.

  3. c. 

    Ensure that Federal and State contracting requirements are imposed on the contractor and any subcontractor or other agent of the contractor.

4. SSA Approval required

  1. a. 

    Contracts involving disclosure of information about SSA claimants or beneficiaries to a private source.

  2. b. 

    Contracts creating and maintaining records about SSA claimants or beneficiaries.

  3. c. 

    Contracts for:

    • •

      case control activities including case receipt, control, and distribution;

    • •

      case evaluation;

    • •

      case development;

    • •

      case processing.

  4. d. 

    Contracts proposed while a State is receiving TMA.

5. SSA not required

  1. a. 

    Contracts not involving disclosure of claimant information to the private sector such as:

    • •

      in-house medical consultants;

    • •

      building services and equipment maintenance;

    • •

      services provided by other agencies of the State;

    • •

      functions, services, or purposes that do not concern SSA in terms of charges to the SSA/DDS budget, e.g., for non-SSA work such as processing claims for a State teachers' disability program or Medicaid.

  2. b. 

    Renewal contracts which do not change contract requirements and were:

    • •

      in force at the time these instructions were published; or

    • •

      based on a Request for Proposal (RFP) which was initially approved by SSA.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0439542001
DI 39542.001 - Contracting Out DDS Functions -- General - 09/10/2025
Batch run: 09/10/2025
Rev:09/10/2025