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: AB 2523 (Cooley) continued PageB 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 AB 2523 (Cooley) continued PageC 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 AB 2523 (Cooley) continued PageD 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. AB 2523 (Cooley) continued PageE 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 AB 2523 (Cooley) continued PageF 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 toall 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. AB 2523 (Cooley) continued PageG 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 **********