BILL ANALYSIS Ó
AB 507
Page 1
Date of Hearing: April 14, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
AB 507
(Olsen) - As Amended March 26, 2015
SUBJECT: Department of Consumer Affairs: BreEZe system:
annual report.
SUMMARY: Requires the Department of Consumer Affairs (DCA) to
submit an annual report to the Legislature and the Department of
Finance that includes an implementation plan for phase three of
the "BreEZe" computer system.
EXISTING LAW
The Business and Professions Code (BPC):
1)Establishes the Consumer Affairs Act which specifies the
intent of the Legislature is to promote and protect the
interests of consumers by the following means: (BPC § 300)
a) Educating and informing the consumer to insure rational
consumer choice in the marketplace;
b) Protecting the consumer from the sale of goods and
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services through the use of deceptive methods, acts, or
practices which are inimical to the general welfare of
consumers;
c) Fostering competition; and,
d) Promoting effective representation of consumers'
interests in all branches and levels of government.
2)Authorizes the DCA to enter into a contract with a vendor for
BreEZe, the integrated, enterprise-wide enforcement case
management and licensing system, no sooner than 30 days after
notification in writing to the chairperson of the
Appropriations Committees of each house of the Legislature and
Chairperson of the Joint Legislative Budget Committee. (BPC §
210 (a)(1))
3)Specifies that the amount of the BreEZe system vendor
construct funds shall be consistent with the project costs
approved by the office of the State Chief Information Officer
based on its review and approval of the most recent BreEZe
Special Project Report to be submitted by the DCA prior to
contract award at the conclusion of procurement activities and
indicates that this shall apply to all Budget Act items for
the DCA that have an appropriation for the BreEZe system.
(BPC § 210(a)(2-3))
4)Specifies that the DCA shall, by December 31, 2014, submit to
the Legislature, the Senate Committee on Business, Professions
and Economic Development, the Assembly Committee on Business,
Professions and Consumer Protection and the budget committees
of each house, a report analyzing the workload of licensing
personnel employed by boards with the department participating
in the BreEZe system. (BPC § 210 (a)(b)(1))
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5)Indicates that the report submitted to the aforementioned
entities shall be submitted in compliance with Government Code
§ 9795. (BPC § 210(a)(b)(2))
The Government Code (GC):
6)Defines "report" as any study or audit. (GC § 9795 (a)(2)(e))
7)Includes the specifications for any report required or
requested by law to be submitted by a state or local agency to
the Members of either house of the Legislature including
guidelines for the summary page of the report, and for
printing, sending electronically and recording the report in
the journal of the appropriate house or houses of the
Legislature by the secretary or clerk of that house. (GC §
9795 (a)(1))
8)Specifies the rights of the public to receive copies of the
report from the state or local agency that authored the
report, or from the California State Library as the final
repository of public information. (GC § 9795 (a)(2))
THIS BILL
1) Requires the DCA, on or after January 31, 2016, to submit an
annual report to the Legislature and the Department of Finance
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that includes the following:
a) The DCA's plan for implementing the BreEZe system for
the regulatory entities in the third phase of the
implementation project, including a timeline for
implementation;
b) The total estimated costs of implementation of the
system for the regulatory entities in the third phase of
implementation along with a cost-benefit analysis; and
c) A description of whether the BreEZe system will achieve
any operational efficiencies after being implemented by
boards and regulatory entities.
2)Specifies that the report shall comply with Government Code §
9795.
3)Lists the regulatory entities in the DCA's third phase of the
implementation project as follows:
a) Acupuncture Board
b) Board for Professional Engineers, Land Surveyors, and
Geologists
c) Bureau of Automotive Repair
d) Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation
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e) Bureau for Private Postsecondary Education
f) California Architects Board
g) California Board of Accountancy
h) California State Board of Pharmacy
i) Cemetery and Funeral Bureau
j) Contractors' State License Board
aa) Court Reporters Board of California
bb) Landscape Architects Technical Committee
cc) Professional Fiduciaries Bureau
dd) Speech-Language Pathology and Audiology and Hearing Aid
Dispensers Board
ee) State Athletic Commission
ff) State Board of Chiropractic Examiners
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gg) State Board of Guide Dogs for the Blind
hh) Structural Pest Control Board
ii) Telephone Medical Advice Services Bureau
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS
1)Purpose. This bill is sponsored by the author. According to
the author, "In order to ensure that Californians can rely on
the services they depend on in a timely and efficient manner -
even after implementing new technology - the Legislature and
DOF need to keep a close eye on the negotiation, planning,
development and implementation processes for the boards that
we entrust with licensing professionals."
2)Background. In 2009, The DCA proposed the BreEZe information
technology system and the California Department of Technology
(CalTech) approved the proposal. BreEZe was envisioned to
be an answer to the DCA's out of date Legacy technology system
and would provide needed applicant tracking licensing,
renewal, enforcement monitoring and cashiering support for 37
of the 40 boards, bureaus, committees and one commission
housed within the DCA. The project began in 2011, and in
2013, BreEZe was launched for ten of the regulatory entities
(release 1). In March of 2016, BreEZe is intended to be
launched for another eight entities (release 2).
State Audit. In the midst of BreEZe implementation for release
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1 and 2 regulatory entities, the DCA's management of the
project came under public scrutiny from a variety of sources
including Assemblymember Olson and myriad nursing students and
graduates. The students and graduates were having difficulty
getting their applications for licensure and examination
processed by the Board of Registered Nursing - one of the
regulatory boards housed within the DCA. In response, on May
20, 2014, Assemblymember Olson wrote a letter to the former
Chairman of the Joint Legislative Audit Committee,
Assemblymember Adam Gray, requesting that the Joint
Legislative Audit Committee, "approve an audit of policies and
procedures on the planning, development and implementation of
[BreEZe] that was used by the Board of Registered Nursing."
On February 12, 2015, the State Auditor released a report
reflecting the following key findings from the audit:
"[DCA] did not adequately plan, staff and manage the
project for developing BreEZe;
CalTech did not ensure oversight for BreEZe until more
than one year after the project's commencement, and despite
being aware of the significant problems with the project,
continued to approve additional funding and allowed the
project to press forward without intervening to ensure
[DCA] took corrective action; and,
The three contracts that [DCA] awarded and the
Department of General Services approved for the BreEZe
project did not adequately protect the State- the
contracts' terms and conditions transferred significant
risk to the State, limited DCA's ability to terminate the
contracts, and reduced the State's protections against
intellectual property rights violations."
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The State Auditor also provided the following key
recommendations:
"The Legislature should require [DCA] to submit a report
annually that includes implementation plans for the
project's phase 3 regulatory entities, estimated costs
through implementation, and nay operation efficiencies that
will result from implementation by the regulatory entities;
CalTech should ensure that [DCA] promptly responds to
and addresses concerns raised by independent oversight
entities, require [DCA] to analyze the costs and benefits
of moving forward with the project as planned versus
suspending or terminating the projects, and document
reasons for approving any future deviations from standard
contract language; and,
[DCA] should undertake all required oversight activities
with respect to BreEZe to prevent or identify and monitor
any problems that arise, complete a cost-benefit analysis
of the project and any required changes, and continue to
work with the phase 1 regulatory entities to ensure
problems are promptly resolved."
(California State Auditor Fact Sheet, California Department
of Consumer Affairs' BreEZe System, February 12, 2015)
The DCA responded to the State Auditor's audit in a letter
dated January 22, 2015. In it, the Director of the DCA, Awet
Kidane, stated, "The Department appreciates your office's
review of the BreEZe System and agrees with its
recommendations. The Audit findings reflect a number of areas
of concern that the Department has been in the process of
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correcting, and in many cases, has already corrected."
The CalTech also responded to the audit in a letter dated
January 22, 2015, "While the recommendations made in the
report are for the most part appropriate and in line with
actions and initiatives that CalTech has already undertaken,
we have general concerns with the report?It is important to
acknowledge that the BreEZe system was successfully put into
production in 2014. BreEZe is currently in daily use and is
successfully processing licenses, collecting fees and handling
customer service request for the Boards and Bureaus that were
included in Release 1. This is evidenced by the following
production metrics for the period of October 2013 through
October 2014:
Number of Registrations processed: $444,000
Initial Applications Processed: $251,000
Revenue Collected: $137,000,000
50,000 complaints filed [online]."
Changes to the BreEZe Contract. After negotiation with the
BreEZe vendor, Accenture, the DCA decided to end the "design
and development" contract at the conclusion of release 2 while
maintaining the "software licensing" and "maintenance and
operations" contracts for release 1 and 2 regulatory entities.
This amendment to the contract was estimated to increase
project costs by $17.5 million. DCA indicated it would
perform a cost-benefit analysis and reassess the plan for
providing IT support to the remaining regulatory entities that
had not launched BreEZe yet.
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On January 27, 2015, the Department of Finance notified the
Joint Legislative Budget Committee (JLBC) of a request from
the DCA to enter into the aforementioned contract amendment.
The response to the request, from the Chair of JLBC, Senator
Mark Leno, was as follows, "I do not concur at this time?the
request reflect a significant change in project costs and
scope?" Instead, the Chair of the JLBC requested additional
information from the DCA including:
1. DCA's long term plan for the project. "The legislature
needs the long-term plan for moving forward?including the
anticipated cost and timeline for providing IT solutions
for the [boards] and bureaus in Release 3;
2. Allocation of project costs. "Information is also needed
on how project costs will be allocated across boards and
bureaus and how those costs will affect license fees for
each entity; and,
3. Reassess request following oversight hearings. "By not
concurring with the [request] at this time, it will provide
budget and policy committees with an opportunity to more
fully evaluate the options for moving forward with the
project."
Legislative Committees' Response. On March 12, 2015, the DCA,
CalTech and the State Auditor presented information about the
BreEZe project and the audit before the Senate Budget and
Fiscal Review Committee Subcommittee No. 4. These parties
presented information again On March 23, 2015, before the
Assembly Committee on Business and Professions and the Senate
Committee on Business, Professions and Economic Development's
Joint Sunset Review Oversight Hearing.
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On March 24, 2015, the JLBC Chair wrote a letter to the
Department of Finance indicating, "The hearings have provided
[an] opportunity for [a] fuller evaluation of BreEZe." As a
result, the JLBC Chair noted in his letter, "DCA may proceed
with the contract amendment." He also noted, "?it is my
expectation that DCA will provide the Legislature with more
comprehensive and timely information regarding the
implementation of the BreEZe project on an ongoing basis. This
should include:
Any relevant project updates related to Releases 1 and
2;
A plan for Release 3, including DCA's best current
estimate of anticipated project schedule and costs, as well
as the expected costs to each board and bureau and their
licensees; and,
Copies of DCA's mandated status reports to the State
Auditor regarding implementation of the Auditor's
recommendations."
REGISTERED SUPPORT / OPPOSITION
Support:
None on file.
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Opposition:
None on file.
Analysis Prepared by:Le Ondra Clark Harvey, Ph.D. / B. & P. /
(916) 319-3301