Lawmakers Widen Scrutiny of Non-Bid Pacts

Lawmakers moved Monday to expand their probe of state computer software contracts by asking the auditor to scrutinize other contracts awarded without competitive bidding.

The probe also shifted closer to Gov. Gray Davis, as legislative staff, in a rare move, asked the governor to turn over e-mails, memos, phone conversation notes, calendars and meeting minutes related to a $95-million Oracle software licensing agreement signed a year ago.

The request, from Assemblyman Dean Florez (D-Shafter), chairman of the Joint Legislative Audit Committee, to Davis legal affairs secretary Barry Goode, seeks copies of communications between the governor and his staff and the companies and government agencies involved in the contract.

Davis spokesman Steve Maviglio said the governor’s office has so far cooperated with the Legislature’s investigation and turned over numerous e-mails and documents.

“Our policy has been to let it all hang out,” he said. “But there may be a limit to that.”

The governor’s staff had not seen the request Monday afternoon, he said.

Davis has taken political heat for accepting a $25,000 campaign donation from Oracle just days after the contract was signed, and two department heads resigned after the state auditor released a highly critical report on the contract last month. Davis returned the Oracle donation last week.

After several days of hearings about how and why the state signed the no-bid Oracle contract, lawmakers said a wider look is needed at the way California spends billions of dollars for goods and services, especially those related to computers.

The Legislature “needs to use this as a case study to learn how can we prevent this from happening ever again in California,” Florez said.

While his bipartisan committee is taking testimony about the Oracle contract--a third hearing is scheduled for today--Florez has asked the state auditor to scrutinize those state contracts signed without competitive bidding and analyze the workings of a Department of General Services purchasing program called the California Multiple Award Schedules.

The Legislature created the program nine years ago to streamline how the state made small-scale purchases of computer-related goods and services. It allows departments to pick vendors from an approved list without soliciting and sifting bids. The value of the contracts signed through the purchasing program jumped from $84 million in 1994 to more than $500 million in 2000. A 1998 state audit concluded that the program didn’t always deliver the best value or price for the state because it didn’t force state departments to make comparisons before they bought.

Some lawmakers say the program, while speeding up purchases, also limits scrutiny of contracts.

“We’re asking the auditor to pick up right where they left off and finish the job and get to the heart of how the system works and whether it’s being abused,” Florez said.

In a letter to state auditor Elaine M. Howle, Florez asked that the review focus on the state’s no-bid contracts with Oracle and its business partner Logicon, a Virginia-based subsidiary of aerospace giant Northrop Grumman. Florez also singled out for scrutiny those contracts signed by D.R. Lema and Associates, an information technology consulting company that played a major role in preparing the state’s computers for the calendar change from 1999 to 2000.

David R. Lema, the former head of a major state data center, said last week that he is dumbfounded as to why Florez’s committee has focused on his company.

Although he has worked for both Oracle and Logicon, Lema has said he had nothing to do with the state’s $95-million Oracle software licensing contract.

But Florez described Lema as “someone who really knows how to manipulate the system.”

Florez noted that in 1999, D.R. Lema and Associates was hired by the state Department of Information Technology for $489,000--just under the $500,000 Multiple Award Schedules limit for information technology purchases.

At the same time, his company had a $450,000 contract with the Stephen P. Teale Data Center, which operates many of the large computer systems that drive state government.

“How do all these contracts come in just under the threshold?” said Florez. “We’re anxious to have him come in and explain his role.”

Oracle and Logicon have volunteered to rescind the contract, and talks are underway with the state to do so.