The State of North Dakota. proudly submits to the NASCIO Awards Committee. Governor s Office Executive Order

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1 The State of North Dakota proudly submits to the NASCIO Awards Committee Governor s Office Executive Order in the Enterprise IT Management Initiatives category

2 B. Executive Summary One of the strengths of North Dakota state government is the agencies ability to work together to accomplish what we couldn t do separately. Governor Dalrymple recognized the challenges that face large information technology projects. So building upon programs already in place, he forged Executive Order to help strengthen IT procurement and project management. The Executive Order put four fundamental controls in place for all IT projects of $1 million or greater. First, it forms a procurement committee who oversees the procurement and contracting of the project. Its members are subject matter experts in legal, IT procurement, project management and agency functional business. Second, it defines the membership of an Executive Steering Committee. The committee consists of executive level staff in the agency, the Office of Management and Budget, the Information Technology Department and a project management subject matter expert. Third, the order ensures the Governor s Office is updated at least quarterly with the status of these projects and finally, the order defines the qualifications of the primary project managers for these types of projects. By working together and bringing experts into the processes, we feel North Dakota has improved their chances of success with these significant investments of our citizens tax dollars. Thank you for your consideration of our nomination. Sincerely, Dr. Lisa Feldner ND CIO Page 2 of 6

3 C. Description North Dakota recognizes the importance of information technology projects and challenges of procuring, contracting and managing their deployments. Even though we have had an oversight process in for IT projects over $250,000 for over ten years and IT specific procurement support for over eight years, we were still having challenges in consistency and continuity between projects, especially between projects from different agencies. North Dakota saw the need to improve these processes to ensure the best interests of the state are considered, to provide better service and protection to state agencies and to add transparency to the contract process. On July 6, 2011, North Dakota Governor Jack Dalrymple issued Executive Order requiring all statutorily created agencies and statutory boards and commissions with appointed heads to follow several items for all information technology projects with a cost estimate of at least $1 million. Processes for the implementation of the Order were in place by the end of September The first step requires all contracts and requests for proposals (RFPs) to be reviewed, negotiated and approved by a committee of subject matter experts. The committee is comprised of three permanent members and two project specific members with the permanent members being appointed by the Governor. The permanent members include an information technology contract attorney from the Attorney General s Office (AG), and Information Technology Department (ITD) procurement officer, and an Information Technology Department project management subject matter expert. Project specific members are the project sponsor and one optional member at large from the procuring agency. At least three votes in favor of a recommendation of approval are needed before the RFP or contract may be forwarded by the committee to the Executive Steering Committee (ESC). The next step requires the creation of an Executive Steering Committee. The committee comprises of the agency head of the contracting agency or designee, the director of the Office of Management and Budget (OMB) or designee, the state Chief Information Officer or designee, the project sponsor and a large project oversight analyst. Four affirmative votes are required to make any project decisions related to contracts, budgets, and scope or schedule changes deemed by any one member of the committee to be a major project decision. The contracting agency head and the state Chief Information Technology Officer must both sign all contracts, amendments and scope changes as directed by the Executive Steering Committee. Each quarter, members from the Governor s Office, Office of Management and Budget, Information Technology Department and the sponsoring agencies with projects under this order are required to meet and review the status of the projects. Finally, the order defines the minimal level of experience required of project managers to be assigned to projects of this scale. Page 3 of 6

4 Barriers, Challenges and Opportunities: One of the challenges faced by the team implementing the order was that the committees were required to follow formal open meeting requirements. Staff had to be brought up to speed on the requirements of noticing and recording a public meeting. Also, for many staff members it had been a number of years since they had to utilize parliamentary procedure. Training and processes for noticing, tracking, and managing these meetings had to be developed and deployed. Another challenge in deploying this initiative was the concern agencies had of losing control of their projects. However, most agencies have quickly come to realize that is less about control and more about having the advice and buy-in of some key fellow executives. The Information Technology Department leveraged the programs already in place to meet the requirements of the Executive Order. There was a process in place for supporting agency IT RFPs & IT contracts. An IT procurement subject matter expert would work with the agency in consultation with an AG attorney and OMB s Risk Management division to help in the procurement, but with a few exceptions, like limited liability, this service was advisory only. The ESC was already a requirement for major IT projects, but the membership of the committee was significantly different. Again, we leveraged much of what was already in place to meet this requirement. Cost: There was no direct outlay of cash for deploying the Executive Order. However, staff time to develop the processes and procedures and to fill the roles required for the committee s has not been insignificant. The ESC requires a senior staff member from each OMB and ITD. These committees meet at least monthly and some of the larger projects meet biweekly. The Large Project Oversight analyst generally sits on both the ESC and the procurement committee. They current have a flat fee billed at the beginning of projects to cover their services, so at this time there has been no cost impact for their involvement. However, with the addition time commitments, ITD will need to review that fee and determine if the rate must be increase to cover the increased effort. The IT procurement specialists do not charge for their time. However, this has increased their workload by about 48%. ITD will need to consider adding a ½ FTE to cover the workload or look to shift work such as routine/non-project procurements to the OMB State Procurement Office. The Attorney General s office bills for the time spent on the procurement committee placing a direct cost impact on the project s agency. The Executive Order was an innovative approach to address the challenges of ensuring the proper procurement and project management processes we being used consistently across state IT projects, good contracts that protect the state and the vendor were being Page 4 of 6

5 signed and executives from the procuring agency, ITD and OMB are part of the decision making process. The Governor s Office worked with ITD to communicate the order and issued an additional memo that addressed many of the questions that came from the initial announcement. ITD worked closely with affected agencies to help them realign their existing structures to meet the EO requirements. D. Significance One of the key improvements is the consistency being applied across all of the impacted projects. The same approaches are being used in all of the procurements, contracts, and in the overall management of the projects. The make-up of the decision-making teams is consistent with industry best practice for conducting complex contract negotiations with a cross-function team with expertise across the spectrum of disciplines. We also see significant improvement in communications between critical executives. The agency executive, the Governor s Office, the Office of Management and Budget, and the Information Technology Department are all on the same page regarding status and why critical decisions were determined. State agencies see the benefits of having the support of key executives from OMB and ITD. Vendors see the benefits of consistent processes being applied. 75% of the projects being monitored by LPO are impacted by the order (15 of 20, over $250K) E. Benefit of the Project Impact: The processes defined to implement the Executive Order help ensure that all levels of state government are aware and involved in these high profile IT projects. It gets more key decision makers into the process. Ultimately the goal is to have a successful implementation of the IT project that meets the business needs of the agency so they may better serve the citizens of the state of North Dakota. Financial Benefits: From a financial point of view, there is an investment of staff time, training, and the strengthening of existing programs. Unfortunately, much of the financial payback is from non-events; the project that comes in significantly over schedule but on-budget because of a deliverables based contract; the project didn t have as many change orders because of the time and effort put into gathering detailed requirements and ensuring that both sides understood the expectations for those requirements during contract negotiations; or the project comes in on schedule because an experienced project manager lead the project. Page 5 of 6

6 Non-Financial Benefits and Outcomes A key outcome has been improved procurements and contracts. RFPs have a consistency that should help vendors improve their proposals and lower costs for those who do repeat business with the state. The state has been able to negotiate liquidated damages into each contract executed since the order. There have been expanded discussions between the agency and the vendor on the Statement of Works (SOWs), which has clarified misunderstandings and should result in fewer change orders. There has been an improved understanding of project status at executive level in IT, OMB, and GO. In addition to the business, this has ensured that there is experienced representation from procurement, technology, project management and legal collaborating on decision making. These additional resources have brought decades of diverse, statewide ITproject-specific experience to projects It is still early in the process, however, we have already seen how this improves likelihood of a successful deployment of IT projects and helps protect the investment of the state. 1. The executive order has added more openness, and a more transparent exchange of information between agencies. This has resulted in better information sharing and collaborative decision-making. 2. Having specialists on the decision making teams from the business, procurement, technology, project management and legal has resulted in better decision making, better negotiating, and better checks and balances and consistency in how decisions are made. 3. Practical application of the executive order has resulted in delivering better quality RFPs and contracts for the state which ensures the proper protections are in place to allow the ESC to manage the contractual relationships effectively. 4. Has empowered project managers to fully utilize international project management standards and practices, which has resulted in more consistent initiating, planning and executing of projects. 5. Has ensured that project managers are appropriately trained and experienced to manage large-scale projects. 6. Has allowed the business to retain a positive, long-term working relationship with contracted vendors while ensuring that contracts continue to be managed in the best interest of the state. 7. Main focus has continued to be providing for the needs of the business in their mission to serve the citizens of the state. Aligns with Governance goals of the NASCIO state CIO priorities The ESC meetings are now public meetings and have significantly increased the transparency of these major IT initiatives. Page 6 of 6