BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                       Bill No:  AB  
          2523
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                           Senator Lou Correa, Chair
                           2013-2014 Regular Session
                                 Staff Analysis



          AB 2523  Author:  Cooley
          As Amended:  June 25, 2014
          Hearing Date:  July 1, 2014
          Consultant:  Paul Donahue


                                     SUBJECT  

                           Department of Technology 

                                   DESCRIPTION
           
          Requires the Director of the Department of Technology (DOT)  
          to review a specified manual and draft a report to the  
          Legislature by July 1, 2016. Specifically,  this bill  :

          1)Requires the DOT to report to the Legislature  
            recommending how a team of senior consulting information  
            technology experts could be developed to serve as support  
            for state agencies and senior project team members in  
            state government to support their exercise of leadership,  
            monitoring, control, and direction over information  
            technology projects to minimize risks of those projects  
            being completed improperly and over budget.

          2)In preparing the report, directs DOT to review the  
            California Project Management Methodology Reference  
            Manual. 

          3)Specifies that the report shall be based on the review of  
            that manual, and shall also consider how a team of senior  
            consulting advisors can assist senior executives charged  
            with oversight of major information technology projects  
            in terms of the challenges arising from all of the  
            following:






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             a)   Governance.
             b)   Development and management of contracts.
             c)   Testing.
             d)   Organizational change management.
             e)   Data conversion and migration.
             f)   Schedule development and management.
             g)   Evaluation and possible pitfalls of seeking value  
               for taxpayers by re-engineering state systems and  
               procedures.
             h)   Risk and issue identification and management.
             i)   Interface identification and management.
             j)   Quality assurance and quality control.
             aa)  Requirements definition and management.
             bb)  Architecture.
             cc)  Roll-out planning and approach.

          4)Requires the Director of Technology (aka the State Chief  
            Information Officer) to establish a unit within DOT of  
            consulting information technology experts to serve as  
            support for state agencies.

          5)Contains an urgency clause. The facts constituting its  
            necessity are to facilitate early support for ongoing  
            technology projects.

                                   EXISTING LAW

           Existing law establishes the Department of Technology (DOT)  
          within the Government Operations Agency. The director of  
          the DOT is also known as the State Chief Information  
          Officer (CIO). The DOT is responsible for the approval and  
          oversight of information technology projects by, among  
          other things, consulting with agencies during initial  
          project planning to ensure that project proposals are based  
          on well-defined programmatic needs and consider feasible  
          alternatives to address the identified needs and benefits  
          consistent with statewide strategies, policies, and  
          procedures.

                                    BACKGROUND
           
           1)Purpose of the bill  : According to the author, large State  
            technology projects often take years, and may span  
            multiple gubernatorial administrations. There is often  
            costly and disruptive turnover in staff due to change in  
            senior managers, retirements, and career changes that  





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            occur during development and implementation of the  
            projects. The author believes that the long time horizon  
            of major projects and staffing turnover destroys  
            continuity at the project management level and this  
            hinders active project leadership.

            The author believes that AB 2523 would provide needed  
            guidance and would strengthen State government by  
            developing a strong class of IT professionals whose  
            career track will allow them to grow a depth of  
            familiarity with the unique challenges across a broad  
            array of large and complex IT projects - providing a  
            source of highly seasoned and experienced IT advisors to  
            support strengthened management of complex projects. 

           2)Selected State information technology problems in recent  
            years  : In 1987, the Department of Motor Vehicles (DMV)  
            undertook a major project whose goal was to update its  
            20-year-old system and merge the DMV's driver's license  
            and vehicle registration databases. At the beginning of  
            the project, it was expected to cost $27 million and be  
            up and running within 5 years. However, in 1993, six  
            years later, the DMV project was abandoned completely.  
            The DMV had spent $44.3 million on a system that  
            ultimately did not work. 

            The Department of Information Technology (DOIT) was  
            created in 1995 to oversee planning development of  
            government information technology and was instrumental in  
            securing a six-year, $95 million contract with Oracle for  
            enterprise software. The no-bid, sole-source deal was  
            widely scorned and triggered an investigation by the  
            State Auditor in 2002, who issued a report criticizing  
            the deal, alleging among other things that the State  
            might have saved $41 million if it had obtained the  
            software without the contract. In the wake on the  
            controversy, four state officials resigned, including the  
            director of DOIT, and in July 2002, the State officially  
            canceled the contract. 

            In 2012 the State Auditor reviewed and roundly criticized  
            Administrative Office of the Courts' (AOC) oversight of  
            the development of its statewide case management project.  
            The audit revealed that the AOC:

                     Inadequately planned for the statewide case  





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                 management project and did not analyze whether the  
                 project would be a cost-beneficial solution to the  
                 superior courts' needs.
                     Was unable to provide contemporaneous analysis  
                 and documentation supporting key decisions on the  
                 project's scope and direction.
                     Did not structure the development vendor's  
                 contract to adequately control cost and scope - over  
                 the course of seven years, the AOC entered into 102  
                 amendments and increased the cost from $33 million  
                 to $310 million.
                     Failed to develop accurate cost estimates - in  
                 2004 the cost estimate was $260 million and by 2010  
                 the estimated cost was $1.9 billion. 
                     Did not obtain the funding needed for statewide  
                 deployment, noting that, without full deployment to  
                 the 58 superior courts, the value of the project is  
                 diminished.<1>

            In recent years, the Employment Development Department  
            (EDD) has spent roughly $158 million upgrading the  
            State's 30-year-old unemployment payment processing  
            system. The upgraded system was originally supposed to  
            cost $35 million and be operational in 2009, but a series  
            of missteps delayed the delivery schedule and increased  
            costs. 

            Once the system was operational last year, EDD discovered  
            that the new computer system was misreading its existing,  
            legacy beneficiary data, and that the "glitch" was  
            significantly more widespread that first anticipated. EDD  
            admitted that nearly 50,000 claimants were affected by  
            the system's operational problems. It was later revealed  
            in news accounts that the new unemployment system was  
            essentially broken from the start, that EDD officials  
            knew it was not fully operational, and yet they moved  
            forward with the rollout of the system in any event. 

           1)Organizational history of State technology management  
            entities  : On July 1, 2002, the statutes establishing the  
            Department of Information Technology (DOIT) were allowed  
            to sunset by the California State Legislature. As a  
          -------------------------
          <1> Administrative Office of the Courts: The Statewide Case  
          Management Project Faces Significant Challenges Due to Poor  
          Project Management, Report 2010-102, February 2011.






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            result, decision-making in the Executive Branch for  
            enterprise information technology issues fell to a  
            handful of other agencies exercising discretion pursuant  
            to existing delegations of authority. Decisions about  
            information technology policy, project initiation,  
            project oversight and security policy fell to the  
            Department of Finance. Information technology procurement  
            policy and implementation became the responsibility of  
            the Department of General Services.

            Four years after the closing of DOIT, Senate Bill 834  
            (Figueroa) in 2006 authorized the establishment of the  
            Office of the State Chief Information Officer (OCIO).<2>  
            The CIO is a cabinet-level officer. In August 2007 the  
            Legislature appropriated funds to establish the OCIO as  
            the first cabinet-level agency with statutory authority  
            over strategic vision and planning, enterprise  
            architecture, IT policy, and project approval and  
            oversight.<3>

            In May 2009, Governor's IT Reorganization Plan (GRP 1)  
            took effect, consolidating statewide information  
            technology functions under OCIO. Specifically, GRP  
            1combined four agencies - OCIO, Office of Information  
            Security and Privacy Protection, the Department of  
            Technology Services, and the Department of General  
            Services' Telecommunications Division - into an expanded  
            OCIO. The GRP and its subsequent enabling legislation  
            also re-established the office as the California  
            Technology Agency and renamed the State Chief Information  
            Officer as the Secretary of California Technology.

            On July 1, 2013, the California Technology Agency became  
            the Department of Technology (DOT) pursuant to GRP 2 of  
            2012. The DOT now reports through the newly established  
            Government Operations Agency. The GRP also includes a new  
            Statewide Technology Procurement Division, which is now  
            responsible for procurement of the State's largest IT  
            ------------------------
          <2> Govt. Code § 11545

          <3> SB 90 (Budget & Fiscal Review), Chapter 183, Statutes  
          of 2007








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            projects.<4>   

           2)California Project Methodology Manual  : As noted in the  
            Legislative findings and declarations in AB 2523, the CIO  
            issued the manual in July 2013. "The manual breaks large  
            information technology projects into the phases of  
            initial concept, initiating, planning, executing, and  
            closing. The manual emphasizes that the critical role  
            throughout these phases is with the attendant management  
            duties of monitoring and controlling to ensure the  
            project is advancing in accordance with budget and  
            outcome expectations. The manual highlights the critical  
            role of the project management team, which includes the  
            distinct roles of the executive sponsor, project steering  
            committees, project director, and project manager."  

            The report required by AB 2523 must be based on the  
            review of the manual. The author thereby believes that  
            the manual highlights critical leadership functions that  
            successful IT project management requires.

           3)Technical amendment  : On Page 4, lines 25 through 28,  
            inclusive, the following technical amendment should be  
            adopted by the author or the Committee:

            (b) The report shall be transmitted to  all legislative  
            committees with jurisdiction over state information  
            technology, including, but not limited to,  the Senate  
            Committee on Governmental Organization and the Assembly  
            Committee on Accountability and Administrative Review, in  
            compliance with Section 9795.

                            PRIOR/RELATED LEGISLATION
           
          AB 2408 (Smyth), Chapter 404, Statutes of 2010. Codified  
          GRP 1 and Executive Order S-03-10, extending the sunset  
          date of the provisions of law [SB 834 (Figueroa), infra]  
          that first established the OCIO. The OCIO was reestablished  
          as the California Technology Agency (Technology Agency),  
          and the bill renamed the State Chief Information Officer as  
          the Secretary of California Technology.

          SB 834 (Figueroa), Chapter 533, Statutes of 2006.  
          Implemented GRP 2 from 2005. Authorized the establishment  
          -------------------------
          <4> The Public Safety Communications Office moved to the  
          Governor's Office of Emergency Services under GRP 2 of  
          2012.





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          of the Office of the State Chief Information Officer  
          (OCIO), established the Department of Technology Services  
          (DTS) in state government within the State and Consumer  
          Services Agency, and the Technology Services Board, with a  
          specified membership, within DTS. Authorized DTS to  
          acquire, install, equip, maintain, and operate new or  
          existing business telecommunications systems and services  
          and requires it to coordinate all matters affecting  
          statewide business telecommunications policy and planning. 

          SB 791 (Florez), 2003-2004 Session. Would have created the  
          position of the State Chief Information Officer (CIO) for  
          the purpose of directing the state's information technology  
          investments through strategic planning that would advance  
          statewide information policy. Would also have created the  
          Information Technology Board, administered by the Director  
          of Finance (DOF) with the assistance of the Director of  
          General Services, to advance the procedures and policies  
          for state agencies as developed by the CIO. Would have  
          required DOF to establish policies for information  
          technology projects. (Failed passage in Senate Governmental  
          Organization Committee) 

          SB 1 (Alquist), Chapter 508, Statutes of 1995. Replaced the  
          Office of Information Technology with the Department of  
          Information Technology, and prescribed the duties and  
          responsibilities of the department.

           SUPPORT:   

          None on file

           OPPOSE:   

          None on file

           FISCAL COMMITTEE:   Senate Appropriations Committee



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