$150K Non-IT Service Contract Exemption Program Audits
State agencies that have been granted $150,000 non-IT service contract approval exemption by the Department of General Services (DGS) are required to conduct an audit of their contracting program using DGS’ Audit Guide and submit their final report to the department every three years per Public Contract Code (PCC) section 10351.
Overview
As required by PCC Section 10352, for each final audit report submitted, DGS will schedule a quality control reviews of the audit performed to ensure compliance with the departments' exemption.
Instructions for the Contracting Program Audit Guide for Departments with $150K Exemption has been provided below. This audit guide is required to be used when an audit is required as a condition for exemption of an agency's non-IT service contracts from approval by Department of General Services, Office of Legal Services.
Information Guides for Other Departments
How does a state department obtain a $150K non-IT service contract approval exemption?
To apply for $150K non-IT service contract approval exemption, contact DGS' Office of Audit Services for instructions at (916) 376-5055, or send a request to: DGS Office of Audit Services, Attn: $150K Contract Exemption, 707 3rd Street, 8th Floor, West Sacramento, CA 95605.
Departments that are using the $150K audit guide, please contact Office of Audit Services, (916) 376-5055, for the most current audit guide package.
How does a state department obtain a $150K non-IT service contract approval exemption?
To apply for $150K non-IT service contract approval exemption, contact DGS' Office of Audit Services for instructions at (916) 376-5055.
How does a state department renew a $150K non-IT service contract approval exemption?
Two months prior to the expiration of the department's current exemption letter, please contact DGS' Office of Audit Services for renewal instructions at (916) 376-5055.
What are the exemption requirements?
The exemption requirements are set forth in Public Contract Code section 10351. In summary, these requirements necessitate maintaining an internal control system sufficient to provide reasonable assurance of compliance with contracting laws and policies. The specific requirements are as follows:
“(1) Designates an agency officer as responsible and directly accountable for the agency’s contracting program.
(2) Establishes written policies and procedures and a management system that will ensure the state agency’s contracting activities comply with applicable provisions of law and regulations and that it has demonstrated the ability to carry out these policies and procedures and to implement the management system.
(3) Establishes a plan for ensuring that contracting personnel are adequately trained in contract administration and contract management.
(4) Conducts an audit every three years of the contracting program and reports to the department as it may require.
(5) Establishes procedures for reporting to the department and the Legislature on such contracts as the Legislature may require in the Budget Act.”
Does the $150K service contract approval exemption apply to all types of contracts?
No. This exemption applies only to Non-IT services contracts. Particularly, this exemption relates only to contracts subject to DGS’ approval per PCC section 10335 and therefore does not address any approval requirements applicable to other types of contracts, including but not necessarily limited to: contracts for real estate related activities subject to DGS’ approval per SAM section 1300, and contracts for goods and information technology and telecommunications goods and services subject to PCC sections 10300 et seq. and 12100 et seq. and related requirements issued by DGS, Procurement Division.
What if a department is not able to complete the audit and submit audit report to DGS timely due to other priorities?
The two audits required as a condition for exemption of an agency’s contracts from approval by DGS must be completed, and audit reports must be submitted by the reported due dates as specified in the exemption letter. However, if a department is not able to complete the audits and submit the audit reports timely, the department should inform DGS’ Office of Audit Services (OAS). On a case-by-case basis, DGS may provide an extension to the department’s current exemption.
How long will a quality control review be conducted after a department submits an audit report?
DGS’ Office of Audit Services will call the department to schedule a quality control review after each required audit report is received.
What to expect from a DGS $150K quality control review?
For each audit report submitted to DGS per PCC 10351, DGS is required to conduct a quality control review per PCC 10352. The cost of each of these reviews will be charged to your department.
Where are audit reports posted?
Final audit reports conducted by OAS are posted to the OAS website within 5-7 business days after issuance.
How is OAS preparing to audit for FI$CAL as a lot of departments were or have been in the process of switching over to the FI$CAL processes?
OAS staff will work with the department’s programs that are affected by the Fi$Cal implementation.
Helpful Links
Management Memos - A Management Memo is used for the distribution of management or policy information to state entities and often is a preliminary amendment to the State Administrative Manual.
State Contracting Manual Volume 1, Consolidated State Contracting Manual, and State Contracting Manual Archived Volume 2, 3 and FI$Cal - A resource to those in California state government who are involved in the state’s contracting process. It provides the policies, procedures and guidelines to promote sound business decisions and practices in securing necessary services for the state.
State Administrative Manual - A reference resource for statewide policies, procedures, requirements and information developed and issued by authoring agencies which include the Department of Finance (DOF), Department of Human Resources (CalHR), Department of General Services (DGS), California Department of Technology (CDT), and the Governor's Office.
Purchasing Authority Delegations
Office of Legal Services Assigned Staff Attorney by Agency
Office of Legal Services Contract Delegation
Procurement Division Broadcast Bulletins
Office of Fleet and Asset Management Forms
Office of Fleet and Asset Management Resources
CONTACT
Department of General Services
Office of Audit Services
West Sacramento, CA 95605
(916) 376-5055