The California State Senate Thursday conducted an oversight hearing on the state’s IT procurement and implementation practices, spurred in part by last year’s failure of the 21st Century project intended to replace HR and payroll systems serving some 260,000 state employees. Hearing Chair Sen. Richard Roth said the state does not have a good track record with IT procurement, and lessons learned from failures must be used to chart a more successful path forward.
The non-partisan Legislative Analyst’s Office (LAO) outlined the scope of the issue, presenting an overview of the state’s IT procurement and implementation. The state, for example, spent $2.2 billion on IT in 2012-2013 and currently has 35 large projects at various stages of development worth an estimated $4 billion by the time they are completed.
The LAO said that of large IT projects surveyed globally in 2012, only 10 percent succeeded while 38 percent failed and 52 percent were "challenged" meaning significant problems developed. Among challenges facing the 21st Century project, said LAO Fiscal and Policy Analyst Lourdes Morales, is the complexity of the state’s payroll practices and how they differ from private-sector practices the software was designed to handle.
The Task Force on Re-Engineering IT Procurement for Success – represented by Chair Dr. Rosio Alvarez and former Oregon CIO Dugan Petty – presented 21 recommendations to improve large IT procurements.
Under questioning by Roth, the discussion focused on some of the specifics of market analysis, which Petty said was embedded in the procurement procedure but for a variety of reasons was not always used. Technology evolves quickly, he said, and government needs to clearly understand what it needs and what is available in the marketplace. "Robust market analysis," said Petty, is much more than sending out an RFI and collecting responses. It involves face-to-face meetings and discussions which government staff may fear could look like a conflict of interest.
California did get some good marks from the task force, notably for the passage of Public Contracting Code 6611 which allows for negotiations and clarifications between government and vendor, but Petty said that the state was not fully using that flexibility and he would recommend lowering the bar for its use.
Petty – who was a state procurement officer as well as a CIO – cited Massachusetts’ procurement flexibility, saying that the state will issue a draft RFP, so suppliers can file an appeal of the specifications. If it makes sense, the state can make adjustments and get a final RFP nailed down. Many states just reject a vendor’s proposal that might be better but doesn’t adhere to the exact specifications.
Petty also cited Philadelphia, which he said was one of the most progressive systems of procurement in the country. "They’re doing an incubator," he said, "defining the business problem, then they’ll invite technologists in to develop a solution, they’ll pilot those solutions, test them, and if they work right, they’ll write a contract for it. But that’s all new and that’s innovative work that’s happening. I think that’s the kind of thing we’re going to see in the future."
Carlos Ramos, director and CIO of the California Department of Technology (CalTech) presented what had been done to improve contracting and asked to set the record straight on some of the observations made by previous presenters, saying that CalTech had commissioned a lessons-learned report which was not yet published, and that following the cancellation of a DMV project CalTech asked for an independent assessment, and addressed the issue of oversight.
