Report 2016-124 Recommendation 3 Responses

Report 2016-124: Department of General Services and California Department of Technology: Neither Entity Has Provided the Oversight Necessary to Ensure That State Agencies Consistently Use the Competitive Bidding Process (Release Date: June 2017)

Recommendation #3 To: General Services, Department of

To improve its oversight of the State's noncompetitive contracts, General Services should, within 90 days, create plans for regularly performing statewide analyses to identify potential abuse or overuse of noncompetitive contracts. These analyses should include, but not be limited to, calculating the proportional value and number of the State's competitive and noncompetitive contracts and amendments, examining trends in agencies' use of noncompetitive contracts and amendments, and identifying unusual patterns among vendors receiving state contracts through noncompetitive means.

1-Year Agency Response

During the development of a plan and procedures to perform regular analyses of statewide non-competitive contracting under DGS' oversight, DGS identified a better method of identifying potential abuse or overuse of non-competitive contracts. DGS determined that it was not feasible to identify potential abuse or overuse of the non-competitively bid (NCB) contract acquisition method by the exclusive review of statewide data showing the quantity of non-competitive contracts. Non-competitive contracting is a valid method of contracting if done correctly; therefore, the statewide quantity of non-competitive contracting is not evidence of abuse. Instead, DGS implemented a process within the Purchasing Authority accreditation process to perform a review of individual state agencies use of the NCB contract acquisition method. This allows DGS to use state agency specific data to identify patterns and follow-up with individual state agencies by reviewing a sample of NCB contract/procurement files to identify potential abuse or overuse of the NCB contract acquisition method. This will assist DGS to perform its oversight function, including determining whether process changes should be undertaken and/or additional training and guidance should be provided to agencies.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

We stand by our recommendation that General Services should create plans for regularly performing statewide analysis to identify potential abuse or overuse of noncompetitive contracts. We believe such analyses should include all types of noncompetitive contracts, which includes more than just noncompetitively bid contract justifications. These analyses would enable General Services to better understand the scale of the State's noncompetitive contracts and to identify situations in which agencies might be abusing noncompetitive contracts by favoring certain vendors.

6-Month Agency Response

During the development of a plan and procedures to perform regular analyses of statewide non-competitive contracting under DGS' oversight, DGS identified a better method of identifying potential abuse or overuse of non-competitive contracts. DGS determined that it was not feasible to identify potential abuse or overuse of the non-competitively bid (NCB) contract acquisition method by the exclusive review of statewide data showing the quantity of non-competitive contracts. Non-competitive contracting is a valid method of contracting if done correctly; therefore, the statewide quantity of non-competitive contracting is not evidence of abuse. Instead, DGS implemented a process within the Purchasing Authority accreditation process to perform a review of individual state agencies use of the NCB contract acquisition method. This allows DGS to use state agency specific data to identify patterns and follow-up with individual state agencies by reviewing a sample of NCB contract/procurement files to identify potential abuse or overuse of the NCB contract acquisition method. This will assist DGS to perform its oversight function, including determining whether process changes should be undertaken and/or additional training and guidance should be provided to agencies.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

We stand by our recommendation that General Services should create plans for regularly performing statewide analysis to identify potential abuse or overuse of noncompetitive contracts. We believe such analyses should include all types of noncompetitive contracts, which includes more than just noncompetitively bid contract justifications (noncompetitive requests). These analyses enable General Services to better understand the scale of the State's noncompetitive contracts and to identify situations in which agencies might be abusing noncompetitive contracts by favoring certain vendors.

60-Day Agency Response

DGS is on track to meet the 90 day completion date for the development of a plan to perform regular statewide analyses of noncompetitive contracts under DGS' oversight for potential abuse or overuse of noncompetitive contracts. DGS is currently developing procedures to perform the recommended analysis.

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

All Recommendations in 2016-124

Agency responses received are posted verbatim.