The Department of General Services (DGS) is the state’s business manager, providing services to other state agencies that include real estate management, approval of architectural designs for state buildings including schools, procurement of labor and services, equipment and other items, printing services, and maintenance of state-owned vehicles. The diversified department, which is in the Government Operations Agency, oversees about $9 billion in procurements throughout the government each year. It manages tens of millions of square feet of office and warehouse space, buys and sells real estate, oversees 50,000 vehicles in the state’s vehicle fleet, buys $300 million worth of natural gas each year and purchases $3 billion worth of insurance annually. The department  finished transitioning from the State and Consumer Services Agency in July 1, 2013, as part of a larger government reorganization.

Executive Briefing (7th Annual State of California Technology Executive Seminar)

The creation of a state Department of General Services was proposed by the Little Hoover Commission in 1963, to be built out of the Department of Finance. The Department of Finance retained responsibility for fiscal planning and policies, while transferring “housekeeping” functions to the new department, which would have approximately 4,000 employees and be responsible for spending more than $300 million annually. Governor Pat Brown, father of Governor Jerry Brown, approved the new department as part of his reorganization of state government.

DGS was not a new idea; newspapers reported that such an agency had been proposed several times in the previous 25 years.

The new DGS took over the planning, acquisition, construction and maintenance of state properties and the responsibility for the storage of state records, as well as printing services, administrative hearings, auditing and accounting functions. The state architect and fire marshal were also transferred to the DGS.

The department was envisioned as a business manager with responsibility for both real and personal property, but by 1970 the Little Hoover Commission was expressing disappointment in its organization and effectiveness. It noted a lack of centralized inventory control and lousy storage and transportation systems for distributing materials (i.e. a bad warehouse system).

After passage of Proposition 13 in 1978, most of the spending decisions on school construction for local school districts shifted to the state. The department had picked up the Office of Local Assistance—later renamed the Office of Public School Construction—in 1963 from the Department of Finance, but its involvement in education facilities was complicated by one of the more unusual administrative structures in California government.

The independent State Allocation Board, which was created in 1947 to establish policies for distribution of school facility financing funds, uses the Office of Public School Construction as its administrative staff. The State Allocation Board is chaired by the Department of Finance director, with the DGS director as one of its board members. But the majority of  the members are legislators, and the board and the office share the same executive officer.   

Since 1986, DGS has inventoried the state’s lands and buildings in accordance with legislation, replacing 18 separate inventories used by other agencies previously.

A Study of the Need for a Materials Management System (Little Hoover Commission) (pdf)

A History of the Role of the State Allocation Board and Options for Distribution of Proposition 1A Funds (by Joel Cohen, California Research Bureau) (pdf)

The State Allocation Board: Improving Transparency and Structure (Little Hoover Commission) (pdf)

The Department of General Services manages 2,920 properties totaling almost 7 million acres, owned by the state and controlled by over 40 state agencies. These include everything from multistory office buildings, college dormitories, warehouses and armories to small pump stations and comfort stations. The state also holds 2,376 leases covering 16.6 million square feet of office space and over 5.4 million square feet of storage and other space, and DGS manages most of these.

DGS’ Real Estate Services Division (RESD) coordinates real estate services for over 135 state agencies, boards and commissions. The services provided include property management, architecture and engineering, acquisitions and sale of property, construction, budget development, environmental studies, seismic retrofit services, green and energy efficiency projects, and many more. A gateway to these services is at the DGS website.

The Office of Administrative Hearings is the largest and oldest central panel agency in the nation, established in 1945, before DGS even existed. Highly qualified judges preside at hearings and mediations throughout the state for state, local, and county agencies. In addition, a Special Education Division decides and mediates for school districts and parents of children with special education needs.

Through its Office of Risk and Insurance Management, DGS purchases about $3 billion in insurance annually for state and public entities. DGS’ Office of Fiscal Services coordinates and provides free financial services, and the Statewide Travel and Meeting Management Program (STAMMP) offers efficient travel and meeting assistance. The Office of State Publishing makes printing and communication services available to federal, state, county and city agencies throughout California. DGS also maintains an Office of Legal Services, an Office of Public School Construction, an Office of Legislative Affairs and an Office of Audit Services.

The Procurement Division offers centralized purchasing of supplies, equipment, and even labor to all state agencies and institutions, down to local levels and boards of education, with emphasis on buying green. Special services for small businesses and businesses owned by disabled veterans are available.

The Office of Fleet and Asset Management (OFAM) supports the state’s transportation need, overseeing about 50,000 vehicles. This office also manages DGS parking facilities, disposes of state surplus property and the use of state and federal surplus property, manages short-term warehouse services, and handles statewide travel and meeting management services.

DGS Services (DGS website)

Department of General Services Testimony (Little Hoover Commission) (pdf)

The Department of General Services spends $5.45 million on infrastructure: not only the many buildings owned by DGS or leased and managed by DGS, but another 52 office buildings, the Central Heating and Cooling Plant, the State Printing Plant, State Records Warehouse, three Sacramento parking structures, and housing and retail units in the Capitol Area Development Authority

Of the state money spent, only $5.47 million comes from the state’s general fund. Almost $98 million is from special funds, and selected bond funds cover another $20.2 million. That totals $123.62 million.

According to data obtained from the State Contract & Procurement Registration System (eSCPRS) online database, the Top 10 service contacts awarded by the department in 2012 were:

Department of General Services Testimony (Little Hoover Commission) (pdf)

3-Year Budget (pdf)

2011-12 Budget (Ebudget)

State Architect’s Office Erases Computer Drives amid Investigation

In April 2011, investigative journalists at California Watch published a three-part series exposing systemic failures by the Department of General Services’ Division of the State Architect to properly regulate school construction projects and enforce seismic safety laws.

The journalists followed up their initial series with subsequent stories revealing cozy relationships between the State Architect’s office and lobbyists, questionable selections of project inspectors and suspect decision-making. As political pressure mounted on the division, the state auditor conducted an investigation that when released in December amplified much of the journalists’ work.

But any further investigation of the division’s practices will be hampered by the revelation that the State Architect’s office has systematically destroyed for the past five years key documents, including emails, meeting notes and minutes, policy documents and appointment calendars. Employees’ entire hard drives were erased along with server copies within a month of their leaving the division, despite a retention agreement that requires it to retain all of its employee records for four years before transferring the material to the State Archives.

While investigators probed why the State Architect’s office had failed to certify thousands of construction projects as required by law, key employees left their jobs and had their records destroyed on their way out the door. 

An executive order from DGS Director Ron Joseph in 2006 had unilaterally changed the retention agreement, instituting a one-month slash and burn policy, ostensibly to save money.

UC Berkeley archivist David Uhlich said agencies do sometimes run up against storage limitations and have to delete material, but this policy seemed “a little extreme.”

On Shaky Ground (California Watch)

State Seismic Regulators Destroy Electronic Records (by Corey G. Johnson, California Watch)

Retention Agreement (pdf)

The State Vehicle Fleet

Shortly after taking office in January 2011, Governor Jerry Brown ordered that the state cut in half the number of passenger vehicles and home storage permits that employees use. “There is a lot of wasteful spending on cars that aren’t even driven,” Brown said in announcing the cuts he wanted made within 120 days.

The state fleet has been an object of controversy for years. Attempts to transform it using more fuel efficient vehicles have stumbled and the Department of General Services, which oversees the fleet, has even had trouble keeping track of how much fuel it uses. In July 2008, with gasoline prices hovering near $5 a gallon, state Senate hearings prompted President Pro Tem Don Perata to call the department’s vehicle tracking system, or lack of it, “a mess.”   

Newly-appointed Director Will Bush admitted as much to senators. “As California begins to look at its needs, we really do need to get a handle on where our vehicles are, what our vehicles cost us, the maintenance on them, fuel use.” At the time, the state owned 40,000 passenger vehicles and 10,000 medium- and heavy-duty vehicles spread out over more than 100 agencies. The Department of General Services operated only about 15% of the fleet itself.

Brown’s 2011 executive order applied to the 11,000 vehicles in the state fleet and 4,500 home storage permits that don’t serve a health or public safety function. By June, the state said it had reached half its goal. The largest vehicle reduction was in the Department of Transportation (926), Department of Corrections and Rehabilitation (795), State Parks (388) and California Highway Patrol (322).

But the Department of Fish and Game, which was next on the list at 251 vehicles, claimed a hardship in November and lobbied to have its targeted number of vehicles, 527, reduced. “There's a lot of specialized equipment on the chopping block,” said John Carlson, a former Fish and Game manager now heading up the California Waterfowl Association. “A lot of this equipment was purchased with hunting and fish license revenue dollars. For that to be eliminated in some kind of bean-counter exercise is extremely concerning to sportsmen.”

Jon Coupal, president of the fiscally conservative Howard Jarvis Taxpayers Association, agreed: “Sometimes these reductions in spending throw the baby out with the bathwater.”

State Fleet Fuel Purchases (pdf)

No One Tracks State’s Fuel Bill (by Aurelio Rojas, Sacramento Bee)

Governor Brown Orders Immediate State Car Cutback (Press release)

California Fleet Reduction Has Eliminated 3,800 Vehicles So Far (Government Fleet)

Cuts to Fish and Game Vehicle Fleet Could Harm Conservation Efforts, Some Say (by Matt Weiser, Sacramento Bee)          

Selling Off the State’s Property

For decades, DGS has sold unused and unwanted properties belonging to the state. At times, however, the sale of property was pushed by politicians as a way to get out of budget difficulties.

In 2009, the Schwarzenegger administration had instructed DGS to estimate the sale price of 11 office complexes in the state. The idea was to sell the properties and lease them back, so no offices would be shut down. DGS came up with a value of $2 billion, resulting in $660 million profit after bond debt on the properties was retired. As Eric Lanoureaux of DGS explained, “If the state had to borrow the $660 million, it would cost a lot more.”

The state would commit to a 20-year lease for the 24 office buildings in question (on 11 separate properties) to make the offer attractive to buyers. New owners would take over maintenance, relieving the state of that responsibility.  However, the rents over 20 years were expected to be $800 million.

The proposed sale was decried by California’s treasurer, Bill Lockyer, as “poor fiscal policy and bad for taxpayers.”  And the Legislative Analyst figured the sale would end up costing the state $200 million more than if the state simply retained ownership of the properties.

The DGS, however, said the sale was financially sound and would save the state $2 million over 20 years. A buyer was found: a consortium of investors called California First LLC. Questions were raised when Lockyer testified that  a half-million dollar finder’s fee was to be paid to the mayor of Santa Ana if the sale was successful.

The assumed revenue from the sale, $1.2 billion, was included in the 2010-2011 state budget, although the sales had not yet been made.

In February 2011 Governor Jerry Brown canceled the proposed sale. “The sale and leaseback proposal was short-sighted and would have cost taxpayers billions of dollars in the long-run,” said Brown.

State Selling Properties to Raise Cash (by Katy Grimes, CalWatchdog)

Executive Summary, Evaluating the Sale-Leaseback Proposal  (Legislative Analyst’s Office)

Governor Brown Cancels Sales of State Properties (Official news release)

Overpaying for Unwanted Software?

Trying to keep current with technology, California entered into a sole-source deal with software manufacturer Oracle Corp in May 2001. The state agreed to pay Oracle $95 million. A year later, fingers were pointed, documents had been shredded, and California’s budding IT proficiency was dealt a major setback. DGS Director Barry Keene was forced to resign; the state’s Chief Information Officer Elias Cortez was suspended and e-Government Director Arun Baheti resigned.

The problem?  The software simply wasn’t worth the money. State auditors estimated that Oracle overpriced their product by $41 million. The contract was contradictory and flawed, and violated a law that said agencies had to notify the Legislature before signing a contract valued at more than $500,000.

DGS was responsible for negotiating IT contracts. Testimony before auditors found that a DGS attorney went over Director Keene’s head and took the contract to another agency for advice, because she felt the contract was a “mess” and contradictory.

Although Northrop Grumman IT had advised the state that Oracle’s software would save California $111 million, that estimate was apparently based on a statewide implementation across a hundred departments that, state auditors said, never would have taken place. In fact, while the contract agreed on 270,000 licenses, only 234,000 state employees existed, and not all of them had computers.

To add insult to injury, Oracle released a software upgrade not included in the contract only two weeks after signing.

DGS was one of several agencies (like the Departments of Finance or of Information Technology) who claimed they thought someone else was vetting Oracle’s claims and analyzing their prices. Keene claimed to be unaware of a survey of 127 state departments—a survey that said all but five of those departments didn’t want or need Oracle’s software program. However, DGS approved the contract with Oracle in 2001, and had to answer for the fact that 10 months later, it had not taken delivery on the product.

The contract was repealed; Oracle returned money already paid on it.

An Oracle’s Mistake (by Bill Bradley, LA Weekly)

Lawmakers Review State Oracle Contract that Audit Says Could Cost California Millions  (by Jennifer Coleman, Associated Press)

Calif, Oracle Set to Nix License Deal (by Trudy Walsh, Government Computer News)

The Department of General Services has broad authority over school construction through its Office of Public School Construction. But the relationship has always been convoluted. The office reports directly to the DGS director, but is actually the administrative staff for the independent State Allocation Board that sets the policy for distributing education construction money.

The office and the board used to be directly associated with the Department of Finance, whose director still chairs the State Allocation Board. The DGS director is a board member. But the State Allocation Board is an unusual executive agency in that the majority of the board are legislators. And the board shares a controlling executive officer with the Office of Public School Construction. 

A bill introduced in the 2005-2006 legislative session would have put the Office of Public School Construction directly under control of the State Allocation Board but it was withdrawn when Governor Arnold Schwarzenegger indicated he would likely veto it. The Legislature then turned to the Little Hoover Commission for its opinion.

The commission made note of the “irrational governance structure,” the fractured chain of command and potential for conflict between the executive and legislative branch over control. And although it praised the relatively smooth functioning of the operation, it recommended that the State Allocation Board and the Office of Public School Construction be spun off as a separate independent entity, with a balance between executive and legislative representation and a clearer line of authority on the board.

The State Allocation Board: Improving Transparency and Structure (Little Hoover Commission) (pdf)

Is the State Architect’s Office Failing the Schools of California?

In April 2011, California Watch published a three-part series on the failure of state regulators to oversee implementation of earthquake standards in California K-12 schools and community colleges. Nearly 1,100 building projects were red-flagged and then ignored by the Division of the State Architect, which operates under the Department of General Services.

More than 16,000 school construction projects lacked the certification required by the 80-year-old Field Act. California Watch cited malfunctioning fire alarms, poor welding, missing wall anchors, dangerously poised light fixtures and poorly designed emergency exits among the problems it found.

The landmark 1933 Field Act, passed one month after a major earthquake, requires the state to act as a watchdog and make sure that school construction and repair—from design to completion—meets certain standards.

Is the State Architect failing to fulfill this responsibility?

Yes.

In December, the State Auditor completed an investigation and verified much of what the journalists found. Twenty-three percent of the 8,800 projects completed in the last three years lacked certification. The Architect division sporadically showed up to inspect projects and relied on project inspectors hired by the districts themselves. And the division failed to properly document its determinations about the risk levels of uncertified projects. That month, Governor Jerry Brown appointed Chester “Chet” Widom to be the new State Architect, about 16 months after the abrupt resignation of David Thorman.

Many of the office’s employees hold membership in construction industry lobbying groups. Top managers have been members, for a decade, of the Coalition for Adequate School Housing, an organization that pushed for less regulation and oversight of school construction. Many members of the coalition—known by its acronym CASH—are contractors and other professionals with projects regularly reviewed by the State Architect’s office.

Government officials essentially became members of a lobbying group for school construction firms, mingling with them at conferences and social functions.

The director of the division’s parent General Services department acknowledged all the complaints leveled against the state Architect office. Sloppy record-keeping, lax enforcement, a backlog of uncertified project, too few inspections.

As former chief State aArchitect Steve Castellanos put it: “This is a crisis. I think there has been a failure in the system.”

No. Schools Are Safe

As the auditor’s report pointed out, the Division of the State Architect is working  to address every issue raised by its critics. But the auditor acknowledges that some of the difficulties the division has had over the years are a direct result of legislation that ties its hands.

One of the major criticisms in the report is that the division allows occupancy of uncertified buildings. But the Field Act specifically permits that and also doesn’t give the state authority to stop construction projects when it does determine a risk to public safety exists. A move is underway to pursue legislation that would change that.

Many of the non-certified projects have been minor in scope and to date there have been no specific claims that work done, or not done, by the division has led to physical harm. “We haven’t actually seen a case where a significant, imminent hazard or risk was posed by one of these projects,” acting division head Howard “Chip” Smith said in April 2011.

The Field Act of 1933 is still considered a major reason why and seen as a reason no child has died in an earthquake since its passage.

The division has not been unaware of the problems noted in the California Watch and auditor reports, but has been constrained by funding and staffing issues endemic to state government. The division, which had nearly 400 employees in the 1990s, now has less than 200. One division official admitted in a memo that it would take 14 years to clear the backlog of projects not properly reviewed. It is a situation complicated by sloppy record keeping among local school administrators and poor communication between them and the state.

Complaints that the division has been lax in seeking sanctions against school districts and contractors belies the division’s mission. “Although we are a regulatory enforcement agency, our goal is to facilitate construction of safe schools,” according to Kathy Hicks, former deputy director of the State Architect’s office. “The idea of prosecuting is counter to what we are trying to accomplish.”  

Former State Architect David Thorman defended the cozy relationship with lobbyists by pointing out that it hadn’t led to any instances of corruption. While he did acknowledge that, perhaps, there needed to be more distance between the two, a lobbyist offered a full-throated defense of the relationship.

“We believe that top-down, authoritarian state policy creation and control is counterproductive to meeting local needs,” said Tom Duffy, the legislative director of the Coalition for Adequate School Housing. He claims that extending membership to state officials builds “understanding and contributes to conflict resolution.”

State, School Builders Got Cozy  (by Corey G. Johnson, California Watch)

The Division of the State Architect Lacks Enforcement Authority and Has Weak Oversight Procedures, Increasing the Risk That School Construction Projects May Be Unsafe (State Auditor) (pdf)

Lax Oversight of School Construction Raises Quake Safety Doubts  (by Corey G. Johnson, California Watch)

Troubled School Inspectors Slip Through State’s Oversight (by Erica Perez and Corey G. Johnson, California Watch)

Restrictive Rules Keep Schools from State’s Seismic Repair Fund (by Corey G. Johnson, California Watch)

Thousands of Students Attending Schools with Unresolved Safety Issues (by Kendall Taggart and Corey G. Johnson, California Watch)

Details Surface about Brown's Candidates for State Architect (by Corey G. Johnson, California Watch)

New State Architect Appointed by Governor Brown (DGS website) (pdf)

Fred Klass, 2011-2014

Scott Harvey, 2011 (Acting)

Ron Diedrich, 2009-2010 (acting)

Will Bush, 2007-2009. Governor Schwarzenegger appointed Bush, a world-class professional water skier, as director on the first day of summer, 2007. He led the department through a difficult two and a half years and held the Great California State Garage Sale before retiring, selling surplus equipment and cars that raised more than $1.6 million.

Ron Joseph, 2004-2007

Ron Joseph, 2004 (interim)

J. Clark Kelso,  2003 (interim)

Clothilde Hewlett, 2002 (interim)

Barry Keene, 2000-2001. Keene resigned in the wake of a pricing scandal involving Oracle Corporation that almost cost the state $41 million in unnecessary charges. The dust-up also helped bring down Governor Gray Davis, exposing him to a recall.

Cliff Allenby, 1999-2000 (interim)

Peter G. Stamison, 1995-1998

Robert Griffith, 1995

John Lockwood, 1991-1995

William J. Anthony, 1983-1990

David E. Janssen, 1977-1982. After leaving the DGS, Janssen spent nine years as San Diego County’s assistant chief administrative officer and four years in the top job. In 1996, he was appointed chief administrative officer of Los Angeles County and stayed until his retirement in 2007.

Leonard M. Grimes, 1975-1977. After serving as head of DGS for two years, Governor Jerry Brown tapped Grimes to head the Agriculture and Services Agency, making him the first black cabinet member in California’s history. Grimes replaced Rose Bird, whom Brown moved to the State Supreme Court.

Lawrence Robinson, 1971-1974

Charles E. Dixon, 1970-1971

Verne Orr, 1969 (interim)

Andrew R. Lolli, 1967-1969

Robert L. Harkness, 1963-1967