1 2 3 4 --o0o-- 5 STATE OF CALIFORNIA 6 DEPARTMENT OF GENERAL SERVICES 7 PROCUREMENT DIVISION 8 --o0o-- 9 10 11 12 13 --o0o-- 14 STATE AGENCY MEETING 15 WEDNESDAY, JULY 10, 2002 16 9:35 A.M. 17 --o0o-- 18 19 20 21 Reported By: Jamie Lynne Oelrichs, CSR No. 8086 22 23 24 25 1 1 APPEARANCES 2 For the Department of General Services: 3 PATRICIA JONES, Office Chief 4 707 Third Street, First Floor, Room 1-400 West Sacramento, California 95691 5 (916) 375-4945 6 --o0o-- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2 1 I N D E X 2 Page 3 Meeting 4 4 Reporter's Certificate 72 5 6 --o0o-- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 BE IT REMEMBERED, that on Wednesday, July 2 10, 2002, commencing at the hour of 9:35 a.m., at 3 the offices of Department of General Services, 707 4 Third Street, West Sacramento, California, before 5 me, JAMIE LYNNE OELRICHS, a Certified Shorthand 6 Reporter in and for the county of Sacramento, state 7 of California, the following proceedings were had: 8 --o0o-- 9 MS. JONES: Good morning everybody. 10 Welcome to our meeting of the subcommittee on the 11 governor's task force for contract and procurement 12 review. We actually call ourselves the CPR 13 subcommittee. It's kind of a fun name. We have 14 some of the subcommittee members in the audience 15 today. They refused to come up and sit at the 16 table. I told them I was going to make them stand 17 up anyway. 18 Russ Guarna is the acquisitions manager in 19 the procurement division. Earl Sante is the 20 engineering manager. Bill Fackenthall is one of our 21 resident experts and historians. Debbie Kerns from 22 legal division over to my left, if she'll come out 23 of the shadows there, is one of the lawyers up in 24 legal. Some of you may remember or recognize her. 25 We have a few other members that are not 4 1 here. Bill Cade is also a lawyer in the legal 2 office. And Janice King from the procurement 3 division. And who did I forget? Mariel. She's not 4 even here today at all. That's why I forgot her 5 name. 6 And I'm Pat Jones, one of the managers in 7 the procurement division. And Ralph asked me to 8 kind of spearhead this effort this morning. Seems 9 like I'm not going to get away from procurement 10 reforms. Seems like that's all I've been doing for 11 the last seven or eight years. 12 What we wanted to do today was meet with 13 state agencies. And see if I can get this thing to 14 work here. Okay. We wanted to -- maybe I should 15 back up a little bit. 16 The task force is looking at some very 17 specific things having to do with contracting, 18 statutes, regulations and procedures, to ensure that 19 competition is achieved, to ensure there's integrity 20 in the process, and those sorts of things. That's 21 kind of a broad overview of the task force. The 22 subcommittee is working with them to achieve those 23 objectives. And we will be helping them prepare 24 recommendations to the governor, which will be due 25 August 21st to the governor. So we don't have much 5 1 time to put this together. 2 The task force, at their very first 3 hearing especially, made a comment that they 4 especially wanted to hear input from state agencies, 5 and we do too. And we didn't think you'd all come 6 to the public hearing ready to speak, so we called a 7 meeting today, hoping that you will be willing to 8 engage in some sort of dialogue with us today about 9 the specific issues that the task force is looking 10 at. 11 And just to let you know how serious we 12 are about the input that we receive from you, we do 13 have a court reporter here today who's taking notes, 14 and will prepare a transcript for this meeting. I 15 see one of our executive sponsors just walked in in 16 the back of the room. Jeff Marschner, our chief 17 counsel at DGS. 18 So we have a court reporter. So as we're 19 going through this meeting and the topics that we 20 want to discuss, we would like the speakers to -- if 21 they could identify themselves. We'll have some 22 folks with microphones on each side, and we'll pass 23 those over. If you could identify yourself for the 24 record, so the reporter can capture your name and 25 department, that would be great. 6 1 Basically what we're doing is we want to 2 include you in the changes that are going on. We 3 don't want to just suggest things to the task force 4 or have the task force make recommendations. So 5 your input is very important to us when we're 6 preparing for what we're calling day 91, which is 7 August 21st and beyond. 8 So with that, the way we've structured 9 this, and we sent this out in e-mails, is we 10 presented a set of questions, and we were hoping 11 that we could engage you or ask folks to speak to 12 those specific questions. If you have comments that 13 you'd like to give on, you know, a whole slew of 14 questions all at once, don't be daunted by the fact 15 that there's only two questions up there now. We 16 want to listen and hear your input. 17 So this is not something where we're going 18 to stand up here and talk to you for two hours. I'm 19 going to stop talking in just about two minutes and 20 ask you to tell us what you think, what your 21 thoughts and ideas and concerns are about the reform 22 that will be going into effect for the long term 23 after August 21st. So with that, any questions? 24 Okay. 25 So here's the first question. How do you 7 1 think competition should be enhanced? So who wants 2 to speak to that question? Okay. Don't be shy. 3 One of the things -- maybe I'll help nudge you a 4 little bit here. One of the things the governor's 5 executive order D-55-02 -- I got that number right, 6 didn't I? Imprinted up here. One of the things 7 that executive order focused on and which the 8 interim guidelines focused on is transactions that 9 are perceived to be executed without doing the 10 competitive bid. 11 And I say perceived, because there are 12 different levels of competition, and I'm sure you're 13 all aware of that. And part of our job is to 14 educate folks as to the types of competition going 15 on. But clearly, the governor asked the task force 16 to address competition and make sure that it's 17 enhanced, and that more transactions are handled 18 competitively. So how do we do that? Who wants to 19 talk? Not going to stand up here and talk all day. 20 Here we go. Thank you. 21 MR. HOLTZ: Good morning. My name is Bill 22 Holtz, Department of Justice. When we talk about 23 competition, I've been to the first public hearing 24 and the forums that are held here. There's been a 25 lot of talk about the lack of competition due to 8 1 favoritism or nepotism or some other ism. What I 2 hope, and a lot of people in here agree, that the 3 main concern is the time involved, and that the one 4 way that competition should be enhanced is to make 5 the process more timely, and to somehow speed things 6 up so we can get a full competitive bid and still 7 provide the essential goods and services that we 8 need. 9 MS. JONES: So do it quickly? Would folks 10 like me to jot these things down on the flip chart? 11 Would that be helpful? 12 UNIDENTIFIED SPEAKER: Is there any way to 13 get light up there? 14 MR. MARSCHNER: What would be changed in 15 the current process? Where do you propose we can 16 save days or weeks in the process over what we're 17 doing right now? 18 MR. HOLTZ: I really don't know the answer 19 to that, Jeff. I was hoping the subcommittee would 20 be able to put some meat in that. I think in all 21 phases of a competitive bid process, from the 22 advertisement period, to how vendors comply with 23 DVBE requirements, as well as other participation 24 programs that the state has in the process. I know 25 a lot of us have a lot of problems with vendors 9 1 protesting bids and taking forever to get the 2 contract awarded. 3 Obviously we can't enhance competition 4 without those bids. But in the long run, it seems to 5 hurt the state agencies through this long, drawn out 6 formal bid process. So we always differentiate 7 between formal bidding and informal bidding. And 8 we'd love to get to the point where more things were 9 informally bid as opposed to formally bid. So it's 10 the formal bid process that takes forever. We're 11 talking sometimes a year to when you start a service 12 contract bid to when you can start the contract. I 13 think that's why we got into the CMAS project to 14 start with. By the time a bid process was done, the 15 process was obsolete. And I think if we went back 16 to that, we'd run into the same problem. 17 MR. LAWRENCE: Rick Lawrence from the 18 Department of Insurance. Following up on that, I 19 think we find that master service agreements, CMAS, 20 and the statewide agreements that were in place seem 21 to benefit state agencies the best. That to me is 22 the most enhanced effort made in competing for 23 contracts for the state, with every state agency 24 taking the repeated effort and with their limited 25 funds. Perhaps in some cases they may not have the 10 1 best leverage offered in buying and obtaining 2 services. 3 So I certainly support the statewide 4 agreements that were in place with the service 5 enhanced competition. Needless to say, by following 6 existing prescribed bidding and awarding processes 7 that aren't in place in the contract codes and the 8 regulations I think would bring in the lowest 9 compliant bidders available to all state agencies to 10 use. Needless to say, those are working for us. 11 They provide a lot of administrative support 12 following up on bid issues. The time and effort 13 made by each agency, all of that is resolved by the 14 time we take and using your master agreements and 15 contracts. 16 MS. JONES: Thank you for those comments. 17 I want to pose a question back to you as well. If 18 you could keep that microphone handy, maybe. One of 19 the issues that is troublesome to many is the 20 apparent or the appearance of lack of competition 21 within certain programs, including CMAS and 22 masters. And again, that -- maybe it's a 23 perception, and it may be a lack of knowledge about 24 the different types of competition that go on, you 25 know. We don't have all the answers to why people 11 1 think that way. But I have a question with respect 2 to CMAS in particular and how can competition be 3 enhanced in that program so that the public 4 perception is that it is a competitive program. 5 MR. LAWRENCE: I think the public needs to 6 understand that these are public agreements, and 7 we're dovetailing off the federal contracts. And I 8 think to give the impression to the state that we're 9 spending the taxpayers' money, I would propose that 10 we continue seeking price quotes, as you're calling 11 them at this time, from existing contractors, if 12 there are a pool of contractors to establish. 13 Certainly that's not hurting the issue at all. It's 14 enhancing the issue. 15 Again, provided that we do not delay 16 ourselves or invite ourselves back into the 17 situation of protests and things like that. 18 Criteria needs to be established that if we engage 19 in certain term agreements, we can support 20 continuing agreements even with established 21 contractors. 22 Because many agencies spend a lot of 23 money. Particularly with IT projects, there's a lot 24 of education and training gained by existing 25 contractors. And that tends to skew contractors to 12 1 one source with an advantage over others. But 2 clearly, if we make that initial effort in 3 developing a project, and if we obtain quotes from 4 an existing pool, knowing that all the 5 administrative elements have already been addressed, 6 I think we stand to gain a lot in that direction. 7 MS. JONES: Okay. 8 MR. BIRD: My name is Jack Bird. I'm with 9 the California Department of Veteran's Affairs. On 10 the question of how do we enhance competition, I 11 think what state agencies have to start looking at 12 is the different ways of advertising. Right now I 13 imagine that most state agencies use the California 14 state contract registry and that's it. There are an 15 enormous amount of ways to advertise, and we should 16 utilize those. Such as journals, everything. 17 Trade magazines. Every mechanism that a private 18 industry has to use to find competitive bidders 19 should be utilized. Yes. It takes time to identify 20 that. But as we all know, you very seldom start to 21 go to competitive bid two days prior to when you met 22 the contract, yet a lot of agencies do that. It's 23 not a wise thing to do. 24 Another one is looking at the types of 25 bidders. Right now they all look to large firms. 13 1 Only large firms can provide our needs. That's not 2 necessarily so. There are consortiums, there are 3 limited partnerships, there are joints, all kinds of 4 partnerships out there that can be utilized. DVBE 5 could be the prime contractor with a large firm 6 being the sub-contractor. 7 What that would mean, when you submit your 8 bid, you identify how you're going to accomplish 9 that. That would mean letters of intent from your 10 subcontractors showing that the job would get done. 11 It means taking a different look at what competitive 12 bid is and competition is. There was one other 13 comment on the CMAS. 14 The CMAS, one of the things, the downfall 15 of CMAS is you have limited people that you 16 constantly choose from. I like it. Okay. But it 17 does not enhance competition. What needs to be 18 explained to the general public is how they can get 19 on to the CMAS. What are the requirements and how 20 they can then become part of the CMAS. It usually 21 takes, if I'm not wrong, about six months for an 22 applicant to be included in the CMAS. And they can 23 only then dovetail on it only from certain 24 requirements. I'm not sure of that. I'd have to 25 look at it. 14 1 But the MSA is another way. Prior to the 2 management memo, each department could get their own 3 MSAs for whatever they need. That's another way of 4 enhancing competition. It's another way of finding 5 bidders. 6 But what I've laid out for you in very 7 brief -- a very brief presentation is simply that 8 you're going to have to start looking at it from a 9 different perspective. Look at your options and 10 then make the resources available to meet them. 11 MS. JONES: Okay. Thank you, Jack. I 12 want to acknowledge, another of the subcommittee 13 members came in. Janice King. She's sitting down 14 front. I just want to make sure folks know who the 15 subcommittee members are. Appreciate your comments, 16 Jack. 17 Just a point of clarification. I don't 18 think it takes six months to get a CMAS. But it 19 might take that long to get a MSA contract. I don't 20 believe it takes that long to get a CMAS 21 established. But whatever the time is, it is 22 timely. Folks have to invest for that. So whoever 23 else wants to talk here. I've got somebody to help 24 me with the flip chart so I won't have to turn my 25 back on you. We have -- okay. 15 1 MS. DOUGLAS: Hi. I'm Gloria Douglas with 2 the Department of Corporations. I have a question 3 with master service agreements. We already use the 4 offers. So when we send out our offers to, I guess, 5 the vendors that are on MSA, we do a detailed 6 offer. So I never saw it as being, you know, like 7 non-competitive. I never have with MSAs. So when 8 people say it's non-competitive, we're not getting 9 no compitition. They're actually with offers they 10 have proposed in MSAs. Now with the CMAS, as 11 everyone is stating, everyone's not eligible or 12 capable of doing a CMAS agreement. That's actually 13 IT as a whole. So that's going to narrow the 14 field. It's not going to include the vendors. So 15 like I say, I don't see us doing anything more than 16 the way we utilize our MSAs. Because we do send out 17 three, four, five offers, and we actually try to 18 target small businesses as well as DVBEs. 19 We're having a hard time. That's a little 20 more challenging. But we do, you know, send out a 21 pretty extensive offer package. In fact, we even 22 follow the guidelines of DGS, as well as Health 23 Services. So it's our goal. So I think that, at 24 least with our department, you know, we try to get 25 the most competition or the best competition or 16 1 competitors. 2 MS. JONES: Okay. Who else? Raise your 3 hand if you want to speak. Over here. 4 MR. LEBONATE: My name is Jim Lebonate 5 with the Department of Water Resources. The 6 question about enhancing competition, you have to 7 instill in people -- I think in our department, we 8 tried to find ways in the past to do things as 9 quickly as we can. And what a lot of managers want 10 to do is to do it the quickest way. And the 11 quickest way is not the competitive bid process. Up 12 to this point, it's the old sole source way. 13 And in order to make the process more 14 competitive, we, as department management, need to 15 instill in our managers and supervisors a basis for 16 doing it a different way. And to do that, we have 17 to provide incentives for them. And I think, the 18 first gentleman that spoke this morning, I think hit 19 it on the head. 20 The existing process, the competitive 21 process that requires bidding is a very lengthy 22 process. Much more lengthy than the old sole 23 source. But if you want to have more competition in 24 the process utilized by departments, that process 25 needs to be excelerated to the degree that it can 17 1 be, or else people are still going to want to do it 2 the quickest way they can. And to this point, the 3 quickest way seems to have been the sole source way, 4 which I think now is the non-competitively bid 5 process. That needs to be departments with, and I'm 6 not an expert in contracts, one of your staff 7 persons asked how do you do that? And I can't 8 answer that, because I don't honestly know. But I 9 do know that a lot of our division seats in our 10 department call me saying that it just takes too 11 long to go through this extended process. We have 12 needs to be met, and we want to do them as quickly 13 as we can. 14 And up to this point, in a lot of cases, 15 sole source has been a way to do that. We strongly 16 support competitive bidding. We think it's good for 17 vendors, and it's good for the state, because it 18 gives the services that need to be provided and with 19 the proper price. But the speed of the process 20 needs to be dealt with to make it more palatable for 21 the people that are actually trying to do the 22 contracts. The managers and supervisors who are 23 trying get something done. 24 MS. JONES: Do you have any suggestions as 25 to how we accomplish that? 18 1 MR. LEBONATE: As I said before, no. 2 MS. JONES: Anybody else want to talk on 3 this topic, or should we move on to the second 4 bullet there? 5 MS. WARSNITER: I'm Mary Warsniter with 6 the Department of Youth Authority. I think one of 7 the things we would really like to see is a 8 consolidated effort of outreach for representing all 9 state agencies. And that includes particularly as 10 it relates to the small businesses and the DVBEs. 11 It's really hard for us to make a lot of those 12 efforts when we are so short staffed. And I'm sure 13 everyone else is in the same boat. 14 The other part of that is a lot of our 15 purchases are not at the level that would go to a 16 bid, a formal bid. And if we're trying to encourage 17 competition, things like the Cal Buy where people 18 can easily click on items they need and it 19 automatically goes out for a competitive price quote 20 will help us on the major part of our purchasing. 21 MS. JONES: Thank you. Mariel D'Eustachio 22 is the Cal Buy manager, and she would be delighted 23 with those remarks. Okay. Do we have somebody over 24 here? Down in front, Joyce. 25 MS. McCARTHY: Linda McCarthy for the 19 1 Department of Personnel Administration. Part of the 2 problem that we've run into, and we're a small 3 agency, is we have to meet all the participation 4 goals. You want to make sure you seek small 5 businesses, disabled vets, and your CMAS, and your 6 vendors, and you're going on and on and on. The 7 process is not streamlined. 8 We were under the impression when we 9 started utilizing CMAS and master service 10 agreements, those administrative needs would be 11 taken care of. At least streamlined. Some of that 12 effort for us to move forward, the participation 13 goals are varied by the same, the small businesses, 14 disabled vets. When we go into this, its 15 administration goals, 5 percent, 10 percent, 3 16 percent, it's very tough. 17 We're in the same boat as the last lady. 18 We're a small agency. A lot of our contracts and 19 purchasing did not require competitive bid process. 20 So it's very tough for the smaller agencies for our 21 purchases. 22 What should have been streamlined and take 23 a day or two or three days or a week, really can run 24 into several days just to meet the participation 25 goals and make sure we met the guidelines provided 20 1 by DGS. So if you're utilizing contracts that are 2 already in place by CMAS and MSAs, that would be 3 helpful. 4 MS. JONES: Are folks aware of simplified 5 contracts? 6 MS. McCARTHY: Not necessarily the low 7 bidder for our department. That's what we utilize. 8 MS. JONES: Okay. I just wanted to 9 mention, the streamlined contracting process for 10 certified small businesses and certified DVBEs can 11 contract with them up to $100,000 a transaction 12 after getting only two price quotes from a certified 13 firm so -- can you identify yourself for the court 14 reporter? 15 MS. DOUGLAS: Gloria Douglas. We use the 16 process quite often also. But because it's 17 centralized, we work with a lot of attorneys. 18 MS. JONES: Please remember to indentify 19 yourself for the reporter. We really do want to 20 capture everybody's comments. 21 MS. TRADE: My name is Salish Trade. I'm 22 with the Department of Corrections. One of the 23 things that I personally would like to see -- we all 24 like CMAS. We like the fact that you can get to it 25 faster. What would be really good is a clearing 21 1 house where you have -- all of the vendors can go to 2 one place and we, as a state agency, can go to that 3 one place and find out who it is and then do a quick 4 turnaround bid. But they've all been 5 pre-qualified. They've all been allowed to let us 6 know what they have and the affairs or something 7 like that might be a good place where we can meet 8 and confer. I've seen them with planned contracts, 9 affairs with construction stuff. 10 But we need to see that with the services, 11 and even purchasing and that sort of stuff, that we 12 can get to faster and we can go right there. 13 They've made themselves available to us. I think 14 that would be very helpful in making our process 15 quick and make them -- allow them to let us know 16 what they have. 17 MS. JONES: Okay. Any other comments on 18 this topic? Okay. Now you guys are going to talk 19 all day on this topic. You got warmed up. We've 20 got three people on this side of the room. 21 MR. HOLTZ: Bill Holtz again, DOJ. I just 22 want to add to number two up there, use of leveraged 23 contracts. I just want to say that we need CMAS, 24 and we've got to have leveraged contracts. We've 25 got to be able to -- I guess what I was going to add 22 1 here was support for the informal bidding process 2 that's in place now with the interim guidelines. 3 The three informal price quotes from CMAS vendors. 4 And we have that now in a lot of the MSAs where we 5 get proposals from vendors. It works well. It 6 streamlines the process. 7 Again going back to informal versus formal 8 process, and we definitely would have no objection 9 to making that part of the statute that you put 10 informal bidding into CMAS. But especially if it 11 means keeping the program, because we've got to have 12 it. 13 MS. JONES: Okay. In the back. I'd like 14 to thank Joyce Gibson, who's helping with the 15 microphone. She works with me in legislation, so 16 this isn't what she's used to doing. But maybe a 17 little fun. 18 MS. ALLISON: Good morning. My name is 19 Joan Allison. I'm with the State Personnel Board. 20 And I simply want to share an observation. I've 21 worked in a number of departments, and in some of 22 those the procurement process has been centralized, 23 like the Office of Procurement, or a part of that, 24 something like that, and in others, it's not. It 25 comes straight through the department and the 23 1 programs do it themselves. 2 And I observed that when the programs do 3 it themselves, they don't do it often enough that 4 they develop a real expertise or familiarity with 5 all the bidding requirements. And so sometimes that 6 seems to take longer, because they forget a step. 7 They need to go on back and redo it. Or they don't 8 anticipate the time line properly to begin with. So 9 I think in many situations where you centralize 10 procurement activities, those individuals can 11 anticipate when a new contract needs to be in place, 12 establish time lines that are reasonable to bid, and 13 all the steps. So I don't know if other people have 14 had the same experience, but keep that in mind. 15 MS. WARSNITER: This is Mary Warsniter 16 again from the Youth Authority. And the thing that 17 I would like to see is a recognition that something 18 can't be competitive, and by using that process, it 19 freezes up the things that should be competitive, 20 and cuts down the resistance from staff when you 21 say, "You've got to go out to bid on this." And 22 they go, "But it's the only curriculum that meets 23 this criteria in the entire state," or something 24 like that. And we're saying, "But you still have to 25 find something similar." And maybe that's an 24 1 extension of or an enhancement of the exemption 2 list, or maybe it's a new process that has a limited 3 type of categorical exemption. As an example, if we 4 determine that a centralized drug program is the 5 program we were going to use in our orientation, 6 that may be for a three-year period. That would be 7 a categorical exemption for our department, and that 8 we wouldn't have to continue to go back on each 9 purchase or curriculum or workplace or whatever. So 10 a categorical -- limited categorical exemption 11 process. 12 MS. JONES: Okay. Do we have someone on 13 this side? Okay. One more. 14 MR. SANLITIS: I'm Gus Sanlitis with the 15 TEALE Data Center. I just wanted to say that the 16 thing that -- the rules have always been in place. 17 It's just a matter of following the rules. I think 18 that that's why we are here now is because people 19 simply didn't follow the rules. I don't think that 20 we need to enhance the competition. I would like to 21 see us use this variation or modification to 22 simplify contracting work procurement or service 23 procurement. As they increase the level from 5,000 24 to 100,000, people do a request for quotes or 25 something like that, so we could avoid, perhaps, the 25 1 formal bid process. Like to have people consider 2 that as an option. 3 I think that, you know, we've always been 4 required to look for three vendors when looking to 5 use CMAS vendors. It's just a matter of following 6 the rules. I think it's the case that you have a 7 lot of people out there that don't know the rules 8 and they need to be trained. I don't know that I 9 can say too much more. Actually, I could probably 10 say too much more. 11 MS. JONES: Thank you, Gus. Okay. Now, 12 all right. Let's move to the next topic there. 13 How can adequate oversight be built in at all 14 levels? There does seem to be a concern with the 15 lack of oversight in some of the programs. And 16 that's partially, you know, why we're even here 17 today. So how can adequate oversight be build in at 18 all levels? That's a tough question. It's 19 like, "Please don't ask us to tell you how to tie 20 our hands," right? Okay. Up front. We've got 21 someone here. We have a volunteer. 22 MR. LAWRENCE: Let me start on the second 23 question. Rick Lawrence with the Department of 24 Insurance. I think we need to determine what 25 oversight exists already. First and foremost, we 26 1 have adequate recording going on. When it's our 2 delegation authorities reporting their activity, 3 they're reporting our sole source non-competitive 4 bid activity. We have internal auditing going on in 5 our operations in our department. We have external 6 auditing occurring. 7 I would only think perhaps if we did 8 enhance or expand on our oversight, it's probably, 9 given the current situation of the existing interim 10 guidelines, we would look at the sole source of a 11 non-competitive bid a little closer at a higher 12 level. And that would help us, the middle level 13 processers of the contracts, to ensure that our 14 management is aware that we are following the rules 15 that are already in place, and that our programs are 16 likewise aware that, you know, that we must obey by 17 those existing rules. Our executive management 18 likewise recognizes what we are pursuing in the sole 19 source non-competitive bid activity. Again, though, 20 recognizing that if we establish or enhance a 21 criteria of what is non-competitive bid. 22 MS. JONES: Thank you. I want to share 23 with the group -- I should have done this to begin 24 with. A question that we received from the task 25 force at their first hearing, and this is 27 1 paraphrased, but we gave them a chart that showed 2 state expenditures last year in services, one-time 3 purchases of goods and technology, CMAS and master 4 agreements. They were all kind of lumped together. 5 Delegations, that sort of thing. 6 And as many of you know, we have a pretty 7 good -- a very robust delegation program, with 8 oversight built into that. But the delegation 9 program itself, this is delegation for goods and 10 information technology, that adds up to about $300 11 million a year, which is a lot of money. But when 12 compared to the approximate $7 billion a year that 13 state agencies are spending, the question came from 14 the task force as to other transactions, and was 15 there similar kinds of oversight, for instance, of 16 the transactions occurring under the CMAS and the 17 master agreements. Those leveraged agreements and 18 under some of the other kinds of transactions. 19 So clearly, that was a question that the 20 task force was interested in knowing. And we 21 basically had to say there really is not oversight 22 of the individual transactions under those leveraged 23 contracts for the most part. Some of them there's 24 some review at the front. But for the most part, 25 there is no review by any control agency. 28 1 So I ask you to kind of ponder that while 2 you're pondering this question, and if changes in 3 some of those other programs might be appropriate to 4 alleviate the concerns expressed by the task force, 5 which is listening to the general public. So 6 anybody else got something to say here? Come on. 7 Don't be shy. Joyce found somebody. 8 MR. SPEAR: Hi. Tom Spear with Water 9 Resources. And I think that there's plenty of 10 oversight in the state generally because there's -- 11 we have to go through so many processes to get 12 anything done. And you mentioned earlier that this 13 was brought on by a concern of some departments or 14 people that didn't quite do things correctly. I 15 think we need to focus on the departments that don't 16 do things correctly. Because the bulk of the 17 departments try to follow the rules and do a good 18 job. And I think we need to be able to have the 19 delegations such as we've had before to do the best 20 job we can and hold the directors responsible. 21 I think a contract award form is very 22 good. That way I think that should give you some 23 oversight into what we're doing, how we're awarding 24 contracts, and your people can pick up pretty 25 quickly if there looks to be some kind of a problem 29 1 within a department, and you could step in and take 2 away the delegation or work with them. 3 But I don't think we should punish 4 everybody for a few. And some things that happened 5 lately that brought this forward, no department 6 could have done. It took very high level people to 7 make something happen. And I don't think any single 8 department could have done any of these things. We 9 just have too many controls in place. 10 So don't, you know, add a lot of levels of 11 approval with finance and agencies and various 12 people to slow things down. Because that's -- 13 they're not going to have a good knowledge of your 14 program. They're not going to be able to approve 15 things as quickly as maybe they should. And let's 16 hold the directors responsible. That's what they're 17 there for. 18 MS. JONES: Okay. Thank you. 19 MS. DENACO: My name is Pat Denaco, and 20 I'm with the Office of the Chancellor of the 21 California State University System. Pat, first of 22 all, I'd like to voice our support for the CMAS 23 program. It's an effective, efficient vehicle, and 24 just try not to destroy it. I mean, although 25 certainly, obtaining quotes and using it as a first 30 1 level competitive bid and then sourcing from the 2 pre-qualified list. 3 But in terms of oversight, do you hold the 4 contractors accountable to any standard or reporting 5 standard, or is there any specific unit that is 6 managing those contractors from that perspective, 7 versus looking at oversight from a state agency 8 perspective? It's really more of a question. I 9 didn't know whether -- there's a question whether 10 there's a method in place that's really looking to 11 those contractors for reporting and statistics on 12 usage and activity. 13 MS. JONES: We do have -- thank you, Pat. 14 We do have oversight. Judy Harringer manages the 15 delegation program. And within that program is 16 oversight of the CMAS contractors. Correct? 17 MS. HARRINGER: And at an agency level. 18 MS. JONES: And use the agreement at the 19 agency level. We don't have significant oversight 20 that is done. We manage the contract. But we don't 21 audit, for instance, like the master agreement, that 22 sort of thing. Not to the level of detail that 23 Judy's group does with the CMAS suppliers. It is 24 kind of a difficult task, with so many suppliers. 25 You can only do so much at a time with limited 31 1 resources. But that is something that we do. And 2 perhaps that is something that we need to look at 3 different ways of doing so we can scoop up more 4 suppliers and take a closer look. Anybody else? In 5 the back. 6 MR. GODFREY: This is Ron Godfrey with the 7 California Department of Forestry. As far as 8 oversight goes for CMAS, we just had our review 9 done. And they did cover not only our delegation 10 purchases, but we also had to give a percentage of 11 our CMAS contracts. So the way I look at it, it is 12 being reviewed as far as are we following the 13 guidelines of CMAS. And I think that's a good thing 14 that should be continued. 15 MS. JONES: And that's brand new, right? 16 That's the first time they've looked at that at your 17 department? 18 MR. GODFREY: I don't know that it's the 19 first time I've gone through that. But they did ask 20 a specific percentage. I think it was 10 percent of 21 our CMAS contracts. 22 MS. JONES: Okay. 23 MS. RUBENS: Colleen Rubens with the 24 Department of Consumer Affairs. Especially IT 25 contracts out there in CMAS and MSAs that don't 32 1 require review, which as a contract analyst 2 protecting our clients, we feel that they should 3 have more review to eliminate some of the problems 4 that could happen down the road, you know. To 5 protect our agency and clients. And it's kind of 6 funny that, you know, a lot of contracts that need 7 to go to DGS, whereas these contracts there's a lot 8 of detail, a lot of information, and there's a lot 9 of dollar amount, and they don't have to be 10 reviewed. That's never made sense to me. 11 MS. JONES: You mean they don't have to be 12 reviewed in advance? 13 MS. RUBENS: Correct. Getting DGS a lot 14 of -- there's an MSA contract that's in there all 15 the time for consulting, which is really reviewed. 16 But I mean, some of the IT contracts which present 17 the problems, they don't have to go to there for 18 review, which I -- it's kind of crazy. 19 MS. JONES: So you think they should? 20 MS. RUBENS: I think they should. I think 21 it protects the agency. It protects the client. 22 There's usually a dollar amount in those. I don't 23 know. I think, you know, IT, you're going to see 24 more and more contracts out there. And I think they 25 do need to be reviewed, because it protects 33 1 everyone. 2 MS. JONES: Okay. 3 MS. SOMLEA: Charlene Somlea, Department 4 of Consumer Affairs. And kind of to add to 5 Colleen's, because our expertise really lies in 6 service contracts. But we also handle the CMAS 7 services, IT service contracts. And when you have a 8 lot of questions before the contract is finalized, I 9 mean, we have to pick and choose who to go to in 10 procurement to ask for assistance. And it could be 11 various reasons, whether it's contract terms and 12 language. What would really help is just having 13 someone dedicated to the department who can even 14 provide some sort of, I'm going to call it review 15 rather than oversight, that can provide an idea for 16 improving especially the scope of work. Because 17 there's a difference between the IT world and the 18 service world. 19 And for my group, having to go back and 20 forth between the different laws between IT and the 21 different laws for the services, just having an 22 expertise in the IT service arena would help 23 tremendously, whether it's an introductory, to 24 writing a scope of work. But I know that I'll 25 review them, and I'll still have questions, and I 34 1 still would like another opinion. And the CMAS 2 unit, you know, that's great. But I would like more 3 consistency. It would be helpful to have a 4 designated person. 5 MS. JONES: Thank you. I thought we had 6 someone else down here. 7 MS. SMELSER: Jan Smelser from the 8 Department of Transportation. And I just want to 9 make the comment as far as -- we're a large 10 department, I realize that. But we have auditors 11 probably in our office most of the year. Whether 12 it's the Bureau of State Auditors or other internal 13 auditors or DGS auditors. I think at least for our 14 department, we have a lot of oversight. And maybe 15 what we should be doing is sending DGS the report, 16 the audit reports from those other agencies so you 17 can see how departments are performing. 18 MS. JONES: Good idea. Thank you. 19 MR. MARSCHNER: Jeff Marschner here. I 20 think I'm really supposed to just sit here and 21 listen to people. But I have perceived a need over 22 the years, and I think it's coming through here this 23 morning too, in the context of needed oversight. I 24 really think there needs to be some uniform 25 reporting mechanism for contracting so somebody in 35 1 the state can have a, I guess, a global view of 2 what's going on. 3 Typically most departments can't give you 4 a real comprehensive idea of all the contracts that 5 are going on in their own departments, let alone the 6 legislature or the governor's office or somebody 7 like that wanting to know what's going on in 8 contracting. And I don't know. 9 One of the things we've proposed in the 10 past is, you know, any time you enter into a 11 contract over X amount, fill in the blank, whether 12 it's 5 grand, 10 grand or what have you, that has to 13 be reported. And I think some of the shannigans 14 that do go on in contracting, those who don't follow 15 the rules that we have, it's because there's 16 relative anonymity in the process. And if you have 17 to, you know, enter the fact of that contract and 18 your name in a database, somebody can search later 19 on, as opposed to sifting through a pile of papers 20 that have been submitted over the years. 21 We're still very paper-based in our 22 contracting and our reporting. I think it can serve 23 as not only a deterrent to some of the wrongdoing, 24 but really give people some of the tools they need 25 for knowing what's going on in their own department 36 1 with respect to contracts. So anyway, that's my 2 little oversight bias. 3 MS. JONES: Okay. Any other comments on 4 that topic? Over here. Gus? 5 MR. SANLITIS: I was just thinking about 6 what Jeff said. I was just wondering what happens 7 to the standard form 16s that go to DVBE for every 8 procurement over 5K? Are we supposed to be able to 9 access that? Is that entered into a database? 10 MS. JONES: Actually, we have looked into 11 that and discussed that with DVBE with the idea in 12 mind of what Jeff's talking about. I don't believe 13 they -- well, they do have a database that that 14 information is entered into. There are some pieces 15 of that that DGS would need. 16 But that is a possible candidate for 17 capturing the kind of data that we need. And we 18 might only have to modify that slightly to capture 19 all of it. But it's -- there's a lot technology 20 that we'd have to look into, and the easiest way to 21 do that so they would be inclined to continue doing 22 it and not look at it as an extra burden. But that 23 is one thing that we've looked at is that particular 24 form. Because state agencies are required to send 25 that over to DVBE. 37 1 MR. SANLITIS: So we might have the 2 information we need? 3 MS. JONES: Probably in terms of all of 4 the information, no. Some of it, yes. And that 5 seems to capture more information than some of the 6 other forms that get filed at different levels. 7 Anybody else with comments on this? We 8 can move on then. Oh, boy. Get to get off this 9 slide. Okay. Here again, this is really -- it's 10 just the same way of looking at the earlier 11 question, but it's more specific. Basically 12 ensuring open competition. Are there specific 13 changes that you'd like to recommend? And I should 14 have said statutes, regulations, procedures, in that 15 order. So it's not probably in the right order. 16 But are there some specific changes that you would 17 like to recommend the task force consider as they 18 consider all these issues? 19 I know some of the folks have come up with 20 ideas and would like us to flush those out and see 21 what we can come up with. But how -- but do you 22 have specific changes that you would suggest? 23 Anybody? 24 MS. HUNTER: Michelle Hunter from the 25 TEALE Data Center, the contract unit. If we're 38 1 going to continue CMAS, one of the things I find 2 very cumbersome is the query part of finding a 3 vendor when you want to be competitive or whatever. 4 The new word is obtain pricing quotes on whatever 5 bid you're reporting. Excuse me. Not that. But I 6 was looking for something very simple that I thought 7 a CMAS vendor would sell. And I didn't know which 8 word to put in. And I know that's part of CMAS's 9 problem that will have to be worked on. Thank you. 10 MS. JONES: Thank you. Key word search. 11 Would that help? As opposed to -- I think they 12 categorize. They have a certain number of levels 13 they categorize folks with. 14 MS. HUNTER: Let me tell you what I was 15 looking for. Oracle. Now, I had many vendors that 16 called me up and said, "I sell Oracle." And I 17 said, "You didn't come up in the query." 18 MS. JONES: Thank you. Okay. Who else? 19 So we don't really need to change anything. 20 Actually, I did here, earlier part of the message 21 that we do have good processes in place. We need to 22 make sure to follow the rules and follow the 23 process. And hopefully, they do ensure 24 competition. Is that -- I'm just trying to engage 25 people here. Thank you, Jan. 39 1 MS. SMELSER: This is Jan Smelser again, 2 Department of Transportation. And I think that 3 there's certain things that the department -- I know 4 we have gotten exemptions from DGS for advertising 5 that are not in the statute, and they're not on the 6 list. And I think those things we've gotten, you 7 know, like a permanent exemption from should be 8 changed in the statute and we're not in this 9 situation in the future where we have to try to get 10 three bids for something. That doesn't make any 11 sense at all. 12 Native American tribe advisors is one for 13 an example. I also think that the MSAs and -- 14 mainly the MSAs, they're not consistent, you know. 15 One of them may say, "We recommend that you get 16 three proposals." And another one will say, "You 17 must get three proposals." And I think those should 18 be made more consistent. 19 MS. JONES: So standardize the ordering 20 procedures? 21 MS. RUBENS: Colleen Rubens, Department of 22 Consumer Affairs. I totally agree with what you 23 just said. Our clients have national examptions, 24 and for some reason that was taken off. We do not 25 know why. And we're just curious if that's going to 40 1 be put back on, because that's been really difficult 2 for our department. But everything she said about 3 the MSAs being standardized to where they're, you 4 know, all the rules and regulations are the same 5 would be really good. You have to go through and 6 read everything, and it's what they expect you to 7 do. 8 MS. JONES: Okay. Other comments? You'll 9 leave the rest to us. 10 MS. DOUGLAS: Gloria Douglas again. I 11 also agree with the MSAs. But I also have a GSOP 12 form or a standard 2. If we use a standard 2 versus 13 a 65, then it goes over to General Services. If we 14 use 65, then that concerns me also. Who gets the 15 authority over it? And if I use 2, do I have to 16 take it over to OLS? But if I use a 65, then 17 procurement gets it. It will be little problems. 18 So that would be a nice change. 19 MS. JONES: The bifurcation. 20 MS. DOUGLAS: Definitely. 21 MS. JONES: Okay. Anybody else? 22 MR. HOLTZ: Bill Holtz, DOJ. I agree 23 that -- one person made the comment that we need 24 additional statutory exemptions. I think one way to 25 enhance bidding is to come to clear terms with those 41 1 types of contracts where it doesn't make sense to 2 bid and you're not spinning your wheels and wasting 3 time. 4 I think in our case, one of those big ones 5 is legal services, and to be able to extend that 6 beyond just the use of law firms to all the services 7 needed to move litigation forward. I think that the 8 first comment about searching capability is 9 especially true in CMAS. I think we need to be able 10 to find our CMAS vendors easier and for them to find 11 us easier and for technological advances such as 12 putting all the CMAS on line so we aren't depending 13 on the vendors for copies of the contracts. 14 That whole issue of automation, I think 15 automation can help us here to be able to move 16 information documents around better. It would 17 increase oversight. It would also increase our 18 ability to competitively bid those contracts where 19 it's appropriate. 20 MS. JONES: Okay. 21 MR. HOLTZ: And I also agree with the MSAs 22 as being somewhat inconsistent. I would like to 23 see, whether it's a statute or a regulation, DGS 24 further their efforts in MSAs, you know, where 25 those -- there are contracts, I can't think of 42 1 specifics right now, but there are many cases where 2 we're not leveraging the buying power of the state 3 where we could be doing that. 4 MS. JONES: Okay. Thanks. Anyone else? 5 MS. WARSNITER: Mary Warsniter, Youth 6 Authority. Add to the list of categorical 7 exemptions accreditation process groups. Because we 8 have to get accredited for certain things, and we 9 have to go through this sole source process, and 10 it's just again frustrating for everyone involved. 11 And the second thing is really to have a 12 single source. And I'm looking at DGS to do more 13 outreach to the vendors so that they can know we're 14 around and can reach out to us. That we do want to 15 work with them. 16 MS. JONES: Okay. Anybody else? In the 17 back over here. 18 MS. GONZALEZ: This is Debra Gonzales, 19 TEALE Data Center. And we may want to consider a 20 second option for the CMAS vehicle. Rather than 21 departments going out to identify the vendors that 22 they use for the competitive process, create a 23 website where the organization can post their -- 24 whatever it is they're procuring and allow bidders, 25 vendors, pre-qualified CMAS vendors, to bid against 43 1 that. 2 MS. JONES: Kind of like a reverse 3 auction. That's something I know Mariel has been 4 looking into with regard to the Cal Buy system. 5 Don't know how far off that is. I think we need 6 legislation to do that too. 7 MS. McCARTHY: Linda McCarthy, Department 8 of Personnel Administration. It is very confusing, 9 and what she had said about the bifurcation of the 10 delegation program for procurement and contracts, 11 there really is no unification there. And it's 12 pretty much the same at our agency. Procurement is 13 procurement, contracts is contracts. And we tend to 14 walk on each other really. The right hand does not 15 know what the left hand is doing until after the 16 fact. We have sometimes overlapped in our work. We 17 take a lot of time. I've contacted procurement on 18 several occasions and everyone's not giving the same 19 information for the same question. You can be 20 bounced around to several people to get a 21 clarification on an issue. 22 So I think, you know, some training, the 23 Cal Pro class was very helpful, to have more of 24 those on an ongoing basis. Open up for quarterly, 25 or just a full day of training. That would be 44 1 training for procurement for Department of General 2 Services as well as for the state agencies. I think 3 that would help bridge the gap between the 4 bifurcation of both sides of contract and 5 procurement. 6 MS. JONES: Okay. Thank you. Anybody 7 else? We really appreciate the input. It's going 8 to be tremendously helpful. 9 MS. MOORE: Good morning. I am Patty 10 Moore from the State Controller's Office. It just 11 occurred to me, I don't know if there's a difference 12 between the CSCR and the other side where you can go 13 and search for vendors. But perhaps if there were 14 some sort of e-mail notification where we can place 15 an ad on CSCR. We have to choose the work that the 16 contractors will be involved in. There's two 17 different areas that we choose. And I can't think 18 right now what they're called. But perhaps if there 19 were some sort of way that they could link the 20 category where we choose a work category on the 21 CSCR, if there were some sort of link to the vendors 22 that that corroborates with on the other side, on 23 the search side, where they could be notified, 24 perhaps that would enhance our advertising of bids 25 that are available. 45 1 MS. JONES: Good idea. Okay. Who's 2 next? All right. Are we ready to move on then to 3 the next topic? Okay. We say are the contract 4 tools adequate to do the job? And this essentially 5 is the master agreements, the CMAS agreements, the 6 WSCA agreements, Western State Contracting 7 Association, state pricing schedules, statewide 8 commodity contracts. Did I forget anything? So are 9 those adequate to do the job? Is the delegation 10 authority, if you have purchasing delegation, is 11 that adequate to do your job? Is the authority you 12 have under simplified contracting procedures for 13 small businesses and DVBE, is that adequate to do 14 the job, or do we need some more tools? 15 In the back, Joyce. 16 MS. SOMORA: Linda Somora from the 17 Department of Corrections. Can we start with the 18 new procurement listing? I have trouble trying to 19 find people, and that can be the biggest pain I have 20 right now. And then when you find them, no one 21 calls back. So it gets to the point where I am now 22 calling supervisors. 23 MS. JONES: Okay. Point taken. We had 24 someone over here. 25 MR. HOLTZ: Bill Holtz, DOJ. I think the 46 1 dollar threshold needs to be looked at. I don't 2 know if they need to be indexed or somehow -- some 3 of them are inadequate for us to do our job. And 4 I'm thinking of the CMAS limitations. $150 and 5 $200,000 ceilings that are currently in place. The 6 base delegations at $25,000 for goods and $500,000 7 for IT based delegations. I believe those are the 8 standard, and the $5,000 limit for the formal 9 bidding on service contracts. I think all of those 10 need to be looked at and perhaps raised. 11 MS. JONES: Okay. Anybody else? Over 12 here. 13 MR. ORBY: Thank you. Mike Orby 14 Department of Motor Vehicles. I have a concern 15 regarding the CMAS contracts that currently exist 16 regarding such things as cabling. Those tend to be 17 more public work, as opposed to just a procurement 18 of the product itself. And we'd like to see that 19 written into the CMAS contract so we've not having 20 to deal with those issues separately. 21 MS. JONES: Okay. Joyce, there was 22 someone further back. 23 MS. GONZALEZ: Debra Gonzalez, TEALE. And 24 I'm speaking to the second bullet. 25 MS. JONES: You can't do that yet. 47 1 MS. GONZALEZ: What's that? 2 MS. JONES: I was teasing. 3 MS. GONZELEZ: I just want to comment 4 regarding the second bullet. I recently returned to 5 the executive business area, and I was astounded 6 that nothing had changed. So I truly do believe 7 that the automation is very inadequate, and this 8 needs a real concentrated effort. I think we could 9 achieve so many improvements by automation, and 10 we're nowhere near where we could be if we would do 11 that. I'm not sure I think it should be centralized 12 instead of individual organizations. Perhaps DGS 13 and your procurement area. I don't know. But I 14 think we'd get further if there was one centralized 15 point for those areas. 16 MS. JONES: Thank you. You can speak to 17 any of the bullets up here. Hello. 18 MS. DOUGLAS: Gloria Douglas from the 19 Department of Corporations. And on that subject, we 20 do have a database that we are in practice on right 21 now. It was originally from the Office of Emergency 22 Services, and they shared it with us. And the 23 vendor is putting it where you take a bid worksheet, 24 and that populates the form 5 in office, which in 25 turn populates the standard 65, which in turn 48 1 populates a standard C report and channels being 2 approved electronically by e-mail. And the person 3 that originated it knows the process. And those 4 things are being shared among some state agencies, 5 and DGS could find out about it. 6 MS. JONES: Actually, there are similar 7 kinds of controls and forms set up in the Cal Buy 8 system. But that's still relatively new and in 9 pilot. 10 Pat, you have to identify yourself too. 11 MS. DENACO: Pat Denaco, California State 12 University System. Certainly support the comments 13 on electronic application and development of 14 electronic application. In particular, I would like 15 to see some standard be developed by the state for 16 authentication for signatures for the bid posting, 17 to award, to acceptance, to -- you know. There 18 doesn't seem to be a lot of guidelines, other than I 19 think there is a provision that we can accept fax 20 bids for commodities. But certainly there seems to 21 be sort of a big hole there in terms of guidelines 22 and standards in that field. 23 MS. JONES: Thank you. In the back over 24 here. 25 MR. SPEAR: Tom Spear, Water Resources. 49 1 I'd like to touch on a couple of things. I think 2 the tools are really good, and we really need to 3 keep those in place. And possibly even expand them 4 into areas where all the departments use the same 5 service. We really need to have somebody 6 centralized taking care of those postage meters, 7 stuff like that. We all shouldn't be out bidding 8 for the exact same thing. 9 And I agree with Debra. We really need to 10 look at doing things in a more modern way. In our 11 department, we've pretty much done away with paper. 12 We send things electronically. It would be faster 13 and it would be helpful if we could send our 14 contracts to DGS electronically. Things wouldn't be 15 lost. It would be more efficient, I think, than it 16 has been in the past. 17 And the procurement training, we believe 18 that the training that you provide is excellent, but 19 there's not enough of it. It's very difficult to 20 get into classes. And I know that you have resource 21 constraints and some problems too. But it would 22 really be helpful if there were more classes. Maybe 23 work with departments to put that into their SB409 24 to give them basic stuff in contracting procurement 25 to help get the word out that there's things they're 50 1 supposed to be doing. 2 And one last thing. As far as giving 3 exemptions, I think you really need to look at the 4 maintenance of software. There should not be limits 5 on that. Because there are some times when you have 6 to have a maintenance contract that's going to cost 7 you more than $500,000 a year, and there's only one 8 place to get it. And it really is frustrating to go 9 out and only Oracle is going to upgrade Oracle, and 10 SAP SAP. There's no other way to do it. 11 So it's foolish to try to look at 12 something competitive, because it's just not there. 13 And if you bid the stuff originally, you have gone 14 through the competitive process, so they should be 15 able to do it. 16 MS. JONES: Okay. Thank you. In the 17 back. 18 MR. GODFREY: Ron Godfrey with the 19 Department of Forestry. I'll agree with the major 20 portion of that. It's very frustrating to go to 21 vendors that you know they're not going to have it 22 and get a bid that you can always go through the 23 manufacturer. 24 The other part, as far as the training 25 goes, I've been to some of the DGS procurement 51 1 training. It's very good. But I would like to see 2 a class specialize in IT procurements. It's very 3 lacking. A lot of the stuff I had to learn on my 4 own, calling people at DGS. And it would have been 5 nice to have a forum where we can go and talk about 6 it. 7 MS. JONES: Thank you. What does this 8 group think about the idea of a series of classes 9 that might result in a professional certification? 10 Is that just a vote, or do people want to comment? 11 (Applause.) 12 MS. JONES: That's the support for that 13 idea. Well, that's the first round of applause. 14 Cool. Did anybody else have any comments on the -- 15 MS. WARSNITER: Mary Warsniter, Youth 16 Authority. I'd like to see a centralized database 17 with all the 204s so it would be vendor community. 18 MS. JONES: So the vendor community 19 doesn't have to do what? 20 MS. WARSNITER: Submit 204s to each 21 department they do business with. 22 MS. JONES: Okay. They say -- I guess 23 lawyers say you don't ever ask questions that you 24 don't know the answer to. That is trial lawyers. 25 So I guess we don't know all the answers and we're 52 1 just asking the questions. So we have to take all 2 these down. And that's a great idea. 3 MS. WARSNITER: We presented the idea to 4 DGS for the last ten years, and nobody has ever done 5 it. 6 MS. JONES: Anybody else? 7 UNIDENTIFIED SPEAKER: It might be along 8 the same lines at the 204. But install businesses 9 and certification and their numbers for small 10 businesses in a list or database that we can pull 11 that up instead of having them send us copies all 12 the time. 13 MS. JONES: You can do that. You can do 14 that now if you want. I can talk with you off line 15 afterwards. Any other -- oh. Back over here. 16 People in the middle don't want to talk though, 17 huh? 18 MR. MONROE: Michael Monroe for the 19 Department of Corrections. On the idea of the 20 training, it would be nice to have a DGS on-line 21 training program. That would be nice for people who 22 are coming into the field. And that would be 23 something that they could do without having to worry 24 about entering your class and still get credit for 25 the training. 53 1 MS. JONES: Thank you. We've thought from 2 time to time about, this is my nomenclature, but an 3 on-line decision support function, which would kind 4 of walk you through the basic what are you buying, 5 how much is the spending, and move from screen to 6 screen, and ultimately you get to a point where 7 here's all your options. Is that someting that 8 sounds -- sounds interesting? Okay. We thought it 9 was interesting too. Nobody can hire anybody these 10 days, so it's difficult to implement some of the 11 ideas without the resources. 12 Good idea though. Okay. Who else? Done 13 with that one. All right. Done with all those on 14 there. Okay. 15 August 21st. You're all operating under 16 the interim guidelines now that were issued by the 17 management memo following the governor's executive 18 order. What would the impact be to your 19 organization if those stay in place? Lots of 20 hands. 21 MS. HUNTER: Michelle Hunter from TEALE 22 Data Center. We do a lot of proprietary software. 23 But being a data center, we support 250 clients, and 24 we are out there. The $100,000 limit on software 25 maintenance is going to kill us. We're looking at a 54 1 long process for us. 2 MS. JONES: Okay. You have to put your 3 hand back up. All right. Jan? 4 MS. SMELSER: Jan Smelser, Department of 5 Transportation. We do a large volume of 6 procurements and contracts, and the approval levels 7 would be devastating to us. We have virtually come 8 to a standstill in our department. 9 MS. JONES: Right now? 10 MS. SMELSER: Yes. With the interim 11 guidelines. And the dollar levels also are causing 12 us problems. 13 MS. JONES: So the approval signatures as 14 well at the dollar levels? 15 MS. SMELSER: Yes. 16 MS. JONES: Okay. There's Mariel. 17 Mariel's the manager of the Cal Buy system, and one 18 of the members of the subcommittee. And I mentioned 19 your name a few times, Mariel, because folks have 20 mentioned things that Cal Buy either does or might 21 do or could do in the future. 22 MS. D'EUSTACHIO: That's really good to 23 know. Thank you. 24 MR. GODFREY: I'm Ron Godfrey from the 25 California Department of Forestry. Since the 55 1 interim guidelines have been put in place this 2 fiscal year we've had a lot more overtime within our 3 department to meet needs. A lot of it is dealing 4 with items like maintenance. We have to try and get 5 three bids, you know. For one, trying to find 6 vendors that actually would resell that. So I 7 wouldn't want to keep the guidelines in there, 8 because of the time factor involved in the 9 department and the time frame involved. 10 MS. JONES: Okay. Others? 11 MS. RUBENS: Colleen Rubens, Department of 12 Consumer Affairs. One of the things was the postage 13 meters. They paid to use their equipment. You 14 could use them. But then you have to bid the 15 postage meters. It went with the equipment that all 16 these agencies had gotten -- spent all this money 17 on. You had to do a non-competitive bid. That's 18 not even considered proprietary, even though part of 19 the equipment that we had gotten you can do 20 something with. And it's crazy. You have to go to 21 the other extreme to get contracts for the postage 22 meters to use for the equipment you buy. I mean, 23 it's crazy. And what happened was they -- when all 24 this happened, it's just like everybody went berserk 25 and made everything a big deal. It wasn't a big 56 1 deal. There are things that need to be looked at 2 closely. The most simplest contract has become like 3 an almost RFP IFB nickel and dime contract. 4 MS. JONES: Okay. Anybody else? Someone 5 in the middle. 6 GAIL: I'm Gail from Parks and 7 Recreation. And I actually have two issues, if I 8 might. The non-competitive bid process for current 9 service contracts for amendments when you're going 10 to add money, I have one on my desk to add $1,400 to 11 have some chemical outlet pumped, and it has to go 12 to the secretary and beyond. So if we could do 13 amendments, that would be wonderful to not have to 14 go through all that. Put applause next to that 15 one. 16 And my second thing is we have -- I know 17 people have brought up different exemptions. And we 18 had a current exemption for artifact conservation. 19 So is takes a special thing. If the current 20 exemptions could be looked at closely, hopefully 21 that they will live again. Thank you. 22 MS. JONES: Okay. Are there any pieces of 23 the interim guidelines that you think are beneficial 24 and should be retained? Well, now, wait a minute. 25 Let me me remind you that there were folks that 57 1 thought the notion of obtaining three quotes for 2 CMAS orders, that wasn't necessarily unreasonable, 3 and there are departments that do that all the time 4 and did that before the guidelines. So you guys 5 have to back me up on this. So that's just -- I 6 just want to try to get you engaged. 7 MS. McCARTHY: Linda McCarthy, Department 8 of Personnel Administration. One of the things I 9 would like to see, we have the state training center 10 as part of our agency. A great deal of our 11 purchases are sole source and copyrighting. Once we 12 get the initial purchase order, it is signed by the 13 director. Is there some kind of guideline or 14 exemption so next time we make that purchase, and 15 the next time we make the purchase we do not have to 16 go through our director for each purchase that we 17 make for the training center? 18 A lot of new purchases are sole source, 19 and sometimes we have time constraints to meet their 20 needs, you know. Once it has been identified that 21 it is and it's going to be a repetitive purchase, is 22 there some type of guideline to say once we have the 23 agency secretary and the department director, we do 24 not have to continue getting the process to get that 25 order? 58 1 MS. JONES: Okay. Others? 2 MS. YOKAMYOSHI: Peggy Yokamyoshi with the 3 Department of Motor Vehicles. We have had a major 4 concern with the MSA that was not reviewed at the 5 end of the fiscal year regarding Pitney Bowes, 6 because we have a very large mailing machine 7 operation. Pitney Bowes is utilizing some tactics 8 right now with EDD and ourselves to get -- leverage 9 their power. Well, their contract with us. And we 10 need assistance on that. We'd like to see the MSAs 11 reinstated. We're not renewed at the end of the 12 fiscal year. That's been a tremendous issue with 13 DMV, and I know with other departments as well. 14 MS. JONES: I know we had someone up here 15 in the middle. 16 MS. FRITAG: Hi. I'm Debra Fritag with 17 the Department of Education. I work in the contract 18 office. Actually, regarding the interim guidelines, 19 they actually don't impact us. Because we require 20 the CMAS contracts, IT, three CMAS, and a certified 21 actual business from each category if possible. The 22 only thing we changed is that we require the program 23 submit their statement of work, and all the 24 documentation. For anyone who's submitted a price 25 quote, that we have the documentation in our office 59 1 rather than the program office. 2 And actually, since the executive order 3 and the guidelines came out, it actually has been 4 beneficial to our office. Because it's given us 5 credibility when requesting this documentation for 6 the file. And also we've been notified by the state 7 auditor, I guess, that they plan on obtaining our IT 8 contracts. And thank goodness we don't have to 9 sweat it, because we followed the rules. And we 10 just want to support you with the interim 11 guidelines. It hasn't increased our workload or 12 anything like that. 13 MS. JONES: Who's next? 14 MR. HOLTZ: Bill Holtz, DOJ. I think one 15 of the impacts that I've seen is that those 16 contracts that go through the non-competitive bid 17 process are often the contracts of most importance. 18 Upper management. They're contracts where they're 19 important to get through. And the NCB process seems 20 to be built to slow things down. And I think that 21 the prudence is good. But in many cases, it's 22 really hurt getting out essential surveys. And 23 that's been a -- that's been a major impact. 24 I also don't know, I think they're still 25 working on it, what role finance is going to have in 60 1 the approval process and how much additional time 2 that's going to add. Just in prior dealing with 3 finance, I would assume that's going to be awhile. 4 MS. JONES: Okay. Thanks. Anybody else? 5 Okay. Well, there's the last big question. 6 Anything we haven't covered already, or anybody that 7 would like to comment or speak up about issues that 8 you would like the task force to consider as they 9 review the statutes, regulations and procedures in 10 place to ensure that competition is enhanced in 11 state transactions? 12 MS. GONZALEZ: Debra Gonzalez, TEALE. I 13 simply say do not adopt the interim guidelines. 14 MS. JONES: Okay. Nobody else has any -- 15 how about if I ask a bombshell question here. We 16 have a few minutes. 17 Actually, one of the topics that's come up 18 in the hearings with the task force is the idea of 19 centralizing. Of centralizing the buying authority 20 in DGS and reducing the authority now held by the 21 department under delegation for various forms of 22 delegations. So what are your thoughts about that? 23 I think I can guess, but I don't want to guess. So 24 you tell us. 25 MR. GEANCY: Chris Geancy with the 61 1 Department of Justice. One of the things about this 2 whole process is there seems to be a reaction going 3 on about the interim guidelines for obvious 4 reasons. We're looking for value at its steps. And 5 things worked pretty good at DOJ. And I think 6 things seem to be working pretty good in other 7 departments. 8 If we're going to make other changes, 9 let's make appropriate accountability. By adopting 10 the interim guidelines or by centralizing, that 11 seems to fly in the face of some 20 years of 12 procurement reform that have been ongoing, and it's 13 going to throw everything into chaos. So from our 14 standpoint, centralizing doesn't help us. It's not 15 going to help our programs. It's not going to help 16 us meet our mission. And most likely, it's not 17 going to help other departments either. If we need 18 to do things a little better, provide oversight. 19 Help us to do a better job. But centralizing isn't 20 going to accomplish that. 21 MS. JONES: Okay. I figured I would get 22 you guys to talk if I asked that one. 23 MR. ACRES: Charles Acres, Military 24 Department. I think centralizing is the opposite 25 direction from where we should be going. We need to 62 1 decentralize and get back to technology 2 improvement. The people in the field need to have 3 web-based application database information where 4 it's there. It's easy to get to. The rules are 5 there, clear and concise, and everybody is looking 6 at the same thing at the same time. 7 MR. MONROE: Michael Monroe with the 8 Department of Corrections. I think DGS can 9 centralize. That would be fine, as long as they do 10 it with existing resources. 11 MS. JONES: Okay. Good point. My guess 12 is we're right. Who else? Well, you guys are only 13 going to take up an hour and a half instead of two 14 hours. Does anybody have anything else they'd like 15 to share? Over here we do. 16 UNIDENTIFIED SPEAKER: I just have a 17 question. It's the 30 percent total dollars that 18 you were going to amend the contract. The 30 19 percent, how do we do that? Are we going to be able 20 to do that? No? Yes? When I spoke to an attorney, 21 it's -- 22 MS. JONES: Let's let Jeff Marschner 23 answer that question. 24 MR. MARSCHNER: The 30 percent rule is one 25 of many issues dealing with a amendments that we're 63 1 trying to get some clarification on. Because we 2 know that, and I heard it today, the amendment 3 process is one that's just really plugging up the 4 system right now. And I think probably within the 5 next two weeks, we might be able to get some 6 clarification. But for now, the 30 percent rule is 7 inoperative, I guess is the word. 8 MS. JONES: Okay. In the back. 9 MS. SAMORA: This is back to the -- Linda 10 Samora from Corrections. My only thing is on the 11 task force, can they maybe go to a state agency and 12 see how we do our job, instead of being told how we 13 do our job? 14 MS. JONES: Anybody else? Okay. Now, I 15 don't want to say this is all over and then the real 16 discussion begins, so -- 17 GAIL: Gail from Parks and Recreation. 18 We're trying to enter into an agreement with one of 19 the DPA contracts, but it's not on the approved 20 contract list. Are the DPA contracts -- there's 21 only one listed so far. Do we have any idea what 22 the DPA -- that is, what's their life span? 23 MS. JONES: I can't answer that question 24 for you. I don't know if that question has been 25 posed. But what I would propose you do is propose 64 1 that to the procurement division by e-mail. We have 2 a committee that meets every single day to deal with 3 the questions that are coming in from state 4 agencies, and we're getting answers back and posting 5 the frequently asked questions on our website. Is 6 that okay? Thank you. 7 MS. BEACHTREE: Sue Beachtree from the 8 Department of Corrections. You were talking about 9 the court reporter. Are these meeting notes going 10 to be made available to everybody? 11 MS. JONES: I hope to do that. Put them 12 on the website. 13 MS. BEACHTREE: Do we know when? 14 MS. JONES: Well, we will -- I think we've 15 asked for just a couple of days turnaround. And 16 then it's just a matter of just formatting them in 17 such a way that they can be put on the website. So 18 possibly as early as next week even. 19 MR. GEANCY: Chris Geancy with the 20 Department of Justice. When the draft 21 recommendations from the task force come in, I'd 22 like to ensure that they clearly identify the 23 problems that they are trying to address. Again, 24 the interim guidelines weren't real clear to us 25 about what the problem was for which the various 65 1 rule changes were being imposed. 2 Second to that, I think it's important to 3 remember that this session, and no doubt the 4 afternoon session, the people here represent a 5 tremendous amount of expertise in contracting in 6 state and probably local government agencies. And 7 we need to know what it is we're being asked to do 8 and why, to make it worthwhile, so it can work to 9 the extent that something does need to change. So I 10 hope the task force keeps that in mind when they're 11 producing these recommendations. 12 MS. JONES: Okay. Thank you. 13 MS. DENACO: Pat Denaco, CSU. I'd just 14 like to reiterate that I think the CMAS program and 15 state contracting programs are major tools which 16 expedite and provide for fixed procurement -- reduce 17 the cost of individual procurements, and avoid 18 unproductive and redundant work. And I'd just like 19 to encourage that certainly DGS was going in the 20 right direction as they undertook the programs and 21 have administered them. And I think they have been 22 very effective programs, even if there is some need 23 for enhancement to use them more as a sourcing 24 vehicle. 25 MS. JONES: Okay. Thank you. 66 1 MS. COUTS: Lori Couts, Department of 2 Corporations. Basically there was a media issue 3 that came out and our dirty laundry. And parts of 4 it were spread around. And the point is the public 5 saw that, and you had to -- they didn't understand 6 it completely, but they saw it. The point is they 7 don't have a clue what procurement people have to go 8 through to get the process done. They also, at this 9 point, don't really care anymore. There have been 10 people that are shot, and they're no longer in 11 position. That is sufficient for them. Believe me, 12 what we need to do is do some PR and definitely not 13 go through the interim guidelines at all, except for 14 the three bid process. Just make it more standard, 15 and I think that would be sufficient. 16 MS. JONES: Okay. Thank you. Anybody 17 else? Okay. Jeff, you want -- not to put you on 18 the spot. Would you like to come up and close this 19 with any words of wisdom for everybody? Sorry about 20 that. 21 MR. MARSCHNER: Feel like I'm being asked 22 to give the benediction here. But no. In that 23 light, one thing that I have sensed in talking with 24 groups like yourselves and department 25 representatives when we've been rolling out the 67 1 management memo and the guidelines is the stress 2 level that this has added to all of your lives. 3 And it's stressed out my office as well. We like to 4 be in a position where we can give you clear 5 guidance on things when you call. And it's 6 frustrating to my staff to say, "Gee. I'm really 7 not sure. We'll see how that settles in a couple of 8 weeks." Or something like that. It's very 9 frustrating to us too. But all I can say is for now 10 I feel your pain, and I know you're going through 11 it. 12 And I spoke with -- I used to be a 13 prosecutor in an earlier life. And I was telling 14 the group over at corrections about three weeks ago, 15 I spoke to about 15 of their deputy directors. And 16 they were all in one room. And, you know, I was 17 kind of speaking about the guidelines. And the body 18 language and the scowls and the frowns. I said I 19 hadn't seen that, you know, since I was a prosecutor 20 trying to pitch a weak case to a jury. And the jury 21 is just going, "Hey. Who is this guy?" 22 So you know. I know, and I've heard it 23 again today, that these guidelines are unpopular. 24 They've impacted severely what you're doing. Just 25 as in the military sometimes when they have 68 1 accidents or something like that at a higher than 2 normal rate, they do a stand-down and they increase 3 training or something like that. It's a period of 4 reflection. And maybe that's a beneficial purpose 5 that's going to come out of this that, you know, we 6 do appreciate the tools that are useful and realize 7 now that let's not abuse them, or we'll lose them. 8 So there is a little bit of cleaning up to 9 be done. And hopefully day 91 will look a little 10 better than day 90. But I don't think that 11 realistically day 91 is going to look very much like 12 day zero before we started this. That's just the 13 sense I have. But some of these critical areas like 14 amendments, like some of the exemptions that you had 15 for some of these very unique services, those things 16 deserve to be looked at and solved. Areas where 17 competitive bidding just doesn't make any sense. 18 We need to recognize those areas and focus 19 our efforts on competitive bidding to where it 20 really serves a purpose, and we'll get the state a 21 good product or good service at a good price and not 22 spin our wheels. So anyway, go and do good, I 23 guess. And we'll try and be as helpful to you as we 24 can. Look at the procurement website for the 25 frequently asked questions. 69 1 If nothing else, I guess, there's -- 2 there's comfort in shared misery. And you'll see 3 that other people are asking the same questions. 4 And by golly, they got an answer, and maybe that 5 answer will help you. So use that resource. Again, 6 the group is working very hard on a daily basis to 7 answer your questions and to get the information 8 out. But thanks for attending today. This has been 9 extremely helpful. 10 The other day I went down to the task 11 force meeting in LA. Although there was a fairly 12 small group of vendor representatives there, it was 13 very refreshing to me to hear what the vendor 14 community is talking about. As a state employee, I 15 tend to sit up there in my office and deal with my 16 staff and everything kind of filters, I think, a lot 17 of times by the time it gets to me. It was 18 refreshing and enlightening to hear what the 19 industry people were talking about. And ditto 20 toady. 21 I don't know that I was truly surprised by 22 anything that I heard today. But number one was it 23 is nice to match the faces with some of the names 24 that I've been dealing with over the phone for 25 years. But just to realize the sincerity of your 70 1 concerns and to hear it, it was very helpful to me. 2 And I hope that I can transmit some of those 3 concerns to the task force when we assist them in 4 doing a draft report. 5 But believe me, I appreciate very much the 6 collective expertise that's gathered here in this 7 room. I deal with you frequently and know the 8 expertise that's out there. And I'm often 9 encouraged and enlightened by you and what you do. 10 So know that there's a sense of appreciation. 11 There's a sense of feeling your pain. But we've got 12 a little bit of a struggle yet to go. Thank you 13 very much. 14 (The proceedings ended at 11:19 a.m.) 15 --o0o-- 16 17 18 19 20 21 22 23 24 25 71 1 REPORTER'S CERTIFICATE 2 3 STATE OF CALIFORNIA ) 4 ) ss. 5 COUNTY OF SACRAMENTO ). 6 I, JAMIE LYNNE OELRICHS, a Certified 7 Shorthand Reporter, licensed by the state of 8 California and empowered to administer oaths and 9 affirmations pursuant to Section 2093 (b) of the 10 Code of Civil Procedure, do hereby certify: 11 That the said proceedings were recorded 12 stenographically by me and were thereafter 13 transcribed under my direction via computer-assisted 14 transcription. 15 That the foregoing transcript is a true 16 record of the proceedings which then and there took 17 place. 18 That I am a disinterested person to said 19 action. 20 IN WITNESS WHEREOF, I have subscribed my 21 name on July 15, 2002. 22 ____________________________________ 23 Jamie Lynne Oelrichs Certified Shorthand Reporter No. 8086 24 25 72