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California State Auditor Report Number : 2016-301

Judicial Branch Procurement
The Five Superior Courts We Reviewed Mostly Adhered to Required and Recommended Practices,
but Some Improvements Are Needed

Introduction

The California Judicial Branch Contract Law

The California Judicial Branch Contract Law (judicial contract law) went into effect in 2011. It requires all judicial branch entities 2 to comply with the provisions of the Public Contract Code that are applicable to state agencies for procurements of goods and services. As required by the judicial contract law, the Judicial Council has adopted and published the judicial contracting manual, which establishes the requirements and recommended practices for procurement for all judicial branch entities. In addition, each judicial branch entity is required to adopt a local contracting manual containing local procurement rules that its staff is to follow.


Further, judicial contract law directs the California State Auditor (State Auditor) to audit five judicial branch entities, other than the Judicial Council, to assess the implementation of the judicial contract law. We are to conduct this audit every two years, beginning on or before July 1, 2014. Over the past four years, the State Auditor issued two audits that included 11 of the State’s 58 superior courts, and we found weaknesses in internal controls over procurement processes for all 11 of those superior courts. For this audit, we selected the superior courts of Riverside, San Diego, San Joaquin, San Mateo, and Tehama counties. Our decision to select courts for audit is based on factors such as the size of the court, total volume of contracts, previous audits or known deficiencies, and significant or unusual changes in the court’s management. In this and previous audits, we have considered only courts that we have not already audited, and we will continue to do so unless we become aware of circumstances that would warrant a review of a previously audited court. Table 2 provides the relative size and workload data of the five superior courts we selected for this audit.

 

Table 2
Relative Size and Workload Data for Five County Superior Courts

 
County Superior Court
Riverside San Diego San Joaquin San Mateo Tehama
County population, July 2015 2,361,000 3,300,000 726,000 765,000 63,000
County area in square miles 7,206 4,207 1,391 448 2,950
 
Expenditures, fiscal year 2015–16  $149,449,000  $181,108,000  $39,212,000  $44,436,000  $5,038,000
Procurement payments, fiscal year 2015–16  $24,789,000  $35,407,000  $4,434,000  $5,263,000  $880,000
 
Case filings, fiscal year 2015–16 368,000 471,000 116,000 134,000 17,000
Judges, authorized positions 62 134 29 26 4
Support staff, authorized positions 1,094 1,303 321 283 45

Sources: U.S. Census Bureau, the Judicial Council of California’s 2015 Court Statistics Report, and the superior courts.

Note: Data in this table are unaudited and rounded.


The Judicial Contracting Manual

The judicial contract law requires that the provisions of the judicial contracting manual be substantially similar to those of the State Administrative Manual and the State Contracting Manual and consistent with the Public Contract Code. The State Administrative Manual provides general fiscal and business policy guidance to state agencies, while the State Contracting Manual provides more specific guidance in the areas of procurement and contract management. The Public Contract Code contains competitive bidding requirements that state agencies must comply with, among other provisions. The purpose of these requirements is to provide all qualified bidders with a fair opportunity to enter the bidding process and to eliminate favoritism, fraud, and corruption in the awarding of public contracts. In addition to establishing procurement requirements, the judicial contracting manual contains some provisions that it recommends that courts perform. Although these provisions are not required, the courts should follow them unless they have a compelling reason for doing otherwise.

Types of Allowable Noncompetitive Procurements

Source: July 2015 Judicial Branch Contracting Manual.

Like the Public Contract Code, the judicial contracting manual generally requires judicial branch entities to secure competitive bids or proposals for each contract, with certain exceptions, as shown in the text box.3 For example, the judicial contracting manual exempts contracts of less than $5,000 from competitive bidding requirements so long as the court determines that the price is fair and reasonable. Further, the State’s procurement rules do not require competitive bids when a contract is necessary for the immediate preservation of public health or when the contract is with a state agency or other local government entity, rules that the judicial contracting manual also includes.

 

 

 

 

 

Sole-Source Procurement

A procurement in which either a specific vendor’s goods or services are the only goods or services that will meet a court’s needs or a grant application submittal deadline does not allow the time necessary for a competitive procurement. However, before a court enters a sole-source procurement it must request use of a sole source and the request must be approved by an appropriate court authority. Also, the request should include the following information:

Source: July 2015 Judicial Branch Contracting Manual.

Finally, two types of noncompetitive procurements that the judicial contracting manual allows and that judicial branch entities commonly use are sole‑source procurements and leveraged procurement agreements. A procurement with a specific vendor that is secured without bidding is a sole‑source procurement, as described in the text box.























Leveraged Procurement Agreement

An agreement that allows multiple entities to make purchases in order to take advantage of their combined buying power to reduce prices, improve terms and conditions, or improve procurement efficiency when buying commonly needed goods and services. The Judicial Branch Contracting Manual recommends determining whether pricing is fair and reasonable when using a leveraged procurement agreement because the courts may be able to obtain better prices by negotiating directly with the vendor or by conducting a competitive procurement.

Examples of goods and services typically covered under leveraged procurement agreements:

Source: July 2015 Judicial Branch Contracting Manual.

Leveraged procurement agreements are used to purchase goods and services from certain vendors at agreed‑upon prices, without having to seek competitive bids, as described in the text box. The Department of General Services and other state agencies enter into various types of leveraged procurement agreements, including master service agreements and California Multiple Awards Schedules, to consolidate the needs of multiple state agencies and to leverage the State’s buying power when purchasing commonly needed goods and services. The judicial contracting manual includes a process for using and establishing leveraged procurement agreements, but it also recommends that judicial branch entities consider whether they can obtain better pricing or terms by negotiating with the vendor or by soliciting competitive bids.

 

 

 







Footnotes

2 According to the judicial contract law, a judicial branch entity is any superior court, court of appeal, the California Supreme Court, the Judicial Council, and the Habeas Corpus Resource Center. Go back to text

3 The word contracts, as used in this report and described in the judicial contracting manual, can generally refer to several types of formal agreements for procuring goods and services, such as a formal contract or a purchase order. Go back to text



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