Report 2012-301 All Recommendation Responses

Report 2012-301: Judicial Branch Procurement: Six Superior Courts Generally Complied With the Judicial Branch Contracting Law, but They Could Improve Some Policies and Practices (Release Date: March 2013)

Recommendation #1 To: Administrative Office of the Courts

To comply with state requirements, the Judicial Council should include policies in the judicial contracting manual regarding the State's small business preference for information technology procurements.

1-Year Agency Response

The judicial contracting manual was revised effective January 1, 2014, to require judicial branch entities to adopt small business preference procedures applicable to the competitive procurement of information technology goods and services.

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

6-Month Agency Response

Although the Judicial Council will ultimately decide what action is appropriate with respect to the small business preference, the AOC anticipates presenting to the Judicial Council for approval at its meeting scheduled for December 12-13, 2013, revisions to the current Judicial Branch Contracting Manual that will include a small business preference for information technology procurements. The public comment period regarding proposed revisions to the manual ended October 11, 2013; comments received will be included in the public report relating to the Judicial Council's consideration of proposed revisions.

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

60-Day Agency Response

The AOC consulted with the California Technology Agency. The AOC currently anticipates presenting to the Judicial Council for approval revisions to the current judicial contracting manual that will include a small business preference for information technology procurements.

The AOC anticipates that the effective date of any revisions to the judicial contracting manual will be no later than January 1, 2014. The Chief Counsel, AOC Legal Services Office, or her designee, is the person responsible for submitting to the Judicial Council a proposed revised version of the judicial contracting manual.

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

Recommendation #2 To: Administrative Office of the Courts

To ensure complete reports to the Legislature, the AOC should review and modify its methodology for excluding certain transactions from the semiannual report to ensure that the AOC is not inadvertently excluding legitimate procurements. Further, the AOC's methodology should ensure that all procurements or contracts—such as those related to court security, court reporters, and interpreters when such services result in payment by a judicial branch entity to a vendor or contractor—are included in the semiannual report unless specifically excluded by state law.

Annual Follow-Up Agency Response From September 2014

The AOC reviewed and modified its methodology for excluding certain transactions from the semiannual report. Beginning with the reporting period starting January 1, 2014, the semiannual report includes payments, but not contracts, for services provided by independent contractor court reporters and independent contractor interpreters. To the limited extent a superior court may make payments for security services (given that the sheriff, and not the superior court, is generally responsible for the cost of court security under the Superior Court Security Act of 2012) such payments are also included in the semiannual report beginning with the reporting period starting January 1, 2014.

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

1-Year Agency Response

The AOC reviewed and modified its methodology for excluding certain transactions from the semiannual report. Beginning with the reporting period starting January 1, 2014, the semiannual report will include payments, but not contracts, for services provided by independent contractor court reporters and independent contractor interpreters. To the limited extent a superior court may make payments for security services (given that the sheriff, and not the superior court, is generally responsible for the cost of court security under the Superior Court Security Act of 2012) such payments will also be included in the semiannual report beginning with the reporting period starting January 1, 2014.

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

The AOC will issue its semiannual report for the reporting period starting January 1, 2014 in August 2014. Because we cannot verify that the new methodology is in place until the AOC releases that report, we consider this recommendation partially implemented.

6-Month Agency Response

The AOC intends to present to the Judicial Council at its meeting in December 2013 a recommendation to include payments for services provided by independent contractor court reporters and independent contractor interpreters in future semiannual reports beginning with the reporting period starting January 1, 2014. To the limited extent a superior court may make payments for security services (given that the sheriff, and not the superior court, is generally responsible for the cost of court security under the Superior Court Security Act of 2012), such payments would also be included in the semiannual report. Even though the State Auditor agrees the AOC has a valid argument for excluding these types of services transactions from the substantive provisions of the Judicial Branch Contract Law, the AOC appreciates that including payment information in the semiannual reports will serve as a tool to aid the Legislature's budget oversight and to provide greater transparency for the public.

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

60-Day Agency Response

The AOC is in the process of reviewing its methodology for excluding certain transactions from the semiannual report. To facilitate the Legislature's budget oversight and to provide greater transparency for the public, the AOC anticipates including payments for such services in future semiannual reports as recommended by the state auditor.

The effective date for including payments for services provided by the county sheriffs, independent contractor court reporters, and independent contractor court interpreters will be no later than the reporting period starting January 1, 2014. The persons responsible for ensuring that any future methodology employed does not exclude transactions that should be included in the semiannual report are Doug Kauffroath, Senior Manager, AOC Trial Court Administrative Services Office, and John A. Judnick, Senior Manager, AOC Internal Audit Services.

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

Recommendation #3 To: Administrative Office of the Courts

To ensure accurate reports to the Legislature, the AOC should ensure that its process for extracting data from the courts' common accounting system provides accurate information—including, but not limited to, data describing the item or service procured and data reflecting the amount courts actually paid to vendors—for use in the semiannual report.

60-Day Agency Response

Although the AOC has confidence it has corrected all previously identified programming errors, the AOC is continuing its efforts to ensure that its process for extracting data from the courts' common accounting system provides accurate information. In this regard, the AOC is responsible for the architecture of the courts' common accounting system. Each superior court, however, is responsible for ensuring that the information in the system relating to payments to, and contracts with, the court's vendors is accurate, consistent, and complete.

It is anticipated that the process for extracting data from the courts' common accounting system will result in substantially accurate information for all future semiannual reports, provided that each superior court has put into the system information that is accurate, consistent, and complete. Doug Kauffroath, Senior Manager, AOC Trial Court Administrative Services Office, is the person responsible for the architecture of the courts' common accounting system and for identifying programming errors.

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

Although the Administrative Office of the Courts (AOC) has indicated that it has not yet fully implemented this recommendation, we consider this issue closed for the purpose of our audit report #2012-301. The AOC believes it has corrected the problem and we note that our office will perform future audit work to review the accuracy of the AOC's semi-annual reports to the Legislature.

Recommendation #4 To: Superior Court of California, County of Napa

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

60-Day Agency Response

On March 22, 2013, the Napa Superior Court updated its Local Contracting Manual (LCM). The revised LCM includes a new Section 6 - California Disabled Veterans Business Enterprise (DVBE) Program, and Section 7 - Shared Procurement Services.

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

The LCM manual includes new procedures that address our DVBE recommendation.

Recommendation #5 To: Superior Court of California, County of Orange

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

1-Year Agency Response

The Superior Court of California, County of Orange (Orange court) has fully addressed the recommendation. Effective January 22, 2014, the Orange court began issuing solicitations with the Disabled Veteran Business Enterprise (DVBE) incentives. During the last 12 months, the Orange court developed DVBE rules and procedures including developing a method for monitoring adherence to DVBE goals, using existing state government resources to administer the program, and creating incentive amounts and a formula for incentive calculation for procurements subject to DVBE incentives. In addition, the court designated a DVBE advocate, adopted related forms, and created a public Web page with DVBE information.

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

6-Month Agency Response

As of September 2013, the Superior Court of Orange County (court) has taken several steps toward addressing the state auditor's recommendation regarding the Disabled Veteran Business Enterprise (DVBE) program. First, the court designated one of its senior contracts administrators as a DVBE advocate. That individual has drafted a DVBE policy addressing general policy, eligibility advocate responsibilities, incentive, incentive waiver, DVBE maximum, forms, and subcontractors. The policy is currently under review by the court's executive management. The court plans to adopt DVBE rules and procedures. Once the executive management adopts the policy, the court will incorporate corresponding DVBE language into its solicitation documents, contract documents, local contracting manual, and corresponding desk procedures. The court is also considering whether to post a Web page with DVBE information. The court is working toward an implementation date of January 2014.

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

60-Day Agency Response

During the last sixty (60) days, Superior Court of California, County of Orange (Orange court) has taken steps towards compliance: Specifically, the Orange court has designated a DVBE Advocate and adopted rules and procedures for the DVBE program. Pending activities include, but are not limted to, establishing a methodology to track and report DVBE participation statistics and adopting standard solictation forms that include DVBE requirements. The Orange court is committed to remain on track with the implementation schedule date of January 2014.

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

Recommendation #6 To: Superior Court of California, County of Sacramento

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

1-Year Agency Response

The court reviewed DVBE policy sections from the State of CA and other Calfornia Superior courts, along with recommendations from the Administrative Office of the Courts. A final draft document was developed and approved in-house. The policy section was added to the court's internal contracting manual effective January 1, 2014.

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

6-Month Agency Response

The Court is in the final stages of addressing the DVBE issue,having compiled several examples of DVBE policies and information from several sources including the State Department of General Services, CalTrans, and the Administrative Office of the Courts, along with existing policies from several courts. Court staff reviewed the various documents and have settled on a variation expected to meet the needs of the Court and the spirit of the legislation. A preliminary draft of the proposal has been developed and will be presented to the Court Executive Office by mid-September. The Court anticipates having a finalized policy in place by the end of October 2013.

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

60-Day Agency Response

The court has taken steps toward addressing the DVBE issue. To date, the Court's Contract Manager has instructed Purchasing staff to include potential DVBE vendors using the State Department of General Services Listing. The court also will review the DVBE potential bidders list from the State Department of Transportation to further expand the number of firms noticed for procurements.

For the policy development part of this issue, the Court, during Fiscal Year 2013-14, will gather a number of different DVBE policy guidelines from various sources to provide for a merge of the best components that will be most beneficial to the Court's needs. The court plans to secure all necessary approvals for the new DVBE policy by December 31, 2013.

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

Recommendation #7 To: Superior Court of California, County of Stanislaus

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

Annual Follow-Up Agency Response From September 2014

We have added procedural language for implementation of the DVBE program in our Local Contracting Manual effective 10/01/14.

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

1-Year Agency Response

The Court will now target 09/30/2014 for implementation, contingent on adequate staffing. Due to staff furloughs, reduction in force, turnover in the Buyer/Purchasing position, etc., we have not had available resources to implement.

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

6-Month Agency Response

The Court recognizes the DVBE requirement in the Judicial Branch Contracting Manual (JBCM). However, the JBCM indicates using available resources to implement the DVBE program. Due to several years of budget cuts, our Court does not have available resources to implement at this time. The Court will continue to target January 2014 for implementation; however, implementation is contingent on adequate staffing levels.

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

60-Day Agency Response

The Court recognizes the DVBE requirement in the Judicial Branch Contract Manual (JBCM), and our court's local manual designates the buyer as the DVBE advocate. However, the JBCM indicates the Courts are to use available resources to implement the DVBE program. Due to several years of unprecedented budget cuts, our Court does not have available resources at this time. The Court will target January 2014 as the date to fully establish and implement the DVBE preference; including written policies and procedures in our local contracting manual.

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

Recommendation #8 To: Superior Court of California, County of Sutter

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

60-Day Agency Response

At the time of filing our initial response to the audit report one outstanding issue remained.

The local contract manual has been revised to include a policy targeting the State's Disabled Veterans Business Enterprise (DVBE) program.

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

The court provided a copy of its revised manual, which included policies related to the DVBE program. Specifically, the court's manual sets a DVBE participation goal of a minimum of 3 percent of the value of all court contracts in a given fiscal year, names the court's fiscal manager as the DVBE advocate, and states that the court will track its total contract value for DVBE purposes and will determine whether or not the DVBE goal is met on an annual basis.

Recommendation #9 To: Superior Court of California, County of Yolo

To ensure that transactions reflect the State's priorities regarding businesses owned by disabled veterans, and to comply with requirements in the judicial contracting manual, the courts we reviewed should develop formal policies to implement the DVBE program.

60-Day Agency Response

Yolo Superior Court has updated its Local Contracting Manual to include a section on the Disabled Veteran Business Enterprise program, has established a goal of three percent (3%) participation of disabled veterans, and drafted procedures by which to achieve the goal.

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

Recommendation #10 To: Superior Court of California, County of Napa

To ensure that court executive management is aware of and approves large purchases, the Napa court's staff should restrict approvals to established dollar levels. Further, to demonstrate adherence to its approval policies, the court should implement its new procedure to record executive committee approvals in the procurement file.

60-Day Agency Response

The Court agrees with the recommendation and has already implemented a new process and corresponding form to document the approval of all large purchases by the Executive Committee. The new procedure was effective January 31, 2013 and will ensure that each large purchase has Executive Committee approval and that approval is properly documented. Each purchase order for $20,000 or more will have an associated "Executive Committee Authorization to Purchase" form. The signed original form will be kept in the contract file or the procurement file if there is no contract. The Accounting Division will also have a copy of the form attached to the Accounting copy of the Purchase Order. This will allow the Chief financial Officer to ensure that the appropriate approval documentation is present and notify executive management if that is not the case.

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

As we reported in 2012-301 and as the court describes in its response, subsequent to our audit fieldwork, the court developed a form for documenting executive committee approval of large purchases.

Recommendation #11 To: Superior Court of California, County of Sacramento

The Sacramento court should ensure that managers restrict their approvals to established dollar levels so that managers with sufficient knowledge of the court's resources approve purchases.

60-Day Agency Response

The Court addressed this issue immediately upon notification. As an added check/balance, the Contracts Purchasing Unit has been instructed to scrutinize Purchase Request Forms that have been approved and authorized to ensure the person authorizing the purchase has not exceeded his/her purchasing limit.

The Court has also added language to its local policies to address the review by Purchasing staff of valid levels of approvals by managers. The Court's Purchasing staff included this review step into their normal procurement process beginning in March 2013.

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

Recommendation #12 To: Superior Court of California, County of Sacramento

To ensure that the Sacramento court receives the best value for the goods and services it procures, the court should justify all sole-source or noncompetitively bid purchases according to its policies.

60-Day Agency Response

The Court addressed this issue immediately upon notification. The Court has taken additional steps to ensure adherence to the development of sole source documentation in all cases where it is required. Accordingly, such procurements will require that IT submit (along with its Purchase Request form) a Sole Source Justification form for approval by the Court CEO in these particular instances. This provides transparency for the Executive Office and will provide the necessary required audit documentation for future audit reviews. To reinforce this requirement, the Court's Contract Manager initially provided verbal communication of the matter to the IT managerial staff after receipt of the draft issue from the auditor.

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

On Wednesday May 8, 2013, in an email provided to the State Auditor's Office, the court's Contract Services Manager instructed court staff that it is the court's policy to document justification for using a sole-source vendor and to receive approval for such a vendor from the executive office prior to the procurement.

Recommendation #13 To: Superior Court of California, County of Stanislaus

To ensure that the Stanislaus court receives the best value for the goods and services it procures, the court should advertise its solicitations of goods and services when required by the judicial contracting manual.

60-Day Agency Response

The Court strives to adhere to the Judicial Branch Contracting Manual and recognizes the need to advertise a solicitation for information technology service procurements over $5,000 in order to obtain goods/services at best value. Although one of nine procurements reviewed omitted the advertising step, we submit that our purchasing agent was instructed to expedite the referenced information technology services procurement and did indirectly solicit multiple vendors to make a procurement based on best value. Normally, the Court would advertise as required by the JBCM. We are treating this issue as a one-time (emergency purchase) incident.

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

The court has demonstrated its awareness of the requirement to advertise procurements over $5,000. Given that the court acknowledges it would normally advertise such procurements, we consider this recommendation fully implemented.

Recommendation #14 To: Superior Court of California, County of Sutter

To ensure that the Sutter court receives the best value for the goods and services it procures, the court should justify decisions to make sole-source purchases and document that justification in the procurement files.

60-Day Agency Response

The audit found that Sutter failed to justify a sole-source procurement. This procurement occurred in Jul 2012. Our Court Executive Officer has reviewed the procurement and verified that there was appropriate justification for the sole-source procurement as noted on the purchase requisition form, however, the justification was not fully documented as required by the Judicial Branch Contract Manual. Procedures are now in place to ensure the appropriate court manager prepares a sole-source procurement request that includes a description of the goods and/or services to be procured, an explanation of why the goods and/or services cannot be procured competitively, and documentation that the price offered is fair and reasonable.

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

In its initial response to our audit, and published with the audit report on March 19, 2013, the Sutter Court provided an example form titled "Request for Sole Source Procurement." The form requires a description of the goods or services, an explanation of why the goods or services cannot be procured competitively, and a space for approval.

Recommendation #15 To: Superior Court of California, County of Yolo

To ensure it receives the best value, the Yolo court should document that it compared the offerings of multiple vendors when using leveraged procurement agreements unless the judicial contracting manual or guidance on the particular leveraged procurement agreement does not require such comparison.

60-Day Agency Response

The Court has modified a form provided by Riverside Court Shared Procurement Services to document its comparison of multiple vendors when using Leveraged Procurement Agreements (LPA). The Judicial Branch Contracting Manual was updated in August, 2012, to include more detailed guidance on the use of LPAs, which the Court will use in future procurements.

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

All Recommendations in 2012-301

Agency responses received after June 2013 are posted verbatim.