1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 NOVEMBER 20, 2013 9 P OTHER ADMINISTRATIVE MATTERS 10 P1.2 CROS PROJECT UPDATE AND ACTIONS 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Reported by: Juli Price Jackson 25 No. CSR 5214 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John 12 Chiang, State Controller (per 13 Government Code Section 7.9) 14 15 Joann Richmond Chief, Board 16 Proceedings Division 17 18 For the staff: Eric Steen CROS Project Director 19 20 ---oOo--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 20, 2013 4 ---oOo--- 5 MS. RICHMOND: So, our next item is item P, 6 Other Administrative Matters, P1.2, CROS Project 7 Update and Actions. 8 MR. HORTON: Welcome, Mr. Steen. 9 MR. STEEN: Thank you. Good afternoon, 10 Members -- honorable Members, Mr. Chairman, Eric 11 Steen, CROS Project Director. Thank you for the 12 opportunity to give you a brief update on the 13 project. 14 As you're aware, we received conceptual 15 proposals in October from -- from bidders. And we 16 spent a number of days in November having 17 confidential discussions with these bidders. And 18 that was over -- that process was overseen by the 19 Department of Technology. And I am pleased to 20 report that I feel it went very well because it gave 21 us an opportunity to clarify some of our 22 requirements and also to help the bidders better 23 position themselves to craft their solutions such 24 that it meets our requirements. So, that went very 25 well. 26 What's on the horizon is that in February 27 we will receive draft proposals. And in August of 28 2014 we will receive final proposals. 3 1 Now should anything occur that disrupts 2 that schedule, we will -- I will certainly keep you 3 apprised of that. But that's what's on the horizon. 4 Another item of note is that we have 5 crafted what's called a Special Project Report. And 6 this is something we give to the Department of 7 Technology. And we do that any time there is a 8 variance of greater than 10 percent in either the 9 schedule or the cost. 10 And, so, what's -- what has been the 11 trigger for this is that we had delayed the release 12 of the RFP by nine months. So, there's that change 13 we to have accommodate for. And then, based on 14 feedback that we received from bidders during the 15 request for information we submitted in August of 16 2012, and interactions with the Department of 17 General Services and the Department of Technology, 18 we added a year to the overall timeline for 19 implementation. 20 So, we went from a three-year delivery 21 timeline to -- we allowed for four year -- a 22 four-year timeline. 23 So, in essence, we had to account for 21 24 months of schedule change. And that, of course, 25 results in additional costs. And, so, we went from 26 an estimated project cost of $269 million to $309 27 million. Again that's an estimated cost, more than 28 half of that is the result of -- or those costs are 4 1 associated to internal staff salaries, other costs 2 are related to data center hardware and software and 3 then oversight costs and various contracts and that 4 sort of thing. 5 There's some very positive news about the 6 project. We -- that is that we keep making forward 7 progress on preparing the organization for the 8 implementation. 9 And I'm pleased to say that we have 10 generated an additional $38.4 million in revenue as 11 a result of activities related to the CROS Project. 12 Thus ends my report. If you have any 13 questions, I would be happy to answer them. 14 MR. HORTON: Thank you very much. 15 The Board will receive and file -- 16 MR. RUNNER: One real quick. 17 I assume -- 18 MR. HORTON: -- Mr. Runner. 19 MR. RUNNER: -- again, given the fact that 20 -- the way that technology projects are watched here 21 in Sacramento, that it would be very likely to get a 22 comment in regards to the delay and also an 23 increased cost. 24 So, I would hope that we are working well 25 as to how we are going to be artic -- how we're 26 going to articulate exactly what that process was, 27 what it means to the project and why we need to do 28 what we're doing -- and be prepared for that, 'cause 5 1 I think the call will come. 2 MR. STEEN: Absolutely. 3 MR. HORTON: Thank you, Mr. Runner. 4 Member Yee. 5 MS. YEE: Just very quickly. 6 Thank you, Mr. Steen, for the update. 7 And I think the transparency this Board has 8 provided over this project really goes a long ways 9 towards, hopefully, gaining some broader public 10 confidence about it. 11 But there have been some benefits in 12 addition to additional costs, so, it's been a 13 different kind of procurement. And I think maybe 14 one that, in the future, could be a model. 15 And, so, I would like to just encourage 16 that we continue to be transparent about the 17 entire -- all of the developments relating to the 18 project up until we award the -- 19 MR. HORTON: Further discussion, Members? 20 Thank you very much for your presentation. 21 MR. STEEN: Thank you. 22 MR. HORTON: The Board will receive and 23 file. 24 ---o0o--- 25 26 27 28 6 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on NOVEMBER 20, 2013 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 6 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: AUGUST 25, 2014 18 19 20 ____________________________ 21 JULI PRICE JACKSON 22 Hearing Reporter 23 24 25 26 27 28 7