Report 2018-114 Recommendation 20 Responses

Report 2018-114: Disabled Veteran Business Enterprise Program: The Departments of General Services and Veterans Affairs Have Failed to Maximize Participation and to Accurately Measure Program Success (Release Date: February 2019)

Recommendation #20 To: General Services, Department of

To minimize the occurrence of program abuse and ensure that program abuse cases are handled appropriately and consistently, General Services should remind the awarding departments about preventive measures, including contract award notification to all subcontractors listed on the winning contractor's bid and providing the subcontractors with the name of the prime contractor, the role of the DVBE firm in the contract, the amount of the contract dollars designated for each subcontractor, and contact information that subcontractors can use if they encounter any issues on the project.

Annual Follow-Up Agency Response From October 2020

As of June 2020, the Department of General Services (DGS) has fully implemented this recommendation. In January 2020, DGS issued a statewide Broadcast Bulletin P-01-20 announcing a Program Guide location on the DGS website.

The Program Guide includes information to awarding departments on recommended practices for preventing small business (SB) and Disabled Veteran Business Enterprise (DVBE) program abuse, program violations and sanctions, commercially useful function (CUF), DVBE substitution requirements and procedures, and what constitutes SB and DVBE unlawful activities.

Between April and August 2019, DGS held six training sessions for procurement officials and advocates regarding SB/DVBE program abuse recognition, prevention and reporting.

On June 15, 2020, DGS issued a statewide communication through Broadcast Bulletin F-03-20 on the implementation of the Fiscal Information System for California's (FI$Cal) generated notification to prime contractors and all certified SB/DVBE subcontractors listed on all state contracts and purchase orders (PO) with SB and DVBE participation.

The notification provides the SB and DVBE subcontractors with the awarding department and prime contractor information, contract description, terms, awarded amount, and the percent of the award to be performed on the contract by each listed subcontractor. It also guides them to contact the prime contractor, includes a link to the DGS SB and DVBE advocate directory, and the DGS Office of Small Business and DVBE Services (OSDS) Program Compliance email address SB.DVBECompliance@dgs.ca.gov, so firms can report any complaints of non-compliance or fraud allegations regarding SB/DVBE participation on state contracts.

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

1-Year Agency Response

DGS issued a January 2020 Broadcast Bulletin to all state departments informing all Purchasing Authority Contacts, Procurement and Contracting Officers and SB/DVBE Advocates of the Program Guide location on the DGS website at:

https://www.dgs.ca.gov/PD/Services/Page-Content/Procurement-Division-Services-List-Folder/File-a-Complaint-to-OSDS#@ViewBag.JumpTo

DGS will be posting important information regarding SB/DVBE program abuse in this Program Guide section. The section includes information on recommended practices, program violations and sanctions, commercially useful function (CUF), as well as DVBE substitution requirements and procedures.

Broadcast Bulletins are published on DGS website at:

https://www.dgs.ca.gov/PD/Resources/Page-Content/Procurement-Division-Resources-List-Folder/Broadcast-Bulletins#@ViewBag.JumpTo

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

The documentation on General Services' website does not include information related to reminding departments about taking preventive measures to minimize the occurrence of program abuse as specified in our recommendation.

6-Month Agency Response

DGS is providing guidance to State Departments regarding preventative measures including notification of subcontractors when they are named as DVBE subcontractors, as well as notifying them of their rights and responsibilities. These preventative measures are part of the Awarding Department Comprehensive Program Abuse Training. This training and materials are being posted on the DGS website (https://www.dgs.ca.gov/PD/Resources/Page-Content/Procurement-Division-Resources-List-Folder/SB-DVBE-Program-Violations-and-Sanctions), as well as included in handouts during training.

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

The documentation that General Services provided included a document titled "Recommended Practices", which included the practice of notifying the prime contractor, at the time of the contract award, with a copy to the DVBE subcontractor. However, the documentation does not clearly support that General Services provided these "Recommended Practices" to all awarding departments. Until General Services can demonstrate that it has provided this information to all awarding departments, we will continue to report this recommendation as partially implemented.

60-Day Agency Response

DGS is currently implementing guidance on preventative measures for state departments that include notification of subcontractors, as well as notifying them of their rights and responsibilities. Additional reminders will be included in the training materials for upcoming Awarding Department Comprehensive Program Abuse Training scheduled to begin in April 2019 and completed by August 2019. This training and materials will be posted on the DGS website as well as included in handouts during training.

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

All Recommendations in 2018-114

Agency responses received are posted verbatim.