Report 2011-120 Recommendation 36 Responses

Report 2011-120: California Department of Transportation: Its Poor Management of State Route 710 Extension Project Properties Costs the State Millions of Dollars Annually, Yet State Law Limits the Potential Income From Selling the Properties (Release Date: August 2012)

Recommendation #36 To: General Services, Department of

To ensure that the construction unit complies with the State's procurement laws and policies, General Services should clarify the waiver process in the administrative order governing the small business participation goal.

Annual Follow-Up Agency Response From October 2014

Subsequent to the audit, DGS significantly changed its policies, procedures and responsibilities for procurement which alleviates the need for this recommendation. Specifically, effective July 1, 2013, DGS consolidated its purchasing and contracting functions in a new office within its Administration Division, the Office of Business and Acquisition Services (OBAS). Consequently, the Direct Construction Unit (DCU) is no longer responsible for those activities. Instead, the responsibility rests with OBAS' professional procurement staff.

DCU's role in the new procurement system is primarily limited to requesting a purchase and certifying the receipt of the goods. OBAS is now responsible for ensuring that DGS procurement practices fully comply with state and DGS requirements. This responsibility includes complying with DGS policies which require the procurement of goods and services under certain dollar thresholds from certified small businesses (SB) and disabled veteran business enterprises (DVBE). In recognition of the consolidation of the purchasing and contracting functions, a recently issued administrative order addressing, in part, the award of contracts to SBs and DVBEs no longer includes provisions for the waiver process discussed in the state auditor's report.

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

General Services issued an administrative order related to contracting with small businesses, microbusinesses,and disabled veteran business enterprises that no longer includes the waiver process.

Annual Follow-Up Agency Response From November 2013

Please refer to our one-year response.

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

1-Year Agency Response

Currently, DGS is in process of clarifying the waiver process discussed in the administrative order that requires department operating entities to procure goods and services under certain dollar thresholds from certified small businesses (SB) and disabled veteran business enterprises (DVBE). Specifically, DGS' Office of Small Business and DVBE Services (OSDS), which is the entity responsible for granting waivers, is actively revising the waiver process, including providing additional examples of situations (such as excessive cost impact) when waivers may be granted from purchasing from certified SBs and DVBEs. OSDS plans for this activity to be completed in March 2014.

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

6-Month Agency Response

General Services stated that it will amend its administrative order to include additional examples of situations in which waivers may be granted. General Services plans to issue its amended administrative order by February 28, 2013, with training of department buyers to begin in the spring of 2013.

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

60-Day Agency Response

General Services stated that it will amend its administrative order to include additional examples of situations in which waivers may be granted. General Services plans to issue its amended administrative order by November 30, 2012. (See 2013-406, p. 176)

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

All Recommendations in 2011-120

Agency responses received after June 2013 are posted verbatim.