Report 2014-301 All Recommendation Responses

Report 2014-301: Judicial Branch Procurement: Five Superior Courts Did Not Consistently Follow Judicial Branch Contracting Practices (Release Date: November 2014)

Recommendation #1 To: Superior Court of California, County of Alameda

To improve its payment practices and comply with the judicial contracting manual, the Alameda court should establish clear procedures for ensuring that appropriate staff sign and authorize all payments prior to processing. It should ensure that staff follows these procedures and that managers do not approve payments above their authorized dollar limits.

60-Day Agency Response

The Court implemented a Delegation of Duties Approval and Authorization Matrix, under California Rules of the Court Rule 10.603 (c)(6)(D). The matrix clearly delineates the appropriate staff and signature authority limits to approve procurements, invoices, contracts, expenditures, and the allocation of funds. To ensure managers do not approve payments above their authorized limit, the Court revised the verification process that now references a new Delegation of Duties and Approval Authorization Matrix as defined for Executive Administration, Division Directors, Asst. Directors, General Counsel, Managers and Supervisors.

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

Recommendation #2 To: Superior Court of California, County of Alameda

To improve its payment practices and comply with the judicial contracting manual, the Alameda court should prohibit staff from purchasing unauthorized goods or services.

6-Month Agency Response

Court has complied with the judicial contracting manual. To ensure staff is prohibited from purchasing unauthorized goods or services the Alameda Court Office of Information Technology has completed setup of access controls for authorized personnel and training on the electronic automated procedural workflow approval and authorization for the purchase of goods and services processed in the Court payment system.

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

60-Day Agency Response

A new workflow approval and authorization verification procedure is now in place for payments in accordance with the Disbursements and Payment Programs as outlined in the Court Local Contracting Manual. The Court is in the process of implementing an electronic and automated procedural workflow approval and authorization for payments processed in the Court payment system. The implementation of an automated workflow authorization procedure is expected to be completed by end of year December 2015.

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

Recommendation #3 To: Superior Court of California, County of Alameda

To improve its payment practices and comply with the judicial contracting manual, the Alameda court should only make advance payments under the conditions that the judicial contracting manual allows.

60-Day Agency Response

The Court has reviewed the audit and will continue to provide water for court staff and jurors; lower cost alternative approaches to water provision will however be explored. We agree with the recommendation with regard to improper and unallowable payments specifically overpayments and advance payments and will follow the Judicial Branch Contract Manuel for direction in the future.

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

Recommendation #4 To: Superior Court of California, County of Alameda

To improve its payment practices and comply with the judicial contracting manual, the Alameda court should ensure that all purchases are for allowable purposes.

6-Month Agency Response

The court reviewed with staff the conditions and policies as outlined in the judicial and local contracting manual. The court concurs with recommendation and has fully implemented by meeting with with personnel to ensure understanding of policies and ensure additional care is taken regarding improper payments, namely, that they do not occur in the future resulting in either advance or overpayments to vendors. Court personnel has complied with the judicial contracting policies, procedures,and guidelines.

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

60-Day Agency Response

The Court has reviewed the audit and will continue to provide water for court staff and jurors; lower cost alternative approaches to water provision will however be explored. We agree with the recommendation with regard to improper and unallowable payments specifically overpayments and advance payments and will follow the Judicial Branch Contract Manuel for direction in the future.

California State Auditor's Assessment of 60-Day Status: Will Not Implement

Although the judicial contracting manual does not specify whether bottled water is allowable, the California Judicial Branch Contract Law (judicial contract law) requires the manual's policies and procedures to be substantially similar to provisions in the State

Administrative Manual and the State Contracting Manual. These manuals generally prohibit the purchase of bottled water for staff, except in limited circumstances, such as when the building water does not meet health standards. Thus, we believe the court should not be using court funds to purchase water for court staff and jurors except where allowed.

Recommendation #5 To: Superior Court of California, County of Alameda

To improve its payment practices and comply with the judicial contracting manual, the Alameda court should ensure that it adheres to the $1,500 single transaction limit for all Cal-Card purchases.

Annual Follow-Up Agency Response From October 2016

The Cal Card Policies and Procedures state "The maximum Single Purchase Limit is limited to $2,500..." In response to that per Judicial Branch Contract Manual "Alternative procedures should be documented, incorporated into the court's Local Contracting Manual, and distributed to court personnel." To address these types of transactions in the future the Court will be amending its Local Contracting Manual to place the single transaction limit at $2,500 for the Facilities and Procurement Manager, Information Technology Director and Sr. Fiscal Services Specialist only. All other cards will remain at the per transaction limit of $1,500.

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

1-Year Agency Response

See comments below regarding this response.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Alameda County Superior Court has not responded to our repeated requests over the past year to provide the actions it has taken or plans to take to implement our recommendation. As a result, the status of the court's implementation of our recommendation is unknown.

6-Month Agency Response

Cal-Card no longer lists a minimum transaction limit in its policy, this is left up to the authorizing parties when setting up the account. The Court's maximum per transaction limit is $2,500 per it's local policy & procedure manual. Court is reviewing the best practices of other courts in the amendment of Local Contracting Manual to place the single transaction limit to $2,500 for the Procurement Manager and Information Technology Director only. All other cards are at the per transaction limit of $1,500.

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

60-Day Agency Response

Though not well documented there were sufficient reasons it was necessary to exceed this limit on those transactions. The Cal Card Policies and Procedures state "The maximum Single Purchase Limit is limited to $2,500..." In response to that per Judicial Branch Contract Manual "Alternative procedures should be documented, incorporated into the court's Local Contracting Manual, and distributed to court personnel." To address these types of transactions in the future the Court will be amending its Local Contracting Manual to place the single transaction limit to $2,500 for the Procurement Manager and Information Technology Director only. All other cards will remain at the per transaction limit of $1,500.

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

Recommendation #6 To: Superior Court of California, County of Alameda

To improve its procurement practices and comply with the judicial contracting manual, the Alameda court should ensure that it either anticipates contracts expiring and competitively rebids them timely or establishes proper noncompetitive amendments to the contracts as the judicial contracting manual specifies.

Annual Follow-Up Agency Response From October 2016

The Court has created and implemented an annual plan which includes all contracts with expiration dates, action due dates, and type of action needed in order to anticipate any circumstance where competitive bidding is required. The plan will be updated annually and accounts for those contracts expiring within the next calendar year.

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

1-Year Agency Response

See comments below regarding this response.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Alameda County Superior Court has not responded to our repeated requests over the past year to provide the actions it has taken or plans to take to implement our recommendation. As a result, the status of the court's implementation of our recommendation is unknown.

6-Month Agency Response

The Court has created an annual plan which includes all contracts with expiration and action dates in order to anticipate any action where competitive bidding is required. This will be updated annually and account for those contracts expiring within that calendar year.

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

Although Alameda asserts that it has created an annual plan to track and anticipate contracts expiring, it has not provided us a copy of the plan. Instead, Alameda gave us a copy of a sample of an annual plan.

60-Day Agency Response

The Court will ensure that proper justification and support are provided when entering into noncompetitive procurements. The Court has started to obtain proper documentation from its contractors whose services are provided as community rehabilitation programs. We should be completed with the process of collecting certified community rehabilitation program certificates by June 2015.

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

Recommendation #7 To: Superior Court of California, County of Alameda

To improve its procurement practices and comply with the judicial contracting manual, the Alameda court should ensure that it maintains proper documentation in its procurement files to justify its decisions to enter into noncompetitive procurements.

60-Day Agency Response

The Court will ensure that proper justification and support are provided should it enter into any noncompetitive contracts. The Court has updated its annual plan to include additional cells to include contract expirations so that it can anticipate appropriate action ahead of the end date. This is a manual process so the Court will seek alternative methods for automating the tracking of contract expiration dates in SAP.

**RESPONSE** 6 and 7 are reversed. The Annual plan supports documentation that pertains to Response *6

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

Recommendation #8 To: Superior Court of California, County of Alameda

To improve its procurement practices and comply with the judicial contracting manual, the Alameda court should adopt procedures to implement the small business preference for competitive information technology procurements by December 31, 2014.

60-Day Agency Response

The Court has adopted a Small Business Preference procedure and has included it in our Local Contracting Manual as Chapter 13. A copy of the revision is attached.

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

Recommendation #9 To: Superior Court of California, County of Fresno

To improve its procurement practices and comply with the judicial contracting manual, the Fresno court should ensure that it maintains proper documentation in its procurement files to justify its decisions to enter into sole-source contracts and to demonstrate that it received fair and reasonable prices.

60-Day Agency Response

We have updated the file to include a sole source form for this contract; additionally, this form is used for all sole source procurements. All court personnel that will use the form are aware of its availability, and have been trained on the sole source process.

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

Recommendation #10 To: Superior Court of California, County of Fresno

To improve its procurement practices and comply with the judicial contracting manual, the Fresno court should use the appropriate solicitation method for the dollar value of the procurements it seeks.

60-Day Agency Response

The Local Contracting Manual has been revised. The Court has determined a threshold of $80,000 is reasonable and appropriate for Non-IT Goods and Services. The CFO provides oversight as to the appropriate use of the larger value RFQs. The revised manual is in the approval process with the Court Executive Committee and is expected to be adopted within 30 days.

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

Recommendation #11 To: Superior Court of California, County of Fresno

To improve its procurement practices and comply with the judicial contracting manual, the Fresno court should ensure that it conducts competitive procurements when it establishes blanket purchase orders of $5,000 or more.

60-Day Agency Response

All staff with purchasing authority have been fully trained on the use of blanket purchases orders and the required competitive process for purchases over $5,000.

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

Recommendation #12 To: Superior Court of California, County of Fresno

To improve its procurement practices and comply with the judicial contracting manual, the Fresno court should ensure that staff does not approve payments for amounts greater than their authorized limits.

60-Day Agency Response

The local Authorization Matrix has been revised to reflect the court's intent and all staff listed on the matrix have received mandatory training regarding their approval limits.

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

Recommendation #13 To: Superior Court of California, County of Fresno

To improve its procurement practices and comply with the judicial contracting manual, the Fresno court should adopt procedures to implement the State's DVBE program and the small business preference for competitive information technology procurements by December 31, 2014.

60-Day Agency Response

The Court has adopted a DVBE program and offers an incentive for competitive solicitations over $50,000. The Court provides a five percent preference to entities that have been certified as a "small business" or "microbusiness" by the State of California, Department of General Services.

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

Recommendation #14 To: Superior Court of California, County of San Luis Obispo

To improve its procurement practices and comply with the judicial contracting manual, the San Luis Obispo court should solicit competitive bids for procurements of $5,000 or more when required to do so.

60-Day Agency Response

The San Luis Obispo court has fully implemented policies and procedures regarding the solicitation of competitive bids of $5,000 or more as of November 1, 2014. A work document entitled Procurement Summary has been created to aid staff in determining the specifics of all procurements and to confirm all required steps are performed. This new document prompts staff to determine the type of procurement process required, whether a formal RFP, informal RFP or whether the product is available under an existing Master or Leverage Purchasing Agreement and directs them to the appropriate local procurement procedure document.

This new procedure ensures that all competitive procurements of $5,000 or more are properly assessed, documented and awarded. Additional training and materials have been provided to procurement staff to ensure that this process is followed as established in the Judicial Branch Contracting Manual and in the Local Contracting Manual.

Please contact Patsy Glenn, Court Accountant II, at (805) 781-5622 or via email patsy.glenn@slo.courts.ca.gov for further questions or assistance.

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

Recommendation #15 To: Superior Court of California, County of San Luis Obispo

To improve its procurement practices and comply with the judicial contracting manual, the San Luis Obispo court should ensure that it maintains proper documentation in its procurement files to justify its decisions to enter into noncompetitive procurements, including sole-source contracts.

60-Day Agency Response

As of December 2014, the court implemented additional procedures in order to create and maintain the proper documentation for its procurement files. All procurements for the San Luis Obispo Superior Court will be required to include three (3) quotes from qualified vendors when requesting a purchase requisition/order.

If there are no vendors who qualify or respond under the competitive procurement process or if a reason exists not to seek additional proposals or quotes, a sole source document will be completed by the requesting department, signed by the individual authorized for that contract value.

In addition, should the SB/DVBE options not be available, the court will document this information however efforts will be made to search for additional certified vendors for compliance purposes.

The Procurement Summary form will also be completed and submitted for review and approval. Each contract file folder will contain the following documents: original request, three (3) or more quotes, a Sole-Source document, Procurement Summary. The file may also contain if appropriate, the original signed contract, purchase requisition and order, Darfur Certification and any other supporting documentation used to justify the court's decision making process.

Additional training and materials have been provided to procurement staff to ensure that this process is followed as established in the Judicial Branch Contracting Manual and in the Local Contracting Manual.

Please contact Patsy Glenn, Court Accountant II, at (805) 781-5622 or via email patsy.glenn@slo.courts.ca.gov for further questions or assistance.

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

Recommendation #16 To: Superior Court of California, County of San Luis Obispo

To improve its procurement practices and comply with the judicial contracting manual, the San Luis Obispo court should take steps to ensure that pricing it receives is fair and reasonable when it uses leveraged procurement agreements and document these steps in its procurement files.

60-Day Agency Response

In December 2014, the San Luis Obispo Superior Court added a Price Analysis for Reasonableness section into the Procurement Summary document. This analysis will be required for all purchases under a Master Agreement or Leveraged Procurement to confirm that the price of the service or item included in the Master Agreement or Leveraged Procurement contract is fair and reasonable. If it is determined that better pricing can be obtained through negotiation with the vendor or by opening the procurement up to a bid process, the procurement will be made in that manner.

Documentation of the entire process, including a complete cost analysis will be included in the procurement file, and be available for future reference. Additional training and materials have been provided to procurement staff to ensure that this process is followed as established in the Judicial Branch Contracting Manual and in the Local Contracting Manual.

Please contact Patsy Glenn, Court Accountant II, at (805) 781-5622 or via email patsy.glenn@slo.courts.ca.gov for further questions or assistance.

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

Recommendation #17 To: Superior Court of California, County of Yuba

To improve its procurement practices and comply with the judicial contracting manual, the Yuba court should ensure that it maintains proper documentation in its procurement files to justify its decisions to enter into sole-source contracts.

60-Day Agency Response

The audit noted that Yuba did not adequately document its justification for not obtaining competitive bids for one of its contracts. To prevent this problem in the future, the court has implemented a Procurement Checklist that is now placed in each new procurement file. Included on that checklist is the sole-source justification form.

Additionally, the court has implemented a Fair and Reasonable Checklist to make sure the "fair and reasonable" provision of the sole-source justification form is met.

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

All Recommendations in 2014-301

Agency responses received are posted verbatim.