CALIFORNIA STATE AUDITOR
Bureau of State Audits
Doug CordinerChief DeputyElaine M. HowleState Auditor
555 Capitol Mall, Suite 300 Sacramento, CA 95814 916.445.0255 916.327.0019 ax www.bsa.ca.gov
April 26, 2012 2012‑039Te Governor o CaliorniaPresident pro empore o the SenateSpeaker o the Assembly State CapitolSacramento, Caliornia 95814Dear Governor and Legislative Leaders:Tis letter report provides an update on recent events related to the Financial Inormation Systemor Caliornia (FI$Cal) project. Pursuant to Government Code, Section 15849.22(e), the CaliorniaState Auditor (state auditor) is required to independently monitor the FI$Cal project throughout itsdevelopment, as deemed appropriate by the state auditor. FI$Cal is a business transormation projector state government in the areas o budgeting, accounting, procurement, and cash management. Teindependent monitoring shall include, but is not limited to, monitoring the contracts or independentproject oversight (IPO) and independent verication and validation (IV&V) services, assessing whetherconcerns about the project raised by the IPO and IV&V contractors are appropriately addressed by the FI$Cal steering committee and the FI$Cal project oce within the Department o Finance or itssuccessor entity, and assessing whether the FI$Cal project is progressing timely and within budget. Weare required to report on the project’s status at least annually and this is the seventh report we haveissued since we began our monitoring in April 2007.Te project released its ourth Special Project Report (SPR) on March 1, 2012, to update inormationin prior SPRs regarding FI$Cal’s costs, schedule, benets, and cost savings, and to announce that theproject is ready or implementation. Te project also announced that Accenture plc was the project’swinning t‑gap
and is its selected systems integrator, with a proposed ve‑year contractor $213.1 million. Statute requires the project to submit a report to the Legislature with speciedinormation about the selected system integrator and alternative implementation approaches, 90 daysbeore entering a contract with the system integrator. Te project submitted the FI$Cal legislative reporton March 2, 2012. Te remainder o this letter report provides our review o selected inormation in theourth SPR, including FI$Cal’s updated cost estimates and proposed unding option, projected benets,revised project schedule and implementation approach, and envisioned risks and assumptions. Tisletter report also provides status updates on topics that we have previously reported on.
The Project Reports a Signicant Reduction in Costs and Proposes a Pay-As-You-Go Funding Plan
In the project’s second SPR issued in November 2007, the cost o FI$Cal was estimated to beapproximately $1.6 billion spread over 12 years.
Te ourth SPR revises the estimated cost o the projectdownward to $616.8 million. able 1 on the ollowing page shows the change in estimated costs betweenthe second and ourth SPRs among major categories.
The other “t‑gap” vendors were CGI Group, Inc. and International Business Machines Corporation. “Fit‑gap” is a process where vendors reviewthe State’s requirements or FI$Cal in detail and compare those requirements to the sotware products that they are proposing to generate a rm,xed‑price proposal.
The project did not update the second SPR’s estimate o costs in the third SPR, which it released in November 2009.