Report 2016-104 Recommendation 6 Responses

Report 2016-104: California Public Utilities Commission: It Should Reform Its Rules to Increase Transparency and Accountability, and Its Contracting Practices Do Not Align With Requirements or Best Practices (Release Date: September 2016)

Recommendation #6 To: Public Utilities Commission

To ensure that its contracting practices align with state requirements and best practices, the CPUC should update, distribute, and follow its contracting procedures manual. The manual should identify specific responsibilities for both contracts office staff and project managers, and it should provide specific guidance about the processes the CPUC will employ to do the following:

-Fully justify civil service exemptions.

-Conduct market research for exempt contracts.

-Fully support the need for additional funding.

-Ensure that it does not change the scope of work too significantly from the original.

-Monitor contractor performance against criteria included in its contracts.

-Avoid sole-source contracts when it is able to solicit competitive bids for services.

Annual Follow-Up Agency Response From October 2018

CPUC Contracts and Procurement staff and management have been working with Contractor to develop the contracting manual. First review has been completed. Second review of manual along with accompanying "tool-kits" are being written, to clearly identify roles and responsibilities of Proejct Managers vs Contracts Analysts throughout the contracting process. 19130b, justification, amendment justification are incorporated into the updates.

  • Estimated Completion Date: 10/2019

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


Annual Follow-Up Agency Response From November 2017

CPUC has hired a Contractor. Tasks include development of contracting manual. Contracts are initiated by Program by submitting Contract Request Form (CRF) with detailed description of contract and signed by BCO, Supervisor, and Project Manager. Additional justification memo- explaining compliance/exception to 19130b and draft scope of work are required "starter documents" for project to be assigned to a Contracts Analyst to work with Project Manager. Amendments (for funds and/or time) are initiated by Program submitting (CRF) with detailed description of request and signed by BCO, Supervisor, and Project Manager. Additional amendment justification answering 5 questions related to why amendment is requested, what work has already been done, and whether project will be completed upon end of amendment. documents are required prior to assignment to Contracts Analyst to work with Project Manager.

  • Estimated Completion Date: 12/31/2017

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

As we explained in our comment on the CPUC's one-year response to this recommendation, our recommendation directed the CPUC to update its contracting manual to address several deficiencies we found in its contracting practices. The CPUC's response indicates that it has not yet developed such a manual. Most of the additional activities it describes, such as the use of a contract request form, are practices we observed that the CPUC engaged in during the time period we audited. Despite these practices, we still found deficiencies in the way the CPUC contracted for services. We did note that the CPUC contracts office is requesting answers to five questions related to contract amendments that pertain to concerns we expressed about how the CPUC added funds to contracts through amendments and made changes to the original contract scope of work through an amendment.


1-Year Agency Response

CPUC has hired a Contractor. Tasks include development of contracting manual. Contracts are initiated by Program by submitting Contract Request Form (CRF) with detailed description of contract and signed by BCO, Supervisor, and Project Manager. Additional justification memo- explaining compliance/exception to 19130b and draft scope of work are required "starter documents" for project to be assigned to a Contracts Analyst to work with Project Manager. Amendments (for funds and/or time) are initiated by Program submitting (CRF) with detailed description of request and signed by BCO, Supervisor, and Project Manager. Additional amendment justification answering 5 questions related to why amendment is requested, what work has already been done, and whether project will be completed upon end of amendment. documents are required prior to assignment to Contracts Analyst to work with Project Manager.

  • Completion Date: August 2017
  • Response Date: September 2017

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

Our recommendation directed the CPUC to update its contracting manual to address several deficiencies we found in its contracting practices. The CPUC's response indicates that it has not yet developed such a manual. Most of the additional activities it describes, such as the use of a contract request form, are practices we observed that the CPUC engaged in during the time period we audited. Despite these practices, we still found deficiencies in the way the CPUC contracted for services. We did note that the CPUC contracts office is requesting answers to five questions related to contract amendments that pertain to concerns we expressed about how the CPUC added funds to contracts through amendments and made changes to the original contract scope of work through an amendment.

  • Auditee did not substantiate its claim of full implementation
  • Auditee did not address all aspects of the recommendation

6-Month Agency Response

The contract office has just recently filled three positions with contract staff, but they still need training. CPUC will be hiring a vendor to assist with the contract manual, improvement of processes, and recommendations for improvements.

CPUC has made strides in multiple areas such as; 1) Justifications of civil service exemptions by emailing requirements to project managers to justify and describe efforts made to out state or governmental agencies,2) Market Research for exempt contracts requiring justification requests, market research and fair and reasonable evaluations, 3) Fully support need for additional funding by replying to list of questions,4) Review of SOW by Contract analyst with each amendment, 5) Avoid sole -source contracts by using NCB Justification if/when sole source is considered and ensuring project managers do market research.

Training of contract managers will begin in April and continue until all project trainers have been trained and they understand the responsibility of contract monitoring while being a project manager.

  • Estimated Completion Date: July 31, 2017
  • Response Date: March 2017

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

The CPUC indicates that it has not yet developed a contracting manual and plans to hire a vendor to assist it with the preparation of that manual. In the interim, the CPUC asserts that it has made progress in several of the problem areas that we identified in our report. Although it demonstrated that its contract analysts have communication with project managers about some of these areas, the CPUC has not yet demonstrated that it has an effective control environment that ensures overall contract compliance.


60-Day Agency Response

CPUC is preparing to provide all project managers training and instructions on how to prepare contracts according to the State Contracting Manual. This will include further instructions on the civil service exemptions, market research for exempt contracts, requirements for amendments, sole source contracts and monitoring of contracts. In addition, the contracts and procurement office initiated checklists in June of 2016 to ensure compliance with the State Contracting Manual and continue to use these for review of completed contract and procurement work. The CPUC contract staff will continue its work on a contract manual and has set a completion date for April, 2017.

  • Estimated Completion Date: 4/30/2017
  • Response Date: November 2016

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


All Recommendations in 2016-104

Agency responses received are posted verbatim.