Tuesday, July 7, 2009

Oracle – The Sequel

The governor continues to demand adoption of last-minute policy proposals which have nothing to do with solving California’s immediate cash crisis or closing this year’s deficit. In today’s blog let’s examine another one of the Governor’s so called “reforms.”

The governor proposes to change the method by which the state procures services from outside contractors. Anyone remember the “Oracle” scandal which haunted the Davis administration? Living up to the prophetic meaning of its name, Oracle is back!

As noted in a state audit, in 2001, a firm called Logicon was hired to advise the state regarding awarding a $95 million contract for information technology services. Logicon projected $111 million in savings to the state. After providing these consulting services to the state, Logicon served as a liaison and representative for Oracle. Then, the state entered into the contract with Oracle. But, instead of saving $111 million, the state ultimately lost millions of dollars and never got the services it contracted for. The contract was finally cancelled.

The governor’s proposal undermines the integrity of competitive bidding and actually encourages self-dealing. Current state law prohibits a firm which advises the state on awarding contracts from receiving the contract itself. This long-standing rule is simply common-sense protection for taxpayers and reflects the lessons learned from the Oracle debacle. But the governor now wants to create a loophole that would allow the same firm that advises the state to also be awarded the contract! All the consulting firm would need to do is advise the state that the contract would best be awarded in multiple phases.

Sounds like a pretty sweet deal for special interests, doesn’t it? But we’ve seen this movie before and it didn’t end well for the state. Now the governor proposes to make this flawed method our state’s standard process, arguing it will save the state an unknown amount of money. Such a process will surely benefit someone, but it isn’t the people of the State of California.