BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 335
                                                                  Page  1

          Date of Hearing:   August 22, 2013

                            ASSEMBLY COMMITTEE ON BUDGET
                                Skinner, Nancy, Chair
                      SB 335 (Yee) - As Amended:  August 5, 2013

           SENATE VOTE :   28-10
           
          SUBJECT  :   State Contract Expenditure Reporting

           SUMMARY  :  Requires the FI$Cal accounting system, which is  
          currently under development, to report information on all  
          contracts over $5,001 for agencies and departments that use the  
          system.  Specifically,  this bill  :  Stipulates that contract  
          information for all contracts in departments that use FI$Cal  
          must be searchable and sortable and contain the name of the  
          contractor, a description of services, the total projected costs  
          of the contract, the amount paid to the contractor in the  
          current and prior years, the effective date of the contract, and  
          the procurement method.

           FISCAL EFFECT  :  Committee staff believe any costs associated  
          with this bill have already been accounted for in the current  
          project costs for the FI$Cal project.

           COMMENTS  :  FI$Cal, the State's effort to modernize the State's  
          accounting and budgeting practices and install modern automation  
          tools is well underway.  This bill intends to set reporting  
          requirements upon the new system that are consistent with prior  
          legislative intent around the goals of the project to provide  
          accessible information on State expenditures.    

          In creating the FI$Cal project, the Legislature set some broad  
          goals and priorities for the information contained in the new  
          system.  This bill builds upon those goals, by appropriately  
          refining the expectations regarding the project.

          Currently, the State operates the State Contracting and  
          Procurement Reporting System (SCPRS), which provides information  
          on State contracts.  This data cannot be easily analyzed or  
          sorted, which makes it difficult to analyze and search.  The  
          data is also hard to aggregate because a single vendor name may  
          be coded inconsistently by different account clerks.  This  
          limitation has been recognized during Assembly budget oversight  
          hearings in the recent past, when information regarding State  








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          contract expenditures were scrutinized.

          The FI$Cal system will solve these problems with its  
          improvements to procurement.  The system has already developed a  
          single chart of accounts, which will be rolled out across 140  
          departments and a centralized vendor management file that will  
          improve the standardization of the data.  The system itself is  
          designed to produce reports that have the sortable functionality  
          that is similar to the requirements of this bill.  When the  
          system is fully operational in 2016, the type of information  
          required in this bill will be available within the FI$Cal  
          system.  Therefore, this bill appears to be consistent with the  
          efforts already underway with the FI$Cal project.  Many of the  
          potential costs of this bill, such as changing the State  
          Contracting Manual, will need to be undertaken to implement the  
          FI$Cal project itself, so the additional specificity on  
          reporting articulated in this bill should have no additional  
          costs.

          Fi$Cal project staff restate that not all State agencies will  
          use the contract procurement components of Fi$Cal and thus the  
          data requested in this bill will not be provided for those  
          departments.   In particular, data for Lottery, Corrections,  
          DMV, Caltrans, and Water Resources will not have contract data  
          available in Fi$Cal.  However, these departments would  
          technically "use the Fi$Cal system" for other functionality,  
          like budgeting.  The author's office states that the intent of  
          the bill is consistent with this clarification and there is no  
          expectation that this bill would require an increase in the  
          scope of the project to require new functionality for  
          departments.     

          Currently the $616.8 million FI$Cal project is on schedule and  
          has met its significant project milestones.  The project has  
          implemented its "Pre-Wave" activities to develop the templates  
          and architecture of the system and then will begin rolling out  
          the project through four "Waves" of departments over the next  
          three years.  

          The information gathered through the requirements of this bill  
          may not be sufficient to capture true contract expenditures for  
          State vendors.  Most state appropriations can be encumbered for  
          up to three years, which means contractors can have pending  
          unpaid invoices that would not be reported in the current and  
          prior year data, as required in the bill.  Very large projects,  








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          like the IT contracts for efforts like the FI$Cal system  
          contract or the High Speed Rail Authority's contracts for  
          construction, often have longer appropriation periods to  
          accommodate the complexity and duration of the project.  Thus,  
          if this bill is enacted, further reporting could be required to  
          provide a comprehensive picture of contract expenditures.

          The Legislature may need to revisit FI$Cal reporting language to  
          align the expectations of reporting with the capabilities of the  
          system.  While the requirements in this bill appear to be broad  
          enough to fit within the expected functionality of the system,  
          it will be worth revisiting to ensure that the system is  
          providing data efficiently to the public and the Legislature  
          itself. 


           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          AFSCME (Sponsor)
           
            Opposition 
           
          None on File.

           Analysis Prepared by  :    Christian Griffith / BUDGET / (916)  
          319-2099