Report 2009-103 All Recommendation Responses

Report 2009-103: Departments of Health Care Services and Public Health: Their Actions Reveal Flaws in the State's Oversight of the California Constitution's Implied Civil Service Mandate and in the Departments' Contracting for Information Technology Services (Release Date: September 2009)

Recommendation #1 To: Health Care Services, Department of

To comply with requirements in the State Administrative Manual, Health Care Services should refrain from funding permanent full-time employees with the State's funding mechanism for temporary-help positions.

Annual Follow-Up Agency Response From October 2015

DHCS has taken, and will continue to take, proactive steps to identify positions for those individuals in the temporary help blanket that requires a permanent position.

DHCS will endeavor to limit use of the temp help blanket to those instances which meet the definition in the SAM, Ch. 6500, Sect 6518. In addition, Budget Letter 12-03: Adjust Budget Display to Reflect Actual Expenditures and Eliminate Salary Savings issued March 12, 2012 grants additional flexibility to use blanket authority to fill positions beyond approved position authority on a temporary basis for operational needs.

Contrary to the BSA recommendation, it is not inappropriate to place permanent fulltime employees in the temp help blanket. There are a variety of instances and specifically provided for in SAM 6518 and Budget Letter 12-03 to place perm full-time employees in the temp help blanket and as such, DHCS reserves the right to continue as needed.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2013

DHCS has taken, and will continue to take, proactive steps to identify positions for those individuals in the temporary help blanket that requires a permanent position.

DHCS will endeavor to limit use of the temp help blanket to those instances which meet the definition in the SAM, Ch. 6500, Sect 6518. In addition, Budget Letter 12-03: Adjust Budget Display to Reflect Actual Expenditures and Eliminate Salary Savings issued March 12, 2012 grants additional flexibility to use blanket authority to fill positions beyond approved position authority on a temporary basis for operational needs. Contrary to the BSA recommendation, it is not inappropriate to place permanent fulltime employees in the temp help blanket. There are a variety of instances and specifically provided for in SAM 6518 and Budget Letter 12-03 to place perm full-time employees in the temp help blanket and as such, DHCS reserves the right to continue as needed.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2012

DHCS has taken, and will continue to take, proactive steps to identify positions for those individuals in the temporary help blanket that requires a permanent position.

DHCS will endeavor to limit use of the temp help blanket to those instances which meet the definition in the SAM, Ch. 6500, Sect 6518. In addition, Budget Letter 12-03: Adjust Budget Display to Reflect Actual Expenditures and Eliminate Salary Savings issued March 12, 2012 grants additional flexibility to use blanket authority to fill positions beyond approved position authority on a temporary basis for operational needs.

Contrary to the BSA recommendation, it is not inappropriate to place permanent fulltime employees in the temp help blanket. There are a variety of instances and specifically provided for in SAM 6518 and Budget Letter 12-03 to place perm full-time employees in the temp help blanket and as such, DHCS reserves the right to continue as needed.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Recommendation #2 To: Health Care Services, Department of

To readily identify active IT and other contracts, Health Care Services should either revise its existing contract database or develop and implement a new contract database.

Annual Follow-Up Agency Response From October 2015

DHCS current contract database sufficiently meets the department's needs. As stated in the one-year status report, based on the results of DHCS' business requirements assessment and the current low volume of contracts it is not economically feasible to create a new database. In addition, Budget Letter 08-05 placed a moratorium on the development and enhancement of information technology systems that duplicate functionality of the Financial Information Systems for California (FI$Cal). The FI$Cal system will encompass procurement issues including contracts, requisitions, and purchase orders. It will be a comprehensive information exchange system that will be used to generate, administer, and manage all contracts, purchases, and grant agreements from initiation through final payment. In the interim DHCS' Purchasing Unit will add a "Term Date" column to the Excel spreadsheet that records all Information Technology (IT) purchase requisitions that result in a purchase order. Start and end dates will be logged for those purchases that include or involve an IT service. Term information will be recorded for all IT services procured on or after July 1, 2010. Contract Management Unit staff will continue to record IT service transactions obtained via a Standard Agreement into DHCS' existing service contract system.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2013

DHCS current contract database sufficiently meets the department's needs. As stated in the one-year status report, based on the results of DHCS' business requirements assessment and the current low volume of contracts it is not economically feasible to create a new database. In addition, Budget Letter 08-05 placed a moratorium on the development and enhancement of information technology systems that duplicate functionality of the Financial Information Systems for California (FI$Cal). The FI$Cal system will encompass procurement issues including contracts, requisitions, and purchase orders. It will be a comprehensive information exchange system that will be used to generate, administer, and manage all contracts, purchases, and grant agreements from initiation through final payment. In the interim DHCS' Purchasing Unit will add a "Term Date" column to the Excel spreadsheet that records all Information Technology (IT) purchase requisitions that result in a purchase order. Start and end dates will be logged for those purchases that include or involve an IT service. Term information will be recorded for all IT services procured on or after July 1, 2010. Contract Management Unit staff will continue to record IT service transactions obtained via a Standard Agreement into DHCS' existing service contract system.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2012

DHCS current contract database sufficiently meets the department's needs. As stated in the one-year status report, based on the results of DHCS' business requirements assessment and the current low volume of contracts it is not economically feasible to create a new database. In addition, Budget Letter 08-05 placed a moratorium on the development and enhancement of information technology systems that duplicate functionality of the Financial Information System for California (FI$Cal). The FI$Cal system will encompass procurement issues including contracts, requisitions, and purchase orders. It will be a comprehensive information exchange system that will be used to generate, administer, and manage all contracts, purchases, and grant agreements from initiation through final payment. In the interim DHCS' Purchasing Unit will add a “Term Date” column to the Excel spreadsheet that records all Information Technology (IT) purchase requisitions that result in a purchase order. Start and end dates will be logged for those purchases that include or involve an IT service. Term information will be recorded for all IT services procured on or after July 1, 2010. Contract Management Unit staff will continue to record IT service transactions obtained via a Standard Agreement into DHCS' existing service contract tracking system.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Recommendation #3 To: Public Health, Department of

To promote fairness and to obtain the best value for the State, Public Health should demonstrate its compliance with General Services' policies and procedures. Specifically, in its requests for offer, it should provide potential suppliers with the criteria and points that it will use to evaluate their offers.

Annual Follow-Up Agency Response From October 2013

As previously reported, the California Department of Public Health (CDPH) issued Contract Bulletin 11-07 dated December 1, 2011, requiring CDPH programs to use a request for offer (RFO) template for procurement of services via Department of General Services approved Leverage Procurement Agreements, i.e. California Multiple Award Schedules and Master Service Agreements.

To ensure compliance, the CDPH Program Support Branch, Contract and Purchasing Services Section (CPSS) reviews RFOs developed by programs prior to putting the RFO out to bid. If CPSS determined a program had not appropriately used the RFO template, CPSS required the program to rewrite, or in rare occasions, rebid the required services with the correct template.

Since January 2013, CPSS issued six purchase orders using the RFO template.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From September 2012

We issued Contracts and Purchasing Section (CPSS) Bulletin No. 11-07 on December 1, 2011 which provided instructions to our programs to use a request for offer template. See attached document.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Recommendation #4 To: Personnel Board, State

To provide clarity to state agencies about the results of its decisions under California Government Code, Section 19130(b), the board should explicitly state at the end of its decisions if and when state agencies must terminate disapproved contracts. Additionally, the board should obtain documentation from the state agencies demonstrating the terminations of disapproved contracts.

Recommendation #5 To: Public Health, Department of

To vet more thoroughly the Section 19130(b) justifications put forward by the departments’ contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should review the Section 19130(b) justifications put forward by the contract managers for proposed personal services contracts deemed high risk, such as subsequent contracts for the same or similar services as those in contracts disapproved by the board.

1-Year Agency Response

Public Health issued a policy effective November 3, 2009, that requires its program staff to obtain approval from its legal services before entering into personal services contracts. Public Health stated that it has developed procedures to ensure that contract managers receive timely notification of board decisions and to maintain documentation for all notices of contract terminations in legal services’ case files. (2011-406, p. 87).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #6 To: Health Care Services, Department of

To vet more thoroughly the California Government Code, Section 19130(b), justifications put forward by the departments' contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should review the Section 19130(b) justifications put forward by the contract managers for proposed personal services contracts deemed high risk, such as subsequent contracts for the same or similar services as those in contracts disapproved by the board.

Recommendation #7 To: Public Health, Department of

To vet more thoroughly the Section 19130(b) justifications put forward by the departments’ contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should notify contract managers of the board’s decisions in a timely manner and retain records in the case files showing when and how the notifications were made.

1-Year Agency Response

Public Health issued a policy effective November 3, 2009, that requires its program staff to obtain approval from its legal services before entering into personal services contracts. Public Health stated that it has developed procedures to ensure that contract managers receive timely notification of board decisions and to maintain documentation for all notices of contract terminations in legal services’ case files. (2011-406, p. 87).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #8 To: Health Care Services, Department of

To vet more thoroughly the California Government Code, Section 19130(b), justifications put forward by the departments' contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should notify contract managers of the board's decisions in a timely manner and retain records in the case files showing when and how the notifications were made.

Recommendation #9 To: Public Health, Department of

To vet more thoroughly the Section 19130(b) justifications put forward by the departments’ contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should require documentation from the contract managers demonstrating the termination of disapproved contracts and retain this documentation in the case files.

1-Year Agency Response

Public Health issued a policy effective November 3, 2009, that requires its program staff to obtain approval from its legal services before entering into personal services contracts. Public Health stated that it has developed procedures to ensure that contract managers receive timely notification of board decisions and to maintain documentation for all notices of contract terminations in legal services’ case files. (2011-406, p. 87).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #10 To: Health Care Services, Department of

To vet more thoroughly the California Government Code, Section 19130(b), justifications put forward by the departments' contract managers, to ensure the timely communication of board decisions to the contract managers, and to make certain that disapproved contracts have been appropriately terminated, legal services in both departments should require documentation from the contract managers demonstrating the termination of disapproved contracts and retain this documentation in the case files.

Recommendation #11 To: Health Care Services, Department of

To ensure that Finance and relevant legislative budget subcommittees are able to assess its need for additional IT positions, Health Care Services should prepare BCPs that provide more accurate depictions of the departments existing conditions.

1-Year Agency Response

Health Care Services stated that it strives to provide clear and precise BCPs and that it would continue to provide training to staff on the preparation of BCPs, based on guidance from Finance, that are accurate and complete. Health Care Services also stated that it moved all of the individuals identified by the audit out of temporary-help positions and into newly authorized positions and provided us with a report indicating the same. However, we requested that Health Care Services provide this report for the department as a whole and found—as of November 2010—other permanent full-time employees in temporary-help positions. Four of these employees had been in these positions for more than one year. Health Care Services stated that it will endeavor to limit the use of temporary-help positions to those instances that meet the definition in the State Administrative Manual. (2011-406, p. 88)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Subsequent to the original publication of this response, the state auditor considered this recommendation to be fully implemented.

Recommendation #12 To: Public Health, Department of

To readily identify active IT and other contracts, Public Health should continue its efforts to develop and implement a new contract database.

Annual Follow-Up Agency Response From January 2012

The California Department of Public Health (CDPH) has implemented the Contracts and Purchasing System (CAPS) for tracking and monitoring contract activities. Effective July 1, 2011, all CDPH programs are required to use CAPS for developing and monitoring contracts in process and are required to use CAPS to monitor fully executed contracts. (2011-041, p. 76)

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Recommendation #13 To: Public Health, Department of

To ensure that reporting into General Services contracts database is accurate and complete, both departments should establish a review-and-approval process for entering their contract information into the database.

1-Year Agency Response

Public Health stated that it plans to fully implement its new contract database by December 2010. Public Health added a reminder for entering information into General Services database to its procurement checklists and indicates that it has and will continue to regularly conduct reviews to ensure staff enter the information appropriately. (2011-406, p. 89).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Subsequent to the original publication of this response, the state auditor considered this recommendation to be fully implemented.

Recommendation #14 To: Health Care Services, Department of

To ensure that reporting into General Services contracts database is accurate and complete, both departments should establish a review-and-approval process for entering their contract information into the database.

1-Year Agency Response

Health Care Services stated that it completed an assessment of the feasibility of creating a new contract database, but determined that it is not economically feasible at this time. Health Care Services also stated that it provided training and instructions to staff on the importance of entering accurate information into the General Services database and that a supervisor regularly reviews reports from the database to ensure the accuracy and completeness of the data. (2011-406, p. 89).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Subsequent to the original publication of this response, the state auditor considered this recommendation to be fully implemented.

Recommendation #15 To: Public Health, Department of

To make certain that it procures only maintenance services allowed in the State’s master agreement with Visara, Public Health should either make appropriate changes to its current Visara contract or have General Services and Visara make appropriate changes to Visara’s master agreement.

1-Year Agency Response

Public Health processed an August 2009 amendment to remove noncovered printers from its Visara contract and, after working with General Services to add these printers to its Visara master agreement, executed a January 2010 amendment to add these printers back into its Visara contract. (2011-406, p. 89)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #16 To: Health Care Services, Department of

To promote fairness and to obtain the best value for the State, the two departments should demonstrate their compliance with General Services’ policies and procedures. Specifically, in their requests for offer, they should provide potential suppliers with the criteria and points that they will use to evaluate their offers.

1-Year Agency Response

Health Care Services modified its request-for-offer template to include evaluative criteria that it will use on all CMAS procurements. (2011-406, p. 90)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #17 To: Public Health, Department of

To ensure that each contract receives the levels of approval required in state rules and in their policies and procedures, the departments should obtain approval by their agency secretary and directors on contracts over specified dollar thresholds.

1-Year Agency Response

Public Health revised its IT Manual and provided us with training material demonstrating its efforts to make procurement staff aware of the IT approval policies. Effective November 3, 2009, Public Health issued a policy that requires each staff member who participates in the procurement process to file a conflict-of-interest and confidentiality statement it created. To its procurement checklists, Public Health added a reminder that each member of the evaluation team must complete conflict-of-interest and confidentiality statements. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #18 To: Health Care Services, Department of

To ensure that each contract receives the levels of approval required in state rules and in their policies and procedures, the departments should obtain approval by their agency secretary and directors on contracts over specified dollar thresholds.

1-Year Agency Response

Health Care Services stated that it would obtain the necessary approvals, as required. Health Care Services did not indicate that any revision of policy or procedure would be necessary. Health Care Services also stated that in February 2010 it provided specific instructions to staff regarding the disclosure categories related to offer evaluators. Health Care Services provided documents showing that its contracts management unit added language to its user guides stating that disclosure requirements apply to all persons involved in contractor selection. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #19 To: Public Health, Department of

Public Health should obtain approval from its IT division on all IT contracts, as specified in departmental policy.

1-Year Agency Response

Public Health revised its IT Manual and provided us with training material demonstrating its efforts to make procurement staff aware of the IT approval policies. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #20 To: Public Health, Department of

To make certain that it fairly evaluates offers and supplier responses, Public Health should amend its procedures to include provisions to obtain and retain annual financial interest statements from its offer evaluators.

1-Year Agency Response

Effective November 3, 2009, Public Health issued a policy that requires each staff member who participates in the procurement process to file a conflict-of-interest and confidentiality statement it created. To its procurement checklists, Public Health added a reminder that each member of the evaluation team must complete conflict-of-interest and confidentiality statements. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #21 To: Public Health, Department of

To make certain that it fairly evaluates offers and supplier responses, both departments should ensure that they obtain annual financial interest statements from all designated employees.

1-Year Agency Response

Effective November 3, 2009, Public Health issued a policy that requires each staff member who participates in the procurement process to file a conflict-of-interest and confidentiality statement it created. To its procurement checklists, Public Health added a reminder that each member of the evaluation team must complete conflict-of-interest and confidentiality statements. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #22 To: Health Care Services, Department of

To make certain that it fairly evaluates offers and supplier responses, both departments should ensure that they obtain annual financial interest statements from all designated employees.

1-Year Agency Response

Health Care Services stated that it would obtain the necessary approvals, as required. Health Care Services did not indicate that any revision of policy or procedure would be necessary. Health Care Services also stated that in February 2010 it provided specific instructions to staff regarding the disclosure categories related to offer evaluators. Health Care Services provided documents showing that its contracts management unit added language to its user guides stating that disclosure requirements apply to all persons involved in contractor selection. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #23 To: Public Health, Department of

Public Health should ensure that its conflict-of-interest code is consistent with the requirements of the Political Reform Act.

1-Year Agency Response

Effective November 3, 2009, Public Health issued a policy that requires each staff member who participates in the procurement process to file a conflict-of-interest and confidentiality statement it created. To its procurement checklists, Public Health added a reminder that each member of the evaluation team must complete conflict-of-interest and confidentiality statements. (2011-406, p. 91).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #24 To: Health Care Services, Department of

To verify that its consultants comply with the knowledge-transfer provisions of its IT contracts, and to promote the development of its own IT staff, Health Care Services should require its contract managers to document the completion of knowledge-transfer activities specified in its IT contracts.

1-Year Agency Response

Health Care Services stated that it would remind all managers and supervisors who are responsible for managing IT contracts to document the completion of knowledge-transfer activities. Health Care Services did not indicate that any revision of policy or procedure would be necessary. (2011-406, p 91)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

All Recommendations in 2009-103

Agency responses received after June 2013 are posted verbatim.