Report 2017-302 All Recommendation Responses

Report 2017-302: Judicial Council of California: It Needs to Follow Competitive Bidding Processes More Consistently and Establish Clear Guidance for Invoice Processing (Release Date: December 2017)

Recommendation #1 To: Judicial Council of California

To help ensure that it obtains the best value for the goods and services it purchases and that its staff take the steps necessary to comply with the judicial contracting manual, the Judicial Council should continue to reinforce with staff through management memos, training, or other formal means the need to ensure that the person with the appropriate level of authority approves purchases; obtain authorized approvers' signatures for noncompetitive procurements; properly document justification for noncompetitive procurements; and not exclude potential vendors from bidding based on assumptions about their prices.

60-Day Agency Response

As noted in the Judicial Council's original response to the audit, staff corrected in June 2017 (before the audit) the issue noted in the report of one individual who exceeded his signing authority. Nevertheless, management from the Judicial Council's Branch Accounting and Procurement (BAP) unit has issued an email to key procurement staff highlighting the audit's findings and recommendations. Judicial Council staff are providing a copy of this email and its related contents as an attachment to this 60-day response.

The email reminds procurement staff that purchases must be authorized by those with proper signing authority, and the memo re-issues the memorandum updating the local contracting manual—dated June 5, 2017—with current signature level authorities. Management's email to procurement staff also included the current Non-Competitive Bid (NCB) form along with a document containing applicable NCB requirements from the Judicial Branch Contracting Manual. Finally, despite the auditor questioning why a particular vendor was not asked to bid on a procurement (even though the auditor acknowledged the Judicial Council had already achieved competition and received a sufficient number of bids), management separately advised those procurement staff—who were involved in this transaction—of the need to refrain from any actions that may appear to discourage full and open competition.

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

Recommendation #2 To: Judicial Council of California

To better align the judicial contracting manual with state requirements and to make certain that it receives the best value for services, the Judicial Council should update by March 2018 the judicial contracting manual's guidance on contract splitting and sole-source procurements to reflect the more specific definitions in SCM.

6-Month Agency Response

In June 2018, an advisory committee to the Judicial Council approved changes to the definitions of "contract splitting" and "sole-source" per the auditor's recommendations. Staff anticipate the Judicial Council will formally adopt these revisions during its next business meeting in July 2018. Judicial Council staff have attached the proposed revisions to the Judicial Branch Contracting Manual.

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

60-Day Agency Response

Judicial Council staff have shared the auditor's recommended updates with members of a working group comprised of procurement officials from various courts. The working group periodically considers potential revisions to the Judicial Branch Contracting Manual (JBCM). The working group discussed the auditor's recommendations regarding contract splitting and sole source procurements in its last meeting on January 17, 2018. Revised language in line with provisions in the State Contracting Manual were proposed, and Judicial Council staff anticipate these changes will be published with the next revision of the JBCM (potentially this spring). Judicial Council staff note, as stated in the original response to the audit, that this recommendation is one that Judicial Council staff cannot implement unilaterally, since proposed updates will require formal adoption by the Judicial Council.

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

Recommendation #3 To: Judicial Council of California

To ensure that Judicial Council staff have the information they need to process invoices appropriately and to comply with the judicial contracting manual, the Judicial Council should develop by June 2018 one document with clear invoice-processing procedures for its accounting staff. This document should define the steps for processing invoices related to different types of purchase agreements and common exceptions to the typical process, including instructions for handling invoices processed on behalf of other Judicial Branch entities.

1-Year Agency Response

The judicial branch transitioned to Fi$Cal at the beginning of fiscal year 2018-19. Concurrent with this implementation, the Judicial Council's accounting staff follow the invoice-processing rules associated with Fi$Cal. Further, accounting staff have shared these procedures with the Supreme Court, Courts of Appeal, and the Habeas Corpus Resource Center.

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

6-Month Agency Response

On July 1, 2018, the Judicial Council and the Courts of Appeal will transition to a new accounting system called Fi$Cal. Preparing for this significant transition has been the primary focus of accounting staff, who are simultaneously preparing our end-of-year accounting entries for fiscal year 2017-18. This transition to Fi$Cal will likely require minor revisions and refinements to our invoice processing procedures; however, implementation of Fi$Cal will also result in the Judicial Council having an invoicing process that is substantially similar to other state agencies that use Fi$Cal. Procedures governing invoice processing will ultimately be developed and shared with staff as part of the Fi$Cal deployment.

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

60-Day Agency Response

Staff from the Judicial Council's Branch Accounting and Procurement (BAP) unit are in the process of revising and clarifying its local invoice-processing procedures.

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

Recommendation #4 To: Judicial Council of California

By June 2018, the Judicial Council should fully implement the State Auditor's recommendation from 2013 related to controls over its information systems.

1-Year Agency Response

On November 30, 2018, the Judicial Council approved the Judicial Branch Information Security Framework. The meeting minutes will be available in January on the Judicial Council meetings notes page (www.courts.ca.gov/jcmeetings.htm). The Judicial Council's IT Leadership have also accepted the internal policy manual and disaster recovery plan updates. As mentioned in the previous update, the Judicial Council's information security controls and related framework are by nature confidential documents, but the State Auditor is welcome to review them at any time by visiting the Judicial Council's offices.

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

6-Month Agency Response

The Judicial Council has hired staff who are responsible for developing and monitoring security protocols for key information technology (IT) systems and infrastructure. Updates to the Judicial Branch framework of information systems controls have been completed and are pending presentation to the Judicial Council for ratification. Work is ongoing to address IT security issues, polices are being developed in a manner that involves input from other judicial branch entities, and the Council is actively focused on expanding an information systems security outreach program that was piloted in fiscal year 2017-18.

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

60-Day Agency Response

The Judicial Council's Information Technology (IT) unit anticipates fully correcting the finding by June 2018. Since our previous update, progress has been made on our information technology security program staffing plan with the onboarding of a full time employee to oversee the program in December 2017, and in January 2018, the onboarding of a new manager for the unit the information security program reports to. Remaining steps include ratification of the current revisions of the Judicial Branch Security Framework and Judicial Council Information Technology Policy manual.

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

Recommendation #5 To: Judicial Council of California

To prevent misinterpretation of policies governing its procurement practices, the Judicial Council should reissue its local manual by June 2018, incorporating all updates made since the 2011 version of the manual.

Annual Follow-Up Agency Response From August 2019

The Judicial Council reissued its local manual effective April 2019.

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

The Judicial Council reissued its local manual effective April 2019.

1-Year Agency Response

Judicial Council staff currently expect to publish an updated local procurement manual sometime in February 2019. Nevertheless, the Judicial Council's procurement staff have taken steps to provide clearer guidelines to employees involved in the procurement process. For example, on November 1, 2018, the Judicial Council's procurement staff revised its Contract Administration Procedure (CAP) document, which serves as a reference tool to assist Judicial Council staff with the execution of procurement actions. The CAP provides an overview of the various procurement roles, expected workflow, and the competitive solicitation process.

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

6-Month Agency Response

The Judicial Council's local procurement manual (local manual) primarily defines the level of management at which a procurement, based on its dollar value, must be approved. The Judicial Council's staff agree that the local manual needs to be consolidated into a unified document in order to avoid confusion. However, with the Judicial Council and the Courts of Appeal transitioning to Fi$Cal - which includes a procurement module - staff have been focused on system configuration and staff training. Once Fi$Cal has been successfully implemented, the Judicial Council's procurement process and approval controls will be similar to those of other state agencies that also use Fi$Cal.

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

60-Day Agency Response

Staff from the Judicial Council's Branch Accounting and Procurement (BAP) unit are in the process of consolidating and updating its local contracting manual per the audit's recommendation.

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

Recommendation #6 To: Judicial Council of California

To help ensure that the Judicial Council complies with state reporting requirements related to conflicts of interest, it should report to the appropriate authority any staff who do not file statements of economic interests after reasonable attempts to prompt them to file, as described in guidance from the Fair Political Practices Commission. Further, the Judicial Council should complete its procedures to improve compliance and implement them beginning in January 2018.

6-Month Agency Response

In February 2018, Judicial Council staff revised personnel policy #8.3(C) to include a statement that non-filers will be reported to the Fair Political Practices Commission and may be assessed a late fee of $10 per day. Judicial Council staff also developed a standard e-mail template to inform staff that failure to report will be disclosed to the FPPC. Judicial Council staff have attached revised policy #8.3(C).

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

60-Day Agency Response

Staff from the Judicial Council's Human Resources unit have developed policies and procedures to better ensure staff submit their economic interest disclosure forms timely. Such policies include a process to report non-filers to the Fair Political Practices Commission after repeated reminders to staff are unsuccessful. These policies and procedures are currently under management review and staff expect to publish them in March 2018.

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

All Recommendations in 2017-302

Agency responses received are posted verbatim.