1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 MAY 27, 2015 9 ADMINISTRATIVE SESSION 10 P OTHER ADMINISTRATIVE MATTERS 11 P1.4 CROS PROJECT UPDATES AND ACTIONS 12 13 14 15 16 17 18 19 20 21 22 Reported by: Juli Price Jackson 23 No. CSR 5214 24 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Sen. George Runner (Ret.) of Equalization: Acting Chairman 4 5 6 Fiona Ma, CPA Member 7 8 Diane L. Harkey Member 9 10 Yvette Stowers Appearing for Betty T. 11 Yee, State Controller (per Government Code 12 Section 7.9) 13 Joann Richmond 14 Chief, Board Proceedings Division 15 16 17 ---oOo--- 18 For Staff: Eric Steen CROS ProjectDirector 19 20 ---o0o--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 27, 2015 4 ---oOo--- 5 MS. RICHMOND: Next is P1.4, CROS Project 6 update and actions. 7 MR. STEEN: Good afternoon, Members. 8 For the record, Eric Steen, CROS Project 9 Director. 10 Well, we were expecting to receive final 11 proposals on June 15th, however, last week the 12 Department of Technology placed our procurement on 13 hold. This delay is indefinite until the BOE 14 produces an integrated master schedule, which 15 includes all non CROS projects, the CROS 16 procurement, the CROS pre-implementation activities, 17 the five-year CROS implementation to include tasks, 18 durations for those tasks, dependencies across those 19 tasks, and then the names of the people assigned to 20 those tasks for the next five to six years. 21 So, until we produce this, and it's 22 presented to Cal Tech, and they review and approve 23 it, we will not be allowed to receive final 24 proposals. 25 However, the team is working very hard. 26 BOE is working very hard to produce this artifact. 27 And, in fact, we hope to submit a draft tomorrow, 28 close of business, to Cal Tech and move forward from 3 1 from there. So -- 2 MR. RUNNER: Did I -- I thought it was -- I 3 thought the request from them was a 30-day? 4 MR. STEEN: No, we're being told that at 5 least 30 days, but perhaps more. 6 MR. RUNNER: But at least the 30-day was an 7 option -- was a -- 8 MR. STEEN: Yes, it's 30 days contingent 9 upon -- 10 MR. RUNNER: -- right. 11 MR. STEEN: -- their approval. 12 MR. RUNNER: I think that's different 13 than -- than an indefinite. 14 MR. STEEN: Well, that's the message 15 that -- 16 MR. RUNNER: Right. 17 MR. STEEN: -- we're being told. 18 We're being told that it's at least 30 19 days. 20 MR. RUNNER: Right. 21 MR. STEEN: My impression is that it will 22 be more, but, hopefully, we'll get it done in 30 23 days. 24 MR. RUNNER: Okay, thank you. 25 Discussion? Member Harkey. 26 MS. HARKEY: I have a few. 27 What is the connection between a schedule 28 and receiving final proposals? 4 1 MR. STEEN: I don't think there is a 2 connection. 3 So, there really -- we can develop a 4 schedule in parallel to receiving final proposals. 5 There really isn't dependency. 6 And, in fact, one of the things that we 7 have maintained all along is that our -- our 8 schedule would be more thorough and more detailed if 9 we actually had a bidder's proposed schedule that 10 we've approved -- that we've received and have a 11 selected bidder, so that we have the tasks related 12 to the implementation that we can then use and 13 identify what tasks will be engaged to support 14 that -- that effort. 15 So, really there is no connection. 16 MS. HARKEY: Why are we --why are we 17 delaying the receipt of the proposal then? 18 MR. STEEN: That is a decision that was 19 made by the Department of Technology to delay the 20 proposal. 21 MS. HARKEY: Okay. 22 MR. STEEN: They believe that it's 23 important that we have it before we get the final 24 proposals. 25 MS. HARKEY: Okay. When do you 26 realistically anticipate getting the final proposal? 27 MR. STEEN: That's a good question. 28 I think July 15th would be the earliest 5 1 that we would be able to get it. But again that's 2 dependent upon us putting together this fairly 3 comprehensive and detailed schedule and having it 4 reviewed and approved. 5 So, it's tough for me to to say. 6 MS. HARKEY: What's the outside date if 7 July 15th is about the earliest? 8 MR. STEEN: Maybe mid-September, I really 9 don't know. 10 MS. HARKEY: Okay. I'm just -- you know, 11 I've had issues with contracts like this. In the 12 legislature we had -- we had a lot of cost overruns. 13 So, what's the cost of another delay here? 14 MR. STEEN: Well, if we -- we have about 15 $700,000 a month burn rate for the resources 16 assigned to the project. 17 So, if it -- if we were to receive it in 18 mid-July, that would be $700,000. If it goes all of 19 the way to mid-September, that's $2.1 million. But 20 there's also the costs associated to the new 21 solution. 22 So, we're delaying the implementation of 23 CROS and then any revenue that would be coming in as 24 a result of the CROS solution. 25 MS. HARKEY: I guess then my question is, 26 since there's no connection between the schedule and 27 receiving proposals -- 28 MR. STEEN: That's my assertion. I'm not 6 1 sure Department of Technology shares that opinion. 2 MS. HARKEY: -- I just need -- I need to 3 get this ferreted out because I know these delays 4 cost money. 5 And they keep extending, extending and 6 pretty soon our project is going to be underwater 7 and we'll be criticized. 8 And, so, if we can get a report somehow 9 from our staff as to what -- what's the real issue 10 here and why can't we do these -- do these on the 11 same track and actually get this thing rolling? 12 I mean, these IT projects can get way out 13 of control. And we saw that. And we just -- by the 14 time -- I don't know, not only is it the timing, but 15 by the time you get them out they've become 16 obsolete. But the expense just, you know, 17 compounds. 18 And we want to be really -- we want to 19 really be able to handle this because we will be 20 criticized severely, and rightly so. 21 MR. STEEN: Right. 22 MS. HARKEY: So -- 23 MR. STEEN: In fairness to the Department 24 of Technology, their belief is that we'll -- by 25 having a schedule put together now, it will help the 26 overall implementation. 27 It's just not a view that I share. And 28 I've been doing this for a couple of decades and I 7 1 haven't seen it done this way, but that is their 2 their -- their position. 3 I think we can -- I think we can still have 4 a successful implementation. Unfortunately, when 5 that implementations begins just gets pushed out 6 even further. 7 MS. HARKEY: I'd like our CEO to kind of 8 follow up on this for us, if she wouldn't mind, to 9 find out how we can shave some time off this or get 10 this really tighter because of the money involved. 11 700,000 a month is a lot of money, 12 especially when you're talking about something this 13 expensive to begin with. 14 Okay, thank you. I have no more. 15 MR. RUNNER: I think the frustrations are 16 real, and I think they're amongst many of us, I 17 think. 18 I attended -- I attended a meeting with -- 19 with the California Technology Association and the 20 staff. I think all the executive staff were there 21 in that meeting to try to talk through with them 22 what their challenges are. 23 I think our -- I think what our frustration 24 is that we're battling a control agency, who at the 25 same time, is responsible for helping to deliver 26 efficient and effective IT projects for the State of 27 California. 28 MR. STEEN: Right. 8 1 MR. RUNNER: Oftentimes many of the issues 2 that we see -- that they -- the hurdles that they 3 put before us actually slow us down and cost more 4 money. 5 And that's the challenge that we face. 6 And, so, yeah, I think -- I think we need to 7 continue to keep Board Members clearly up to date as 8 to where the items are coming that are slowing us 9 down and why, the issues that we don't think are 10 necessary, but oftentimes we just have to respond to 11 the control agency. 12 MR. STEEN: Right. 13 MR. RUNNER: That's why in the very 14 beginning of this project the BOE sought to try to 15 get itself out from underneath those requirements. 16 And, unfortunately, we were not successful. 17 And, so, you know, we're in this midst 18 where we end up being -- being responsible for 19 delivering a project, but basically having a control 20 agency that determines a great deal of our 21 schedule -- when it is that they can arbitrarily 22 step in, slow us down, move us around, whatever it 23 is. 24 So, I think that is a challenge. 25 MS. HARKEY: Would it be reasonable to 26 expect some kind of follow-up on this within the 27 next two weeks? 28 Thank you. 9 1 MR. RUNNER: So, I guess -- this Board -- 2 if you guys can provide for us an update, I think 3 you're -- you're prepared to go ahead and submit 4 some things to the technology agency in between, 5 right? 6 MR. STEEN: Right, yes. 7 MR. RUNNER: And I think -- and I think -- 8 I think we should, I think, make it very clear. 9 And I think, you know, our Executive 10 Director can make it very clear to the technology 11 agency that it's our desire to continue to move this 12 and that we don't have arbitrary dates set upon us, 13 that we actually then provide what they need. 14 But yet we need them to be responsive to us 15 wanting to take control and direction in getting 16 this project accomplished. 17 MR. STEEN: I appreciate that. Thank you. 18 MR. RUNNER: Okay. Any other discussion? 19 Okay, thank you. 20 MR. STEEN: Thank you. 21 ---o0o--- 22 23 24 25 26 27 28 10 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on MAY 27, 2015 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 10 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: September 10, 2015 18 19 20 ____________________________ 21 JULI PRICE JACKSON 22 Hearing Reporter 23 24 25 26 27 28 11