BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1668
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          Date of Hearing:   April 17, 2007

          ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
                                Juan Arambula, Chair
                     AB 1668 (Leno) - As Amended:  April 11, 2007
           
          SUBJECT  :  Information technology: open-document software.

           SUMMARY  :  Requires that all state agencies create, exchange,  
          maintain, and preserve electronic documents, only in an open  
          file format, as approved by the State Chief Information Officer  
          (CIO), and that all state agencies are able to accept all  
          electronic documents in an open-file format approved by the CIO.  
          Specifically,  this bill  :  

          1)Requires all state agencies create, exchange, maintain, and  
            preserve documents, including text, spreadsheets, and  
            presentations, only in an open-file format, as specified by  
            the State CIO.

          2)Requires that the State CIO consider a number of factors when  
            determining the implementation of this standard, including:

             a)   The interoperability among computer platforms and  
               applications;

             b)   The extent to which the file format is fully published  
               and royalty free; 

             c)   The implementation of the file format by multiple  
               software providers on multiple platforms without any  
               intellectual property restrictions for necessary  
               technology; and

             d)   The extent to which the file format is developed and  
               maintained by an open industry organization with an  
               inclusive process for evolution of the standard.

          3)Requires all state agencies be able to accept electronic  
            documents in an open file format approved by the State CIO.
                                                                            
                        
          4)Requires the State CIO, by an unspecified date, to develop  
            guidelines for state agencies in determining whether  
            electronic documents existing before January 1, 2008, should  








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            be converted to an open-file format.  Requires the State CIO  
            to consider the cost of conversion, potential cost savings of  
            using approved open-file format applications, the need for  
            public accessibility of converted documents, and the expected  
            storage life of those documents.

          5)Requires state agencies to begin using open-file format  
            applications during their regularly scheduled software upgrade  
            cycle, immediately following notice of the approved open file  
            format applications by the State CIO. 

           



          EXISTING LAW  : 

           1)States legislative intent  that state agencies use an  
            information technology (IT) acquisition method that is  
            compatible to its short and long-term fiscal needs, and that  
            they have a choice of suppliers to meet statewide  
            standardization needs and unique service requirements.

           2)Creates the Department of Technology Services (DTS)  in the  
            State and Consumer Services Agency for the purpose of  
            improving and coordinating the use of technology in state  
            government, and to coordinate and cooperate with all state  
            agencies to eliminate technology duplications and create  
            efficiencies.

           3)Creates the Office of the State CIO  in the Governor's Office.   
            Specifies the duties of the State CIO as follows:

             a)   Advising the Governor on the strategic management and  
               direction of the state's IT resources, including full  
               statutory authority over state IT policy (e.g. IT standard  
               setting), and exercising primary control over IT project  
               approval and oversight;

             b)   Recommending procedures in state IT programs for  
               minimizing overlap, redundancy, and cost in state  
               operations by promoting the efficient and effective use of  
               IT;

             c)   Coordinating the activity of agency information  








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               officers, agency chief information officers, and the  
               Director of DTS, for the purpose of integrating statewide  
               technology initiatives, ensuring compliance with IT  
               policies and standards, and promoting alignment of IT  
               resources and effective management of IT portfolios;

             d)   Working to improve organizational maturity and capacity  
               in the effective management of IT; and

             e)   Establishing performance management and improvement  
               processes to ensure state technology systems and services  
               are efficient and effective.

           4)Establishes an IT procurement process and procedure   for goods  
            and services, and requires that such acquisitions be done  
            through competitive means, except in cases of emergency, or  
            where a sole source purchase is the only way of meeting the  
            state's needs.

           5)Requires DGS to approve IT procurement proposals  , prior to  
            issuing an RFP, by first determining that the procurement is  
            appropriate, and identifying and documenting the following:

             a)   The procurement is responsive to a legislative mandate  
               or state business/operational need;

             b)   The current processes used to accomplish that  
               legislative mandate or business/operational need;

             c)   The priorities the procurement is intended to  
               accomplish;

             d)   The current technology the procurement is related to;

             e)   Whether there are multiple vendors for the technology  
               being procured; and

             f)   Whether the procurement leverages existing state  
               technology investments. 

           6)Defines IT  as all computerized and auxiliary automated  
            information handling, including systems design and analysis,  
            conversion of data, computer programming, information storage  
            and retrieval, voice, video, data communications, requisite  
            systems controls, and simulation.








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          FISCAL EFFECT  :  Unknown

           COMMENTS  :  

           1)Purpose of the bill  :  According to the author, there are no  
            appropriate standards in place to preserve access to, nor use  
            of, electronic text, spreadsheets, and presentations created  
            by state agencies.  Currently, many of these electronic  
            documents exist in a format that restricts and limits their  
            use because of their proprietary structure.  

          AB 1668 would establish a standard in California to improve and  
            ensure the interoperability of documents between state  
            agencies and the public by implementing a file format standard  
            that is fully published, freely distributed, and available to  
            the users without having to pay a royalty.

           2)Open-file formats versus proprietary formats  :  In the simplest  
            of terms, when the intellectual property rights of a computer  
            file format are owned by an entity, and the use of that file  
            format in a software application requires the payment of a  
            licensing fee or royalty to the owner of that file format, the  
            file format is considered proprietary.  For example, the most  
            popular and widely used word-processing program in the world  
            is Microsoft Corporation's "Word", which creates and preserves  
            electronic documents in a format commonly called "doc."  In  
            order for any software application to interface, or  
            interoperate with documents that are created and preserved in  
            a "doc." file format, the software application must speak or  
            work in the same file format, which would require the software  
            developer to pay a royalty to Microsoft for that privilege. 

          On the other hand, open-file format software applications are  
            available for implementation and use, free from the payment of  
            royalties, not licensed, and not subject to other user  
            restrictions.  Open-file formats are developed through a  
            multi-vendor/multi-stakeholder process conducted by an  
            international standards organization, which typically consists  
            of software developers, government organizations, technical  
            organizations, academicians, and researchers.   The file  
            format is published and available for any software developer  
            to adopt and utilize in the particular application the  
            developer is creating.  The software application itself is  
            still a proprietary product, but the format of the computer  








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            language that the application uses is not proprietary.

           3)Possible advantages and disadvantages of mandating an  
            open-file format standard for government  :  One of the  
            arguments in favor of mandating a state standard for open-file  
            formats is to ensure that electronic documents generated by  
            government can be freely accessed and used for many years into  
            the future.  This "archival" argument contends that creating  
            and preserving information in an open-file format guards  
            against the risk of being locked-out of that information in  
            the future, by limitations that exist when using proprietary  
            formats.  Therefore, to ensure that government documents  
            remain accessible it could be advisable to have an IT standard  
            that is universally accessible.

          Software developers that use proprietary formats, however, argue  
            that their applications will constantly evolve and respond to  
            market conditions.  They point out that open-file formats are  
            currently available, and in wide use around the world.  To the  
            extent that technological solutions utilizing this approach  
            are offered, and grow increasingly popular, software  
            developers, who use proprietary formats, contend they will  
            accommodate this circumstance in order to stay competitive.   
            This may mean, for example, that proprietary software  
            applications will incorporate features that provide the  
            interoperability characteristics of open-file formats, if that  
            is what the market demands.  Hence, there may be no need to  
            limit the technology to a standard open-file format.

          Interoperability, or the exchange of information from one  
            program to the other, may be enhanced by the use of open-file  
            formats.  If an open-file format standard is established, the  
            interoperability of programs within government, as well as  
            among governments, may be assured.  This may prove crucial in  
            emergency situations, such as recovering from a disaster.

          Notwithstanding the archival and interoperability advantages of  
            open-file formats, there is still a concern that mandating a  
            standard, impinges on the need of government to remain  
            flexible when determining the IT that best meets the business  
            needs for which a technological solution is being sought.   
            Statutorily limiting IT procurement to one type of technology,  
            for example, open-file formats, presupposes that the best IT  
            solutions for any given problem will only emerge in  
            applications that use that approach.  Experience, however, has  








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            shown that innovation spans the gamut of technological  
            approaches, and government should not necessarily preclude  
            itself from being able to take advantage of innovations,  
            whether they are in a proprietary format or not.

          It is uncertain whether a mandate would or would not benefit  
            competition for state IT goods.  On the one hand, the royalty  
            free, and widely published nature of open-file formats might  
            lead to a wide variety of software applications that use  
            open-file formats becoming available in the IT marketplace.  
            The ensuing competition and multiple vendor products could  
            lower the cost of computer software to both public and private  
            users. On the other hand, by limiting the software format, the  
            state could not purchase other products that are already on  
            the market, and may cost less.

          There is also a question of whether the IT hardware currently in  
            use within state government can accommodate open file format  
            software.  There is a possibility that new, more powerful  
            hardware, with larger data storage capability, would have to  
            be procured in order to utilize open-file format programs.   
            While the state typically goes through IT refresh cycles,  
            where new equipment is acquired to replace older, worn, and  
            perhaps outdated components, the question remains whether the  
            replacement equipment will be more costly in order to handle  
            open file format applications.  

          There may also be cost implications for additional training of  
            state personnel to use open-file format software, and possibly  
            having to retain separate staff who are capable of operating  
            the older, legacy systems that are in a proprietary format,  
            until the legacy systems are completely phased out of state  
            service. 

          The issue of workforce training may best be understood in terms  
            of what the state workforce is currently using, and the level  
            of instruction that may be needed to move people into new  
            open-file format applications.  The State CIO reports that 90%  
            to 95% of the state's employees use "Word" to create and  
            preserve their text documents in a "doc." format.  Also,  
            several major state entities have never migrated to the "doc."  
            format, because the applications they have been using have  
            certain features that accommodate their unique workplace  
            needs.  For example, there are still many employees who are  
            using "Wordstar" or "Mac."  Requiring all state employees to  








                                                                  AB 1668
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            transition to new software platforms without regard to  
            determining the level of training required, and other short  
            and long-term fiscal needs, could have implications for  
            employee productivity.                                          
                                                                            
                                                                            
                                   

          State policy and statute require that state departments and  
            agencies evaluate all proposed IT procurements, in part, on  
            the basis of whether they leverage existing state IT  
            investments.  It appears, however, that if a standard is  
            mandated, existing IT investments that do not comply with that  
            standard will ultimately be phased out of state service,  
            regardless of whether that technology has value to the state.   
            Hence, non-compliant IT investment can no longer be leveraged,  
            and there may or may not be significant consequences as a  
            result.  

           4)State IT procurement and development - prospects and problems  :  
             The acquisition of IT goods and services is perhaps the most  
            significant component of state procurement activities.  In  
            2005-06, California agencies entered into 9,100 IT contracts  
            with a value of $1 billion.  Ten departments accounted for 74%  
            of that procurement.  According to the CIO, there are 117  
            active IT projects, with total planned project costs estimated  
            at just over $5 billion, over the next five years.

          IT has long been recognized as a way for the state of California  
            to deliver services in an efficient and cost-effective manner.  
              Well-planned IT programs can make government services more  
            accessible, improve the cost-effective application of the  
            state's business services and ensure the security of state  
            information, while simultaneously using that information to  
            help preserve the peace, health, safety, and prosperity of  
            state residents and its economic enterprises.

          For the last several decades, the challenge to the state of  
            California has been how to utilize IT most effectively.  The  
            costs and complexities of some very worthwhile IT undertakings  
            have been as daunting as they are promising.  

          In his Annual Report on the Executive Branch's Information  
            Technology Program, 2/28/07, the State CIO reports most IT  
            projects have proven their worth, but some have been failures,  








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            costing the state nearly $500 million dollars in futile  
            effort.  Over the years projects have begun and then been  
            abandoned, such as the Department of Motor Vehicles' database  
            upgrade project in 1994, the Department of Social Services'  
            statewide child support project in 1997, and the Health and  
            Human Services Data Center project for a Statewide Automated  
            Welfare System in 1999.

           5)Making IT work for state government  :  The magnitude of IT  
            procurement in California government, and the high costs of  
            project failures that have occurred, underscore the need for  
            coordinated policy, planning, and oversight of IT procurement  
            and operations.  Over the last decade the Legislature and the  
            Executive Branch have worked to bring some cohesion,  
            efficiency, fairness, security and competitiveness to the  
            state's IT procurement policy and processes.  

          Most recently, the state merged its two major data centers and  
            its telecommunications network into a single DTS.  It also  
            revamped and expanded the role of the State CIO, and it  
            implemented the DGS Strategic Sourcing Initiative.  The  
            following is a very brief summary of each of these operations:

             a)   DTS and its governing Technology Services Board (TSB)  
               were established in 2005, by consolidating Calnet (the  
               state's telecommunications network), with the Teale Data  
               Center, and the Health and Human Services Data Center.  The  
               goal of the realignment and consolidation was to improve  
               the performance of the Executive Branch in managing the  
               state's IT infrastructure.  Management focus has been  
               placed on receiving best value acquisition and management  
               of IT resources, ensuring security, minimizing IT risk, and  
               ensuring competency among IT personnel throughout state  
               government.

             b)   Since 2002, the State CIO has been charged with  
               providing leadership on IT policy.  The State CIO develops  
               policy recommendations by working with three distinct  
               governance bodies or councils.  The IT Council advises on  
               overall IT planning and policy. The TSB sets policy on  
               enterprise services provided by DTS. The Enterprise  
               Leadership Council (ELC) provides a forum for Executive  
               Branch agencies to discuss and resolve business issues  
               related to enterprise-wide IT from a business perspective.









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             c)   The Strategic Sourcing Initiative is a process designed  
               to allow the state to purchase the best products and  
               services for the best value.  Strategic sourcing  
               streamlines procurement activities by consolidating,  
               renegotiating and automating contracts to achieve  
               significant savings.

           6)Key policy questions  :  The following are key policy issues AB  
            1668 raises:

              a)   Mandating a standard  :   According to DTS, there are no  
               other technology specific standards that are now in state  
               statute.  Whenever a standard, of any sort, is codified it  
               means that unless a future change in law occurs, the  
               codified standard is the only approach the state can take  
               to satisfying a technological business need.  If, in this  
               case, IT evolved in a manner that presented a yet  
               unanticipated software file format that exceeded the  
               promises of everything on the market today, the state would  
               have to make a statutory change to take advantage of the  
               new technology.
              
             It is unclear whether mandating a technology standard in  
               statute may or may not be a way to obtain best value  
               solutions to state business needs, while leveraging the  
               state's existing IT investment, and minimizing state costs  
               over the short, medium, and long term. 

              b)   Market forces already in play  :  There are changes  
               occurring in the IT marketplace and among organizations  
               that develop IT standards that may lead the state into  
               widespread utilization of open-file format software  
               applications without a statutory mandate.

             According to the ODF Alliance, an international organization  
               of companies that develop and promote the use of open-file  
               format standards, the use of open-file standards is growing  
               rapidly around the world.  More than 50 national  
               governments are using open-



             file format standards.  Furthermore, the alliance states that  
               businesses are responding to the needs of governments and  
               their customers, and implementing open-file formats in  








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               their products, with a variety of applications already on  
               the market.

              c)   Evaluating a proposal for a state IT standard  :  To date,  
               the State CIO and DTS have not prepared an analysis on the  
               potential impact of implementing an open-file format  
               standard in state government.  The State CIO has stated  
               there is no state preference in project design or in  
               procurement for open source or proprietary solutions.  The  
               Legislature has stated its intent that IT acquisitions be  
               compatible to a department or agency's short and long term  
               fiscal needs.  Therefore, the architecture of individual  
               information technology projects is determined initially by  
               the project owner, and the analysis supporting those  
               decisions typically appears in a Feasibility Study Report  
               (FSR) prepared by the Department of Finance.

             It is reasonable to assume that there are cost and  
               operational implications of imposing one kind of technology  
               standard upon an organization as large and complex as  
               California state government.  The state of Texas has  
               considered moving to an open-file format standard, and  
               found, at a minimum, there are cost and manpower  
               implications for training IT personnel on using the new  
               software, converting current files to the new format,  
               hardware requirements to accommodate greater data storage  
               needs associated with programs utilizing open-file  
               software, and reprogramming needs of existing computer  
                                                          systems. 

             According to the Director of DTS, which has no position on  
               the bill, implementation of and open-file format standard  
               would have to occur over a period of five or more years, at  
               a minimum, because that would be the earliest a refresh  
               cycle for IT could be accomplished.

             Before mandating a technology standard in statute, the  
               committee may wish to consider whether an evaluation of the  
               costs and implications resulting from implementation of an  
               open-file format standard should be undertaken.

             An analysis of mandating an open-file format standard for all  
               state software applications would need to assess the  
               opportunities, benefits, costs, and requirements of taking  
               such action.  An evaluation should also investigate the  








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               potential impact of what technology the state could not use  
               as a result of prohibiting the utilization of IT that is  
               based on a different standard than the one which would be  
               mandated, and the opportunity costs associated with that  
               kind of restriction.  The analysis might also consider how  
               a new technology standard would impact the 117 IT projects  
               currently in some form of development in state government.

             If an evaluation of mandating an open-file format standard is  
               undertaken, it may also need to assess the implications of  
               not taking such an action at all, and allowing state  
               government to migrate towards a standard on an evolutionary  
               basis.  With 117 IT projects in the development pipeline,  
               and probably many more to come, there may be practical and  
               policy consequences of not moving expeditiously to using  
               software applications built on open-file formats.  For  
               example, the number of state documents that might  
               additionally be created, and preserved in proprietary  
               formats, as a percentage of all government documents  
               already created in a proprietary format, may or may not be  
               statistically significant, as it pertains to goals and  
               policies concerning the accessibility of government  
               information.  Further, if the state were to purposefully  
               shift to mandating the use of open-file format  
               applications, the public may or may not be technologically  
               capable of following suit.  The implications of changing  
               the file format for preserved documents does not  
               necessarily mean the public will soon have the capability  
               to reasonably access that information from their existing  
               computer equipment and software.

              d)   Americans with Disability Act compliance :   Issues have  
               arisen as to whether current and future open-file format  
               software may be compliant with the Americans with  
               Disabilities Act (ADA).  Title II of the ADA prohibits  
               discrimination against persons with disabilities in state  
               and local government services, programs and activities.   
               State and local governments must operate their programs so  
               that when viewed in their entirety, are readily accessible  
               and useable by people with disabilities.  As disabilities  
               may affect people in different ways, flexibility in the  
               provision of programs and services has been a core element  
               of many ADA compliance programs.
              
             Meeting ADA has been a challenge for some state IT programs.   








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               Having one standard for the type of software may limit the  
               state's ability to provide systems that are fully ADA  
               compliant.  Allowing the state to use multiple formats,  
               both open-file and proprietary, may give the state more  
               opportunity to meet its ADA obligations.  It is unclear  
               whether  technology standards developed by international  
               standards organizations would appropriately address a  
               uniquely American and California civil right.                
                                              

              e)   Responding to technological change  :  How the state  
               chooses to pursue the implementation of any technology  
               standard may be influenced by its existing process to  
               study, and respond to changes in the world of IT, in a time  
               and manner which keeps California globally competitive, as  
               well as integrated with IT changes, in and out of  
               government.

             The recent reorganization of entities like DTS and the State  
               CIO, with their established advisory councils, is intended  
               to provide the state with strategic directives and ongoing  
               guidance to effectively utilize IT, to the best of the  
               state's ability.  Both of these organizations have produced  
               strategic plans that are designed to take the state into  
               the future with a minimum of problems in using IT. 

             The California State Information Technology Strategic Plan  
               was adopted in November, 2004, and is annually updated.  It  
               guides the acquisition, management and use of technology in  
               the Executive Branch of state government, for a five year  
               period.  The purpose of the plan is to undertake  
               comprehensive, collaborative planning and sustained,  
               engaged management and oversight, to reduce risks of IT  
               failure and increase opportunities for success.  The Plan  
               reflects the State CIO's ongoing evaluation, management,  
               and oversight efforts of all major IT initiatives in state  
               government.

           7)Options for moving ahead  :  To the extent that the committee  
            may wish to move forward with establishing an open-file  
            format, the following are several options:

              a)   Status Quo  :  Proceed with the bill as is, but request  
               that the State CIO and the Director of DTS provide  
               testimony, to the best of their ability, on the various  








                                                                  AB 1668
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               implications, advantages, disadvantages, estimated costs  
               and other relevant information, as the bill moves forward;

              b)   Two year bill  :  Make AB 1668 a two year bill, and hold  
               an informational hearing with appropriate stakeholders, as  
               well as the State CIO and the Director of DTS providing  
               relevant testimony;

              c)   Conduct a study and make recommendations for further  
               legislative action  :  Amend the bill to remove the mandate  
               for a technology standard, and add language that requires  
               the State CIO, in consultation with DTS, to perform an  
               evaluation on utilizing an open-file format standard in all  
               future state software applications, and report back to the  
               legislature for future action;

              d)   Conduct a study and authorize the State CIO to issue  
               guidance to all state agencies  :  Amend the bill to remove  
               the mandate for a technology standard, and add language  
               that authorizes the State CIO, in consultation with DTS, to  
               perform an evaluation on utilizing an open-file format  
               standard in all future state software applications, report  
               back to the legislature, and in the absence of any further  
               legislative direction, require the State CIO issue a  
               guidance to all state agencies reflecting his or her  
               findings, conclusions, and recommendations in regard to the  
               state migrating to the use of an open-file format standard;  
               and,

              e)   Conduct a proof of concept examination  :  Amend the bill  
               to require the State CIO, in conjunction with one  
               department, to conduct a proof of concept examination of  
               the issues and strategies associated with the state  
               adopting an open-file format standard, and moving forward  
               with multiple formats.   

           8)Technical amendment  :  The committee staff understands that the  
            author will offer a technical amendment to clarify that  
            open-file formats would be included in state standards  
            established by the State CIO.  The standard shall be developed  
            by an open-file standard setting organization.

           9)Related legislation  :  The following is a list of related bills  
            introduced this session:









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              a)   AB 617 (Torrico)  :  This bill changes the term of  
               "progress payments" relating to IT contracts for the  
               purpose of financing that contractor's cost of delivering a  
               good or service, prior to actual delivery.  Status:   
               Pending in the Assembly Committee on Business and  
               Professions.

              b)   AB 1579 (Lieber)  :  This bill requires DGS and the State  
               CIO to consult on appropriate requirements for IT  
               procurement RFPs.  Status:  Pending in the Assembly  
               Committee on Jobs, Economic Development, and the Economy.   
               Set for hearing on April 17, 2007.

              c)   SB 617 (Alquist)  :  This bill establishes a California IT  
               Procurement Practices Force to review the state's  
               practices, procedures and policies relating to IT  
               procurement.  Status: Pending in the Senate Committee on  
               Governmental Organization.  Set for hearing on April 24,  
               2007.

          10)Related legislation  :  The following related bill was enacted  
            during the 2005-06 session:

              a)   SB 954 (Figuroa)  : This bill required the Department of  
               General Services to establish policies and guidelines of IT  
               goods and services on or before January 1, 2007, and to  
               prepare an IT procurement checklist and establish a  
               centralized entity responsible for IT procurement methods.   
               Status:  Signed by the Governor - Chapter, 556, statutes of  
               2005.
             

           REGISTERED SUPPORT / OPPOSITION  :  

           Support 
           Adobe
          California Association of Environmental Health Administrators
          County Recorders Association of California
          Open Document Format Alliance
          Redhat
          Software & Information Industry Association
          Sun microsystems
          14 individuals

           Opposition 








                                                                 AB 1668
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           Computerland of Silicon Valley
          Initiative for Software Choice
          InterKnowlegy
          Micorsoft
          Vertigo Software
          Xponentia
          Harolds Board Shop
          Main Street Computers
          1 individual
           
          Analysis Prepared by  :    Les Spahnn / J., E.D. & E. / (916)  
          319-2090