Report 2016-124 Recommendation 7 Responses

Report 2016-124: Department of General Services and California Department of Technology: Neither Entity Has Provided the Oversight Necessary to Ensure That State Agencies Consistently Use the Competitive Bidding Process (Release Date: June 2017)

Recommendation #7 To: General Services, Department of

To ensure that the State receives the best value for its contracts, General Services should immediately begin performing the following:
For contracts that are exempt from competition by policy or statute, including noncompetitive requests for contracts, General Services should require agencies to justify that the price is fair and reasonable. This should include a current price analysis pointing to competitive pricing from another contract, such as a statewide agreement, or a comparison of rates to other available vendors, or another valid price analysis with objective evidence.

1-Year Agency Response

Updates to the State Contracting Manual (SCM) Volumes and the Non-Competitive Bid (NCB) Contract Justification request form that provide enhanced guidance regarding fair and reasonable pricing are finalized and have been approved. DGS continues to require agencies to submit current cost justification information when feasible and continues to remind procurement professionals at meetings and customer forums. On June 7, 2018, DGS notified all agencies of the enhanced guidelines through Broadcast Bulletin P-07-18.

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

6-Month Agency Response

General Services (DGS) has assessed the non-competitive contracting methods where additional justification of a fair and reasonable price would be most effective and drafted updates to the State Contracting Manual (SCM) Volumes. In addition, DGS has drafted updates to the Non-Competitive Bid (NCB) Contract Justification request form to ensure fair and reasonable pricing is justified. DGS continues to require agencies to submit current cost justifications from available vendors when feasible and has reminded procurement professionals of this at the Purchasing Authority Round Table meeting held on August 1, 2017 and DGS' Procurement Division State Agency Customer Forum held on August 30, 2017. Once the updates to the SCM Volumes and NCB form are finalized, DGS will notify all agencies of the enhanced guidelines.

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

60-Day Agency Response

DGS is currently assessing non-competitive contracting methods where additional justification of a fair and reasonable price would be most effective and will update SCM policy as applicable once the assessment is complete. DGS continues to require agencies to submit current cost justifications from available vendors when feasible and will remind procurement professionals of this in upcoming customer forums such as the Purchasing Authority Round Table scheduled for August 1, 2017 and DGS' Procurement Division State Agency Customer Forum scheduled for August 30, 2017.

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

All Recommendations in 2016-124

Agency responses received are posted verbatim.