A performance audit of the Department of Administration-Data Processing Division

              STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
A PERFORMANCE AUDIT
OF THE
DEPARTMENT OF ADMINISTRATION-DATA
PROCESSING DIVISION
OCTOBER 1981
A REPORT TO THE
ARIZONA STATE LEGISLATURE
REPORT 81 - 1 2
DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
October 23, 1981
Members of the Arizona Legislature
The Honorable Bruce Babbitt, Governor
M r . George Britton, Acting Director
Department of Administration
Transmitted herewith is a report of the Auditor General, A Performance
Audit of the Department of Administration - Data Processing Division.
This report is i n response to a January 30, 1980, resolution of the Joint
Legislative Oversight Committee. The performance audit was conducted as a
part of the Sunset review s e t f o r t h i n A. R. S. Sfj41- 2351 through 41- 2779.
The blue pages present a summary of the report; a response from M r . Jack
Stanton, s t a t e automation d i r e c t o r is found on the yellow pages preceding
the appendices.
My s t a f f and I w i l l be pleased t o discuss or c l a r i f y items i n the report.
Respectfully submitted,
~ o u ~ i Ra. sN orton
Auditor General
Staff: Gerald A. Silva
William Thomson
Steve Wallace
Brent Nelson
U r s Bauder
Ray Hernandez
Enclosure
cc: Jack Stanton, Assistant Director
DOA- Data Processing Division
LEGISLATIVE SERVICES WING SUITE 200 STATE CAPITOL PHOENIX. ARIZONA 85007 255- 4385
O F F I C E OF THE AUDITOR GENERAL
A PERFORMANCE AUDIT OF THE
DEPARTMENT OF ADMINISTRATION -
DATA PROCESSING D I V I S I O N
A REPORT TO THE
ARIZONA STATE LEGISLATURE
REPORT 81- 12
TABLE OF CONTENTS
- Page
INTRODUCTION AND BACKGROUND
SUNSET FACTORS
FINDINGS
FINDING I
DOA- Data Processing has not e f f e c t i v e l y f u l f i l l e d
its s t a t u t o r y r e s p o n s i b i l i t y to develop, implement
and maintain a coordinated Statewide plan f o r
data processing.
CONCLUSION
RECOMNENDATI ONS
FINDING I1
The enabling s t a t u t e s f o r DOA- Data Processing
are inadequate.
CONCLUSION
RECOMMENDATIONS
FINDING I11
DOA- Data Processing is not f u l f i l l i n g its
intended r o l e i n the EDP acquisition process.
CONCLUSION
RECOMMENDATIONS
APPENDICES
APPENDIX I - Legislstive Council Opinion 0- 81- 28, May 4, 1981
APPENDIX I1 - Legislative Council Opinion 0- 81- 44, June 1, 1981
APPENDIX I11 - Procedures manual for the acquisition of
electronic data processing hardware, software
and services
SUMMARY
The O f f i c e o f the Auditor General has conducted a performance a u d i t of the
Department of Administration - Data Processing Division ( DOA-~ ata
processing) i n response t o a January 70, 1980, r e s o l u t i o n of t h e J o i n t
L e g i s l a t i v e Oversight Committee. This performance a u d i t was conducted a s
a p a r t of the Sunset review s e t f o r t h i n Arizona Revised S t a t u t e s ( A. R. s.)
$ 541- 2751 through 41- 2779.
Electronic data processing ( EDP) has become a s i g n i f i c a n t f a c t o r i n the
operations of S t a t e government, with f i v e major, c e n t r a l i z e d computer
centers and a d d i t i o n a l mini- and micro- computers and word processors
d i s t r i b u t e d among S t a t e agencies. Thus, EDP s i g n i f i c a n t l y impacts the
efficiency, e f f e c t i v e n e s s and c o s t of S t a t e programs. For example, i n
f i s c a l year 1980- 81, S t a t e expenditures f o r EDP a c t i v i t i e s exceeded $ 28
m i l l i o n .
To provide f o r e f f i c i e n t and coordinated use of the S t a t e ' s EDP resources
and t o plan f o r f u t u r e EDP needs, the L e g i s l a t u r e created DOA- Data
Processing i n 1972. The Division c u r r e n t l y h a s nine f u l l - t i m e s t a f f
members and a f i s c a l year 1981- 82 budget of $ 394,700.
Our review showed t h a t DOA- Data Processing h a s n o t f u l f i l l e d its s t a t u t o r y
r e s p o n s i b i l i t y t o develop, implement and maintain a coordinated Statewide
plan f o r data processing. The Statewide EDP plans the Division has
produced a r e not adequately s t r u c t u r e d and cannot be implemented. The
plans do not f u l f i l l s t a t u t o r y o b j e c t i v e s . F u r t h e r , the D i v i s i o n ' s
h i s t o r y is r e p l e t e with p r o j e c t s t h a t have been i d e n t i f i e d repeatedly i n
the plans, but which have been abandoned or not s t a r t e d . We recommend the
Division be required t o report t o the L e g i s l a t u r e the progress it makes i n
implementing - a l l o b j e c t i v e s and p r o j e c t s i d e n t i f i e d i n its Statewide data
processing plans. ( page 7)
We found the Division's current enabling s t a t u t e s are inadequate i n that
they give the Division the responsibility to provide for e f f i c i e n t and
coordinated u t i l i z a t i o n of data processing equipment, techniques and
employees, but do not give the Division commensurate authority over the
data centers. Also, the s t a t u t e s ' singular emphasis on centralized data
processing no longer appears appropriate, given today's technology.
Further, the Division lacks needed s t a t u t o r y authority to review EDP
equipment acquisitions. ( page 25)
Finally, the Division is not f u l f i l l i n g i t s intended role i n the EDP
acquisition process. The Division has not published guidelines to a s s i s t
agencies in the process, or provided them with adequate consultation.
Agencies can and do circumvent the Division when acquiring EDP equipment
and services. ( page 35)
Consideration should be given to the following recommendations:
1. The Division follow its own Long- Range Planning Guidelines by
developing a plan which specifically defines: a) stated
objectives, a c t i v i t i e s , time schedules and measurable r e s u l t s ,
and b) the estimated resource requirements to carry out the
identified a c t i v i t i e s .
2. The Division f u l f i l l its statutory planning mandate by developing
a Statewide data processing plan that addresses the
consolidation, transfer or elimination of data processing
a c t i v i t i e s and the establishment of additional data processing
operations centers.
3. The Division report to the Legislature the progress made to
achieve - a l l objectives that are stated i n the plan document.
4. The Legislature consider the establishment of a steering board or
committee to review and approve Statewide data processing plans
prepared by the Division and to monitor the implementation of the
Statewide plan.
5. The Legislature consider the following alternatives regarding the
funding and operation of the data operations centers:
a. Clarify A. R . S. 541- 713 by specifically including data
operations centers under the data processing revolving
fund. This would involve:
1) appropriating sufficient monies to the Division for
deposit i n the data processing revolving fund for the
purpose of employing persons i n and purchasing
equipment for the data processing operations centers, or
2) transferring employees performing functions related to
the data processing operations centers, data processing
equipment and unexpended and unencumbered monies
appropriated to the host agencies for performing
functions related to the data processing operations
centers to the Division.
b. Continue to fund the data operations centers by
appropriation and s t a t u t o r i l y establish the
authority/ responsibility relationship between DOA- Data
Processing and the data operations centers.
c. Authorize the a s s i s t a n t d i r e c t o r for data processing to
deputize employees i n the agencies hosting data processing
operations centers to perform c e r t a i n functions of the
Division.
d. Authorize DOA or its Data Processing Division to contract or
enter into agreements with the host agencies f o r joint or
cooperative action regarding the data processing operations
centers.
6. The Legislature amend A. R. S. $ 41- 712, subsection B to provide for
data processing systems other than centralized systems.
7. The Legislature consider s t a t u t o r i l y prescribing the review
process for data processing acquisitions.
iii
8. The Division should provide more consulting support to those
agencies lacking EDP expertise, and seek to improve
communications with t h e l a r g e r agencies regarding acquisitions.
9. The Division cooperate with the General Accounting Office of
DOA- Finance to eliminate circumvention of t h e a c q u i s i t i o n review
process.
10. The Legislature consider prescribing s t a t u t o r i l y the review
process for data processing acquisitions and include statutory
provisions for an appeal process t o review disputed decisions.
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the
Department of Administration - Data Processing Division ( DOA-~ ata
Processing) i n response to a January 30, 1980, resolution of the Joint
Legislative Oversight Committee. This performance audit was conducted as
a part of the Sunset review s e t forth i n Arizona Revised Statutes ( A. R. s.)
$ $ 41- 23 51 through 41- 2379.
Electronic data processing ( EDP) has become a significant factor i n the
operations of State government, with five major, centralized computer
centers and additional mini- and micro- computers and word processors
distributed among State agencies. Thus, EDP significantly impacts the
efficiency, effectiveness and cost of State programs. For example, i n
f i s c a l year 1980- 81, State expenditures for EDP a c t i v i t i e s exceeded $ 28
million.
To provide f o r e f f i c i e n t and coordinated use of the S t a t e ' s EDP resources
and to plan for future EDP needs, the Legislature created DOA- Data
Processing i n 1972. The Division currently has nine full- time s t a f f
members and a f i s c a l year 1981- 82 budget of $ 394,700.
The Division's a c t i v i t i e s include:
- Preparation of the Statewide Data Processing Plan for Arizona and
the Annual Automation Report to the Arizona Legislature,
- Development and issuance of policies, guidelines, procedures and
directives to govern State EDP operations,
- Technical reviews of State data centers, and
- Review and approve each State EDP equipment acquisition.
DOA- Data Processing is funded by an appropriation from the State General
Fund. Table 1 d e t a i l s the staffing and expenditures of the Division for
f i s c a l years 1977- 78 to 1981- 82.
TABLE 1
FTE positions*
EXPENDITURES OF DOA- DATA PROCESSING FOR FISCAL YEARS
1977- 78 THROUGH 1981- 82
Personal s e r v i c e s
Employee- related expenditures
P r o f e s s i o n a l and outside
s e r v i c e s
Travel:
In- State
Out- of- State
Other operating expenses
Equipment
Total
The Auditor General expresses g r a t i t u d e t o the a s s i s t a n t d i r e c t o r ,
Department of Administration - Data Processing D i v i s i o n , and h i s
s t a f f f o r t h e i r cooperation, a s s i s t a n c e and c o n s i d e r a t i o n during t h e
course of the a u d i t .
* Full- time equivalent p o s i t i o n s .
2
SUNSET FACTORS
SUNSET FACTOR: OBJECTIVE AND PURPOSE
I N ESTABLISHING THE DIVISION
Although we were unable to find a statement of l e g i s l a t i v e intent
pertaining to the purpose i n establishing the Division, the enabling
statutes s e t forth two main duties: 1) to provide for e f f i c i e n t and
coordinated use of the S t a t e ' s EDP resources, and 2) to develop and
implement a Statewide plan for data processing.
The Division has stated its goal to be:
" Provide a l l the people of the State of Arizona with
optimum effectiveness, efficiency and economy i n the ,
coordination, collection, storage, interchange,
management, processing, transmission and protection of
information and related services by u t i l i z i n g
automation equipment, techniques and personnel to
support the requirements of the appropriate levels of
the Legislative, Executive and Judicial Branches of
State Government."
SUNSET FACTOR: THE DEGREE TO WHICH THE DIVISION
HAS BEEN ABLE TO RESPOND TO THE NEEDS OF THE PUBLIC
AND THE EFFICIENCY WITH WHICH I T HAS OPERATED
In contrast to a licensing board or regulatory agency the Division has
incidental interaction only with the public. The nature and purpose of
the Division do not place it i n the position of responding to public needs
directly.
SUNSET FACTOR: THE EXTENT TO WHICH THE DIVISION
HAS OPERATED WITHIN THE PUBLIC INTEREST
To the extent the Division's f a i l u r e to plan adequately f o r data
processing a f f e c t s the use of public funds, the Division may not have
operated within the public i n t e r e s t . ( page 7)
SUNSET FACTOR: THE EXTENT TO WHICH RULES AND
REGULATIONS PROMULGATED BY THE DIVISION ARE
CONSISTENT WITH THE LEGISLATIVE MANDATE
The Division's enabling s t a t u t e s do not provide it with rule- making
authority. Consequently, the Division does not promulgate rules.
SUNSET FACTOR: THE EXTENT TO WHICH THE DIVISION HAS
ENCOURAGED INPUT FROM THE PUBLIC BEFORE PROMULGATING
ITS RULES AND RZGULATIONS AND THE EXTENT TO WHICH I T
HAS INFORMED THE PUBLIC AS TO ITS ACTIONS AND THEIR
EXPECTED IMPACT ON THE PUBLIC
This Sunset factor is n o t applicable to DOA- Data Processing.
SUNSET FACTOR: THE EXTENT TO WICH THE
- -
DIVISION HAS BEEN ABLE TO INVESTIGATE AND
RESOLVE COMPLAINTS THAT ARE WITHIN ITS JURISDICTION
- -- --
The Division does not receive, investigate or resolve complaints.
SUNSET FACTOR: THE EXTENT TO WHICH THE ATTORNEY
GENERAL OR ANY OTHER APPLICABLE AGENCY OF STATE
GOVERNMENT HAS THE AUTHORITY TO PROSECUTE
ACTIONS UNDER ENABLING LEGISLATION
The Division's enabling l e g i s l a t i o n does not define violations or
offenses. Therefore, there are no prosecutable actions under the enabling
l e g i s l a t i o n .
SUNSET FACTOR: THE EXTENT TO WHICH THE DIVISION
HAS ADDRESSED DEFICIENCIES I N THE ENABLING STATUTES
WHICH PREVENT I T FROM FULFILLING ITS STATUTORY MANDATE
The Division has - not addressed deficiencies i n its enabling s t a t u t e s that
prevent it from f u l f i l l i n g its s t a t u t o r y mandate. ( page 32)
SUNSET FACTOR: THE EXTENT TO WHICH CHANGES ARE
NECESSARY I N THE LAWS OF THE DIVISION TO ADEQUATELY
COMPLY WITH THE FACTORS LISTED I N THE SUBSECTION
The enabling s t a t u t e s of the Division are inadequate and should be
amended. While the Division has been given the responsibility for the
S t a t e ' s various data centers, it has not been given commensurate a b i l i t y
to control the operations of those centers. We recommend i n t h i s report
several possible alternatives for statutory revisions to c l a r i f y the
Division's relationship with the centers. ( page 26)
Another needed change pertains to the statutory language of A. R. S.
$ 41- 712. B, which emphasizes the establishment of centralized data
processing centers. Such singular emphasis on centralization may not be
appropriate, given the advent of distributed data processing systems.
A. R. S. $ 41- 712. B should be revised to provide f o r both centralized and
distributed data processing. ( page 30)
A third needed change pertains to providing the Division with statutory
authority to review and approve t h e acquisition of EDP equipment, coupled
with a provision for the appeal of Division decisions. Such a change
would enhance the Division's a b i l i t y to coordinate and control the S t a t e ' s
EDP resources. In the absence of such s t a t u t o r y a u t h o r i t y , State agencies
can and do circumvent the review process. ( page 32)
FINDING I
DOA- DATA PROCESSING HAS NOT EFFECTIVELY FULFILLED ITS STATUTORY
RESPONSIBILITY TO DEVELOP, IMPLEMENT AND MAINTAIN 4 COORDINATED STATEWIDE
PLAN FOR DATA PROCESSING.
Arizona Revised S t a t u t e s ( A. R. s.) $ 41- 712 provides t h a t DOA- Data
Processing ". . . s h a l l develop, implement and maintain a coordinated
Statewide plan f o r data processing ...." Reviewing t h i s requirement we
found t h e Division h a s n o t e f f e c t i v e l y f u l f i l l e d its s t a t u t o r y planning
r o l e i n t h a t :
1. The Statewide data processing plan does not meet the c r i t e r i a of
a good planning document and cannot be implemented,
2. The Statewide data processing plan does not address or f u l f i l l
s t a t u t o r y o b j e c t i v e s , and
3. The D i v i s i o n ' s h i s t o r y is r e p l e t e with unstarted or abandoned
p r o j e c t s .
A s a r e s u l t , the S t a t e ' s data processing u s e r s , who spent more than $ 28
m i l l i o n i n f i s c a l year 1980- 81, a r e not receiving adequate guidance or
planning a s s i s t a n c e .
Statewide EDP Plan Is Not Adeauatelv
Structured and Cannot Be Implemented
The Statewide EDP plan developed by t h e Division does not meet the
c r i t e r i a of a good planning document a s defined i n Long Range Planning
Guidelines For EDP Functions, which the Division i t s e l f developed and
published i n August 1980. I n s t e a d , the Statewide plan a s c u r r e n t l y
s t r u c t u r e d is unmeasurable and of such l i t t l e p r a c t i c a l use t h a t it cannot
be implemented.
The deficiencies i n Arizona's Statewide EDP plan are more clearly
i l l u s t r a t e d when it is compared to the EDP plan of the s t a t e of I l l i n o i s .
The I l l i n o i s plan does f u l f i l l the requirements for a good planning
document as outlined i n the ~ i v i s i o n ' slo ng- range planning guidelines.
Each of the I l l i n o i s plan objectives is outlined i n nine major areas:
1. Current s t a t e of a f f a i r s ,
2. Forces constraining further action,
3. Problems which need to be addressed,
4. Emerging technology,
5. Strategies which w i l l influence e f f o r t s ,
6. Descriptions of actions to e f f e c t those s t r a t e g i e s ,
7. Benefits of implementation of these actions,
8. Resources necessary to implement actions, and
9. Milestones which can be measured.
Two similar objectives from the 1980 Arizona and I l l i n o i s plans, data
communications and long- range planning, are contrasted below.
I. Data Communications Objective
A. Arizona Plan - The objective and plans t o implement t h e
o b j e c t i v e , a s s t a t e d i n the 1980 Statewide plan, a r e presented
f u l l y below:
" Communications
" Define plans t o meet statewide ( data)
communications needs within FY 1980- 81.
" Plans: DFD w i l l produce d e f i n i t i v e plans
during FY 80- 81." These w i l l take
i n t o account t h e e x i s t i n g networks
and f a c i l i t i e s and f u t u r e
requirements . "
B. I l l i n o i s Plan - A few major elements of a 14- page plan a r e
summarized as follows:
c Problems t o be addressed
- E x i s t i n g networks a r e very complex,
- Technology c u r r e n t l y i n use is hardware- dependent,
- No standard protocol e x i s t s , and
- Improvement i n data communications must be r e l a t e d t o
changes i n computing equipment, data management and
a p p l i c a t i o n s .
a S t r a t e g i e s t o influence e f f o r t s
- E s t a b l i s h a standard p r o t o c o l ,
- Encourage the sharing of transmission l i n e s ,
- Use appropriate technology, and
- Seek a balanced communications network.
* It should be noted t h a t the Division d i d n o t produce a data
communications plan during f i s c a l 1980- 81.
a Essential actions
- Build acceptance for use of a standard protocol,
- Undertake cooperative planning f o r a balanced network,
- Demonstrate the cost- effectiveness of new
communications technology, and
- Conduct biennial review of data communications,
Q C r i t i c a l milestones
- Dissemination of policy and supporting plan f o r use of
standard protocol by the f o u r t h q u a r t e r of 1980,
- Recommendations f o r enhancements i n data communications
by t h e f o u r t h quarter of 1981 and every two years
t h e r e a f t e r ,
- Acceptance of plan f o r a balanced s t a t e government
network by the second quarter of 1982,
- Revision of network plan t o incorporate use of
communications c a r r i e r ' s expanded services by t h e t h i r d
quarter of 1984, and
- Beginning of conversion t o externally- provided expanded
communications service by the f i r s t quarter of 1985.
The data communications section of the I l l i n o i s plan a l s o contains a chart
showing actions to be completed during a five- year time frame, the
resources necessary t o implement the plan and the projected benefits.
11. Long- Range Planning Objective
A. Arizona Plan - The action plan designed t o achieve the long- range
planning objective is presented i n its e n t i r e t y a s s t a t e d i n the
1981 Statewide plan.
" Long- Range Planning for Data Processing
" The complexity and cost of data processing
require formal planning f o r the future development
of S t a t e automation resources.
" Agency 1981 EDP Plans
" The Department of Public Safety has indicated
t h a t a long- range plan f o r data processing w i l l be
developed i n 1981. DOR w i l l complete an EDP plan
begun i n 1980. The DOA- Data Center w i l l complete
an update to its original long- range plan issued
i n 1979. The Department of Economic Security has
agreed to develop a computer system capacity plan
to help ensure that its hardware w i l l be adequate
to accommodate the extensive applications
development already begun."
B. I l l i n o i s Plan - The major elements of a 30- page plan are
summarized a s follows:
o Problems t o be addressed
- Deficiencies i n prior planning procedures,
- Inadequate means to resolve c o n f l i c t s between planning
agency and EDP users,
- Lack of training i n current planning techniques, and
- Lack of continuing planning assignments.
s Strategies to influence e f f o r t s
- Developing the process f o r comprehensive EDP planning,
- Strengthening the resources f o r EDP planning,
- Linking EDP planning to f i s c a l control, and
- Evaluating communitywide EDP performance a s well a s the
quality of the planning process on t h e b a s i s of the
r e s u l t s of the comprehensive planning system.
o Essential actions
- Obtain management support and involvement in
comprehensive planning,
- Organize and s t a f f the EDP planning process,
- Maintain necessary policy and procedural support for
comprehensive planning,
- Improve fact- gathering function f o r strategic EDP
planning,
- Provide formal training for comprehensive planning,
- Conduct annual strategic EDF planning,
- Prepare short- term EDP planning, and
- Conduct mid- year EDP planning reviews.
The long- range planning section of the I l l i n o i s plan also included the
necessary resources and expected benefits from the planning process and a
list of milestones which could be easily monitored.
A s shown, the I l l i n o i s plan is f a r superior to the Arizona plan. The
deficiencies i n the Arizona plan are further i l l u s t r a t e d by comments made
by managers of State data processing operations centers. During our
review of the Division we interviewed the management of the f i v e S t a t e
data centers. The following statements about shortcomings in the
Statewide EDP plan are representative comments:
Data Center No. 1:
" The purpose of a plan i s to determine where you are,
where you want to go and how t o g e t there; the
statewide plan addresses none of these concerns i n
sufficient d e t a i l to be useful."
" The current plan ( or lack of one) does not provide for
coordinated data processing and data communications;
for example, the statewide plan does not deal with:
1) how to get s t a t e computers to talk to each other;
2) how to use data communications; or 3) the exchange
of information between data centers. "
" The statewide plan cannot be implemented because the
plan does not have enough d e t a i l to implement."
Data Center No. 2:
" Several changes and improvements need to be made i n
the statewide plan: 1) specific goals and objectives
need to be s e t out i n the plan; 2) the plan should s e t
out functional requirements f o r each data center agency
and how the agency w i l l meet those needs. Also, the
statewide plan should establish what DPD w i l l do on a
statewide basis; 3) the plan should identify statewide
needs and obtain the support of the Governor and agency
heads. "
" There are no specific plans to guide implementation or
to monitor progress."
Data Center No. 3:
" The statewide plan does not represent a plan.
Although goals and objectives have been developed, no
one has worked on d e t a i l . The r e a l meat of the
planning job has not been performed."
" The meat of planning is: 1) to find out what the
state- of- the- art is and how it best f i t s the S t a t e ' s
needs and 2) based upon t h a t , how each s t a t e agency
and data center can f u l f i l l a part of the S t a t e ' s EDP
need."
" Although goals have been developed, there is no
sufficient analysis on how to get there."
" There is really no plan to implement, only goals to
achieve. "
Although A. R. S. $ 41- 712 requires the Division to develop - and implement a
Statewide plan, the a s s i s t a n t director f o r the Division t o l d a u d i t s t a f f :
" The statewide EDP plan document is intended to be a
s t r a t e g i c document to provide direction and is not a
plan that i n i t s e l f emphasizes actions toward
implementation. The individual data center and DPD
plans should emphasize actions toward implementation."
Effects Of Inadequate Plan
Because t h e D i v i s i o n ' s Statewide data processing plan contains
nonimplementable and nonmeasurable objectives, the S t a t e ' s data processing
users, who spent more than $ 28 million i n f i s c a l year 1980- 81, are not
receiving adequate guidance or planning assistance. I n a d d i t i o n , t h e
deficiencies i n t h e D i v i s i o n ' s plan place other functions of DOA- Data
Processing i n a vacuum. For example, the Division has assumed
r e s p o n s i b i l i t y f o r the following actions:
1. Reviewing every acquisition of data processing equipment and
services by S t a t e agencies,
2. Reviewing budget requests involving the expenditure of funds for
data processing, and
I
3 Reviewing other S t a t e agencies' EDP plans.
The purpose of these reviews is t o ensure conformance with the statewide
plan. However, t h e e f f e c t i v e n e s s of these reviews is, of necessity,
hampered by inadequacies i n the plan.
Statewide Plans Do Not
Meet Statutory Objectives
Our review of the 1979, 1980 and 1981 Statewide data processing plans
published by the Division has revealed t h a t these plans neither address
nor f u l f i l l statutory objectives. S p e c i f i c a l l y , t h e plans do not address
the following areas as required by A. R. S. $ 41- 712:
" 1. ... consolidation, t r a n s f e r or elimination of data
processing a c t i v i t i e s . . . .
" 2. ... establishment of one or more centralized data
processing operations centers...."
According to the DOA- Data Processing assistant director, the
consolidation, t r a n s f e r o r elimination of data processing a c t i v i t i e s and
the establishment of data centers have not been addressed i n the plans
because there has been very l i t t l e a c t i v i t y i n e i t h e r area since the plans
have been published. However, the assistant d i r e c t o r ' s comments
notwithstanding, planning is by definition a forward- looking a c t i v i t y
designed to guide future action. A s such the Division should be
projecting the need for future data centers and establishing the c r i t e r i a
for the necessary decision- making involved. With t h i s process absent,
major data processing decisions a r e made without knowing i f such decisions
are i n the best long- term i n t e r e s t s of the State. Two examples involving
the DOA- Data Center i l l u s t r a t e t h i s point:
1. The DOA- Data Center currently is implementing an $ 820,000
hardware upgrade i n September 1981. This w i l l be the f i f t h
upgrade i n the past three years a t a cost of $ 7.2 million.
2. The State Compensation Fund currently spends almost $ 1.2 million
a year for data processing services a t the DOA- Data Center. By
way of contrast, the California State Compensation Fund has its
own data center, pays l e s s than $ 1.7 million a year for
comparable data processing services, but is five times as large
as the Arizona system.
In the absence of long- range plans and c r i t e r i a concerning the
establishment of additional centers, it cannot be determined i f the
DOA- Data Center should continue to upgrade its equipment or a new center
should be created. Similarly, it cannot be determined a t what point, and
under what conditions, it may become more e f f i c i e n t t o e s t a b l i s h a
separate data center for major data processsing users such as the State
Compensation Fund.
The Division's History Is Replete
with Unstarted or Abandoned Projects
In addition to developing a Statewide plan for data processing, the
Division is required s t a t u t o r i l y to submit to the Legislature an amual
report which includes plans for the ensuing f i s c a l year.
Our review of the annual reports to the Legislature and the Statewide data •
processing plans prepared by the Division disclosed that sevsral
significant a c t i v i t i e s , identified as needing attention or requiring
specific Division action, have not i n f a c t been completed. In addition,
the Division's annual reports to the Legislature and the Statewide EDP •
planning document do not include those a c t i v i t i e s which were abandoned o r
never started. Five instances of such inaction by the Division are
documented i n the case h i s t o r i e s t h a t follow:
Case History No. 1 - Data Communications
Source and
Date of Statement Statement
Annual Report* 4
May 1975 "... the purpose of the Master Plan for statewide data
processing providers, is to promote b e t t e r service
and lower costs through a s e r i e s of carefully planned
and cost j u s t i f i e d steps that w i l l . . . .
" Link these Functional Networks through a common, 0
shared, Statewide Data Communications Network."
( ~ m ~ h a saidsd ed)
EDP Master Plan**
1975 " A high- speed, data communications network is being
developed to support the functional centers i n the •
processing of data from the original sources to
points of need."
* The publication's f u l l t i t l e is " Annual Automation Report t o the
Arizona Legislature" and is published annually. ** The publication's f u l l t i t l e is " Data Processing Master Plan For The
State of Arizona." This plan was never implemented.
Case History No. 1 - Data Communications ( ~ o n c l ' d )
Source and
Date of Statement St a t ement
Annual Report*
January 1977 " There appears to be a need to establish a
telecommunications network for data communications
within the State....
" Therefore, a major e f f o r t by DPD i n ( FY) 77- 78 w i l l
be to add an individual to the s t a f f t o accomplish
needed work i n t h i s area. .. .
" I t appears reasonable to expect that from
$ 50,000- 100,000/ yr. could eventually be saved through
the use of a statewide data network."
Annual Report
January 1978 " with the added technical s t a f f position for ( FY)
77- 78, e f f o r t s are underway to study and report on
t h i s subject . I n i t i a l recommends tions and plans
should be available for both executive and
l e g i s l a t i v e branch review by the end of t h i s f i s c a l
year .' I
Annual Report
January 1979 " Continued e f f o r t s to define the needs of the State
for a coordinated data network are planned to be
completed by f i s c a l year 1979- 80."
Statewide EDP Plan
February 1979 " Data Communications.. . .
" DPD is working toward publishing formal plan by
6/ 80."
Statewide EDP Plan
February 1980 " DPD w i l l produce definitive plans during FY 80- 81.
These w i l l take into account the existing networks
and f a c i l i t i e s and future requirements."
Annual Report
January 1981
and
Statewide EDP Plan
March 1981 " The Data Processing Division w i l l form a committee
of data processing managers, communications experts
and other State o f f i c i a l s to work on a statewide
policy f o r voice and data telecommunications."
* The publication's f u l l t i t l e is " Statewide Data Processing Plan For
Arizona" and has been published annually since 1979.
A s shown, the Division has made l i t t l e progress towards achieving a data
communications plan or network i n s p i t e of: 1) hiring a technical
s p e c i a l i s t f o r data communications on July 25, 1977, 2) recognizing the
need for data communications network as early as 1975, and 3) promising
to produce plans by June 30, 1978, June 30, 1980, and during f i s c a l year
1980- 81. According to the Division's technical s p e c i a l i s t i n data
communications:
" Nothing has r e a l l y been accomplished towards
developing a common communications network i n three
years. "
It should be noted that the Division completed an inventory of data
communications c i r c u i t s i n early 1980. However, t h i s inventory already is
outdated because it has not been maintained properly.
Case Historv No. 2 - Cost Allocation
Source and
Date of Statement Statement
Annual Report
January 1976 " Some other areas that need attention are:. . .
" Establish a s e r i e s of ' standard practices' to be
applied to such EDP areas as;
"- uniform cost allocation procedures for a l l s t a t e
data processing operation centers..,"
Annual Report
January 1977 " Other specific plans and objectives scheduled for
F . Y. 77- 78 are.. ."
Provide i n i t i a l guidelines for uniform cost
allocations a t the five s t a t e computer centers by
September 1977.. .."
Annual Report
January 1978 " Also scheduled for completion during the coming year 4
are guidelines for uniform statewide cost allocation
and charge r a t e structures...."
Statewide EDP Plan
February 1979 " Minimum standards to be defined by DPD i n calendar
year 1979 ."
Case History No. 2 - Cost Allocation ( ~ o n c l ' d )
Source and
Date of Statement Statement
Annual Report
January 1980 " The Data Processing Division w i l l produce guidelines
for the development of computer cost systems during
1980. "
Statewide EDP Plan
February 1980 " DPD w i l l issue guidelines for computer cost
allocation i n FY 79- 80."
Statwide EDP Plan
March 1981 " DPD w i l l produce Cost Allocation Guidelines.. . by
June, 1981."
The Division has identified the need to establish uniform cost allocation
procedures f o r State data centers and has promised to provide cost
allocation guidelines every year since 1977. However, as of September 16,
1981, no guidelines had been provided.
Case History No. 3 - Compatability of Computers
Source and
Date of Statement Statement
Annual Report
March 1974 " Information has value to management - only i f it can
be i n t e r r e l a t e d and to the degree 2t is interrelated.
" I t is practically, and technically impossible to
i n t e r r e l a t e data within Arizona government because of
the diverse programming languages, methods, standards
and non- compatible computers."
EDP Master Plan
1975 " The organization s e t forth in t h i s plan
involves.. . standardization, to the extent feasible,
of data processing equipment configurations u t i l i z e d
by the State..."
Case History No. 3 - Compatability of Computers ( ~ o n c l ' d )
Source and
Date of Statement Statement
Statewide EDP Plan
February 1979 " Improved compatability which w i l l yield interchange
of information and reduced costs is a desirable
goal. Economic and technical benefit/ cost aspects of
achieving compatability should be studied in
anticipation of a decision to be effective i n the
next 5- 7 years."
Statewide EDP Plan
February 1980 " Economic, security and multi- agency information
exchange advantages of increased compatability w i l l
be studied i n anticipation of a decision by 1984- 86."
Statewide EDP Plan
March 1981 " Economic, security and multi- agency information
exchange requirements w i l l benefit from increased
compatibility. These factors w i l l be studied and
plans made to achieve a satisfactory solution by F'Y
1986."
Although the question of computer compatability has been identified as a
topic requiring attention since March of 1974, the Division has not made
demonstrable progress i n t h i s area. A careful reading of the 1981
Statewide data processing plan indicates that the Division expects the
problem to provide its own solution.
The plan s t a t e s ,
" Fortunately, vendors i n the marketplace see sufficient
value i n compatability to work toward it on t h e i r own
with t h e p o t e n t i a l r e s u l t t h a t Arizona may be able to
meet t h i s need simply by keeping it i n mind whenever a
change i n computer hardware, software or telecom
network design is contemplated ." ( ~ m ~ h a saidsd ed)
The data center managers, however, f e e l that the DOA- Data Processing
philosophy i n t h i s area is inappropriate. During the June 4, 1981,
day- long semiannual Division planning session one data center manager
stated that i f the State waited f o r vendors to provide interfaces to allow
compatability, the State would still be waiting i n 1986. Several others
i n attendance agreed, and were receptive to be " up and doing."
Case History No. 4 - Minicomputer and Distributed Data Processing
Source and
Date of Statement Statement
Annual Report
January 1976 " Some other areas that need attention are:. . .
" Investigate and determine which of the new
techniques and technologies ( such as minicomputers)
can and should be adopted to our S t a t e ' s automation
f a c i l i t i e s i n a uniform manner."
Annual Report
January 1977 " Other specific plans and objectives scheduled for
F. Y. 77- 78 are:...
" I n i t i a t e p i l o t i n s t a l l a t i o n s to study the various
aspects and c a p a b i l i t i e s of applying minicomputers to
generalized data processing within our s t a t e
government."
Annual Report
January 1978 " Because the overall technology of computers is
changing, and to f o s t e r a needed logical, orderly and
factual investigation of how t h i s changing
environment might benefit the State, the following
minicomputer policy w i l l be effective during the
study and evaluation phase which w i l l extend for
approximately 18- 24 months.
" No new ' stand alone' computer centers w i l l be
established. A limited and controlled number of
' p i l o t ' minicomputer i n s t a l l a t i o n s w i l l be authorized
by the DPD from those requested by the agencies."
Case History No. 4 - Minicomputer and Distributed Data Processing ( ~ o n c l ' d )
Source and
Date of Statement Statement
Statewide EDP Plan
February 1979 " 0b j e c t i v e / ~ s s u e
" Allow expanded deployment of general purpose
minicomputers i f appropriate economic, managerial and
s t a f f i n g standards a r e met i n the judgment of the
c e n t r a l reviewing authority ( DPD) ."
Annual Report
January 1981 " This division and the managers of the l a r g e r data
processing centers w i l l address t h i s important new
technology i n the coming year t o attempt to a r r i v e a t
a statewide policy t h a t w i l l permit orderly growth
with control."
Statewide EDP Plan
February 1981 " A statewide policy w i l l be developed t o define
d i s t r i b u t e d processing and the requirements for
p a r t i c i p a t i o n , including t h e use of minicomputers,
communications devices and techniques.... This should
occur during the 1982 calendar year time frame."
Although the Division has recognized the need to determine i f
minicomputers should be applied t o the S t a t e ' s automation f a c i l i t i e s , it
has made l i t t l e progress toward such a determination other than monitoring
the use of a Department of Health Services minicomputer. A policy
statement dated January 25, 1978, indicated the study and evaluation phase
would be extended to January 25, 1980. It should be noted t h a t t h i s phase
has been extended t o 1982.
Case History No. 5 - Computer Application
Source and
Date of Statement Statement
Statewide EDP Plan
February 1979 " ~ b j e c t i v e / ~ s s u e
" The EDP community i n cooperation with users should
e s t a b l i s h a process f o r the review of existing as
well a s new applications leading to possible
recommendations f o r revision or even elimination from
automated processing."
" C omment
" A number of l e g i s l a t o r s and others were concerned
about the possible misuse of computers resulting from
running unnecessary, inappropriate or i n e f f i c i e n t
applications."
Statewide EDP Plan
February 1980 " DPD w i l l produce standards or guidelines governing
the applications review procedure during calendar
year 1980."
Statewide EDP Plan
March 1981 " Guidelines w i l l be produced i n 1981
for... applications reviews..."
A s of September 16, 1981, the Division had not produced applications
review guidelines t h a t were scheduled f o r completion i n 1980.
The above f i v e cases i l l u s t r a t e t h a t the Statewide data processing plan is
not being developed or implemented properly. A possible solution might be
to e s t a b l i s h a Statewide ED? advisory council. I n the 1979 Statewide plan
DOA- Data Processing suggested the creation of such a council, s t a t i n g :
" The group should consist of non- DP professionals from
the l e g i s l a t i v e , executive and j u d i c i a l branches and
possibly members of the private sector. The council
should meet approximately four times each year to
review EDP p l ~ n san d recommend actions."
I f such a council were created to review plans, monitoring the
implementation of the plans could be a natural extension of i t s duties.
CONCLUSION
The Division's Statewide data processing plan is inadequate i n that it
does not meet the c r i t e r i a of a good plan document, cannot be implemented,
is not in compliance with statutory requirements and is replete with
abandoned or never- started projects.
A s a r e s u l t , the S t a t e ' s data processing users are not receiving adequate
guidance or assistance.
RECOMMENDATIONS
Consideration should be given to the following recommendations:
1. The Division follow i t s own Long- Range Planning Guidelines by
developing a plan which specifically defines: 1) stated
objectives, a c t i v i t i e s , time schedules and measurable r e s u l t s ,
and 2) the estimated resource requirements to carry out the
identified a c t i v i t i e s .
2. The Division f u l f i l l its statutory planning mandate by developing
a Statewide data processing plan that addresses the
consolidation, transfer or elimination of data processing
a c t i v i t i e s and the establishment of additional data processing
operations centers.
3. The Division report to the Legislature the progress made to
achieve - a l l objectives that are stated i n the plan document.
It is further recommended that the Legislature consider the establishment
of a steering board or committee to review and approve Statewide data
processing plans prepared by the Division and to monitor the
implementation of the Statewide plan.
FINDING I1
THE ENABLING STATUTES FOR DOA- DATA PROCESSING ARE INADEQUATE.
In 1972 the Legislature established by s t a t u t e DOA- Data Processing, the
position and r e s p o n s i b i l i t i e s of an a s s i s t a n t director f o r data processing
and a revolving fund to be managed by the Division.
Our review shows the s t a t u t e s are inadequate i n that:
1. While the Division is given the responsibility to provide for
e f f i c i e n t and coordinated u t i l i z a t i o n of data processing
equipment, techniques and personnel it is not given commensurate
authority over the S t a t e ' s f i v e major data centers.
2. The enabling s t a t u t e s ' emphasis on a centralization of data
processing may no longer be appropriate, given the s t a t e of
to& ay's technology, and
3. There is no s p e c i f i c s t a t u t o r y authority f o r the Division to
perform acquisition reviews.
In addition, the Division has not sought curative l e g i s l a t i o n to address
needed c l a r i f i c a t i o n s and revisions of its s t a t u t e s . A s a r e s u l t , the
Division has not provided effectively for the e f f i c i e n t and coordinated
use of the S t a t e ' s data processing resources envisioned i n its enabling
I, s t a t u t e s .
I n a b i l i t y to Enforce Efficiency and Coordination
A. R. S. $ 541- 711 through 41- 713 contain the enabling s t a t u t e s for the
Division, descriptions of its r e s p o n s i b i l i t i e s and a data proc; ssing
revolving fund. A. R. S. $ 41- 712 s t a t e s :
" A. The data processing division shall provide for an
e f f i c i e n t and coordinated u t i l i z a t i o n of data
processing equipment, techniques and personnel to
achieve optimum effectiveness and economy i n
collection, storage, interchange, r e t r i e v a l , processing
and transmission of information.
" B. The data processing division s h a l l develop,
implement and maintain a coordinated statewide plan for
data processing and data communications systems,
including but not lilriiteci to the consolidation,
transfer or elimination of data processing a c t i v i t i e s ,
and the establishment of one or more centralized data
processing operations centers, for the purpose of
serving the management and other needs of the
l e g i s l a t i v e , executive and judicial branches of s t a t e
government."
In giving the Division the mandate to achieve efficiency and coordination,
A. R. S. $ 41- 712 gives the Division responsibility for, and sole authority
over, the data processing needs of State government, Reviewing A. R. S.
$ 41- 712, Legislative Council commented:
" In authorizing the DPD to develop, implement and
maintain a coordinated s t a t e plan f o r data processing
and data communications systems for the purpose of
serving the needs of s t a t e government, the l e g i s l a t u r e
has clearly expressed its i n t e n t t o confer on the DPD
the sole authority to provide for the data processing
needs of the branches of s t a t e government and t h e i r
departments; agencies, boards and commissions."
" The a s s i s t a n t director f o r data processing is,
therefore, responsible for t h e d i r e c t i o n and control of
data processing operations centers which DPD
establishes, and - not the departments, agencies, boards
or commissions which serve only as hosts for the
centers." ( ~ m ~ h a saidsd ed)"
* A f u l l text of the opinion is included as Appendix I.
Despite t h i s s t a t u t o r y a u t h o r i t y , t h e Division is unable to enforce
efficiency and coordination because:
a. The Division does not have authority over the data processing
resources of other agencies, and
b. The method of financing the S t a t e ' s data centers s e t forth i n
A. R. S. $ 41- 713 has not been implemented.
Lack of Authority over Resources
The Division has attempted to achieve efficiency and coordination by
issuing p o l i c i e s , d i r e c t i v e s , guidelines and procedures for the S t a t e ' s
five data processing centers. However, the data processing centers and
the host agencies for those centers e i t h e r ignore the Division's
directives or do not comply with them i n a timely manner.
Data Processing Division Directives 80- OlD, 80- 04D and 80- 05D i l l u s t r a t e :
Directive 80- 01D
This directive required applicable agencies to develop and submit EDP
security plans by the end of the third quarter of 1980. None of the
data operation centers complied. One center submitted the requested
plan i n the fourth quarter of 1980, one i n the f i r s t quarter of 1981
and the other three i n the second quarter of 1981.
Directive 80- 04D
This directive required the data operations centers to submit
long- range plans annually. Only two of the five data operation
centers complied.
Directive 80- 05D
This directive required the data operations centers to f i l e a copy of
t h e i r disaster- recovery plans with the Division by June 30, 1981. A s
of July 14, 1981, none of the data centers had complied.
According t o the Legislative Council, the a s s i s t a n t d i r e c t o r f o r data
processing is "... responsible f o r the d i r e c t i o n and control of data
processing operations c e n t e r s . . . ." However, the Division has no control
over center employees or equipment i n t h a t " the host agency, not DPD, is
authorized to supervise the persons s t a f f i n g the data processing
operations centers...."" Therefore, while DOA- Data Processing may be
generally responsible f o r d i r e c t i o n and control of data processing, the
host agencies control the resources and may ignore Division d i r e c t i v e s i f
they so choose.
Responding to the incongruity of Division r e s p o n s i b i l i t i e s without
a u t h o r i t y , Legislative Council offered four possible solutions:
" 1. Authorize the a s s i s t a n t d i r e c t o r f o r data
processing to deputize employees i n the agencies
hosting data processing operations centers t o
perform c e r t a i n functions of the DPD.
" 2. Authorize the DOA or the DPD alone t o contract or
enter i n t o agreements with the host agencies for
joint or cooperative action regarding the data
processing operations centers. A. R. S. sec tion
11- 952, subsection A provides t h a t :
" ' I f authorized by t h e i r l e g i s l a t i v e o r other
governing bodies, two or more public agencies by
d i r e c t contract or agreement may contract for
services, o r j o i n t l y exercise any powers common to
the contracting p a r t i e s and may enter i n t o
agreements with one another for joint or
cooperative action, except t h a t i f two or more
school d i s t r i c t s arrange to become contracting
p a r t i e s under the terms of t h i s section, such
contract s h a l l f i r s t be approved by the s t a t e
board of education.'
" The departments of revenue, economic s e c u r i t y ,
public safety and transportation a r e authorized to
enter such agreements with other agencies. See,
respectively, A. R. S. sections 42- 104, 41- 1954,
41- 1713 and 28- 114.
* A f u l l t e x t of the opinion is included a s Appendix 11.
2 E3
" 3. Appropriate s u f f i c i e n t monies to the DPD for
deposit i n the data processing revolving fund for
the purpose of employing persons i n and purchasing
equipment for the data processing operations
centers.
" 4. Transfer personnel performing functions related to
the data processing operations centers, data
processing equipment and unexpended and
unencumbered monies appropriated to the host
agencies for performing functions related to the
data processing operations centers t o the DPD."
The t h i r d a l t e r n a t i v e is particularly noteworthy i n l i g h t of the existing
statutory provisions f o r financing State data centers.
Financing Centers According to A. R. S. $ 41- 713
Four of the five data processing operation centers have been funded
through appropriation since t h e i r creation i n 1975. These data centers
should be operating under the data processing revolving fund provided for
i n A. R. S. $ 41- 713 . In a May 4, 1981, memorandum the Legislative Council
stated:
" A. R. S. section 41- 713 is applicable to a l l data
processing operations centers in that the assistant
director for data processing may prescribe t h a t a l l
data processing operations centers be financed from and
operate under the data processing revolving fund."
In addition, the Legislative Council stated i n an opinion dated June 1,
1981 :
" . . . i f the l e g i s l a t u r e appropriates monies to the DPD
f o r deposit i n the data processing revolving fund and
those monies are expended by DPD for data processing
equipment of the data processing operations centers and
s a l a r i e s of employees it assigns to the data processing
operations centers, DPD is the owner of the equipment
and the supervisor of a l l persons it employs for
assignment to the data processing operations centers.
The host agencies would serve only as hosts of the data
processing operations centers."
Under the revolving fund concept the Division would possess much broader
authority over the data centers than it now has. It should be noted that
the Division attempted to require a l l the data centers to operate under
the revolving fund by issuing Policy Statement 80- 02 and Directive 80- 03D
on August 11, 1980, establishing a uniform method of financing, cost
allocation, cost recovery and budgeting for the S t a t e ' s data processing
operation centers by including a l l of them under the revolving fund.
However, the policy and directive never were implemented* because of
significant opposition from the data center managers, department heads of
the host agencies and l e g i s l a t o r s .
The lack of Division authority over the resources of the data centers
precludes it from enforcing i t s p o l i c i e s , d i r e c t i v e s , procedures and
guidelines. According to the Division assistant director:
" DPD has very few mechanisms available to exercise its
authority over those agencies hosting the designated
State data centers other than the power to establish
them. For example, the DPD would need more d i r e c t
involvement i n the f i s c a l management of the S t a t e ' s
data processing resources including review authority
over data processing revenues and expenditures i n order
to enforce its stated and implied statutory
responsibility for those who choose t o ignore i t . "
Statutorv Focus On Centralized
Centers May Be Inappropriate
The focus of A. R. S. $ 41- 712.~ on centralized data centers may not be i n
the best i n t e r e s t of the State. Some experts now believe distributed data
processing, through the use of minicomputers, microcomputers and word
processing centers, is the new generation of data processing.
Distributed data processing has been defined as a system:
"... in which the computing functions are dispersed
among several physical computing elements. These
elements may be colocated or geographically separated."
* The Director of the Department of Administration countermanded Policy
Statement 80- 02 and Directive 80- 03D on August 27, 1980.
Such systems have evolved because technological advancements have reduced
costs of minicomputers and microcomputers to the extent that it is
feasible to buy three or four small computers to do work previously
performed by one large central computer.
Although not appropriate for a l l applications, distributed data processing
can provide significant advantages over centralized systems. Some of the
advantages are:
- - More specialized and responsive services - The use of more and
smaller computers allows f o r information systems that better
match the needs and objectives of the users.
- - More r e l i a b i l i t y - A l l computing systems are subject to f a i l u r e .
However, when small computers are linked i n a multiprocessor
system, provisions can be made f o r backup computers i n the event
of such f a i l u r e s . It usually is cost- prohibitive to maintain
backup f o r large, centralized computers. In addition, software
packages for smaller computers often are simpler and more l i k e l y
to be error- free than the more complex software packages for
large computers.
Cost ' savings and productivity improvements - Depending on the
s i t u a t i o n , distributed data processing can offer cost savings and
productivity improvements over centralized systems. For example,
the Connecticut department of education reported that the
implementation of a distributed data processing system increased
productivity 40 percent and cut computing costs 60 percent as
compared to the centralized system it replaced. Similarly, a
distributed data processing system used by the off- track betting
system i n New York City processes four times the data and costs
$ 250,000 a month l e s s than the centralized system it replaced.
Arizona's s t a t u t e s regarding the Division predate many of the
technological advancements that fostered the development of distr5buted
data processing. The statutory language provides only f o r "... the •
establishment of one or more centralized data processing operations
centers.. . . " (~ mphasis added)
Such language, i f adhered to, may r e s t r i c t DOA- Data Processing from 0
planning and implementing distributed data processing systems -- even
though i n some instances such systems may offer significant advactages
over centralized systems.
Lack of Statutory Authority
to Make Acquisition Reviews
A major function of the Division is to review the data processing
acquisition of State agencies. While not s t a t u t o r i l y mandateC, the a
acquisition review process has evolved through Division cooperation with
various offices within DOA- Division of Finance. Through the review
process the Division can prevent effectively the purchase of data
processing hardware and software by State agencies. However, it should be a
noted t h a t S t a t e agencies can and do circumvent the approval process and,
i n the absence of Division s t a t u t o r y a u t h o r i t y , such circumventions are
not i l l e g a l or preventable. ( see Finding 111, page 38)
Inadequate Division Efforts to Address
Deficiencies i n its Enabling Statutes
The Division appears to have done l i t t l e to obtain corrective l e g i s l a t i o n
to address the deficiencies i n its enabling s t a t u t e s .
Apparently the sum and substance of Division e f f o r t s to obtain
c l a r i f i c a t i o n regarding its s t a t u t e s was one request in August 1978 f o r an
Attorney General opinion regarding its authority and enforcement powers. a
The DOA- Director withdrew the request before the Attorney General prepared
his opinion. The Division has not suggested l e g i s l a t i o n , or formally
sought l e g i s l a t i v e changes, to correct the deficiencies i n its s t a t u t e s .
The Division's enabling s t a t u t e s were enacted i n 1972. In our opinion,
the Division must accept some responsibility for the deficiencies that
have been in its s t a t u t e s f o r nine years.
CONCLUSION
Our review revealed that DOA- Data Processing has not been able to f u l f i l l
its statutory mandate because its authority to enforce its policies and
directives is unclear. In addition, there has been l i t t l e formal e f f o r t
to c l a r i f y the s t a t u t e s . We also determined that the specific statutory
language regarding centralization may be inappropriate due to
technological advances i n distributed data processing. Further, the
review process for data processing acquisitions should be prescribed
s t a t u t o r i l y t o help prevent circumventions of the process.
REC ONMENDAT1 ONS
Consideration should be given to the following recommendations:
1. The Legislature consider the following alternatives regarding the
funding and operation of the data operations centers.
a . Clarify A. R . S. $ 41- 713 by specifically including data
operations centers under the data processing revolving
fund. This would involve:
Appropriate sufficient monies to the Division for deposit in
the data processing revolving fund for the purpose of
employing persons i n and purchasing equipment for the data
processing operations centers, or
Transfer employees performing functions related to the data
processing operations centers, data processing equipment and
unexpended and unencumbered monies appropriated to the host
agencies for performing functions related to the data
processing operations centers to the Division.
b. Continue to fund the data operations centers by
appropriation and s t a t u t o r i l y establish the
authority/ responsibility relationship between DOA- Data
Processing and the data operations centers.
c. Authorize the a s s i s t a n t director for data processing to
deputize employees i n the agencies hosting data processing
operations centers to perform c e r t a i n functions of the
Division.
d. Authorize DOA or its Data Processing Division to contract or
enter into agreements with the host agencies for joint or
cooperative action regarding the data processing operations
centers.
2. The Legislature amend A. R. S. $ 41- 712, subsection B to provide for
data processing systems other than centralized systems.
3. The Legislature consider s t a t u t o r i l y prescribing the review
process f o r data processing acquisitions.
FINDING I11
DOA- DATA PROCESSING IS NOT FULFILLING ITS INTENDED ROLE I N THE EDP
ACQUISITION PROCESS.
On July 10, 1979, the Department of Administration issued to agency heads
a procedures manual e n t i t l e d The Acquisition of Electronic Data Processing
Hardware, Software and Sources.* The manual provides a guide for
converting j u s t i f i e d EDP** needs into ZDP capability, and it specifies
that the Division w i l l participate in, review the progress of, provide
consulting during, accept or approve eleven specific tasks i n the EDP
acquisition process. Our review revealed that the Division is not
f u l f i l l i n g its intended role effectively i n the EDP acquisition process i n
that its function i n the process is confined to reviewing and approving
requested acquisitions and that agencies frequently circumvent the
Division i n acquiring EDP equipment and services.
According to the DOA procedures manual, " i t is the responsibility of the
Data Processing Division ( DPD) to provide guidelines throughout the Phase
I*** evaluation and t h e s p e c i f i c a t i o n development process to ensure that
the resultant system conforms to the State data processing plan."**** The
EDP acquisition process is divided into two, phases and several specific
tasks. These tasks and the Division's supposed involvement i n each are
summarized i n Table 2.
. x. Appendix I11 contains the manual text.
jc* The procedure manual describes EDP as data processing equipment,
software, services and word processing systems including
typewriters that have a text storage, editing and automatic
printing capability.
ltw Project definition and approval.
- x- x-* Q See Finding I, page 7 regarding inadequacies i n the State data
processing plan.
TABLE 2
EDP ACQUISITION PROCESS AND DOA- DATA PROCESSING INVOLVEMENT
Division Involvement
Task
Phase I- Project Definition and Approval
Review
Consult Progress Participate Accept Approve
- Statement of need
- Benefit cost j u s t i f i c a t i o n X
- Define EDP resources X X
- Selection and approval of
alternatives X
Phase 11- Project and Acquisition
Implementation
Determine aquisition
method( s)
Develop bid proposal technical
specifiations
Assemble bid/ proposal document
Issue IFB or RFP
~ i d / p r o ~ o s aevl aluation and
selection
Contract f i n a l i z a t i o n and
award
Order EDP equipment, goods
and services
Delivery and acceptance of
EDP equipment, goods and
services
Payment and operations
Our review revealed that while the Division's role i n the EDP acquisition
process is designed to be pervasive and extensive, it is i n fact limited
to the point of being ineffective. For example, DOA- Data Processing's
involvement with agencies during the project definition and approval phase
is to consult with them i n preparing benefit/ cost j u s t i f i c a t i o n s , defining
EDP resources and s e l e c t i n g a l t e r n a t i v e s . In truth, the Division's
consulting services are nothing more than general guidelines which are
appended to the July 10, 1979, procedures manual. The absence of
consulting services is particularly c r i t i c a l for those agencies that do
not have the expertise to identify and select EDP acquisition options, as
the following case i l l u s t r a t e s .
The Department of Insurance has budgeted funds t o purchase a word
processor i n f i s c a l year 1981- 82. The business manager asked f o r Division
assistance and received a copy of the acquisition review procedures and
copies of submissions by other agencies. The business manager, finding
t h i s unsatisfactory, continued to gather information question- by- question,
and it took him more than four months to compile and submit his request.
According to the business manager, he may never need to submit another
request for data processing or word processing equipment and t h a t it does
not seem l o g i c a l t h a t he should be expected to acquire EDP expertise to
make a one- time purchase. He suggested that the Division e i t h e r a s s i s t
agencies i n performing evaluations or provide them with specific
parameters ( such as the number of l e t t e r s processed each month) for which
data should be gathered and developed.
According to the Division, it does not have sufficient s t a f f resources to
consult with agencies i n developing acquisition requests.
Of the eleven EDP acquisition process tasks, DOA- Data Processing is most
v i s i b l y and a c t i v e l y involved i n the approval of EDP acquisition
requests. During calendar year 1980, the Division received 135 agency EDP
acquisition requests, of which it approved 125. According t o the employee
who is primarily responsible f o r receiving agency requests, many approved
requests a r e changed or modified through negotiations between the Division
and the agencies. Such requests a r e considered approved even though they
may d i f f e r s i g n i f i c a n t l y from t h e o r i g i n a l submission. Further, a
Division r e j e c t i o n does not mean t h a t an acquisition is not made. More
often than not, a r e j e c t i o n merely r e s u l t s i n an agency acquiring a
d i f f e r e n t piece of equipment.
While the Division does review many EDP acquisition requests, it appears
t h a t agencies can and do circumvent it i n acquiring EDP equipment and
services.
Three examples of such circumvention a r e presented i n the following cases:
Case I - Mine Inspector Microcomputer
Arizona's Mine Inspector prepared an acquisition request for a
microcomputer system to support an emergency mine rescue project. The
Division denied the request and recommended t h a t the Mine Inspector
reconsider available options. The Mine Inspector disregarded the denial
and purchased a microcomputer. The claim was processed by DOA- Finance,
Accounts and Controls section, with no Division approval.
Case I1 - Department of Education - Word Processor Upgrade
The Department of Education requested an upgrade f o r its word processing
system i n November 1980. The acquisition review procedures c a l l f o r such
requests t o be approved by the Division, Joint Legislative Budget
Committee ( JLBC) s t a f f and Executive Budget Office ( EBO) s t a f f . The
( I
Division and the JLBC s t a f f gave preliminary approval to the request on
December 15, 1980, but EBO withheld approval pending f u r t h e r research into
the request. However, the Department of Education proceeded to order the
equipment on December 31, 1980, without obtaining a l l approvals. EBO's
research eventually led to a denial of the request on February 23, 1981,
but by t h a t time the equipment had been purchased.
Case I11 - Attorney General - Word Processor
The Office of the Attorney General acquired a word processing system in
January 1981. It did not submit an acquisition request to DOA- Data
Processing u n t i l February 23, 1981. The Division response to the Attorney
General commented :
" We were most disappointed to learn that the requested
equipment was acquired p r i o r t o submission to t h i s
office of your Phase I information. Our approval of
t h i s acquisition therefore must be a f t e r the fact ,"
A s the above cases i l l u s t r a t e , Division review of EDP acquisitions can be
circnmvented. It cannot be determined how widespread t h i s practice may be
because of i n s u f f i c i e n t controls and documentation. Further, as shown i n
Case 111, i n the absence of s t a t u t o r y authority to perform the review
process, the Division has l i t t l e authority to take action against agencies
that do not obtain Division approval before acquiring EDP equipment or
services.
No Appeal Procedure for EDP
Acquisition Review Decisions
The procedures manual for EDP acquisitions does not contain an appeal
process for agencies that disagree with a Division review decision. Such
an appeal process appears especially appropriate when large acquisitions
are involved or the requesting agency has its own EDP employees, such as
the five agencies with data centers. The absence of such an appeal
process may account f o r some agencies not submitting requests to the
Division or may result i n an agency acquiring equipment it should not, as
the following case i l l u s t r a t e s :
The Department of Economic Security ( DES) received approval from DOA- Data
Processing i n August 1979 to proceed to bid and contract with an outside
vendor for a software conversion and related hardware requirements. The
accepted bid included $ 760,000 for an attached processor alternative and
$ 240,000 for increased memory capacity for t o t a l hardware cost of
$ 600,000. However, the contract was not finalized due to a lack of
Federal funds. Before the contract was signed the vendor notified DES
that a used processing system could be purchased from Arizona State
University ( ASU) for approximately $ 690,000. Advantages of the ASU system
over the attached processor were increased processing power and a dual
system capability. The Division rejected a DES request to obtain the ASU
system because: 1) DES had not documented properly the need for added
processing capacity, and 2) a system with similar capacity to the ASC
system could be purchased on the open market for approximately one- half
the cost. DES, however, did not want to purchase a system on the open
market because bidding and Federal approval requirements would have caused
an intolerable delay i n acquiring the equipment and software conversion
needed. Because of time pressures DES opted to obtain the attached
processor and in July 1980, the Division, allegedly because of pressure
from the Director of DOA to resolve the issue, approved a DES lease of the
attached processor. That lease was not however, implemented and DES
subsequently circumvented DOA- EDP acquisition procedures and purchased the
attached processor outright. According to DES o f f i c i a l s such an action
was precipitated by the fact that it was $ 40,000 cheaper to buy the
equipment than lease it for 18 months. Ironically, the Division's
assistant director had pointed out p r i o r t o the approval of the contract
and has since confirmed that the equipment DES acquired was possibly the
worst a l t e r n a t i v e t h a t could have been selected.
It should be noted that the Department of Administration director and the
Division assistant director agree that a formal appeal process should be
established.
CONCLUSION
DOA- Data Processing is n o t f u l f i l l i n g its intended role i n the EDP
acquisition process in that it has not provided adequate consulting to
a s s i s t agencies. In addition, agencies can and do circumvent the review
process. Finally, the process can be improved by establishing a formal
appeal procedure.
RECOMMENDATIONS
Consideration should be given to the following recommendations:
1. The Division should provide m r e consulting support to those
agencies lacking EDP expertise, and seek to improve
communications with the larger agencies regarding acquisitions.
2. The Division cooperate with the General Accounting Office of
DOA- Finance to eliminate circumvention of the acquisition review
process.
3. The Legislature consider prescribing s t a t u t o r i l y the review
process f o r data processing acquisitions and include statutory
provisions for an appeal process to review disputed decisions.
I f the Legislature establishes a steering board or committee to
oversee Division a c t i v i t y as recommended i n Finding I ( page 24)
such a body could review disputed acquisition decisions.
STATE OF ARIZONA
THE CAPITOL BRUCE BABBITT. GOVERNOR
PHOENIX, ARIZONA 85007 George Gri tton, Acti ng DIRECTOR
( 602) 255- 3669 JACK STANTON,
ASSISTANT DIRECTOR
October 19, 1981
Mr. Douglas R. Norton
Auditor General
State of Arizona
Phoeni x, Arizona 85007
Dear Mr. Norton:
You wi 11 find enclosed our written response to the performance audit
of the Department of Administration - Data Processing Division.
This response i s based upon the d r a f t report provided September 25th,
our meetings September 29th and October 14th and amendments received
October 5 and October 14, 1981.
We appreciate the opportunity to meet with you, discuss the d r a f t and
to comment in writing about the audit and report.
Jack Stanton
State Automation Director
Approved :
JS: jf
Attachment
DEPARTYEHT OF WDMINISTRWTlO8
DATA PROCESSlNG D13J! S! OH STATE OF ARIZONA d
- -- --
THE CAPITOL BRUCE BABBITT. GOVERNOR
PHOENIX, ARIZONA 85007
( 602) 255- 3669 George Bri t t o n , Acting DIRECTOR
JACK STANTON,
ASSISTANT DIRECTOR
RESPONSE OF THE DATA PROCESSING DIVISION TO TiiE PERFORMANCE AUDIT CONDUCTED BY TtIE a
OFFICE OF THE AUDITOR GENERAL AS PART OF THE SUNSET REVIEW
The Data Processing Division ( DPD) wishes t o thank the Auditor General ' s
s t a f f f o r t h e i r efforts and courtesy in conducting their audi t. Thei r report
general ly ref1 ects the substance of our discussions and points of concurrence.
However, there s t i l l are several areas where the Division has concern about and/
or contention with the report.
Because there i s significant agreement with the basic premise of Finding 11,
we will address this area f i r s t . I t also permeates the other findings and in-fl
uences the conclusions. Findings I11 and I will be addressed aft. ery@; iading I1
respecti vely .
FINDING I1
We concur with the basi c conclusion presented. There are additional consider-ations
and a1 ternati ves that shoul d be exami ned. For i nstance, agencies coul d s t i 11 d
be directly appropriated the funds, b u t as " outside professional" t o the programs/
di visions which use data processing services . DPD advocates this approach with the
computer centers operating out of a charge- for- servi ces rev01 vi ng fund.
The report does not clarify the scope of DPD's statutes in such areas as the
universities and the legislative and judicial branches. The existing statutes
( ARS 41- 712) mention all three branches as part of the scope of DPD. Legislative
appropriations, however, have traditionally been made to a9encies c. ri t h l i t t l e or
no regard t o this provision. We recommend such clarification.
Regarding your argument presenting the advantages of distributed data proces-sing
over centralized systems, normally the objective is one of determining the l( d
proper mix of centralized and distributed f a c i l i t i e s t o be used for the most ef-fective
solution. This must be done on an agency by agency application basis.
The requi rement for management's control of the i nformation processing resource as
well as the level of security of the information and supporti ng eq~ ipnent are
extremely important factors to also consider in such a decision t o decentralize.
The samples presented for the States of Connecticut and New York in their
implementing distributed processing must be viewed with caution ' if direct ex-trap01
ation of the quoted savings to Arizona is intended. There are rcany con-si
derati ons , i ncl udi ng the di fferences i n statutes governing the agencies,
geographi c distances and population distribution whi ch can i nfl uence the econ-omi
cs of trai ni ng , tel ccommuni cati ons costs and servi ce avai labi 1 i ty to remote/
distributed equipment.
FINDING 111
We generally agree with those statements and examples of this finding
regarding those instances where agencies can and do circumvent the EDP Acqui -
si tion Procedure. The lack of clear statutory authority covered in Finding I1
to enforce DPD policy and di recti ves clearly i s appl i cab1 e in this area as we1 1 .
Your recommendations state that DPD should " cooperate wi t h the Accounts
and Controls Section" ( General Accounti ng Offi ce) to el imi nate ci rcumventi on
of the acquisition review process. We feel this reco~ mendation should go
further to include the State Purchasing Office, and be factored into statutory
changes in these areas as we1 1 as for DPD.
There needs to be clarification of the term " consulting services" as used
in the report. The staffing level of DPD has not allowed us to provide primary
resources to an agency to actually perform the detailed analysis and developnient
of docurnentati on to satisfy DOA's EDP acquisition procedure. The " consul ti ng"
provided is to help define the process and what the State agency needs to do
to proceed. As stated in your report, current staffing is insufficient to meet
this need. We have no objection to expanding our function to include actual
needs analysis services to agencies, b u t the Legislature and others must realize
i t would significantly increase our FTE count, related resources and budget
appropriation to do so.
The irnpetus behind issuing DPD Procedure # Kl- OlP dated January 31 , 19e0,
t i t l e d " Procedure for Agency Problem/ Pieed Resolution t h a t Occur Prior to Phase
I of the EDP Acquisition Procedures", was to assist acencies who may not have
the resources to satisfy the acqui si tion requi rements.
45
The addition of our Office Automation s t a f f rnernber l a s t f i s c a l year has
a1 1 owed LIS to prepare seminars and more speci f i c procedures for conducting
word processing studies to determine i f and to what extent this f a c i l i t y may
benefit an agency. A new seminar, to be completed this Fa1 1 1981 will use
a procedure document as a " text". I t wi 11 a1 low managers t o b e t t e r conduct
an analysis of t h e i r agency's word processing needs by f i l l i n g i n the study
forms provided. This wi 11 be suppl emented by 1 imi ted i ndi vi dual agency con-sul
tation from DPD's existing s t a f f .
Our agreement with establishing an " appeal process" i s based upon pro-viding
v i s i b i l i t y to the major decision makers who are concerned with assuring
that the proper data processing a1 ternati ve i s selected and imp1 emented. We
o f f e r t h e following comments regarding that portion of Finding I11 tha.; st- $- refer-ences
DES's operating system conversion bi d and contract.
Exception i s taken with the contention that bidding the equipment portion
on the open market and/ or Federal approval would have caused " an intolerable
delay" for the following reasons:
1 - In June 1980, DES had decided to proceed with the project using
descretionary funds available to the DES Director and not rely on
di rec t Federal fundi ng.
2 - The Department of Adnii ni s tration had cornmi tted to participate wi th
DES and expedi t e open market bi ddi ng to be co~ npel ted w i t h i n 60- 90
days. ( The original bid was issued in August 1979 w i t h the provi-sional
award made in October 1979 - a period of less than 90 days.)
3 - The Division a s s i s t a n t director had received a quote froni a third
party broker of 30- 60 days deli very for an essenti a1 1y equi valent
capacity processor ( an IBM 370/ 158- 3) to the machine being released
from ASU ( an IEF1 3031) for a purchase price of less than $ 275,000.
This information was presented to DES.
4 - The pri ce/ cost of the computer memory portion dropped significantly
from August 1979 ' t i 1 June 1980. The IBM price \$ as down to ap-proximately
half for the quantity involved, and the open market
price was less than $ 100,000.
5 - Even though DES used the existing bid and award, they did not i n s t a l l
the attached processor unti 1 approxi mately si x months 1 ater ( January
1981 ) , a time greater than would have been required to bid, award and
i n s t a l l more powerful equipment a t less cost from the open market.
6 - Based upon the bid specification and the schedule shown in the
vendor's proposal, a 12 month conversion period was indicated with
the 13th month for turnover to DES of the product of the conversion
contract.
7 - The basis for the decision by the Division to only approve the rent/
lease of the attached processor for this 9- 12 month duration was
that i t would have been less costly than purchase and a1 low time
for DES to define and acqui re needed ongoing capaci ty beycpd*
conversion period.
The key question from t h i s argument was and i s that i f the 3031 was the
most effective a1 ternative, why did ASU choose to release i t in favor of a
370/ 158 ( since essential ly the same performance and coinpatibi l i ty pias pro-vi
ded) ?
FINDING I
We agree that improvernents to the State EDP planning process and plan
document can and should be made. Arizona's data processing plan efforts in
general must be viewed as being in the early stages of evolution. The DPD
has been and wi 11 continue emphasizing the need for better planning.
The points made i n your report under Findi ng 11, supporting inadequate
DPD enforcement power under exis ti ng statutes , have also significantly in-fluenced
the statewide data processing planning process. In f a c t , the three
exarnpl es quoted under Fi ndi fig I I regarding DPD di recti ves :' SO- 01 D , + 80- 04D
and Pa- 05D a1 1 involve direction for planning and the lack of the rnajori ty
o f agencies involved to comply.
Regarding I1 l i nois ' plan document as a yardstick by which to compare
Ari zona, the fol lov~ nig points are offered:
1 - " Scope 80", as the I l l i n o i s plan document i s called, was issued in
March 1980, t h e i r f i r s t such major e f f o r t . Arizona i n i t i a t e d our
current plan publication on an annual basis in February 1979.
I l l i n o i s ' plan was developed using a task force of seven s t a f f men-bers
, a professional management consul tant and an IEM advisory rnarket-i
ng representati ve supported by three admi ni s t r a t i ve and secretari a1
s t a f f . The work of t h i s task force was supervised by a Managment
Review Comrni t t e e of six top s t a t e administrators. Arizona has one
FTE appropriated and allocated to this planning function who works
with the data center and major agency data processing managers to
+ 7 9&.+. devel op Ari zona ' s pl an.
3 - There a r e s i gni f i cant differences in the statutes regardi ng scope
and authority between I l l i n o i s and Arizona as well as the level of
expenditures of the two s t a t e s for data processing.
4 - The cost to develop, publish and distribute the I l l i n o i s lona- range
data processing plan exceeds the entire annual budget of the DPD.
The DOA Data Center provides services to over 25 State agencies, son: e
of which are major users such as the Departments of Health Services, Education,
Corrections, Econorni c Security as well as the Compensation Fund. As f a r as
growth rate and total budget i s concerned, rvhil e servicing the 1 argest field
of users of any center, i t s recent growth has been rnuch less than that of
the DES center for example. Since the DOA center operates olrt of the D. P.
Revol vi ng Fund ( the only center to do so) i ts growth i s a di rect c, e asure
of the demand for service from users.
The comparison of the Arizona to California Conipensation Fund also can
be misleadi ng. The figures quoted are not totally co~ parabel . Far in 5tarIce
the Cali forni a figures do not include the cost of such servi ces/ i ters as:
techni cal support personnel , tnagneti c records 1 i brary , computer room space,
uti 1 i ti es , environmental services , fi re and disaster recovery protection,
etc.. The figure quoted for the Arizona Compensation Fund does include
these added cost elements.
Further, there are differences in the level of autoration co~ lmitment
between California and Arizona; Arizona leads in our opinion. There are
differences in the statutes that govern the two states as we1 1 . I t would
be erroneous to conclude that because the California Fund is " five times
larger" that Arizona could provide their current level of service/ use a t
one- fifth the California cost i f they had their own center.
DPD has and i s involved in analyzing how best to understand and apply
the changing technology, the best way t o plan for i t s implementation and
- ; r
where appropriate employing the use of decentralized versus centralized
computer facil i ti es. The on- goi ng pi 1 ot projects authorized and monitored
by DPD, such as those in DHS ( minicomputer use), the Energy Office and Depart-ment
of Corrections ( microcomputer use) and the shared resource office auto-mation
e f f o r t i n DOA, are current efforts being undertaken within Arizona to
provide a sound comparison and basis for such planning decisions.
The need for improvi ng Ari zona's pl anni no process and resul tant plans
is very real and i s not contested. To progress further, hol, vever, will take
the Legislature's support including statutory changes incl udi ng those dis-cussed
in your Finding 11. Our position is that the examples quoted by the
auditors of the apparent lack of ~ l a nex ecution i s in reality a reflection
of the 1a ck of total co~ nmti ment by both the Legi sl at ure and State A~ encei s and
acceptance of the DPD as a necessary central managenlent and control organi-zation.
For your information, the Cost Allocation Guideline for EDP Services
document was issued in September 1981 with DPD Directive % l- O1D. A copy of
both documents has been transrni tted to your offi ce.
APPENDIX I
LEGISLATIVE COUNCIL OPINION ( 0- 81- 28)
May 4, 1981
May 4, 1951
TO: Douglas R. Norton
Auditor General
FROM: Arizona Legislative Council
RE: Request for Research and Statutory Interpretation ( 0- 81- 28)
This is in response t o a request submitted on your behalf by Gerald A. Silva in a
memo dated April 15, 1981. No input was received from the attorney general concerning
this request.
FACT SITUATION:
During 1968 the Arizona Legislature amended Arizona Revised S t a t u t e s ( A. R. S.)
section 35- 122 by adding subsection B, paragraph 2. This amendment was l a t e r codified
as A. R. S. section 41 - 712 representing the duties of t h e data processing division ( DPD)
when the department of administration ( DOA) was formed in 1972. As a result of this
s t a t u t e efforts were made t o consolidate the state's data processing resources from many ( small inefficient and less e f f e c t i v e installations t o a few larger centralized more efficient
computer service c e n t e r s . These e f f o r t s culminated in 1975 when five data processing
centers were authorized t o serve the state's data processing needs.
When DPD was created in 1972 the data processing revolving fund was created by
A. R. S. section 41- 713. Presently only one of the five s t a t e data processing centers, the
DOA center, o p e r a t e s from this revolving fund.
On August 11, 1980, the DOA assistant director for data processing issued DPD
directive # 80- 03D implementing DPD policy statement # 80- 02 which required the
remaining four authorized state data processing centers to i n t e g r a t e t h e i r financial
management i n t o a common system operated and funded through the data processing
revolving fund. These four data processing centers have been historically funded by
appropriation to t h e i r host agencies.
QUESTIONS PRESENTED:
1. Does A. R. S. section 41- 712 give the DPD the sole authority to provide f o r t h e
data processing needs of state government?
2. What authority relationship should exist between the DPD and the five
authorized state data processing centers in light of A. R. S. section 41- 712, subsection E?
Specifically, does DPD have t h e authority t o exercise line authority over the s t a t e data
processing centers?
3. Do the provisions of A. R. S. section 41- 713 apply only to the DOA data
processing center o r to all five authorized s t a t e data processing centers?
&
ANSWERS:
1. Yes.
2. See discussion.
3. A. R. S. section 41- 713 is applicable to all data processing operations centers.
DISCUSSION:
1. A. R. S. section 41 - 712 provides:
A. The data processing division shall provide for an efficient and
coordinated utilization of d a t a processing equipment, techniques and
personnel t o achieve optimum e f f e c t i v e n e s s and economy in collection,
storage, interchange, retrieval, processing and transmission of information.
B. The data processing division shall develop, implement and
maintain a coordinated statewide plan for data processing and data
communications' systems, including but not limited t o the consolidation,
transfer o r elimination of data processing activities, and the establishment
of one or more centralized data processing operations centers, for t h e
purpose of serving the management and other needs of the l e g & I a ~ e L
executive and judicial branches of state government. ( Emphasis added.)
The intent of the legislature is t o be determined primarily from the language o f the
s t a t u t e itself, and when t h a t is plain and unambiguous and conveys a clear and definite
meaning there is no occasion for resorting to the rules of statutory construction. The
statute- must be given its plain and obvious meaning. De Witt v. Magma Copper Company,
( 16 Ariz. App. 305, 492 P. 2d 1243 ( 1972). See Marquez v. Rapid Harvest Co., 89 Ariz. 62,
358 P. 2d 168 ( 1961), cited in Arizona Legislative Council Memorandum ( 0- 81- 9).
In authorizing the DPD t o develop, implement and maintain a coordinated s t a t e
plan for data processing and data communications systems for the purpose of serving the
needs of s t a t e government, the l e g i s l a t u r e h a s c l e a r l y expressed i t s intent t o confer on
t h e DPD the sole authority to provide for the data processing needs of the branches of 4
state government and their departments, agencies, boards and commissions.
2. A. R. S. section 41- 712, subsection B provides:
The data processing division shall develop, implement and maintain a
coordinated statewide plan for data processing and data communications
systerns, including but not limited to the consolidation, transfer or
elimination of data processing activities, and the establishment of one or
more centralized data processing operations c e n t e r s , f o r the purpose of
serving the management and other needs of the legislative, executive and
judicial branches of state government. ( Emphasis added.)
The g r a n t of an express power to an administrative agency carries with i t t h e
authority t o exercise all bther activities reasonably necessary t o carry it i n t o e f f e c t .
Sutherland, Statutes and Statutory Construction section 65.03 ( 4th ed., Sands, 1974).
The DPD is required to develop, implement and maintain a coordinated statewide
plan f o r d a t a processing and is clearly given the power t o establish and maintain one or
more data processing operations c e n t e r s for the purpose of serving t h e needs of s t a t e
government.
c A. R. S. section 41- 712, subsection A provides:
\
The data processing division shall provide f o r an e f f i c i e n t and
coordinated utilization of data processing equipment, techniques and
personnel t o achieve optimum e f f e c t i v e n e s s and economy in collection,
storage, interchange, r e t r i e v a l , processing and transmission of information.
( Emphasis added.)
In construing statutes, the court must look to a s t a t u t e as a whole and give a
harmonious e f f e c t t o all of i t s sections. S t a t e v. Standsberry, 114 Ariz. 351, 560 P. 2d
1258 ( 1976 Ct. App.).
As was s t a t e d in Arizona Legislative Council Memorandum ( 0- 81- 10), the assistant
director for data processing is responsible for direction and control of the DPD and may
issue policy s t a t e m e n t s and directives in the performance of his duties. The assistant
director for data processing is, therefore, responsible for the direction and control of data
processing operations c e n t e r s which DPD establishes, and not the departments, agencies,
boards or commissions which serve only as hosts for the centers. He was authorized
pursuant t o his powers and duties provided for in A. R. S. sections 41- 711 thr~ wg+&&. 1- 713 to
issue policy statement 1180- 02 and directive // go- 03D t o assure and t o provide f o r a n
efficient and coordinated u t i l i z a t i o n of the data processing resources of this state by
establishing a uniform method of financing, cost allocation, cost recovery and budgeting
for data processing functions and services within this state and t o require data processing
operations c e n t e r s to develop, implement and operate a financial management program,
including financing, cost allocation and cost recovery procedures for the s e r v i c e s t h e y
D < provide.
3. A. R. S. section 41- 713 provides for the establishment of t h e d a t a processing
revolving fund " in support of the program of the division of data processing." For the
reasons stated earlier in this Memorandum and Memorandums ( 0- 81- 9) and ( 0- 81- 10), it
seems apparent t h a t the a s s i s t a n t d i r e c t o r for data processing is authorized t o establish a
uniform method of financing and to prescribe t h a t all data processing operations centers
be financed from and operate under the data processing revolving fund as one step toward
providing for an e f f i c i e n t and coordinated utilization of the data processing resources of
this state. The legislature has clearly expressed i t s desire for coordination and economy
of data processing operations by the branches of s t a t e government and t h e i r departments,
agencies, boards and commissions.
The f a c t t h a t only t h e DOA data processing operations center has been financed by
t h e d a t a processing revolving fund and the assistant director has only recently directed
t h a t all the centers be financed from and operate under the revolving fund t o establish a
uniform method of financing is not necessarily evidence t h a t A. R. S. section 41 - 7 13
applies only to the DOA d a t a processing operations center and t h a t the a s s i s t a n t d i r e c t o r
has exceeded his authority. See Arizona Dept. of Revenue v. Transamerica Title Ins. Co.,
124 Ariz. 417, 604 P. 2d 1128 ( 1979).
The assistant director for data processing and his predecessor, the commissioner of
finance, have apparently been working many years towards the goal of an e f f i c i e n t and
coordinated utilization of t h e data processing resources of Arizona.
The magnitude of the duty of DPD is reflected by Governor Castro's April 6, 1975
l e t t e r to Dr. Brent Brown, Director, Office of Economic Planning and Developmenr, in
which he observed t h a t DPD, s t a t e agencies, legislative leaders and the governor's office
would have to work together in the establishment and designation of centralized data ( processing operations centers. T h e l e t t e r itself implied t h e f u t u r e financing of all data
processing operations centers from t h e d a t a processing revolving fund.
CONCLUSIONS:
1. A. R. S section 41- 712 gives the DPD sole authority t o provide for the data
processing needs of the branches of state government and their departments, agencies,
boards and commissions.
2. The DPD is required t o develop, implement and maintain a coordinated
statewide plan for data processing and is clearly given the power t o establish and maintain
one or more data processing operations centers for the purpose of serving t h e needs of
s t a t e government. The a s s i s t a n t director f o r data processing is responsible for direction
and control of t h e DPD and, therefore, data processing operations centers which DPD
establishes and may issue policy statements and directives in the performance of his
duties.
3. A. R. S. section 41- 713 is applicable t o all data processing operations, centers in
t h a t t h e assistan1 director for data processing may prescribe t h a t all & ta$~ ocessing
operations centers be financed from and operate under the data processing revolving fund.
cc: Gerald A. Silva
Performance Audit Manager
APPENDIX 11
LEGISLATIVE COUNCIL OPINION ( 0- 81- 44)
June 1, 1981
June 1, 1981
TO: Douglas R. Norton
Auditor General
FEIOM: Arizona Legislative Council
RE: Request for Research and Statutory Interpretation ( 0- 81- 44)
This is in response t o a reqilest submitted on your behalf by Gerald A. Silva in a
memo dated May 13, 198 1. No input was received from the attorney general concerning
this request.
FACT SITUATION:
There are presently five authorized state data centers hosted by the departments of
administration, revenue, economic security, public s a f e t y and transportation. The '
employees who staff these data centers are hired, fired, p r o ~ n o i e d and d i r e c t e d i n t h e i r
duties by the respective host agency. Per your research and s t a t u t o r y i n t e r p r e t a t i o n
memorandum ( 0- 81- 28), the department of administration ( DOA) division of data
( processing ( DPD) has the sole authority t o provide for the data processing needs of s t a t e
government and is respansible for the direction and control of data processing operations
centers and not the departments which serve only as hosts for the centers.
QUESTIONS:
w 1. What s p e c i f i c a u t h o r i t y does DPD and the host agencies respectively have over
the employees who staff the state data centers, and who owns and controls t h e d a t a
processing equipment of the state data centers?
2. If all data processing operations c e n t e r s were financed from and operating
under t h e DPD data processing revolving fund, then what authority nlouid DPD and t h e
host agencies respectively have over e: nployees and who would own the processing
equipment purchased through t h e revolving fund?
3. If the direction and control provided by DPD over the state d a t a c e n t e r s a r e not
coinplied with by the individual data center managers and/ or the host agency, is this
considered nonfeasance and what a c t i o n c a n b e taken t o rectify the noncompliance
situation?
I., 2. and 3. See discussion.
1. The host agencies of the data processing operations centers, t h a t is, the
departments of administration, revenue, economic security, public safety and
transportation a r e authorized by s t a t u l e t o employ, determine the conditions of
employment, prescribe the powers and duties of and supervise persons they employ. See,
respectively, Arizona Revised S t a t u t e s ( A. R. S.) sections 41- 702, 42- 103, 41- 1954, 41- 1711,
41- 1713 and 28- 108.
If the legislature had intended t h a t t h e DPD exercise authority over employees of
the host agencies for t h e purpose of perforrning certain functions of t h e DPD, i t would
have so provided. For example, the legislature provided t h a t the DOA assistant director
for personnel may " deputize employees in various state agencies where certain of t h e
functions of the personnel ad~ ninistration division can be perforined by such deputies."
A. R. S. section 41- 763, paragraph 4. ( See " deputize" and " deputy", Black's Law Dictionary
398 ( 5th ed., 1979).)
In addition, the host agency, not DPD, is the owner of any data processing
equipment of the data processing operations center which i t hosts for which monies were
appropriated by the legislature t o the agency. See Arizona ~ egi- s~% t?&--~ ouncil
hlemorandum ( 0- 3 1- 32).
2. As s t a t e d above, if the legislature appropriates monies to the DPD for deposit
in the data processing revolving fund and those monies are expended by DPD for data
processing equiprnent of the data processing operations centers and salaries of employees
i t assigns to the data processing operations centers, DPD is the owner of the equipment
and the supervisor of all persons i t ernploys for assignment t o the data processing
operations centers. The host agencies would serve only as hosts of the data processing
operations centers.
3. A. R. S. section 38- 443 provides that:
A public officer or person holding a position of public trust or employment
who knowingly omits to perform any duty the performance of which is
required of him by law i s guilty of a class 2 misdemeanor unless special
provision has been rnade for punishment of such omission.
It is inappropriate for this office to determine whether managers of the data
processing operations c e n t e r s o r the host agencies are guilty of nonfeasance in public
office for t h e i r f a i l u r e t o comply with directives issued by the assistant director for data
processing. You rnay wish to rcco~ nrnend that the assistant director for data processing
seek an opinion of t h e a t t o r n e y general regarding this situation.
CONCLUSIONS:
1. The host agency, not DPD, is a u t h o r i ~ e dt o supervise tile persons staffing the
data processing operations centers whorn i t employs. Jn addition, the host agency is the
o; Lfner of any data processing equipment of the data processing operations center for
which monies were appropriated by t h e legislature t o the agency.
2. DPD ~ vouldb e the o\ vner of t h e d a t a processing equipment and the supervisor of
all persons it ernploys for assignment t o the data processing operations centers if the data
processing operations centers were financed under the data processing revolving fund.
3. It is inappropriate for this office to determine whether managers of t h e d a t a
processing operations centers or the host agencies are guilty of nonfeasance in public
office for their failure to comply with directives issued by the assistant director for data
processing.
RECORIMENDATIONS:
You may wish to recommend to the legislature that i t do one or more of the
following:
I) 1. Authorize the assistant director for data processing t o deputize employees in
the agencies hosting data processing operations centers to perform certain functions of
the DPD.
2. Authorize the DOA or the DPD alone t o contract or enter into agreements with
the host agencies for joint or cooperative action regarding the data proces~ Tn~% p& rations
centers. A. R. S. section 11- 952, subsection A provides that:
If authorized by their legislative or other governing bodies, two or more
public agencies by d i r e c t contract or agreement may contract for services,
or jointly exercise any powers common to the contracting parties and may
enter into agrzements with one another for joint or cooperative action,
except that if two or more school districts arrange to become contracting
parties under the terms of this section, such contract shall first be approved
by the state board of education.
The departments of revenue, economic security, public safety and transportation are
authorized to enter such agreements with other agencies. See, respectively, A. R. S.
sections 42- 104, 41- 1954, 41- 1713 and 28- 114.
3. Appropriate sufficient monies to the DPD for deposit in the data processing
revolving fund for the purpose of employing persons in and purchasing equipment for the
data processing operations centers.
4. Transfer personnel performing functions related to t h e d a t a processing
operations centers, data processing equipment and unexpendzd and unencumbered monies
appropriated to the host agencies for perforrning functions related to the data processing
operations centers to the DPD.
cc: GeraldA. Silva
Performance Audit Manager
APPENDIX I11
PROCEDURES MANUAL FOR THE ACQUISITION
OF ELECTRONIC DATA PROCESSING
HARDWARE, SOFTWARE AND SERVICES
STATE OF ARIZONA
MEMORANDUM:
TO Agency Heads
DEPARTMENT OF ADMINISTRATION
Robert C. Dickeson, Director
FROM : Depart~ ient of Administration
SUW ECT : PROCEDURES MANUAL
For The Acouisi tion of Electronic Data Processing
Hardware, Software and Services
The attached copy( ies) of the revised pr~ cedure for the acquisition of
EDP equipment and services becomes effective as o f t h i s date and
supersedes the previous document and procedure dated February 1978.
You should note thar t h i s procedure has been expanded to include word
processing systerns as well as data processing systms consistent-# i. L&,
current technoloy and tne expressed desires of the Governor's Office
t o e f f e c t i v e l y control the expanding use of these f a c i l i t i e s .
As stated in the procedure, special or unusual situations in the
various portions of the EDP acquisition process are bound t o a r i s e ,
and i t is not the intent t h a t t h i s document try t o detail a l l such
contingencies. When such incidents or cases occur or there are questions
about details of how to apply the procedure, please contact our State
Purchasing Office, Finance or Data Processing divisions f o r c l a r i f i c a t i o n
and guidance.
Robert C. Dickeson
RCD/ 1 b
Attachment
PRGCEDCRES ? LUU. AL
f o r
The .\ ca, uisition of Elecrronic Pa: a Processing
Hardliare, Software and Services
Approved :
D i r e c t o r , De~ artment of Xiimnistra: ion
Date
A PROCEDURE FCR EDP . ACOUISITICY
Forward:
This procedure i s published as a guide f o r converting j u s t i f i e d EDP needs in:?
EDP c a p a b i l i t y . I: i s an i n ~ e r n a lp olicy docmenr f o r a l l s t a t e agencies. For
p u q o s e s of t h i s procedure " EDP" means a l l data processing ea. ui? men:, c f t ~ s r c ,
s e r v i c e s , and word ~ r o c e s s i n g systems including t ) ~ e w r i t e r s t h a t have a rexr . .
s t o r a g e , e d i t i n g , and automatic p r i n t i n g c a p a b i l i t y . The purchase of consi~-! 2- i?
s ~ ~ p l i ' easnd maintenance Darts are excluded from the provisions of t h i s ? r o c e C ~ r . - .
I t i s the u s e r ' s r e s p o n s i b i l i t y t o document and j u s t i f y h i s needs and o b t ~ i n:? . P
necessary fxnds t o make the ac0, uisi: ion. I r is the r e s ? o n s i S i l i t y of : he Data
Processing Division ( DPD) t o provide g u i d e l i n e s throughout the Phase I e~ a: zzt:- n
and the s p e c i f i c a t i o n development Frocess, t o insure t h a t the r e s u l t a n t sys? ez
conforms t o the S t a t e daza processing p l a n . I t i s t h e r e s p o n s i b i l i t y of the
S t a t e Purchasing Cffice ( SPO) t o expedi: iously award c o n t r a c r s f o r the ? urc> ase
of approved i t e n s . This procedure is published a s a d i r e c t i v e to f u l f i l l
s t a t u t o r y requirements of Arizona revised s r a t u t e s including s e c t i o n s 41-- 11,
41- 71?, 41- 713, 11- 729, 51- 730, 71- 1051, 41- 1052, 31- 1053, 41- 1054, 41- 19::,
41- 1056, the S t a t e Procurement !. lanual, and Data Processing Division Policy - ' - 9 - i ' l .
The o b j e c t i v e o f the procedure i s t o provide a systemaric EDP a c q u i s i t i o n ? recess
t h a t is both e f f i c i e n t i n time and e f f e c t i v e i n c o n t r o l .
The Stare Purchasing Office w i l l award open end c o n t r a c t s f o r standard EDF i t e z s
t h a t can be acquired d i r e c t l y by the users a f t e r approval of the Data Processin;
Division. The S t a t e Purchasing Office w i l l award s p e c i f i c c o n t r a c t s f o r unic. ce
one time requirements on the b a s i s of a r e q u i s i t i o n and s p e c i f i c a t i o n s f r o c the
user and a? proved by the Data Processing Division under t h i s p r o c e h r e . The
r e q u i s i t i o n with c o n t r a c t award endorsement w i l l be returned t o t h e u s e r f o r
d i r e c t purchasing a c t i o n .
I t is e s s e n r i a l t h a t each a c q u i s i t i o n under t h i s procedure be made on a nunbere?
purchase order with f u l l t e r n s s p e c i f i e d . The S t a t e Purchasing Office conrract
number and the approval of the Data Processing Division must be i n d i c a t e d on rF. 2
purchase order. Vendors t h a t are awarded EDP c o n t r a c t s w i l l be advised not t c
accept purchase o r d e r s u n l e s s they s a t i s f y the above requirements. Any ac! drt: sr. a!
control doccnent t h a t may be desired betheen the agency and the vendor x~ zt
be i d e n t i f i e d and referenced t o the a p p l i c a b l e purchase order and [< ill Seczze
p a r t o f t h e perzanent purchase order f i l e .
Procedure :
The process of acquiring EDP resources t o s a t i s f y an agency's needs involves : he
e f f o r t s of several departments and is generally c o q o s e d of two phases. Phase I
involves the d e f i n i t i o n o f t h e need or problem, evaluation of a l t e n a t i l , - e s ,
funding review and DPD approval t o proceed with a c q u i s i t i o n . Phase I1 inl; olves
X Procedure f o r EDP Acquisition ( continued)
t h e s p e c i f i c a t i o n s , t h e b i d yrocess, a c q u i s i t i o n and implementation. The t o t z l
process w i l l r e s u l t i n the ? r e ? a r a t i o n of r e p o r t s and memos to d o c ~ y e n t 3cth
the process and the decisions made a t each s t e ? .
Appendix 1 p r o v i d e s a ready reference o u t l i n e t o a s s i s t i n the developnen: of
documentation t o support any ED? requiremen?. The fom and content of t?, e dccx-mentation
i n Phase I w i l l be as a v e e d upon between the agency and the Darn
Processing Division but w i l l generally vary ~ i : h the nature and c o ~ l e x i t yc f
the requirenent being developed. The c h a r t on ? age 3 pros. ides, i n t a b u l a r fa:,
ar! o u t l i n e o f the a c q u i s i t i o n process, the nomal sequence of events, and
~ e c i f i e sth e ~ a r t i c i p a n t st o a i d i n u n d e r s ~ a n d i n gx ho does khaz and when.
EEP ACGUZSITICN P?. OCZSS Dl TPEW3. FOP2*! AT
~ e~ er.", see A~ es?. h 1)
I = k - - t i z t e
P = P ~ r t i c i p a t e
C = C 0 r , " ~ t
B = Rev'- ew progress
- A = A ~ r n - e
A = Acceptzrxe
- - - - - - - . . - - .- . _ __ _ - -
1 f ihe seleczed a l i e n a t i v e ~ ~ s aitne m on onen state contracz o r i n v o l ~ e c
icter- agency agreement see Appendix 2 .
EDP . ACQUISITION PRCCESS
Documentation Cut. line
Phase I
1. Starenent of Need.
Develop a g e n e r a l s t a t e m e n t of the s i t u a r i o n t h a t r e q u l r e s reso1u: i: c.
Describe the s i t u a t i o n in non- technical t e m s char can be understzc?
by a l l l e v e l s of management. Try t o a n t i c i p a t e f a c t s t h a t managenext
w i l l need TO understand the s i t 7 a t i o n . I d e n t i f y the cause, the e f f e z r ,
and the iriipact on o t h e r departments. A t t h i s ~ o i n tdo not tr;, t o jcst: l...
e q u i p e n t o r other means as a s o l u t i o n . Your o b j e c t i v e i s to des2r15e a
problem, o r need, t o a degree t h a t w i l l convince Eanazeaen: t h a t ac:: oz
i s necessary.
2. E~: aluate the . A l t e r n a t i v e s .
, . There are u s u a l l y a number of d i f f e r e n t possible s o l u t i o n s to a proole:.
List then, then evaluate then one a t a time. Some k i l l be more o p ~ i x !
than o t h e r s and some p o i n t s w i l l seem obvious - t o - you , but f a i l u r e t o ' - 7 consider then i n your evaluation xay r e s u l t i n qcescions l a t e r th2; ;(: i
delay a d e c i s i o n .
Each a l t e r n a t i v e considered should include the ad\: antages and d i s a l -
vantages a s s o c i a t e d with its i ~ p l e m e n t a t i o n ( o r in taking no a c t i o n ) .
Inclcde b e n e f i t / c o s t a n a l y s i s and j u s t i f i c a t i o n where a p p r o p r i a t e . For
those a l t e r n a t i v e s t h a t i n c o q o r a t e EDP r e s o u r c e s , 50th the type and
q u a n t i t y must be i d e n t i f i e d .
3. Selection and Approval of Optimal A l t e r n a t i v e .
. A thoroug3 evaluation of the a l t e r n a t i v e s w i l l usually r e s u l t i n the
i d e n t i f i c a t i o n of one t h a t i s c l e a r l y more optimal than a l l o t h e r s .
The j u s t i f i c a t i o n f o r the s e l e c t i o n of a p a r t i c u l a r s o l u t i o n with cost
i n f o r n a t i o n , budget i q a c t f o r 3- 5 y e a r s , and r e a l i s t i c es1ima: es of
implementation time frames should be incorporated i n t o the ? receedirg
documentation f o r review by EBC, approval by DPD and . Agency managece::.
Agency management d e t e r n i n e s the r e l a t i v e p r i o r i t y of t h e p r o j e c t . For
example, t h e p r o j e c t a e f i n i t i o n and approval may be a product o f an
agent? ? lanning and budgetary e f f o r t . I f t h i s i s the c a s e , and f u k s
a r e no: yet a?? ro? riated or a v a i l a b l e , it rnay be months o r y e a r s b e f o r e
the EDP a c q u i s i t i o n can be i n i t i a t e d . On the o t h e r hand, i f fsnls!
a l l o c a t i o n s a r e c u r r e n t l y a v a i l a b l e , a c q u i s i t i o n could proceed in:^
Phase I1 immediately.
If t h e r e i s a s i g n i f i c a n t delay ( beyond several months) between a? src1: a!
of t h e p r o j e c t and EDP a c q u i s i t i o n processing, DPD may request t h a t :?. e
p r o j e c t be reviewed t o be c e r ~ a i nt h a t rhe a l t e r n a t i v e s e l e c t e d i s it:: i
v a l i d i n t e m s of various changes i n EDP technology, s t a t e EDP s e r v i c e s *
a v a i l a b l e , e t c .
. Appendix 1 ( continued)
Phase i I
1. Deteraine . \ c q u i s i t i o n ! lethod( s j .
% en the agency has completed the Phase I a c t i v i t i e s and has adecuats
fanding t o proceed with acquisition, rhe agency sliould consult with : Fie
SPO t o deterxine khether the ECP resource needed is a v a i l a b l e under an
e x i s t i n g s r a t e c c n t r a c t or wherher it w i l l be necessary t o ? repare a?-.
IF3,' RFP. . Appendix - 3 o u t l i n e s the ? rocedures t o be fsllowed f o r acqui-s
i t i o n from an e x i s t i n g c o n t r a c t o r by " inter- agency agreement" & her.
d e t e m i n e d to be a c p r o p r i a t e .
2 . Develop BidiPropcsal Document.
iit- ien the need to develop an i n v l t a t i o n f o r bid has Seen i d e n t i f i e d , the
DP,' DC canazexent function w i l l i n i t i a t e the develocnent of the t e c h n i c z l
s p e c i f i c a t i o n s t o be included i n : he RFP'IFB. The DPD and the end user
w i l l p a r t i c i ? a t e i n developing, reviewin2 and approving the t e c 5 n i c a l
s p e c i f i c a t i o n s . . A l i s t of prospective vendors w i l l a l s o be developed an:
reviewed with CP9. Upon recei?: of the t e c h n i c a l s p e c i f i c a t i o n s , r!-& e SFS
will assenble the remaining p o ~ t i o n s necessary to conplete the overa!;
WF/ IF3 aocment .
5 . Issue o f r h e RF? iIFi3.
The bid docxien: w i l l be p r i n t e d and d i s t r i b u t e d t o ? ros? ective vendcrs
by the S? G. I f a p r e - b i d vendor conference i s r e o c i r e d , it w i l l be
arranged by the SPO. Staze p a r t i c i p a t i o n & ill include the end u s e r ,
the DP/ DC nanager, DPD, SPO and any o t h e r departaen: t h a t may be r e q u e s t e l
by the SPO to assure adequate t e c h n i c a l support.
4. Bid/ Pro? osal Evaluation and S e l e c t i o n .
The SPO w i l l designate an evaluation committee composed of the end u s e r ,
DP/ DC manager, user agency, DPD and SPO. A bid/ proposal evaluation
meeting w i l l be c a l l e d by SPO as soon as ~ r a c t i c s b l ea f t e r bid opening.
The s i z e and c o ~ o s i t i o no f t h i s committee f o r any p a r t i c u l a r eva1uat: on
w i l l depend on the complexity of the syten being acquired b u t ma), include
r e p r e s e n t a t i v e s from a l l those departments c i t e d above. The evaluation
committee w i l l recommend a p a r t i c u l a r bid/ proposal f o r c o n t r a c t axard.
5. Contract F i n a l i z a t i o n and Award.
Based upon committee e v a l u a t i o n , the SPO w i l l ? & l i s h a h o r i c e of .\ ha:?
and Order Data ( FD- 143) t o t h e successfu! vendor ( s ) , the user agent:. . z n i
w i l l n o t i f y a l l o t h e r vendor ~ a r t i c i p a n t so f the d e c i s i o n .
SP9 w i l l conduct and coordinate f i n a l i z i n g the post award contract:^;,
involving the DP/ DC management and DPD f o r in? ut and the Attorney Geners;
f o r c o n s i d e r a t i o n and approval of c o n t r a c t as to l e g a l form.
* Appendix I ( continued)
Phase I I ( continued)
6. Order EDP Equipment/ Services.
m e FD- 143 i s n o t i f i c a t i o n t o the end user agency thzit the r e q u e s t e t
EDP equipment or s e r ~ i c e sa re now a v a i l a b l e f o r d i r e c t purchase. (.\ is:
see Appendix 2 . ) The agency purchasing a c t i v i t y w i i l prepare a ? u r c h ~ s ?
order to t h e designated vendor and arrange d e l i v e r y a f t e r require2
a ~ p r o v a lo f agency management, DPD, and c e r t i f i c a t i o n of f u ~ d sav a:!-
a b i l i t y of . Accounts and Controls. a
7 . Deliver]; and Acceptance of EDP Equipment, Goods, S e r v i c e s .
The DP/ DC xlanageaent working with the end user w i l l v e r i f y and - a. p r::-?
t h z t the DP r e s o u r c e a c q u i r e d i s acceptable with regarc! t o conzlg. u rs. tlzn
and p e r f o n a n c e c r i t e r i a as s p e c i f i e d . A copy of the agency rece: i-::. s
r e p o r t endorsed by the user t o i n d i c a t e performance acceprsnce w i l l 5s
provided t o DPD and SPO o f f i c e s . Equipment o r s e r v i c e problexs t h a t
cannot be resolved t o the s a t i s f a c t i o n o f t h e end user by the agenc. y. hi::
be docmented and r e f e r r e d t o the SPO f o r a ~ p r o p r i a t ere sal. wZ*.& ltri ?: f
vendor. ( I
8. Pa: ment and Operation.
. I c l a i n w i l l be s u b n i t t e d t o . Accounts and Contrcls f o r paF, ent on the
b a s i s o f t h e endofsed receiving r e p o r t ( Ref. Paragraph T). I n f o r a a r i c n
on long t e r n i n s t a l l a e n ; payment schedules and other o b l i g z t i 3 n s t h a t
inpact budget composition must be communicated to the E30.
Special o r unusual s i t u a t i o n s in the EDP a c q u i s i t i o n process a r e bound t o a r i s ? .
and it is not t h e i n t e n t of t h i s document t o t r y t o d e t a i l a l l such contingenc:? s
h% en such i n c i d e n t s occur or t h e r e a r e questions about d e t a i l s of t h i s ? rosed; re,
the head of the department concerned, DPD, o r SPO, should be contacted f o r i : ~ r r -
f i c a r i o n and guidance.
APPENDIX 7
There are two cases khere the Phase I1 procedures t h a t involve the S? O can be
bypassed. These are when the required equipment o r s e n i c e s a r e :
1. a v a i l a b i e on an e x i s t i n g s: ate c o n t r a c t andlor
- -.-
2. to be provided by another governmer.+;: sgency.
=-- a- - . . In the f i r s t case, = he user agency w i l l proceed t o - 3 t - p 6 of Phase I1 anc : z - . : . . .
the reiiialning a c t i v i t i e s of Phase 11.
In the second case, t h e r e a r e c e r t a i n s t a t u t o r y provisions t h a t must be ~ 2:: s-f
i e d i- n consujrm~ rlzg an inter- agency agreement. To assure thaz these require-ments
a r e s a t i s f i e d , the following a l t e r n a t e Phase I1 f o r n a t w i l i be f o l l o k e c .
Leqend ( see .\ ypendix I )
I = I n i t i a t e
1 i End , 3F,/ , I ;\ c...
I T. AS K I User ! DC Ngr. I 1 . DPD ESC ' CrPC ' 4. ;.
I I
t /.\ l: cr- are Phase I1 : Pro) ect \ ,
: and 4cquisi:: on 1,'; rplenentatlo n: 1 I !
I !
, I
I t I
I ' " ' . $&- *
; 1. ( Interagency agreenent 1 ' I 1 ! , P ! ' P , i
I
d e t e m l n e i appropriare) I I
9 I I
;
I
I
: 2 . F i n a l i z e the f o r n a l agree- ! i I I
I 1
men: betzeen the agencies: [ i I ,
I I I I
I
I) I a . d e t a i l EDP eqclpment, ,! P j I I \ C , 1
! goods, s e n l c e s to be i I I
f
I
i
1 1 : provided ( and by hhom) ' i II ! I I I
b. n e ~ o t l z t et he f o r a a l I P,; I ? - ' C . ;
I inter- agency agreemen: ' I I i - -
I
I I i I I
I 3. Delivery and acceptance I 1.5 P,." 1 I
P = P a r t i c i ~ a ~ e
C = Consult
R = Review progress
-. I\ = ,. Approve
A = Acceptance
of EDP equipment, goods,
I s e r v i c e s . I l i
I 4 . Paynent and o p e r a t i o n .
I' I I I
I
I " Both provider and u s e r a g e n c ' e s )
I I -- i I
I I
I
I
I
I
I
I
! !
i i I ,
. b, p~ endi. u 7, ( c o n t i n u e d )
The wide range of se?: ices t h a t can be provided from one agency t o another ~ i ; l
r e q u i r e some cus7omi: ing of t h i s procedure when used i n s p e c i f i c cases. Addi-t
i o n a l equipment requirements generated as a r e s u l t of t h e inter- agency agreaaenr
w i l l be acquired through the nornal EDP a c q u i s i t i o n process.
In the case of a major system a c q u i s i t i o n , i z is conceivable t h a t various elernen::
could be obtained by a combination o f : inter- agency a g r e e c e n t , s t a t e s c n t r a c r
and the bidding process.
. ACTION AGENCIES IS TtiE EDP . ACQUTSITIOS PRCCESS
END USE2 - The p r i n c i p a l party/ Punction thar r e q u i r e s support from orher fxzct;= rs
( such as EDPj to s a t i s f y an o v e r a l l agency need. The function which 2c. t
d e l i v e r the ultimate agency end product and/ or s e r / i c e t o s a t i s f y the n2eJ.
D. P. > l. A. V. AGE! iEST - The management of the D . P . resource f o r an end user asezc-:.
( khetner using in- houze o r o u t s i d e EQP resources to s a t i s r ' v a l l the anezc-.' s
D. P. u s e r s ) . Since chis function has agency ED? planning and o p e r 2 t i o z ~ :
r e s p o n s i b i l i t y , it must be involved in s a t i s f s - i n g the " end users" needs :% nen
they involve a ~ p l i c a t i o n of EDP resources.
D; IT.\ CESTE?? ( 3. C.) ! KT. - The management of one of the S t a t e ' s c e n t r a l i z e d 3.'.
ocerazions c e n t e r s . l 3 e D. C. 31gr. must be i n v o l ~ e di n plannin: f ~ r a,- 2
operation of, EDP f a c i l i t i e s 70 s a t i s f y " end user" needs. Tney must a i s s
p a r t i c i p a t e i n e v a l u a t i o n o f a l t e r n a t i v e s , the s e l e c t i o n cf the optic^^
a l t e r n a t i v e , and o t h e r r e l a t e d a c t i v i t i e s t o meet the " end u s e r ' s " o'cjez-t
i v e s . \\% en required, the Data Cenzer must i n i t i a t e EDP a c q c i s l t i o n t?. zt
w i l l r e s u l t i n the mosr e f f i c i e n t EDP f a c i l i t y c c n f i g u r a r i o n necessary ts
s a t i s f y t h e l s e r ' s needs.
. AGESCY !. t1Y. I\ GE, IE?; T - This i n c l u d e s a d m i n i s t r a t i v e and. execuzive nanasenen: r*.: tnln.
rhe " end use'' agency. They are the F r i n c i p a l s xho nave the u l t i n a r e r e s 3 c r s l -
b i l i t y f o r d e l i v e r i n g the service/ products of t h e i r agency, they musr am. :.::. ?
a l l a c t i o n s t h a t r e q u i r e use of, and a c q u i s i t i o n o f , EDP s e r ~ i i c e s and ec, cl?-
ment. Tneir r e s p o n s i b i l i t y i n c l u d e s p l a n n i n g , budgetin:, a l l o c a t i n z a??:>-
p r i a t i o n s and approving expenditures.
D. 1T. I PRCCESSISG DI?' ISIC'S ( D. P. D.) - The Director of t h i s d i v i s i o n has t h e res7ons:-
b i l l t y to account f o r the configurazion of EDP systems under the control ci
S t a t e agencies and must assure t h a t a l l EDP f a c i l i t i e s acquired by these
agencies confom t o the S t a t e Data Processing P l a n . I t i s , t h e r e f o r e ,
e s s e n t i a l t h a t D. P. D. p a r t i c i p a t e i n a coordinating capacity during Phase ;
t o the degree necessary to ensure t h a t the r e s u l t s of Phase I conform t o
the S t a t e Data Processing P l a n . The p a r t i c i p a t i o n in Phase I1 d u r i n s s). ster.
s e l e c t i o n s i s necessary f o r the sane reason. The reauiremezt t h a t QFD
approve a l l purchase orders f o r EDP is a necessary formality t o a s s u r e t h a i
DPD i s cognizant of a c t u a l d e l i v e r y schedules.
ST. ATE PURCHASING C