BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                        AB 522|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 522
          Author:   Burke (D), et al.
          Amended:  8/31/15 in Senate
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  10-1, 7/14/15
           AYES:  Hall, Block, Gaines, Galgiani, Glazer, Hernandez, Hill,  
            Hueso, Lara, McGuire
           NOES:  Vidak
           NO VOTE RECORDED:  Berryhill, Runner

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/27/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  78-0, 6/2/15 - See last page for vote

           SUBJECT:   Public contracts:  information technology:   
                     contractor performance assessment report


          SOURCE:    Author
          
          DIGEST:    This bill requires the Director of Technology, by  
          January 1, 2017, to develop a standardized contractor  
          performance assessment report system to evaluate the performance  
          of a contractor on any information technology (IT) contract or  
          project reportable to the Department of Technology (Caltech), as  
          provided. 

          ANALYSIS:
          
          Existing law:








                                                                     AB 522  
                                                                    Page  2


          
          1)Establishes Caltech within the Government Operations Agency. 

          2)Provides that Caltech is responsible for the approval and  
            oversight of specified IT projects. 

          3)Sets forth requirements for the acquisition of goods and  
            services by state agencies and sets forth the various  
            responsibilities of the Department of General Services (DGS)  
            and other state agencies in overseeing and implementing state  
            contracting procedures and policies.

          4)Requires, generally, that all contracts for the acquisition of  
            IT goods or services be made by or under the supervision of  
            DGS.

          This bill:

          1)Requires the Director of Technology, by January 1, 2017, to  
            develop a standardized contractor performance assessment  
            report system to evaluate the performance of a contractor on  
            any IT contract or project reportable to Caltech.

          2)Specifies that the contractor performance assessment report  
            system shall include, but is not limited to, multiple  
            evaluations before the final evaluation, a minimum 30-day  
            response period for the contractor to respond to the final  
            evaluation, an objective evaluation of the performance of the  
            contractor, information about the type of contract or project  
            and whether or not that contract or project was completed on  
            time, and information about the number of completed contracts  
            or projects by the contractor. 

          3)Provides that upon the development of the contractor  
            performance assessment report system, the Director of  
            Technology shall implement the contractor performance  
            assessment report system for all IT contracts and projects.

          4)Specifies that the contractor performance assessment report  
            system shall, in addition to any other applicable information  
            technology procurement procedures, be utilized to evaluate and  
            award any IT contract or project awarded pursuant to the  
            provisions of this bill. 








                                                                     AB 522  
                                                                    Page  3


          Background
          
          Purpose of the bill.  According to the author, "over the past  
          several years, the State of California has experienced many  
          difficulties with IT projects that have resulted in projects  
          going over budget, over time, and in some cases not working at  
          all.  As indicated in the recent state auditor report between  
          1994 and 2013 the state terminated or suspended seven IT  
          projects after spending nearly $1 billion and currently the  
          state has 45 IT projects under development that are reported to  
          cost more than $4 billion."

          The author further argues that, "currently the federal  
          government relies heavily on past performance of vendors as an  
          evaluation criterion and has implemented a system known as the  
          Contractor Performance Assessment Reporting System (CPARS).    
          This provides real-time data that is collected through the use  
          of a report card that evaluates vendor performance in key areas  
          that are directly correlated to the quality of work, including  
          project schedule, cost control, project management,  
          communication, and compliance.  Providing a means to collect  
          real-time data on vendor's performance during an IT project  
          offers a significant benefit to California by offering a  
          relevant way to assess quality of work, gauging actual customer  
          satisfaction, and creating an incentive to maximize performance  
          on contracts."

          Contractor Performance Assessment Reporting System.  CPARS is a  
          web-enabled application that collects and manages the library of  
          automated Contractor Performance Assessment Reports (CPAR).  A  
          CPAR assesses a contractor's performance and provides a record,  
          both positive and negative, on a given contractor during a  
          specific period of time.  Each assessment is based on objective  
          facts and supported by program and contract management data,  
          such as cost performance reports, customer comments, quality  
          reviews, technical interchange meetings, financial solvency  
          assessments, construction/production management reviews,  
          contractor operations reviews, functional performance  
          evaluations, and earned contract incentives.

          Prior/Related Legislation
          
          AB 2523 (Cooley, Chapter 391, Statutes of 2014) required Caltech  
          to review a specified project management methodology manual and,  







                                                                     AB 522  
                                                                    Page  4


          based on that review, provide a report to the Legislature by  
          July 1, 2016, recommending how a team of senior consulting IT  
          experts can assist senior department executives charged with  
          oversight of major IT projects. 

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee, Caltech  
          estimates annual costs of approximately $350,000 to develop a  
          performance assessment system, and to maintain the information  
          received from evaluations of contractors and vendors (General  
          Fund).  In addition, unknown ongoing costs to state departments  
          or agencies acquiring IT projects to perform contractor  
          evalutions.  These costs are likely to be built into overall  
          contracts costs (General Fund or special funds, as applicable).




          SUPPORT:   (Verified8/28/15)


          Natoma Technologies


          OPPOSITION:   (Verified8/28/15)


          None received

          ARGUMENTS IN SUPPORT:  According to Natoma Technologies,  
          "currently, State IT procurements qualify vendors via irrelevant  
          and arbitrary data points that include the vendor's annual  
          revenue, the size of previous contracts the vendor has acquired,  
          and whether a vendor can provide a positive reference.  To be  
          clear, most vendors can identify someone associated with the  
          project who will speak positively about it, rendering the highly  
          used reference method rather arbitrary.  While conclusions can  
          be made from collecting this type of data, it falls short of  
          providing key evaluation criteria that actually matter for  
          successful IT projects."








                                                                     AB 522  
                                                                    Page  5


          ASSEMBLY FLOOR:  78-0, 6/2/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Chávez, Grove

          Prepared by:Felipe Lopez / G.O. / (916) 651-1530
          8/30/15 19:42:15


                                   ****  END  ****