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IT faces change in state business

New procurement recommendations after the state of California's multimillion-dollar contract debacle with Oracle are expected to affect IT companies.

Thanks to California's controversial and now-canceled multimillion-dollar contract with Oracle, IT companies that do business with the state may face new procurement rules.

The state auditor released new procurement recommendations Wednesday. They come roughly a year after the auditor released a highly critical report on California's $95 million sole-source contract with Oracle, which alleged that the purported savings would cost the state $41 million more than existing contracts.

The auditor's most recent recommendations are expected to affect all companies who do business with the state of California, but particularly IT companies.

The recommendations went out to various government agencies at the request of the Joint Legislative Audit Committee, which looked into the Oracle contract. Those agencies include the Governor's task force on contracting and procurement review; the Department of General Services, which oversees the procurement policies used by state offices; and the Stephen P. Teale Data Center, which is responsible for the state's Web portal project.

"The legislature should consider a law that requires General Services to review...IT purchases (by the state's various departments) every three years, as it now is required to review non-IT purchases," the report states.

The auditor also calls for the General Services department to take several immediate steps. One is to enforce laws that limit the conditions under which the state can make sole-source and emergency purchases. Another recommendation is for the General Services department to have the Office of Legal Services review all sole-source contract requests above a certain price threshold.

Under current state law, noncompetitive bids are suppose to occur only when a single product or service can meet the state's needs, or if the public's health, safety or welfare is at stake. But the auditor found various cases where state departments had a loose definition of those situations.

State departments are supposed to seek competitive bids for goods that cost $25,000 or more, and services that cost $5,000 and up.

State agencies gave several reasons why they did not always seek a competitive bid when contracting with companies, according to the report.

Previously, General Services only recommended state departments seek the best price among companies listed on the California Multiple Award Schedules (CMAS).

But following the Oracle debacle, which ultimately resulted in a cancelled contract and the California governor returning a $25,000 controversial campaign contribution from Oracle, the governor instituted an executive order last May that required three competitive bids and a host of procurement contract reforms.