Here's the classic public-versus-private argument in miniature.
The Bureau of State Audits has issued an update letter on the $1.6 billion Financial Information System for California, a massive budgeting, accounting, and procurement management modernization systems project currently under development.
You'd expect money to be an issue, and it is. Auditor Elaine Howle's letter to Gov. Arnold Schwarzenegger and the Legislature says this:
We also are concerned about the fact that the FI$Cal project has lost its source of long-term funding and is considering what other funding options are available ... (W)ith the level of uncertainty surrounding its future funding, we are concerned that the FI$Cal project may have difficulty attracting and retaining qualified staff.
Now the public/private issue. The relatively new (and clumsily-named) Office of the State Chief Information Officer plans to "independently" oversee the project. Meanwhile, state Chief Information Officer Teri Takai (pictured) is a voting member of the FI$Cal steering committee. Here's Howle's take on that:
We are concerned that this arrangement -- the OCIO providing the (independent project oversight) services and the CIO being a voting member of the steering committee -- might, either in fact or appearance, create a conflict that undermines the very purpose of the IPO, which is to provide an independent, unbiased perspective.
Click the link below to read the Information Office's reasoning for assuming an oversight role and Howle's response.
The Information office has a rationale for the arrangement, Howle wrote, but she's not persuaded:
The OCIO explained that under the typical structure, the contractor providing the (independent project oversight) services would report directly to the project, which makes the contractor somewhat connected to the project, and thereby susceptible to being swayed by the project manager and other staff. The OCIO explained that using a contractor to conduct (oversight) services would not necessarily provide greater independence because the contractor still has an incentive to continue to have a business relationship with the project.
The OCIO believes that, by using its own staff to perform the (the) services, it is mitigating this risk. Additionally, the OCIO indicated that, although the CIO is a voting member of the steering committee, the CIO does not have ownership of the FI$Cal project as do the other members of the steering committee, but acts in the role of a technical advisor to the project. For these reasons, the OCIO does not believe the CIO's position on the steering committee compromises its ability to perform IPO services in an independent manner. While we appreciate the OCIO's perspective, it does not alleviate our concerns ... (W)e see no reason why the OCIO or some other entity could not hire an IPO contractor to assure that project oversight is unbiased and independent.
The Information Office also said that it's not certain it can contract out the oversight job without violating state civil service code requiring it demonstrate that state workers couldn't do the same work, and pointed to a specific decision by the State Personnel Board to back up that concern.
Howle:
However, in reviewing the State Personnel Board's decision, we observed that footnote 3 expressly noted the department had not relied upon and, accordingly, the State Personnel Board did not analyze the justification for, a decision to contract out based on Government Code, Section, 19130(b)(5). This section permits state agencies to contract for services to, among other things, "insure independent and unbiased findings in cases where there is a clear need for a different, outside perspective."
Click this link to download Howle's letter.
IMAGE: Teri Takai / www.cio.ca.gov
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