DGS Recommendations DGS Recommendations to the Governor’s Task to the Governor’s Task Force on Contracting & Force on Contracting & Procurement ReviewProcurement Review

Report Overview

August 12, 2002

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AgendaAgenda

Opening Remarks Three Reform Themes Recommendations Conclusion

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Goal of RecommendationsGoal of Recommendations

“The DGS recommendations to the Task Force are designed to strengthen the contracting and procurement processes of the State of California, by improving the quality and openness of the process and by implementing a set of checks and balances to ensure its integrity.”

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Reform ThemesReform Themes

Ensuring High Quality Open Process System of Checks and Balances

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Definition of TermsDefinition of Terms Contracting = Contracting & Procurement

throughout report

State Agency = All entities engaged in state

contracting (e.g., state agencies, departments,

offices, commissions, boards, institutions,

hospitals, training facilities, data centers, or other

state entity)

Short Term = implement immediately or up to one

year

Long Term = implementation takes a year or more

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Ensuring High QualityEnsuring High Quality

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High Quality: Quality AssuranceHigh Quality: Quality Assurance Problem: Lack of consistent oversight for

all contract areas Recommendation 1 (short term): Broaden

scope of Quality Assurance program to include CMAS, Master Agreement orders & service contracts

Recommendation 2 (long term): Establish standards and conduct random audits of all types of contracts under DGS authority

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High Quality: Common ProcessesHigh Quality: Common Processes Problem: Multiple bodies of law; lack

of comprehensive source for policies & procedures; need for process alignment

Recommendation 3 (long term): Develop comprehensive & uniform policies, procedures & processes; ; align contracting & procurement align contracting & procurement laws

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High Quality: Training and High Quality: Training and CertificationCertification Problem: Lack of recognition of contracting as a

strategic function; lack of understanding that

contracting is a profession; no comprehensive

training & certification program

Recommendation 4 (short term): Immerse

contracting personnel in training on rules

governing use of contract methods & instruments

Recommendation 5 (long term): Provide

comprehensive training program for Contracting

Officials leading to professional certification

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High Quality: Ethics and IntegrityHigh Quality: Ethics and Integrity Problem: No uniform code of ethics

for contracting personnel or vendors; unclear reporting and oversight; lack of meaningful sanctions

Recommendation 6 (short term): Establish standards of conduct for state contracting personnel and vendors, coupled with sanctions for those violating the standards

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High Quality: Contract ProvisionsHigh Quality: Contract Provisions Problem: Model contract terms and

conditions perceived unduly restrictive

Recommendation 7 (short term): Confer with industry representatives and state stakeholders to improve contract provisions to protect the state’s interest and mitigate risks for all parties

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High Quality: High Quality: Continuous ImprovementsContinuous Improvements Problem: Industry and state

stakeholders not engaged in efforts for continuous improvement of the contracting process

Recommendation 8 (short term): Facilitate industry and state stakeholder participation in continuous improvement of contracting processes through establishment of advisory councils

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Open ProcessOpen Process

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Open Process: Tracking SystemOpen Process: Tracking System Problem: No single point of data

collection and process control for contracts

Recommendation 9 (short term): Implement structured tracking of contracts throughout the contract lifecycle (Contract Administration Tracking System)

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Open Process: Comprehensive SystemOpen Process: Comprehensive System Problem: No rule-based visible system to

process contracts Recommendation 10 (long term):

Continue implementation of a comprehensive eProcurement system– Public access to contracting opportunities;

reverse auctions/dynamic pricing– Link to online policies, procedures & decision

support system and online training– Pricing comparisons & historical data– Rules-based approval routing for all

transactions (or cannot be awarded)– Comprehensive data collection & reporting

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System of System of

Checks and BalancesChecks and Balances

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Checks & Balances:Checks & Balances:Further Legal ReviewFurther Legal Review Problem: Insufficient legal review of IT

and high risk contracts

Recommendation 11 (short term): Further

legal review of high risk transactions;

establish a common process for review

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High Risk CriteriaHigh Risk Criteria Dollar Thresholds

– Goods/IT Goods > $500K

– IT Services > $200K– Non-IT Services > $50K– Large Scale System

Integration - ALL History of protests or

litigation Public safety Acquisition of unique

or specially manufactured goods/services

Complex items

Deviates from standard processes/ terms (e.g., advance payments, modification to warranty/indemnity/ liability verbiage)

High Profile Potential conflicts of

interest Involves hazardous

material Federal Matching Funds

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Checks & Balances:Checks & Balances:Further Legal Review, continuedFurther Legal Review, continued Recommendation 12 (short term): State

agencies will conduct initial review and apply high risk criteria and forward those to DGS for review and approval

Recommendation 13 (short term): DGS should develop and deliver the necessary training to state contracting officials on contract law, regulations & review requirements and how to apply high risk criteria

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Checks & Balances:Checks & Balances:Contract TemplatesContract Templates Problem: Lack of model contract

templates for various contract methods

Recommendation 14 (long term): Develop

model contract templates with standard

terms & conditions (available

electronically)

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Checks & Balances: Checks & Balances: Responsible OfficialResponsible Official Problem: There is no single person

responsible for all contracting at each state agency

Recommendation 15 (short term): State agencies shall designate a single official responsible for all contracting & procurement within the agency

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Checks & Balances:Checks & Balances:Signature AuthoritySignature Authority Problem: No designation of specific

individual signature authority or clearly defined accountability

Recommendation 16 (long term): Signature authority for contracting officials based on position held, experience, training & certification

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ConclusionConclusion

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ConclusionConclusion Recommendation 17 (8/20/02): Issue new

Management Memo to follow expiration of Executive Order D-55-02

Recommendation 18 (short term): Continue provisions of Interim Guidelines, as amended, for up to an additional 90 days to allow time to begin implementing approved reforms