Report 2013-115 All Recommendation Responses

Report 2013-115: Disabled Veteran Business Enterprise Program: Meaningful Performance Standards and Better Guidance by the California Departments of General Services and Veterans Affairs Would Strengthen the Program (Release Date: February 2014)

Recommendation for Legislative Action

To provide a more meaningful measure of how well disabled veteran-owned businesses benefit financially from the DVBE program, the Legislature should amend the DVBE reporting requirements in the Public Contract Code to require that all awarding departments take the following steps to report DVBE participation and ensure that data can be corroborated:

For DVBE firms that contract directly with the State (prime contractors), require awarding departments to report on an annual basis DVBE participation based on amounts they paid the DVBE firms.

For DVBE firms that work as a subcontractor (that do not directly contract with the awarding department), require the awarding departments to track and report on an annual basis DVBE participation based on amounts the subcontracting DVBE firms received, as certified by the subcontractors.

Require awarding departments to maintain accounting records and certifications from DVBE subcontractors, as applicable, that support the DVBE participation data reported.

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation for Legislative Action

If the Legislature chooses not to amend the DVBE reporting requirements in the Public Contracting Code—to require awarding departments to report DVBE participation annually based on amounts paid, not amounts awarded—the Legislature should amend the Public Contracting Code to do the following:

Require awarding departments to maintain detailed support for their DVBE activity and to establish review procedures to ensure the accuracy and completeness of the award amounts reported.

Include specific instructions to awarding departments on how they should report multiyear contracts, either at the time of award or by an equal distribution of the award over the life of the contract.

Description of Legislative Action

Senate Bill 1180 (Newman) was introduced in 2018, and would have required an awarding department to maintain all records of the information provided by the prime contractor and establish appropriate review procedures for those records to ensure the accuracy and completeness of the award amounts and paid amounts reported. This bill died in committee. The Legislature has not taken any additional actions to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Senate Bill 1180 (Newman) was introduced on February 14, 2018, and would require an awarding department to maintain all records of the information provided by the prime contractor and establish appropriate review procedures for those records to ensure the accuracy and completeness of the award amounts and paid amounts reported.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation for Legislative Action

For the DVBE program to benefit a broad base of disabled veteran-owned businesses financially, the Legislature should enact legislation aimed at increasing the number of DVBEs that contract with the State, including increasing the amount of the DVBE incentive that awarding departments can apply when considering bids on state contracts. Such an incentive could include additional preference points to certain bids when the bidder is a DVBE firm that the department has not previously used, and when the DVBE firm is the prime contractor.

Description of Legislative Action

Legislation has not been introduced to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation #4 To: General Services, Department of

To ensure that the State enforces its contractual right to obtain a complete copy of its procurement data, General Services should take all necessary steps to ensure that it can extract a reliable copy of all of the State's procurement data from BidSync so that the data can be used and analyzed to the State's benefit. These steps should include testing that the data it obtains from BidSync is accurate and complete, and it should be completed before the end of the contract term with BidSync, in September 2014.

Annual Follow-Up Agency Response From September 2015

In February 2014, DGS' Procurement Division (PD) finished exporting from the contractor's system (BidSync) the state's procurement data dating back to the 2009 calendar year. Procurement data applicable to each subsequent month has also been periodically, usually monthly, exported from BidSync to the state. DGS' Office of Audit Services (OAS) was tasked with auditing the accuracy and completeness of the data. The objective of the audit was to review PD's and BidSync's procurement data export process to ensure that it resulted in a reliable copy of the data being transferred to the state.

In a June 18, 2015 report, OAS presented the results of its audit. Overall, OAS concluded that PD and BidSync have established an adequate and effective data export process which ensures that a reliable copy of eProcurement data is being transferred to the state by BidSync. The data export process includes sufficient policies and procedures which provide reasonable assurance that the data for sampled categories of eProcurement maintained information is being accurately and completely exported to the state.

The eProcurement system is the web-based portal for the California State Contracts Register, the State Contract and Procurement Registration System, the online Small Business and Disabled Veteran Business Enterprise query system and the listing of statewide Leveraged Procurement Agreements. Currently, the state is transitioning to a new statewide financial data system called the Financial Information System of California (FI$Cal), which contains a procurement component that will replace the BidSync administered system.

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

1-Year Agency Response

In February 2014, DGS' Procurement Division finished exporting the state's procurement data from the contractor's system (BidSync). Subsequently, DGS' Office of Audit Services (OAS) was tasked with reviewing the accuracy and completeness of the data. OAS' review is in its final stages with completion planned by April 30, 2015.

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

6-Month Agency Response

In February 2014, DGS' Procurement Division finished exporting the state's procurement data from the contractor's system (BidSync). Subsequently, DGS' Office of Audit Services was tasked with reviewing the accuracy and completeness of the data. The review began in April 2014 and is planned for completion by December 31, 2014.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

In February 2014, DGS Procurement Division finished exporting the states procurement data from the contractors system (BidSync). Subsequently, DGS Office of Audit Services has been tasked with reviewing the accuracy and completeness of the data. The review is planned for completion in July 2014.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: Corrections and Rehabilitation, Department of

To ensure it has maximized the effectiveness of the DVBE incentive, Corrections should implement measures to help ensure that it applies the DVBE incentive to all applicable contracts and procurements and that these measures include documented policies and procedures and/or training to procurement staff on properly applying the DVBE incentive.

6-Month Agency Response

- CDCR Office of Business Services staff have identifed which incentive mandates and policies apply to procurements and contracts and DVBE policies and procedures have been finalized.

-Determined that DVBE incentive procedures are in place for service contracts and DVBE incentive policies and procedures have been implemented.

-Appropriate handbooks, boilerplates, templates, etc with DVBE incentive policies and procedures have been updated.

- For the procurement of goods, the DVBE incentive requirements are exempt when using the following procurement methods:

SB/DVBE Option, Leveraged Procurement Agreements, and procurements under $5,000 that are fair and reasonable.

-Mandatory training has been provided to all contracts and procurement staff, demonstrating how and when to apply the DVBE incentive.

Proof of Practice Documentation:

-Memorandum dated April 7, 2014

-CSA DVBE Audit Timelines

-CDCR DVBE Incentive Program Policy

-Non-IT Procurement Handbook (excerpts)

-Various DVBE Incentive Training Documents:

1. Email Invite stating Mandatory Training

2. DVBE Incentive Training Agenda

3. List of Invitees

4. DVBE Incentive Training Handouts/Powerpoint

5. DVBE Incentive Training Sessions 1 & 2 Sign In Sheets & Roll Call

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

Identify DVBE incentive mandates and policies which apply to contracts and procurements.

Comments: Incentive mandates and policies which apply to procurement have been identified.

Finalize DVBE incentive policies and procedures to implment.

Comments: Determined that DVBE incentive procedures are in place for service contracts.

Update appropriate handbooks, boilerplates, templates, etc. with DVBE incentive policies and procedures.

Implement policies and procedures by providing mandatory training to all contracts and procurement staff, demonstrating how and when to apply the DVBE incentive.

Comments: For the procurement of goods, the DVBE incentive requirements are exempt when using the following procurement methods: SB/DVBE Option, Leveraged Procurement Agreements, and procurements under $5,000 that are fair and reasonable.

CDCR's Office of Business Services expects to fully implement the recommendation by June 30, 2014 and will submit proof of practice documentation upon completion.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #6 To: Transportation, Department of

To ensure it has maximized the effectiveness of the DVBE incentive, Caltrans should implement measures to help ensure that it applies the DVBE incentive to all applicable contracts and procurements and that these measures include documented policies and procedures and/or training to procurement staff on properly applying the DVBE incentive.

1-Year Agency Response

Caltrans implemented the training on October 31, 2014, and as of March 2015, all appropriate Caltrans staff have taken the new training. Caltrans issued a new policy in March 2015, (Information Bulletin 15-03) requiring all staff involved in the contract and/or procurement evaluation process to complete the training module every two years. The policy also requires that new staff complete the training within 30 days from the hire date. The training is offered in eLearning format and available on the Division of Procurement and Contract's intranet page at: http://admin.dot.ca.gov/pc/training-shtml

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

6-Month Agency Response

Caltrans supervisors continue to review procurement packages to ensure the DVBE incentive application process is properly applied. Caltrans' Division of Procurement and Contracts and the Office of Business and Economic Opportunity are partnering to develop the DVBE incentive training for all procurement staff. Training materials will be complete by September 30, 2014, and staff training will begin by October 15, 2014. Caltrans is on track for completion and implementation by October 31, 2014.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Caltrans supervisors review procurement packages to ensure the DVBE incentive is properly applied. Caltrans is in the process of developing training modules to provide procurement staff instructions on the DVBE incentive application process.

Corrective action partially implemented; training will be completed by October 31, 2014.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #7 To: General Services, Department of

To help ensure that General Services does not incorrectly report businesses that are not certified DVBEs, it should verify, at least on a sample basis for high-value contracts, the certification status of the DVBE firms before submitting their DVBE activity reports to General Services.

1-Year Agency Response

DGS has consolidated its purchasing and contracting functions in a new office within its Administration Division, the Office of Business and Acquisition Services (OBAS). To assist in ensuring the accurate reporting of Disabled Veteran Business Enterprise (DVBE) usage data, OBAS has implemented policies and procedures that provide for the verification of the certification status of DVBE firms awarded state contracts. As part of that process, a copy of the DVBE's certification status database printout is maintained in the procurement file.

On August 11, 2014, OBAS' Small Business/Disabled Veteran Business Enterprise Advocate reminded all acquisitions staff of the requirement to maintain DVBE certification verification documentation in applicable procurement files.

As a final step, the Advocate implemented policies and procedures that provide for the verification, at least on a sample basis, of the certification status of DVBE firms that have high-value contracts. The verification process was implemented as part of DGS' Fiscal Year 2013/14 contracting activity reporting process.

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

6-Month Agency Response

DGS has consolidated its purchasing and contracting functions in a new office within its Administration Division, the Office of Business and Acquisition Services (OBAS). To assist in ensuring the accurate reporting of Disabled Veteran Business Enterprise (DVBE) usage data, OBAS has implemented policies and procedures that provide for the verification of the certification status of DVBE firms awarded state contracts. As part of this process, a copy of the DVBE's certification status database printout is maintained in the procurement file.

On August 11, 2014, OBAS' Small Business/Disabled Veteran Business Enterprise Advocate (Advocate) reminded all acquisitions staff of the requirement to maintain DVBE certification verification documentation in applicable procurement files.

As a final step, the Advocate is in the final stages of implementing policies and procedures that provide for the verification, at least on a sample basis, of the certification status of DVBE firms that have high-value contracts. The verification process will be implemented as part of DGS' Fiscal Year 2013/14 contracting activity report activity.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

DGS has consolidated its purchasing and contracting functions in a new office within its Administration Division, the Office of Business and Acquisition Services (OBAS). Recently, OBAS hired a new Small Business/Disabled Veteran Business Enterprise Advocate. To assist in ensuring the accurate reporting of Disabled Veteran Business Enterprise (DVBE) usage data, the Advocate will be implementing policies and procedures that provide for the verification of the certification status of DVBE firms awarded state contracts. As part of this process, a copy of the DVBEs certification status database printout will be maintained in the procurement file.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #8 To: Transportation, Department of

To help ensure that Caltrans does not incorrectly report businesses that are not certified DVBEs, it should verify, at least on a sample basis for high-value contracts, the certification status of the DVBE firms before submitting their DVBE activity reports to General Services

60-Day Agency Response

As noted in the original response, Caltrans started verifying DVBE certification status on high-value contracts on a quarterly basis. The first five contracts were reviewed on January 30, 2014, and an additioal five contracts on April 1, 2014. All reviewed contracts were accurately represented as certified DVBE firms in the database used to generate the annual participation reports.

Corrective action fully implemented; verification of certification status will be ongoing.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #9 To: Veterans Affairs, Department of

To ensure CalVet is meeting its statutory obligations for the DVBE program, it should do the following:

Develop stronger measures to evaluate its outreach efforts, including formalizing a process for interpreting and evaluating its DVBE survey results and incorporating those results into its DVBE outreach plan.

Work more closely with awarding departments to help them meet the DVBE participation goals and promote DVBE contracting opportunities, including taking a more active role in leading DVBE advocate meetings and posting formal minutes from those meetings on its public Web site.

6-Month Agency Response

In response to Recommendation #1, CalVet is:

- Collecting contact information from outreach events, cross referencing them in BidSync to identify if the potential new DVBEs have since become certified and offering assistance 90 days after each event.

-Interpreting and reporting DVBE survey results quarterly for evaluating and improving the DVBE outreach efforts. Based on feedback, a Welcome Packet was created to support new DVBEs.

-Tracking more metrics on promotional efforts; reports are produced quarterly. FY 2013-14 Annual Report was completed July 8, 2014 and used to develop and improve the FY 2014-15 Outreach Plan, completed August 12, 2014.

-Increasing collaboration with the Department of General Services (DGS) to reduce duplication of efforts and more efficiently use resources. CalVet is increasing the number of unduplicated outreach events from 32 in FY 2013-14 to 47 in FY 2014-15.

In response to Recommendation #2, CalVet is:

-Increasing efforts to help low performing departments meet their DVBE participation goals through executive-level meetings and providing one-on-one training to advocates.

-Leading meetings for advocates: management is now participating in advocate steering committee meetings; CalVet posts minutes on their website and is seeking feedback from advocates on how CalVet and DGS may help them meet their department goals.

-Revitalizing the advocate mentor program and will double the number of seasoned advocates available to mentor new advocates from 9 to 18 by December 2014.

-Developing lists of local DVBE resources specific to prime contractors in California to promote DVBE contracting opportunities.

-Increasing productivity and accountability in the DVBE Advisory Council to include reported progress each quarter on objectives and metrics for each committee.

Through CalVet's increased efforts included but not limited to those described above, CalVet has fully implemented all recommendations.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

In response to Recommendation #1, CalVet is:

- Collecting contact information from outreach events, then cross referencing them in the BidSync database to identify if the potential new DVBEs have since become certified in the program 90 days after each event.

-Tracking more metrics on promotional efforts; reports are produced quarterly for use in evaluating the DVBE outreach plan.

-Interpreting and reporting DVBE survey results quarterly for evaluating and improving the DVBE outreach plan. The next report will be produced in June 2014.

-Increasing collaboration with the Department of General Services (DGS) in evaluating and developing the DVBE outreach plan to reduce duplication of efforts and more efficiently use resources.

In response Recommendation #2, CalVet is:

-Increasing efforts to help low performing departments meet their DVBE participation goals through executive-level meetings and providing training to advocates.

-Leading meetings for advocates: management is now participating in advocate steering committee meetings; CalVet posts minutes on their website and is seeking feedback from advocates on how CalVet and DGS may help them meet their department goals.

-Developing lists of local DVBE resources specific to prime contractors in California to promote DVBE contracting opportunities.

-Increasing productivity in the DVBE Advisory Council to include reported progress each quarter on objectives and metrics for each committee.

In May, CalVet will collaborate with DGS to most efficiently fill gaps and reduce duplication of efforts in our outreach plan for fiscal year 2014-15. This plan will be published by June 30, 2014. Through CalVets increased efforts to work directly with low performing departments on their corrective plans, acting in a greater leadership role with advocates and the Advisory Council, and working directly with prime contractors to facilitate DVBE contracting, CalVet will fully implement this recommendation by July 30, 2014.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2013-115

Agency responses received are posted verbatim.