Report 2018-114 Recommendation 2 Responses

Report 2018-114: Disabled Veteran Business Enterprise Program: The Departments of General Services and Veterans Affairs Have Failed to Maximize Participation and to Accurately Measure Program Success (Release Date: February 2019)

Recommendation #2 To: General Services, Department of

To ensure that a greater number of DVBE firms benefit from the DVBE program, General Services should work with awarding departments to understand why only a few DVBE firms receive a large number of contract awards. Based on its findings, General Services should take the necessary steps to remedy this situation.

Annual Follow-Up Agency Response From October 2020

As of September 2020, the Department of General Services (DGS) has fully implemented this recommendation.

Through its collaboration with awarding departments and DVBE stake holders, DGS identified the top five reasons that have contributed to the problem.

To address the top five reasons, DGS' 2020 Targeted Outreach Plan has corrected the following:

- DVBEs do not list or provide the required products/services used by the state - As of September 2020, more than 31,492 UNSPSC codes have been removed, which will help DVBEs by limiting the codes set to only those that are useful to the state and increase the ability for the DVBE community to accurately identify what they are selling and to match that to what the state is looking to buy.

- DVBEs unknowingly list incorrect UNSPSCs/keywords - Outreach has launched webinar trainings which include information about selecting the appropriate keywords/UNSPSC codes the state uses.

- Desire to reuse qualified, proven DVBE firms - On April 28, 2020, DGS entered into an agreement with the California Department of Veterans Affairs, Veterans Services Division, for the primary purpose to help and promote self-reliance for California's DVBEs. CalVet also has hired two new DVBE advocates as part of the agreement to work closely with departments and DVBE firms.

- Difficulty getting DVBE responses - To remedy this, DGS conducted 160 outreach events with DVBEs and included information on how to update their contact information on their Cal eProcure profile and the importance of being responsive to buyers who contact them directly.

- Cal eProcure problems - DGS' Outreach and Certification Unit has identified and resolved more Cal eProcure defects and regularly tests the system to ensure it is working properly.

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

1-Year Agency Response

Since launching of the Procurement Division's (PD) eProcurement Business Intelligence Strategies Section (eBISS) State Contract and Procurement Registration System (SCPRS) Dashboard website, OSDS has emphasized with state departments the importance of using the dashboards to identify areas where non-certified suppliers are being used and instead utilizing certified DVBE suppliers. This has simplified finding DVBE suppliers for departments and introducing buyers to DVBE firms that departments are not currently using. We will continue to emphasize these tools at quarterly advocate meetings, state agency visits and ongoing communications.

OSDS also added new awards for the annual State Agency Recognition Awards to commend state buyers who used the most variety of certified SB and DVBE firms during the last fiscal year. Presenting this award at a statewide event gives consistent messaging to buyers about the importance of using a variety of firms when doing procurement.

Finally, according to SCPRS data for 2019, we have improved in DVBE participation from the FY 2017-18 figures contained in the CA State Auditor's report.

- 80 more DVBE firms received contract awards from January 2019 through January 2020 than in FY 2017-18.

- $59 million more in contract spending was awarded to DVBEs than in FY 2017-18.

- $9.8 million more was awarded to DVBEs outside of the top 30 DVBE firms than in FY 2017-18.

- Although the top DVBE firm increased its percentage share of all state spending with DVBEs, spending otherwise became more equitably distributed, with the top 30 firms receiving 1.6% less in total spending than the remainder of DVBE firms that won contracts in FY 2017-18.

- When the top two firms are removed from both figures, all DVBEs outside of the top 30 firms received 3.3% more of DVBE contract awards than in FY 2017-18.

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

General Services did not address our recommendation that it work with awarding departments to understand why only a few DVBE firms receive a large number of contract awards. Until it understands the reasons behind why only a few DVBE firms receive a large number of contract awards, it cannot develop effective remedies. Further, although General Services claims that it has improved DVBE participation in fiscal year 2018-19 compared to fiscal year 2017-18, it did not provide any documentation to support this claim.

6-Month Agency Response

On February 8, 2019, DGS issued Broadcast Bulletin P-04-19 informing state agencies and interested stakeholders of the launch of the Procurement Division's (PD) eProcurement Business Intelligence Strategies Section (eBISS) State Contract and Procurement Registration System (SCPRS) Dashboard website. The information from the dashboard will assist departments by allowing them to make more data-informed decisions regarding which DVBE firms to use and what potential goods and services are being purchased by other state departments from certified DVBE firms.

DGS continues to meet with state departments and DVBE advocates quarterly and by request to analyze why only a few DVBE firms receive a large number of contract awards and actively collaborates with them to increase the number of DVBE firms participating in state contracts. Since the April 23, 2019 SB/DVBE advocate meeting, DVBE participation is a standing agenda item and allows departments an opportunity to discuss strategies for increasing the number of firms receiving DVBE contract awards. Advocates are encouraged to report their department's needs to support this endeavor with the Outreach team on an ongoing basis.

In addition, all department advocates received a survey from Outreach in May 2019 asking them to identify potential reasons why only a few DVBE firms receive a large number of contract awards. The responses will provide the Outreach team with data to better assist state departments in contracting with a variety of qualified DVBE firms. As of July 8, 2019, 85 advocate survey responses have been collected, and Outreach uses the information collected to provide ongoing DVBE contracting guidance to departments. Outreach will continue to provide departments information on the eBISS SCPRS Dashboards and meet with departments to address DVBE contracting concerns.

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

In response to the May 2019 survey that General Services conducted, state agencies cited various reasons to explain why only a small number of DVBE firms are receiving contract awards. The primary reason cited by state agencies was not having enough qualified DVBE firms in the state database that can meet the state agency's contracting needs. However, General Services' response does not address the steps it has taken to remedy the situation that only a few DVBE firms are receiving a large number of contract awards. Until it does so, we will continue to report this recommendation as partially implemented.

60-Day Agency Response

On February 8, 2019, DGS issued Broadcast Bulletin P-04-19 informing state agencies and interested stakeholders of the launch of the Procurement Division's (PD) eProcurement Business Intelligence Strategies Section (eBISS) State Contract and Procurement Registration System (SCPRS) Dashboard website. This new information from the dashboard will assist departments by allowing them to make more data informed decisions regarding which DVBE firms to use and what potential goods and services are being purchased by other state departments from certified DVBE firms.

DGS is continuing to meet with other state departments and DVBE advocates to analyze why only a few DVBE firms are receiving a large number of contract awards and will collaborate with them on opportunities to increase DVBE participation. Moving forward, all Small Business (SB) and DVBE advocate meetings will have DVBE participation as a standing agenda item (starting at the April 23, 2019 meeting), which will give departments an opportunity to discuss strategies for increasing the number of firms receiving DVBE contract awards. Advocates will be encouraged to report their department's needs to support this endeavor with the DGS Outreach Team on an ongoing basis.

The Outreach Team will use the information provided by advocates to create updated best practices and suggested strategies for DVBE contracting with the goal of a larger number of DVBE firms receiving contracts in the future. The advocate surveys will be collected by June 1, 2019 and the Outreach Team will update the best practices for DVBE contracting by January 1, 2020.

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

All Recommendations in 2018-114

Agency responses received are posted verbatim.