(endorsed) Office of the Clerk of the Board of Supervisors County Government Center, East Wing Mar 1 0 2023

The County has not addressed the known inaccuracies of public contract data; neither the public nor the Board of Supervisors can determine, with accuracy, the total value or expiration dates of contracts. The County disagrees with this Finding. Public contract data reports are not inaccurate. Public access to Active Contract reports, which are made available via the Procurement public website, involves contract data that is updated monthly. As active contracts are dynamic (i.e., revised via amendments, corrections, etc.), contract data does change from month-to-month. The Active Contracts list, which is made available monthly to the public, is a report of active contracts only and the data is accurate as of the report date posted. The County does not utilize the "Term Contracts list," the Grand Jury Report references such a list, which should be correctly titled "Purchasing Agent Actions Relating to New FY#### Term Contracts" (Purchasing Actions Report). This annual report to the Finance and Government Operations Committee (FGOC) lists purchasing actions executed by the County's purchasing agents on new contracts established within the previous fiscal year. This report is not intended to provide the total contract value, only the portion of which that was executed by the County's purchasing agents in the reported time frame. Both the Active Contracts list and the Purchasing Actions Report serve separate and distinct purposes. Data between the two reports is not intended to match. Separate and individual contracts can be accessed via a California Public Records Act (CPRA) request and would reflect contract data for the requested time frame. Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5

The Civil Grand Jury (consistent with the findings from the Harvey M. Rose Associates, LLC 2021 Management Audit of the County of Santa Clara Procurement Department report) finds that there is a lack of standardized processes to effectively input and validate contract data; the SAP and Ariba databases contain many errors and omissions, thereby rendering the Active Contracts list unreliable. The County partially disagrees with this Finding. The County's eProcurement team deployed numerous enhancements to SAP ERP Central Component (SAP ECC) to improve contract compliance with County policy and administrative guidelines. These include: System-generated reminder of expiring contracts; . System-generated restrictions for inappropriate signature authority; . Sourcing method to capture and report on procurement methods used to award contracts; and, . Maximum financial obligation field to report contract values rather than aggregated purchase . order values. While the County intends to purchase and implement a new ERP system to succeed the current SAP and Ariba systems, this will be a multi-year endeavor requiring considerable resources. The intent is to fully utilize Ariba in the near term while the County develops specifications and sources toward implementing a new ERP solution. In the interim, the continued use and enhancement of the Ariba system will provide benefits to the County, including but not limited to additional controls and compliance in professional services contracting, increased accuracy of County spend data, and more comprehensive reporting on Countywide contracts and spend.

The Civil Grand Jury finds that, although the Procurement Department produced training materials, the County does not mandate that employees participate in the training before entering contract data into ERP systems. The County agrees with this Finding. The County currently requires employees complete a formal training curriculum to attain access is procurement systems. Further, the County will mandate contracts management and data entry training for all users starting no later than September 1, 2023.

Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian 5 County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5 The County failed to fully implement the contract management module of the SAP system purchased a decade ago for millions of dollars. This lapse has prevented the timely integration of contract data from the Ariba and SAP systems, creating incompatibility issues. The County partially disagrees with this Finding. The County did not acquire and implement the SAP contracts management module with its initial SAP deployment in 2002. The County acquired Ariba as a full procure-to-pay suite of tools in 2014, including the contracts management module. This module is currently in use by the Procurement Department for centralized contracts and a phased implementation plan for use by other departments across the County is in progress. Further, the County anticipates acquiring a new ERP system at an undetermined future date, whose business requirements will include a new contracts management module for use by all County departments.