California puts high-risk label on large IT projects; vows closer legal look

A draft report from California's Department of General Services is recommending that the state treat large systems integration and telecommunications projects as high risk and subject them to close legal scrutiny.



The heightened scrutiny would apply to IT goods contracts worth more than $500,000, IT services contracts worth more than $200,000 and non-IT services contracts worth more than $50,000, according to the report released Aug. 19.



The department's recommendations were contained in a report submitted to a task force established by Gov. Gray Davis to study contracting and procurement processes and suggest possible improvements.

The task force was convened this summer following opposition from the state legislature to an award last year of an enterprise licensing agreement without competition to Oracle Corp. of Redwood Shores, Calif.



"On complex acquisitions, it may be prudent to include legal participation in the entire process, including planning, document preparation, negotiations and final review," the report said.



The task force is preparing its final report to the governor and may submit it after its next meeting on Aug. 30, said Anita Gore, a spokeswoman for the California Department of Finance.



The no-bid award to Oracle, which eventually was nullified, triggered the end of the state Department of Information Technology July 1, when its authorizing legislation was not renewed, and revealed serious shortcomings in the state's contracting and procurement process.



The report contains short-term recommendations that may be implemented in less than a year, and long-term recommendations that likely will require more than a year to implement. The recommendations seek to establish a high-quality, open contracting process with checks and balances.



While the report calls for an open process for contracting, it does not recommend the state revert to a formal bid process for the $1.5 billion in awards made annually through California Multiple Award Schedules and master agreements. To do so would negate the efficiencies and effectiveness of those contracting processes, the report stated.



The state, which spends more than $7 billion annually on all goods, services and IT, has had difficulty tracking awards in the past, the report stated. The short-term solution to this problem would be to create an integrated document management system to track agency transactions.

The long-term solution would be to expand the state's electronic procurement program known as Cal-Buy. This is because e-procurement promotes open competition and improves compliance with procurement rules and regulations, the report stated.