To ensure that the board can more effectively exercise oversight for the department's significant information technology projects, the board should develop a process for the board to designate certain information technology projects as having a potentially significant effect on business operations or customer relations, and require that department managers first obtain the board's approval before launching such critical new systems.
As previously indicated in responses to the State Auditor, LADWP has been involved in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. In July of 2017, the Los Angeles Superior Court issued its order giving final approval to the settlement of several of those cases. The settlement calls for refunds and credits for all customer overpayments and for LADWP to meet a set of billing system and customer service performance metrics. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP has begun the several year process - through 2020 - of implementing the settlement agreement, with regular updates of the board of commissioners planned as the implementation proceeds.
LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track. LADWP staff is working with the entire board of commissioners to review these projects as they begin to move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. It is expected that the entire board of commissioners will continue to provide oversight of these projects given their critical nature.
LADWP is pleased to provide this update to the State Auditor.
The board and the department working together to review technology projects is a positive step. However, the recommendation is for the board to develop a process to allow it to designate which of the projects are of such significance that its approval is needed before launching the system. The department's response does not reflect that the board has developed a process to make the recommended designation.
See Response to Recommendation 1.
The Board has to approve all expenditures over $150,000, so they are aware of all information technology projects that could have a potentially significant effect on business operations or customer relations. There are no information technology projects below this expenditure level that would have a significant effect on our business or our customers. Combined with the monthly reports described in Item #2 above, this expenditure approval process provides the Board with the ability to approve launching any such critical new systems.
Although the department has outlined ways in which the board may be aware of significant information technology projects, our recommendation is to the board to develop a process for the department to follow and to obtain the board's explicit approval before launching critical new systems.
As per this recommendation in a letter dated July 23, 2015 LADWP's Chief Administrative Officer instructed LADWP's Chief Information Officer as to "All information technology projects which may have potentially significant effect on business operations or customer relations will require Board of Water and Power Commissioners approval before launching such critical new systems into production. This item will be covered under the Management Report of the Board agenda."
The department did not address all aspects of the recommendation. The department has not supported that the board developed a process to designate certain information technology projects as having a potentially significant effect on business operations or customer relations.
-As part of its current procurement and administrative process, the LADWP submits to its Board proposed contracts where expenditures exceed $150,000 per year.
-All jobs that include business operations or customer relations are approved by the Department management and the Board of Water and Power Commissioners before initiation.
-Additionally prior to implementation of any system, related to business operations or customer relations into production a briefing to the Board of Water and Power Commissioners will be made to obtain their approval.
The first two paragraphs are already in place the third paragraph will be in place before the next reporting date.
Agency responses received are posted verbatim.