1.1) Clarify the distinctions between policy and procedure. Ideally,
policy and procedure will be documented separately since
procedures by definition are the methods to support policy.
Furthermore, this ensures that updates and changes to policy and
procedure are reflected in the proper, corresponding document. `

1.2) Establish a permanent organizational structure and process
for maintaining the purchasing policies in order to keep them
consistent and current.

1.3) Establish a process for the evaluation, analysis, creation, and
approval of new policies.

1.4) Declare SAM the single policy manual for purchasing.
Consolidate all purchasing policies in one source document with
defined custodial structure, update and communication processes.

1.5) Form a purchasing policy reform committee with
representatives from the DGS Office of Legal Services (OLS) and
Procurement Division (PD) as well as other interested parties (e.g.
DOF, Governor's Office) to undertake a sufficiently staffed initiative to
update SAM.

1.6) Using the committee structure and defined process,
systematically analyze the SAM, CAM, SCM, SIMM, and other
current purchasing policy sources and rewrite them section-bysection
to form a consistent set of policies in SAM. Upon completion
of updating SAM, dissolve all other purchasing policy sources.

1.7) Assign responsibility for SAM updates to a sufficiently staffed
and empowered, single entity and enforce appropriate maintenance.

1.8) Because effective policies and procedures require a specific
writing skill, DGS should invest in the appropriate training for policy
and procedure authors.

1.9) Publish SAM on the DGS Internet site. This version ought to
be the most up-to-date and "trusted" version.

1.10) Update procedures for providing printed versions of SAM to
those who cannot access the DGS Internet site.

2.1) Create policies that define and clarify purchasing categories
in keeping with the statutes. Additionally, classify within policy those
types of items that can be "universally" typed or categorized.

2.2) Using the statutory or policy definitions of each category,
develop a standardized procedure to assist buyers in identifying the
correct purchasing category. Standardized procedures should
reduce or eliminate the "gray area" between categories and define a
process for consistent choice and use of the rules and definitions
contained in the statutes and policies. These procedures should
include the documentation necessary to justify what information the
buyers used to make their decision.

2.3) Include telecommunications policies and procedures as one
of the purchasing types. Coordinate with TD to develop an
integrated process including appropriate approvals and checks
performed by TD, DOF, and PD. Telecommunications is an area
where all three oversight agencies must coordinate to make the
process clear for client agencies.

2.4) Develop procedural job-aids or guides, such as decision
trees, checklists, and flowcharts, to assist buyers in classifying or
"typing" the purchasing category as goods, services, IT
goods/services. These tools would help buyers follow the
procedures and comply with the policies as they conduct the State's
purchases.

3.1) To clearly define the authority, roles, and responsibilities for
procurement of IT goods and services, the legislature should pass
such legislation as necessary to update and clarify the Public
Contract Code and Government Code, and assign the DOIT roles
and responsibilities to another agency.

3.2) Since DGS is responsible for developing policies and
procedures for the purchase of goods, it should also be responsible
for developing policies and procedures for the purchase of IT goods
and services. Coordination with other control agencies such as DOF
would be necessary, but the final authority for all purchasing policies
and procedures should lie with DGS. Even though MM 02-20 clearly
states that purchasing policy is DGS' area, an effort should be made
to work through the legislature to change the statutes to grant DGS
the authority for development of statewide purchasing policy and
procedure.

4.1) Since the intent of the alternative procurement process was to
introduce innovation into the purchasing process, DGS should
reinforce the creative aspects of the process to bring it back in line
with the initial intent of providing unique, alternative procurement
approaches to specific, out of the ordinary business problems. This
may be accomplished through the re-introduction of a new, betterdefined
alternative procurement process.

4.2) Upon establishing changes to the alternative procurement
process, update all references to the pilot from SAM, CAM, and
other policy or procedure documents, such as the Delegation
Guidelines and the Alternative Protest Pilot statute PCC §12127(c).

4.3) Remove the terminology that refers to the "pilot" aspects of
the policy (e.g., "Within two years…" and "…assess these
processes…").

5.1) In keeping with previous options, centralize CMAS policies in
SAM. Remove the policy aspects from the existing CMAS "packets"
and place them in SAM where appropriate.

5.2) CMAS Bulletin #35 prescribes that at least three offers be
solicited and obtained when a State agency uses CMAS as a
purchasing mechanism. The CMAS packets also state that CMAS
transactions must be in the context of "best value." Solicitation and
evaluation procedures should be developed to ensure that agency
users of CMAS are adequately and consistently determining and
documenting their "best value" decisions. These procedures should
reflect the appropriate level of rigor for various transaction types and
sizes.

5.3) Optimally, the term "best value" would be replaced with the
codified term of "value-effective".

5.4) Develop procedures for vendors and agencies to follow when
there is a grievance or issue with the selection or Purchase Order
award for a CMAS transaction.

6.1) Only issue Management Memos that announce and explain
policy or procedure changes and reference the policy or procedure
source documents. The source policy document would be SAM and
not the Management Memos. This practice requires that SAM be
updated in a timely manner. As an example of this, the DOF
Management Memo 02-20 summarizes policy changes and provides
pointers to the actual policies in SAM and SIMM.

6.2) Similarly, work with other groups (e.g., DOF, Governor's
Office) to cease issuing Executive Orders, Budget Letters,
Technology Directives and other correspondence that are policy
changes in and of themselves, rather than announcements of policy
changes.

7.1) Create and continuously maintain a purchasing glossary that
clearly defines and documents purchasing terms and phrases.
Provide examples of their usages.

8.1) Develop a defined process, assign responsibility, and
dedicate the requisite resources to maintain the aforementioned
references continually.

8.2) Include the true and updated annotated code in the
references instead of the current plain-text version.

9.1) Identify and dedicate resources to develop common
processes and procedures for use by DGS buyers and those
purchasing officials in other State agencies. These processes and
procedures would culminate in an electronic knowledge-base
accessible at the buyer's desktop, including tools, job aids,
templates, etc. Since procedure is contained in multiple locations
today (e.g., CAM, Delegation Guidelines), an initial task should be a
comprehensive review of the existing material to identify the reusable
elements.

9.2) Develop internal processes to ensure that the procedure
updates occur as necessary and are disseminated in a timely
manner.

9.3) Invest in training for policy and procedure authors because
policies and procedures require a specific writing style to be
effective.

10.1) In response to the Contracting and Procurement Task Force's
Recommendation #8, DGS has begun developing a comprehensive
procurement training program. In accordance with PCC §10349,
DGS is working with the Department of Personnel Administration
(DPA) and a training consultant (California State University,
Northridge). The resulting training should be developed in such a
way that it can be continuously available and updated as changes in
laws and rules occur. Additionally, the training content should be
based on a consolidated policy and procedure source such as SAM.

10.2) DGS/DPA should make training available in a variety of
delivery modes (e.g., on-line, classroom)

10.3) DGS/DPA should develop a process to ensure that all training
materials are kept updated and consistent with current purchasing
policy and procedures. The training should focus on the less welldefined
issues of procurement official responsibilities, ethics, and
judgment/decision making. Additional training topics should include
practical, "hands on" training in areas such as, legal aspects of
purchasing, contract crafting, and post-award contract
administration.

11.1) Identify and dedicate the resources required for policy
development.

11.2) Create a full-time policy development unit that does not have
responsibility for day-to-day management activities.

11.3) Adopt a system/process that ensures rigorous policy
development and continuing maintenance.

11.4) Implement a governance process for developing policies that
manages the full policy lifecycle from inception through
implementation and rescindment.

12.1) Because of the breadth, clarity, and simplicity of the law, there
is little margin for any policy or procedural clarification to positively
change its effect. The required course of action is to revise the law
to allow follow-on work in a less restrictive manner. Specify the law
to deal with situations leading to organizational conflicts of interest
that are inherent in vendor participation in the pre-solicitation
activities. In redrafting this statute, the State ought to make it broadly
applicable to all purchasing transactions not limited to consulting
services and not limited to instances where the initial work is
performed for fee or under a contract. Examples from other
government entities are provided in Appendix J. These examples
are in keeping with our recommendation and should be considered
during implementation.

12.2) With the change in the law due to SB 1467, SAM §5202 must
be updated to remove the reference to PCC §10365.5; it is now
redundant and potentially confusing due to the included example that
applies the rule in a very specific context.

12.3) Develop policy and procedures to clarify the application of the
law.

13.1) Develop a clear policy and procedure reflecting the impact of
the statutes that reflect that the small business preference takes
precedence over other identified preferences (e.g., TACPA, EZA,
LAMBRA), paying particular attention to the applicability of the
Recycle preference and its impact. Upon the completion of the
policy and procedures, it would be possible to develop an automated
tool to ensure accuracy and adherence to the rules.

14.1) Develop standardized models for each type of procurement
(e.g., IFB, RFP, RFQ, CMAS, MSA, NCB) that clearly identify the
required versus optional elements. Also, develop guidelines
outlining the circumstances when the optional steps should be
considered for use. Additionally, these standardized models should
apply universally regardless of the procurement category or type
(i.e., goods, non-IT consulting services, and IT goods and services).

15.1) Develop further comprehensive, detailed procedures for the
SAM §5221 Compliance Phase. Specifically, create procedures
that:

• Provide a decision aid to use when deciding if a compliance
  phase procurement is appropriate. The risks must be outweighed by the benefits.
  
• Specify the roles and responsibilities for each attendee at the
  "confidential discussion," as well as the topics and types of
  information to be discussed and those to be avoided in order
  to protect the integrity of the process.
  
• Ensure that changes to the vendor's proposal do not
  affect/change the original solicitation document unless the
  change is broadcast to the other vendors.

15.2) Reword the Compliance Phase to replace "confidential" with
another phrase, such as "vendor discussions" or "vendor
presentations".

16.1) Prepare "lessons learned" information to share with buyers
and legal staff from DGS and individual departments. These lessons
learned should include ideas, pointers, recommendations, etc., about
ways to standardize and streamline purchasing practices and
minimize protests and disputes.

16.2) Update and distribute these lessons learned on a regular
basis.

16.3) Incorporate lessons learned as examples into training
material.

16.4) Host regular meetings with DGS and individual department
buyers to discuss these lessons learned, share ideas about what
works and what does not, and brainstorm additional ways to
distribute lessons learned information.

16.5) Feed lessons learned into the development of policy and
procedure to ensure timely implementation and dissemination.

17.1) Create clear policies for the definition and use of the various
goods and services contract types that the state chooses to offer as
available alternatives (e.g., fixed-price contracts, cost reimbursement
contracts, incentive contracts, etc.).

17.2) Ensure model terms and conditions exist and are
comprehensive for each approved contract type.

18.1) Develop uniform policies that require performance
specifications and minimize design specifications in solicitations
where the business needs, in whole or in part, are able to be stated
in terms of function.

18.2) Provide procedures and job-aids for "how-to" and "when-to"
develop detailed performance and design specifications.

18.3) Provide "how-to" training for the development of detailed
performance specifications. This is especially important to the
procurement of integrated and custom developed information systems.

18.4) Define the terms "performance specifications," "detailed
specifications," "design specifications," and "technical specifications"
and use them in a consistent manner throughout the statutes,
policies, and procedures.

18.5) Remove any references in the statutes and policies that imply
or direct that specifications are not to be defined in a detailed and
precise manner.

19.1) Develop policies and procedures identifying the appropriate
evaluation methods for each procurement category, as well as
describing the individual evaluation steps for each method. These
methods and procedures should be as consistent as possible without
regard to the type of procurement.

19.2) Develop policies and procedures to provide definition and
guidance relating to the evaluation of solicitations.

20.1) Create policies to protect the right of all respondents to State
of California solicitations to have their protests heard and decided.
An adjunct process is necessary that provides all bidders with an
opportunity to be fully debriefed following a solicitation, thereby,
reducing the protests occurring simply because an unsuccessful
bidder wants to understand the reasons why they lost.

20.2) Create policies with timelines for responding to all protests,
questions, disputes, or complaints.

20.3) Create a policy that clearly states under what conditions the
Alternative Protest Pilot may be applied and which solicitation
methods may be used.

20.4) Create a policy regarding the assignment and roles of the
Customer and Supplier Advocate. Additionally, ensure that IT goods
and services are addressed within this policy.

20.5) Create procedures to handle the protest process with the
following attributes:

• Integrity of the process with regard to roles and conflicts of
  interest
• Chain of custody for the files, documents, and other evidence
  to avoid losses of information that would affect the outcome
  
• Proper and timely routing of protest documents
  
• Communications to vendor controlled to protect against
  improper threats or quid pro quo or other perceived conflicts
  of interest

20.6) Create policies and processes for handling protests and/or
grievances for all procurement mechanisms including informal,
CMAS, MSA, and NCBs.

20.7) Modify the PCC to standardize the protest hearing and
decision body.

20.8) Modify the PCC to standardize the process for announcing
intent to award and the period for accepting protests.

20.9) Modify the PCC to allow for the DGS to find a protest frivolous
and require a bond to be posted for the hearing body to decide the
protest. Require that the bond be forfeited should the disappointed
vendor lose the decision.

21.1) Develop standardized policy and procedures for the
applicability and use of emergency purchases that supports the
definition of emergency as articulated in the PCC.

21.2) Update the standard form (Form 42) used for documenting
and requesting approval on an emergency purchase to reflect the
standardized policy and procedures.

21.3) Include a definition of emergency purchases and examples of
such in training materials.

22.1) Amend the Public Contract Code to define a consistent
definition of non-competitive bid (NCB), and the applicability of the
NCB process for goods, services and IT.

22.2) Regardless of the statutory change, develop standardized
policy and procedures that defines the appropriate use of NCBs,
including all types of NCBs (i.e., single-source [specified brand or
trade name] and emergency).

22.3) Update the standard form to be used for documenting and
requesting approval on an NCB to match the clarified polices and
procedures.

22.4) Establish policies and procedures that include standard
processing durations (e.g., turn-around time) and visibility into the
status of the request to interested parties throughout the NCB
approval process

22.5) Include a definition of NCBs and examples of such in the
purchasing training.

23.1) Develop standardized policies and procedures that support
the electronic receipt of sealed bids via electronic means. DGS
should implement an e-procurement method or system with sufficient
security and transaction integrity features to meet the "no bid can be
opened before the bid deadline and all bids can be verified as
authentic" requirements. The implementation of this option should
be in conjunction with the Task Force Recommendation #14
(implement an e-procurement system) working group.

24.1) Consolidate the approval of contracts for all types of
purchasing to a single entity, the Procurement Division.

24.2) Direct OLS to focus on their duties as DGS house legal
counsel and support the Procurement Division as legal advisers.

24.3) Develop detailed roles and responsibilities for both PD and
OLS that support a collaborative work environment that applies legal
participation as needed in the State's purchasing oversight
processes.

24.4) Increase the legal role in reviewing all contract types based
on the risk to the State or other criteria, such as deviation from
standard contract language or unusual contract terms (e.g., revenuesharing
agreements).

25.1) To address these issues, the creation of a "new" Policy and
Procedures Office (PPO) is necessary. The PPO should report
directly to the DGS Director or alternately the PD executive-level
(i.e., Deputy Director or Assistant Deputy Director) and be granted
the authority and responsibility to develop procurement policy and
procedure as their sole function. This high-level organizational
position reflects executive-level commitment to this vital role.

25.2) The PPO should be staffed utilizing a 24-month rotational
assignment of three to five full-time senior purchasing personnel.
The specific individuals should be highly experienced purchasing
professionals representing, in aggregate, the broad spectrum of
procurement programs (e.g., IT, goods, CMAS). These positions will
have administrative support from two permanent positions (e.g.,
clerk, editor). The introduction of a rotational assignment provides
the following benefits:

• Attracts the "rising stars" within PD to this highly visible,
  challenging position
• Ensures recent procurement experience necessary for the
  development of clear, applicable policy
  
• Provides for career planning and professional development
  opportunities

25.3) The PPO must develop a "mission statement" that clearly
communicates their function and purpose. The mission would reflect
that the PPO is responsible for creating and writing policy, as well as
facilitating the development of procedure. For both of these
functions, the PPO must establish a well-defined governance
process for the policy and procedure lifecycle. This governance
process will identify the numerous stages of a policy and procedure
including (i.e., idea/conception, develop/propose, review, finalize,
approve, publish, update, retire). The governance process is critical
to the overall acceptance of policy and procedure by ensuring the
participation of the various stakeholders and users in the
development process. This includes citizens, the vendor community,
and the State agencies, among others.

25.4) To ensure that qualified candidates are available for the
senior positions within the PPO, a comprehensive training program
must be developed. The training curriculum would include
classes/certifications in policy development and procedure writing.
These training courses would be a pre-requisite when applying for
the senior rotating positions in the PPO, with the exception of the first
rotation.

26.1) Draft legislation that requires negotiation for non-competitive solicitations.

26.2) Develop comprehensive policies implementing the practice of
negotiation that address the following:

• Preservation of the principles of openness, fairness, and
  competition.
  
• Defining the various types of negotiation and when they may
  be applied.
• Specify training and skills needed for the negotiation team
  members.

26.3) Develop detailed step-by-step procedures to guide the
negotiation process including:

• Planning for negotiation – prior to the start of the
  procurement, identify if and how negotiation may aid in
  achieving the specific objectives relating to price, delivery,
  performance standards, warranty, contractual terms and
  conditions, etc.,
• Including language in the solicitation documents specifying if
  negotiation will be employed or not and, if so, detailing the
  negotiation process to be followed
  
• Specifying how contractors are selected to enter into
  negotiations
• Specifying the possible outcomes and process following the
  negotiation up to contract award

26.4) Develop a training and certification program that qualifies
purcahsing officials to conduct negotiations.

27.1) Re-baseline approval levels on risk or metrics to most
effectively apply resources at DGS. The existing approval levels are
too low in some cases and, in general, unnecessarily complex.

27.2) Design a more simple system of thresholds and criteria to
determine those transactions that require review and approval.
Currently, approval levels are overly complex with too many different
monetary criteria for various types of procurements.

27.3) Develop a simplified procedure and forms/tools for goods, IT,
and services purchases below a "small purchase" threshold (i.e.,
$5,000) within the buying agency's delegated or organic authority.

27.4) Develop a service order form, or modify an appropriate
existing form, for small services purchases under $5,000.

27.5) Overall, it may be more effective and efficient for DGS to
increase its use of selective or periodic audits and decrease the
amount of transactions that require approval.

27.6) Clearly communicate specific sanctions and penalties for
agencies and individuals who fail compliance audits and followthrough
with the application of the sanctions.

27.7) Develop simple, clear and well communicated approval
processes. The approval processes are overly complex and poorly
communicated. The requestor ought to know the specific routing of
the document and what happens at each step.

27.8) Allow visibility into DGS processes and systems to allow
requestors and other interested parties access to the status of the
transaction and its documentation.

27.9) Create service level agreements to facilitate procurement
planning and scheduling for the requesting agencies.

27.10) Set the standards or attributes that the reviewer/approver will
check to ensure they are clearly communicated and specific enough
to reduce differences of interpretation.

28.1) Draft legislation to specifically allow for incentive contracting
in goods, services and information technology procurements.

28.2) Develop policies to provide sound guidance on when
incentive contracting should be considered as well as the
requirements and impacts on the solicitation, selection, award, and
contract administration processes.

28.3) Develop procedures for conducting procurements with
incentive contracting.

29.1) Collect and analyze metrics to identify specific opportunities.

29.2) Create a policy and process for combining orders on
commonly purchased items.

29.3) Develop multiple award contracts and master agreements
that contain minimum order commitments and tiered volume pricing
levels.

30.1) Develop a new mission statement for DGS, derived from
statute, to serve as the basis for the subordinate unit mission
statements.

30.2) Develop a new mission statement for PD focusing on the
unit's responsibilities to set policy, and oversee and conduct
procurements.

30.3) Develop a new mission statement for OLS focusing on the
unit's role as the DGS legal advisors.

31.1) Develop a new system of delegation that simplifies the levels
and types of delegations combining the goods, IT, and services
delegations under a single set of rules.

31.2) Centrally manage all delegations (e.g., goods, IT, services
and other delegations managed by a single unit).

31.3) Implement a universal delegation level for all goods, IT, and
services.

31.4) For purposes of the delegated authority, only discriminate by
purchasing level, not procurement type (IT, goods, services) or
mechanism (competition, CMAS, MSA).

31.5) Submit legislation to remove the specific dollar amounts from
the statute authorizing DGS to exempt services contracts from
review and authorize DGS to set the dollar amount levels directly.

31.6) Create a policy that states that the contract approval for
services contracts will only occur if the procurement (solicitation
approach and documents) is pre-approved. This ensures DGS will
review the transaction early in the process and correct mistakes
before the solicitation is conducted.

31.7) Initiate legislation to centralize the purchasing authority with
DGS and remove the organic authority for the purchase of services
from the agencies. This would include creating the authority for DGS
to included services purchases in their delegation system.

32.1) Add the necessary process rigor and skills to the PAMS for
them to perform actual audits on every delegated agency once per
three-year period.

32.2) Alternately, increase the staffing of the OAS to allow that unit
to take on the full responsibility of the delegation audit requirements.

32.3) Because much of the procurement risk to the State exists
within the DGS PD conducted procurements and other activities,
DGS OAS should increase the frequency of audit on the PD and all
of its program areas.

32.4) Within the context of other Procurement Reform changes,
examine opportunities to increase the DGS audit function as a
replacement for up-front review and approval. This will become
increasingly important, as delegations are more widespread.

33.1) Change the organizational structure to elevate the Protests
and Disputes Section to the executive level of PD

33.2) Separate the Customer and Supplier Advocate function from
the protests and disputes function.

33.3) Create a new Customer and Supplier Advocate function at
the DGS executive level, for example, reporting under the Public
Affairs Office or as a peer to that Office.

33.4) Create a mission or charter for the Customer and Supplier
Advocate that complies with the requirements of PCC §10300.