The state Department of Finance reminded IT procurement officials Wednesday about new reporting requirements for projects that run significantly over budget.
The Budget Control Act of 2018 says the regulations contain two key triggers, both of which "afford(s) the Legislature an opportunity to review the status of an IT project and/or enterprise license commitment(s), and the associated future funding obligations before those obligations are made."
As spelled out in the Finance Department budget letter:
"— Control Section 11.00 informs the Legislature of an IT project change and is triggered by cumulative cost increases of $5 million, or 20 percent of the total budgeted cost of the project, whichever is less. For purposes of Section 11.00 requirements, an IT project is subject to reporting until the department has submitted a Post-Implementation Evaluation Report (PIER) to the California Department of Technology (CDT), as required by State Administrative Manual Section 4947.
"— Control Section 11.10 informs the Legislature of statewide software license agreements that: (1) have not been previously approved by the Legislature, (2) obligate state funds in the current or future budget years, whether or not the obligation will result in a net expenditure or savings, and (3) the total amount of the proposed agreement or amendment is $1 million or greater in the aggregate. A statewide software license agreement is defined as a software license contract that can be used by multiple state agencies.
And the regulations have teeth: "Departments should be aware that if notification is not provided and the Legislature later determines that notification should have been given, the project or enterprise agreement and its associated funding will be at risk."
The regulations define a contract as "any of the following enforceable agreements: (A) service agreements for consultant services, including independent project oversight, independent verification and validation, and telecommunications (any CALNET contract included), and (B) contracts, purchase orders, and rental and lease agreements for hardware, software, and facilities. Interagency agreements are not considered contracts."
The change reports should include "the total change in project cost, scope, and schedule; the reason for the change or changes; a description of new or amended contracts required as a result of the project change or changes; a list of the open risks and issues identified in the last two Independent Project Oversight and Independent Verification and Validation Reports, as well as any risks or issues that have been identified since publication of those reports; and the department’s planned mitigation of these risks and issues."
For software licensing, the bulletin says each qualifying business proposal must include:
"— An analysis of the current number of base licenses covered under the statewide software license agreement, including the software products, the license type, and the number of users associated with each license;
"— Projections of anticipated use over the term of the agreement, including the products to be covered under the agreement, the license type, and the number of users associated with each license. The business proposal must include the assumptions used to develop the projections;
"— An analysis of feasible alternatives, including a justification for selecting a statewide software license agreement over other alternatives, such as a volume purchase agreement. The justification must include a detailed cost/benefit analysis comparing the proposed statewide software license agreement against the alternatives discussed; and
"— A plan that explains how costs will be allocated across user departments and identifies the associated funding source(s) for each entity utilizing the agreement."
Those with questions may contact Erica Gonzales, Chief of the Information Technology Consulting Unit, at (916) 445-1777, extension 3256.