Our review assessing five superior courts' compliance with the California Judicial Branch Contract Law highlighted the following:
In 2011 the State enacted the California Judicial Branch Contract Law (judicial contract law) to require all judicial branch entities to comply with the provisions of the Public Contract Code that are applicable to state agencies related to the procurements of goods and services. Among other things, the judicial contract law required the Judicial Council of California to adopt and publish the Judicial Branch Contracting Manual (judicial contracting manual), which establishes the requirements for procurement and contracting for all judicial branch entities. To determine if the State's judicial branch entities have complied with the requirements within the judicial contracting manual, we audited the superior courts of Alameda, Butte, Fresno, San Luis Obispo, and Yuba counties. We found that none of these five superior courts fully complied with the judicial contracting manual's guidance.
Of the five courts we visited, three—the Superior Court of Alameda County (Alameda court), the Superior Court of Fresno County (Fresno court), and the Superior Court of Yuba County (Yuba court)—made procurement payments without proper authorization. Most significantly, because of the magnitude of the Alameda court's deficiencies in its procurement practices, it did not properly authorize any of the 18 payments we tested. In fact, it did not provide any authorization for nine of these payments totaling almost $203,000. As a result, the Alameda court overpaid one vendor $2,500, which the court did not recover until we brought the error to its attention. In another instance, an employee of the Alameda court directed a contractor to perform additional services costing more than $6,000 without receiving prior authorization, leaving the court no option but to pay for these services. We also found that managers at the Fresno and Yuba courts approved seven payments and two payments, respectively, for amounts that exceeded their payment approval levels.
Furthermore, all five superior courts could better follow their procedures for noncompetitive procurements. The judicial contracting manual requires courts to document their approval of noncompetitive procurements. However, all five courts did not follow the judicial contracting manual's requirements for noncompetitive procurements for 21 of the 60 contracts we reviewed. For example, the Superior Court of San Luis Obispo County (San Luis Obispo court) did not document its justification for awarding a noncompetitive contract for microfilm services worth $92,000. Similarly, the Alameda court entered into three sole source contracts with a combined value of over $90,000 without properly documenting that the pricing was fair and reasonable or that competitive bidding was not feasible. One of the five courts—the Superior Court of Butte County (Butte court)—modified its policy in October 2014 to address the problems we observed. When the courts do not comply with the judicial contracting manual's guidance for noncompetitive procurements, they risk giving the appearance of favoritism or failing to achieve the best value for their procurements.
Most of the courts we visited also lacked certain procedures that the judicial contracting manual requires. Specifically, the judicial contracting manual requires that superior courts adopt procedures to implement the State's contracting preferences: the State's Disabled Veteran Business Enterprise (DVBE) program and the small business preference for competitive information technology procurements. However, three courts—the Butte court, the San Luis Obispo court, and the Fresno court—had not adopted procedures for the DVBE program, and four courts—the three previous courts and the Alameda court—had not adopted procedures for the small business preference for competitive information technology procurements. After we brought these issues to the San Luis Obispo and Butte courts' attention, they adopted procedures to implement both programs in August and October 2014, respectively. The other courts stated that they plan to adopt procedures by the end of 2014.
We made several recommendations to four of the five superior courts we visited to ensure that they adequately address the issues we identified. For example, we recommended that the Alameda and Fresno courts ensure that their managers do not approve payments above their authorized dollar limits. Furthermore, we recommended that the Alameda court establish clear procedures to ensure that appropriate staff authorize all payments prior to processing them. Also, we recommended that four of the courts maintain proper documentation to justify noncompetitive procurements. Finally, we recommended that those courts that have not adopted procedures for the DVBE program or the small business preference for competitive information technology procurements adopt such procedures.
The five superior courts agreed with our findings and recommendations.