Leaked report “summary” details familiar problems

Posted on August 23, 2012


Wasn’t it the Ferenghi that said there is profit in chaos?


August 22, 2012
Dear Members and Others,

On August 16th, Alliance director Judge David Lampe requested Executive and Planning Committee chairman Justice Douglas Miller to make public the audit report of the AOC Office of Court Construction and Management prepared by Pegasus Global Holdings. A copy of that letter appears below.

Justice Miller declined to make that report public, indicating that it would be released in September, so we were surprised to learn yesterday that the summary of that report was somehow “leaked” to Daily Journal reporter Paul Jones. We include today’s Daily Journal story on that  “leaked” document.

We were not surprised, of course, by the summarized findings of the audit because we fully expected to see the same dysfunction, incompetence and lack of oversight in the multi-billion dollar court construction and maintenance program that we saw on display in the failed CCMS project.

As to who leaked this document, we will not speculate. As to why the document was leaked, we offer the following possible explanation: it is common to attempt to blunt negative press attention by leaking portions of an embarrassing report to a single reporter. Once that story runs the agency which is the subject of the report can claim that it’s now “old news” and that the recommendations in the report have been complied with. This tactic is often referred to as an “inoculation.” Whether or not this occurred in this instance, the Alliance will not be dissuaded from publicly disseminating the entire report once the Council sees fit to release it. Nor do we expect that the rather strange “leak” to a single reporter will dissuade other reporters in both the print and television media from reporting on yet another instance of Judicial Council and AOC mismanagement.

The common themes of this latest report, the State Auditor’s report on CCMS, the SEC report on the AOC, and the concerns raised by  hundreds of judges during the most recent public comment period all underscore the desperate need for the democratization of the Judicial Council. The 15 year experiment of centralized governance by unelected bureaucrats and the abdication of oversight by handpicked functionaries has significantly damaged the image of the judiciary. The lack of Council oversight of the AOC has become habitual and blatant, as yet another report has found. At some point we need to say enough is enough. Let’s hope that doesn’t occur after additional millions or billions of public funds are wasted.

Directors, Alliance of California Judges
August 16, 2012
Dear Justice Miller:
I am writing on behalf of the Alliance of California Judges to request that the Judicial Council immediately make a public release of the Pegasus Global Holdings, Inc., report on the operations of the Office of Court Construction and Management. I make this request to you in your role as Chair of the Executive and Planning Committee based upon that committee’s authority under Rule 10.11(a) to act on behalf of the Judicial Council between meetings. It is our understanding that this report has issued internally. Even if the current version of the report is preliminary and not final, it is imperative that the preliminary findings of this consultant group be made public. Please do not treat this as a Rule 10.500 request. We are constitutional judicial officers, and we need this information in order to perform our duties for the reasons outlined below. Even draft versions of this report, once released to the AOC, need to be made available to the public and to judges. If the report is preliminary, it may be denominated as such.
The immediate release of this report is critical because the Court Facilities Working Group has invited public comment on the decision-making process and criteria to be used in re-evaluating 31 SB 1407 projects moving forward with limited funds. Comments are due on August 24, 2012 with public meetings scheduled on September 5- 7, 2012 with planned final recommendations by the end of September 2012. The committee expects to make its final recommendations to the Judicial Council by October 26, 2012.
The information in the Pegasus report is critical both to any public comment that would be made on the 1407 projects, and it is also fundamental to any decision to be made upon the recommendations of the Strategic Evaluation Committee. The SEC Report references the Pegasus study at Page 156, after noting substantial deficiencies in the performance of the OCCM.
Prioritizing the 1407 projects from an operational needs standpoint cannot be accomplished in a vacuum without full appreciation of the likely available cash flow from 1407 funds.  There are a number of fundamental deficiencies in the OCCM’s performance relative to likely available capital outlay and cash flow. First, the OCCM has not adequately considered the lack of available funds to maintain new courthouses once constructed, in light of the fact that the size of new courthouses will result in substantially increased costs of maintenance, identified to be at least $32 million more annually, which may have to be taken from 1407 funds. This problem compounds the fact that available funds for existing maintenance are already inadequate. Secondly, the OCCM may not have adequately taken into account available cash flow for the projects under consideration, particularly since there is likely to be an ongoing need to divert some 1407 funds to operations for the foreseeable future.
These discrepancies in the performance of the OCCM need to be addressed before any further decision can be made on prioritizing court construction projects. We are concerned that the court construction program may be headed in the same direction as the CCMS fiasco–a complete failure after a wholesale waste of public funds.  This would be disastrous to the branch on a number of levels.  We think that the Pegasus report must be released to judges, the public, to the Executive, and to the Legislature, in order for there to be a determination whether a public audit of OCCM is warranted, just as it was with CCMS.
Rumors abound that the Pegasus report has been issued internally and that it excoriates the performance of the OCCM, and that the report is being withheld for that reason, or perhaps even being modified.  All interested parties need to be assured that this is not the case by an immediate public release of the report. It is unhealthy for this report to be withheld in light of the judiciary’s newfound commitment to transparency and open decision-making.
Thank you for your careful consideration of this request.
Directors, Alliance of California Judges
by David Lampe, President.
cc:  Members of the Judicial Council, Hon. Brad Hill, Hon. Charles Wacob, Chair of the Strategic Evaluation Committee
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Report is critical of court construction
Audit blames state judicial branch’s lack of involvement for building program’s inefficiency
By Paul Jones
 A leaked summary of an audit of the state judicial branch’s court construction program says the program needs more oversight, coherent policies and better organization in order to function more accountably and efficiently.
 Last August, the working group directed the Administrative Office of the Courts to hire an outside auditor to examine the Office of Court Construction and Management, which handles the branch’s courthouse construction program.
 The audit notes problems with the construction program’s organizational structure and procedures, claiming that limited staffing and “program constraints” have caused what was designed to be a top-down organization to function “horizontally.” Pegasus auditors determined that state law puts the Judicial Council in charge of the program but that there was no evidence it’s sufficiently involved. As a result, “the actual Owner [the Judicial Council] may not be exercising its responsibility to examine and make crucial funding decisions from a program perspective,” according to the audit summary, which didn’t lay out the practical effects of the lack of involvement.
 The document describes structural and operational problems with the court construction program, saying it has been understaffed since its genesis and operates without formal “delegation of authority and responsibility.”
 While the report found policies for projects’ site selection and acquisition were acceptable, it identified policy and procedural deficits,  nonuniform and unimplemented policies and the lack of a true project execution plan.
 It goes on to say that there’s no formal review and approval process for projects, nor a uniform quality management program. Opportunities to achieve efficiencies are missed, and there is also no “apparent” analysis of the cost differences for projects’ initial estimates and final price tag upon completion. The auditors also found there is no formal means to evaluate contractors’ work.
 The audit’s results have been highly anticipated within the branch. Kern County Superior Court Judge David R. Lampe, president of the Alliance of California Judges, which has been critical of branch management, recently petitioned for its release.
 Sacramento County Superior Court Judge Maryanne G. Gilliard, an Alliance member, said the findings of the audit aren’t surprising and that the Alliance believes poor management of the court construction program is resulting in a significant waste of money.
 “The theme of inadequate oversight is one we’ve seen before, after [the Administrative Office of the Courts was] wasting over half a billion [dollars] on a failed computer system,” she said. “We cannot allow this to happen or continue to happen with the multibillion construction program.”
 Jody Patel, interim director of the Administrative Office of the Courts, declined to comment.
 “The report has not been publicly released,” Patel said. “Any comment on the report will fall to the judicial oversight committees.”