Report 2016-125.1 Recommendation 15 Responses

Report 2016-125.1: The University of California Office of the President: It Has Not Adequately Ensured Compliance With Its Employee Displacement and Services Contract Policies (Release Date: August 2017)

Recommendation #15 To: University of California

To maximize benefits from the systemwide procurement initiative and to ensure that the university uses those benefits for its teaching, research, and public service missions, the Office of the President should study ways to measure actual procurement benefits—possibly focusing this effort on benefits from larger dollar amounts—and if such measurement is not possible, it should clearly disclose to the regents and the public that the amounts it reports are based on estimates.

Annual Follow-Up Agency Response From October 2022

As noted in previous updates, UC Procurement Services has designed and deployed new processes and functionality that enable us to delineate actual from estimated benefits. Users are trained and now using these approaches to report actuals and estimates.

UC Health continues to report actual systemwide benefits at a project level. Additionally, UC Health has implemented a new software solution to assist the sourcing team in tracking and reporting savings. This system continues to be implemented.

Additionally, UC Health has updated the value calculation framework to clearly distinguish across ongoing savings, one-time savings, and cost avoidance. Value is tracked for 12 months. This value calculation framework is being reviewed for potential implementation by Health System locations as well.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

UC demonstrated that this recommendation is fully implemented by providing relevant procedures and an example report from the processes it uses to measure or estimate procurement benefits.

Annual Follow-Up Agency Response From October 2021

As noted in previous updates, UC Procurement Services has designed and deployed new processes and functionality that enable us to delineate actual from estimated benefits. Users are trained and now using these approaches to report actuals and estimates.

UC Health continues to implement approaches to measure actual benefits. Analytic tools have been deployed to delineate actual benefits; however, these tools have not been fully implemented due to the priority emphasis on COVID-19 response. UC Health is continuing efforts to expand and improve tools for reporting actual benefits. UC Health currently provides regular report out on impacts through each fiscal year to both the Regents and UC Health senior management.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From October 2020

As noted last year, UC Procurement Services has designed and deployed new processes and functionality that enable us to delineate actual from estimated benefits. Users are trained and now using these approaches to report actuals and estimates.

UC Health has modified it reporting to provided estimated benefits by specific categories and by medical centers. Additionally, analytics are in place to delineate actuals from estimated benefits. Efforts have been completed to use utilization analytics to evaluate clinical value, which includes reduction in patient days, product usage reduction and improved patient outcomes. However, only a few categories have been implemented. Availability of clinical data and resources continue to be a challenge in order to complete full implementation of the utilization analytics.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From October 2019

UC Procurement Services has designed and deployed new processes and functionality that enables us to delineate actual from estimated benefits. Users are trained and now using these approaches to report actuals and estimates.

As part of the second phase of the benefits tracking application, UC Health continues its efforts to use the benefits tracking application to evaluate the clinical value including the reduction of patient days and improved outcomes of identified saving initiatives. Availability of clinical data and resources to work on this phase has limited the ability to complete this phase of the project.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

1-Year Agency Response

UC Procurement Services has begun to address the technical requirements to enable this process. Resource availability is a limiting factor and is expected to result in a target completion of Q2, 2019.

UC Health identified a new analytical tool that will perform a more in depth analysis of the financial and clinical value/impact and potential lost opportunities for failure to move forward or fully implement a procurement initiative. The tool will provide UC Health clinical teams the ability to evaluate the clinical impact, current and future saving opportunities, and potential lost opportunities. The tools will also benchmark our work against other non-UC Health medical centers and this information will hopefully drive more system wide standardization and savings. Data used for the analyses are collected from the UC Health medical centers' procurement and financial databases and therefore, UC Health can evaluate the benefits of any contracting and saving initiatives. Parts of the tool are being customized and implementation is planned towards the end of 2018 calendar year.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The Office of the President oversees two systemwide procurement functions: UC Procurement Services and UC Health.

UC Procurement Services is striving to develop a reporting process to more clearly identify the reported benefits emanating from definite quantity contracts (contacts governing set quantity purchases) and those benefits emanating from requirement contracts (contracts governing large numbers of future transactions with benefit attainment dependent on forecasted purchases, volumes and contract adoption.

Work on this project is anticipated to begin by June, 2018 with a target completion of December, 2018. The initial activity (identifying resources from IT, Campuses, and Systemwide Procurement to define the changes, develop definitions and processes, and make the needed software change) will lead to a project plan and a firmer completion date.

Using analytic tools currently available, UC Health evaluates the procurement and cost benefit for each initiative. UC Health is evaluating new analytical tools that will perform a more in depth analysis of the financial and clinical value/impact and potential lost opportunities for failure to move forward or fully implement a procurement initiative. These tools will allow provide UC Health clinical teams the ability to evaluate the clinical impact, current and future saving opportunities, and potential lost opportunities. The tools will also benchmark our work against other non-UC Health medical centers and this information will hopefully drive more system wide standardization and savings. Data used for the analyses are collected from the UC Health medical centers' procurement and financial databases and therefore, UC Health can evaluate the benefits of any contracting and saving initiatives.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The Office of the President will review its reporting process to more clearly identify the reported benefits emanating from definite quantity contracts (contacts governing set quantity purchases) and those benefits emanating from requirement contracts (contracts governing large numbers of future transactions with benefit attainment dependent on forecasted purchases, volumes and contract adoption).

California State Auditor's Assessment of 60-Day Status: No Action Taken

Although the Office of the President indicates it will implement our recommendation, it has yet to take any actions to do so.

All Recommendations in 2016-125.1

Agency responses received are posted verbatim.