BILL ANALYSIS Ó
AB 507
Page A
ASSEMBLY THIRD READING
AB
507 (Olsen)
As Amended June 1, 2015
Majority vote
-------------------------------------------------------------------
|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Business & |14-0 |Bonilla, Jones, | |
|Professions | |Baker, Bloom, | |
| | |Campos, Chang, Dodd, | |
| | |Eggman, Gatto, | |
| | |Holden, Mullin, | |
| | |Ting, Wilk, Wood | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
AB 507
Page B
-------------------------------------------------------------------
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. Specifically, this bill:
1)Requires the DCA, on and after October 1, 2015, to submit an
annual report to the Legislature and the Department of Finance
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
Section 9795.
3)Lists the regulatory entities in the DCA's third phase of the
implementation project as follows:
a) Acupuncture Board.
AB 507
Page C
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.
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.
AB 507
Page D
dd) Speech-Language Pathology and Audiology and Hearing Aid
Dispensers Board.
ee) State Athletic Commission.
ff) State Board of Chiropractic Examiners.
gg) State Board of Guide Dogs for the Blind.
hh) Structural Pest Control Board.
ii) Telephone Medical Advice Services Bureau.
4)Adds an urgency clause.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill will result in minor and absorbable costs to
the DCA (General Fund) to complete the annual report.
COMMENTS:
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."
AB 507
Page E
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 10 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 1
and 2 regulatory entities, the DCA's management of the project
came under public scrutiny from a variety of sources including
Assembly Member Olsen and a 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, Assembly Member Olsen
wrote a letter to the former Chairman of the Joint Legislative
Audit Committee, Assembly Member 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:
1)"[DCA] did not adequately plan, staff and manage the project for
developing BreEZe;
2)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
AB 507
Page F
forward without intervening to ensure [DCA] took corrective
action; and,
3)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."
The State Auditor also provided the following key
recommendations<1>:
1)"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;
2)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,
----------------------------
<1>
California State Auditor Fact Sheet, California Department of
Consumer Affairs' BreEZe System, February 12, 2015
AB 507
Page G
3)[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."
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 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:
1)Number of Registrations processed: $444,000
2)Initial Applications Processed: $251,000
3)Revenue Collected: $137,000,000
AB 507
Page H
4)Fifty thousand 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.
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
AB 507
Page I
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 Business
and Professions Committee and the Senate Business, Professions and
Economic Development Committee's Joint Sunset Review Oversight
Hearing.
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:
1)Any relevant project updates related to releases 1 and 2;
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,
3)Copies of DCA's mandated status reports to the State Auditor
regarding implementation of the Auditor's recommendations."
Analysis Prepared by:
Le Ondra Clark Harvey, Ph.D. / B.
AB 507
Page J
& P. / (916) 319-3301 FN: 0000867