Report 2014-105 Recommendation 2 Responses

Report 2014-105: Los Angeles Department of Water and Power - Consequences Linked to Its Premature Launch of Its Customer Information System May Push Total Costs Beyond $200 Million (Release Date: March 2015)

Recommendation #2 To: Los Angeles Department of Water and Power

To ensure that the board can more effectively exercise oversight for the department's significant information technology projects, the board should develop reporting standards for the department's management to follow when discussing the status of information technology projects with the standing committee or the board. Such reporting standards should, at a minimum, specify the frequency with which the department's management makes such reports and require the following disclosures about each information technology project:
o The amount of project growth, in terms of both budget and scope of work, from initial project estimates through current projections.
o The results from system testing and a listing of the critical defects that exist and must be fixed prior to system use.
o The concerns the quality assurance contractor has raised and how the department is addressing them.

Annual Follow-Up Agency Response From October 2020

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has implemented the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight, LADWP's board has been regularly briefed, in closed session, on these issues. The first follow-up audit of the billing system, as called for by the settlement, has been completed and submitted to the court, as has a consultant report commissioned by plaintiffs' class counsel on the adequacy of the refunds and credits. The second follow-up audit is scheduled to begin in the next quarter.

LADWP's focus on remediation of the customer billing system has meant that it continues to prioritize other pending major information technology (IT) projects by recognizing the importance of maintaining the day-to-day operations of the enterprise as it implements new systems. In that regard, this year's COVID-19 pandemic did require the reallocation of information technology resources to implement projects to adapt to the large remote workforce resulting from the pandemic.

LADWP staff continues to work with the board to review proposed IT projects, with a focus on assuring ongoing executive management review and board oversight. This has included update briefings on the LADWP's response to the pandemic, as well as the briefing the board received in open session earlier this year on the status of major IT projects. The board continues to provide oversight of these projects given that they are critical to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: Ongoing

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

Annual Follow-Up Agency Response From November 2019

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has been implementing the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP is now in the midst of the several year process - through 2020 - of implementing the settlement agreement. The entire board of commissioners has been provided with regular updates as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track though 2019.

A new LADWP general manager was appointed July 2019. He has made an initial reorganization of the information technology services division, and has reconvened an IT executive steering committee and will adopt a holistic approach to technology project budgeting, staffing and prioritization.

LADWP staff continues to work with the entire board of commissioners to review these projects as they move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. The entire board of commissioners continues to provide oversight of these projects given their critical nature to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: 2020.

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

Annual Follow-Up Agency Response From October 2018

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has been implementing the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP is now in the midst of the several year process - through 2020 - of implementing the settlement agreement. The entire board of commissioners has been provided with regular updates as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track. LADWP staff continues to work with the entire board of commissioners to review these projects as they move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. The entire board of commissioners continues to provide oversight of these projects given their critical nature to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: 2020.

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

The board oversight that the department describes is a positive step. However, the recommendation is specific to creating reporting standards and the department has not described any such standards.

Annual Follow-Up Agency Response From November 2017

As previously indicated in responses to the State Auditor, LADWP has been involved in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. In July of 2017, the Los Angeles Superior Court issued its order giving final approval to the settlement of several of those cases. The settlement calls for refunds and credits for all customer overpayments and for LADWP to meet a set of billing system and customer service performance metrics. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP has begun the several year process - through 2020 - of implementing the settlement agreement, with regular updates of the board of commissioners planned as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track. LADWP staff is working with the entire board of commissioners to review these projects as they begin to move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. It is expected that the entire board of commissioners will continue to provide oversight of these projects given their critical nature.

LADWP is pleased to provide this update to the State Auditor.

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

The board oversight the department describes is a positive step. However, the recommendation is specific to creating reporting standards and the department has not described any such standards.

Annual Follow-Up Agency Response From November 2016

See Response to Recommendation 1.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

Discussion on the status of technology projects is now included in the monthly reports by LADWP's Chief Operating Officer to the Board of Water and Power Commissioners. Depending upon the size of the project, the report may include the scope of work, budget, and schedule from initial project estimates through current projections including the status of the project as to testing, defect, and enhancement resolutions.

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

Although the department asserts that its monthly board reports include the concerns the quality assurance contractor raised and how it is addressing them, our recommendation is to the board to develop reporting standards for the department's management to follow. The department has not substantiated that the board has developed these reporting standards.

6-Month Agency Response

As per this recommendation LADWP's Chief Administrative Officer will prepare and present reports on a quarterly basis, or more frequently if needed, on the status of the Information Technology projects to the Board of Water and Power Commissioners, which will cover the scope of work, budget, and schedule from initial project estimates through current projections including the status of the project as to testing, defect, and enhancement resolutions.

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

The department did not substantiate its claim of full implementation. It did not support that the Chief Administrative Officer's reports were agendized and that the reports' contents address our recommendation.

60-Day Agency Response

As explained in the letter dated May 11, 2015; staff is reviewing possible metrics to create a reporting "dashboard" that could be used for major conversions to measure such things as original and updated estimates of the budget and scope of projects, results of system testing and listing of defects, and issues raised by a quality assurance contractor. These recommended metrics will be brought to the Board at a later date.

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

All Recommendations in 2014-105

Agency responses received are posted verbatim.