Loading...
HomeMy WebLinkAboutORCATS-Assessment and Taxation system Costs and consortium agreement Deschutes County Internal Audit Program David Givans, CPA, CIA -County Internal Auditor 1300 NW Wall St., Suite 200, Bend, OR 97701 (541) 330-4674 - Fax (541) 385-3202 davidg@co.deschutes.or.us CAO Internal Audit Debbie Taylor, County Auditor, CIA, CGAP, CFE, CGFM 10 S Oakdale Ave Room 214 Medford, OR 97501 Phone: (541) 774-6021 Fax: (541) 774-6455 taylordk@jacksoncounty.org DESCHUTES AND JACKSON COUNTY JOINT INTERNAL AUDIT of Oregon Counties Assessment and Taxation System (ORCATS) COSTS and CONSORTIUM AGREEMENT November 2007 {This page intentionally left blank} DESCHUTES AND JACKSON COUNTY JOINT INTERNAL AUDIT of ORCATS COSTS and CONSORTIUM AGREEMENT TABLE OF CONTENTS: EXECUTIVE SUMMARY ....................................................................................... i-ii 1. INTRODUCTION AND BACKGROUND 1.1. Audit Authority...............................................................................................1 1.2. Audit Objectives.............................................................................................1 1.3. Audit Methodology and Scope..................................................................... 1-2 1.4. Noteworthy Accomplishments .........................................................................2 1.5. Privileged and Confidential Information ...........................................................2 1.6. Background Information............................................................................. 2-4 2. AUDIT FINDINGS 2.1. Cost Compliance with ORCATS Consortium Agreement................................. 4-6 2.2. Reasonableness of Methodology Used to Allocate Support Costs................... 6-9 2.3. Sales Prices of ORCATS Program................................................................9-11 2.4. Compliance with Consortium General Practice and Procedure Terms ..........11-12 2.5. Clarity of Consortium Agreement..............................................................13-14 2.6. Designated Contractor Accountability .......................................................14-15 2.7. Other Issues to Consider .........................................................................15-17 3. RESPONSES FROM MANAGEMENT 3.1. Deschutes County management.............................................................. 18-19 3.2. Jackson County management.................................................................. 20-21 3.3. Polk County management....................................................................... 22-23 3.4. Tillamook County management.................................................................... 24 3.5. Helion Inc. management ........................................................................ 25-30 A. APPENDIX A1 Glossary of frequently used terms................................................................. 31 A2 Helion invoiced costs for each county by type of service and year................... 32 A3 List of Recommendations..........................................................................32-35 {This page intentionally left blank} ORCATS Costs and Consortium Agreement Report November 2007 i DESCHUTES and JACKSON COUNTY JOINT INTERNAL AUDIT of ORCATS COSTS and CONSORTIUM AGREEMENT EXECUTIVE SUMMARY Purpose The purpose of the audit was to determine if Deschutes and Jackson Counties’ ORCATS (Oregon Counties Assessment and Taxation System) costs were comparable with what other consortium members were paying for support to the designated contractor (Helion), and whether the allocated costs were consistent with the consortium agreement. This report includes management responses received from consortium counties and the designated contractor. Results in brief Implementing audit recommendations will improve effectiveness of the consortium and designated contractor agreements. The following highlights the significant findings presented to the consortium for consideration with associated report page reference. FINDINGS Starting at Page The amounts paid by Deschutes and Jackson Counties to Helion through FY 2003-04 agree with the amounts specified in the consortium agreements. The amounts paid after FY 2003-04 were specified in contracts between Helion and each county, but the contracts did not indicate how the costs were determined. The consortium agreements also did not specify how costs were determined. 4 The methodology used to allocate base support costs did not include enough support hours to sustain the needs of larger counties. A methodology using anticipated direct service hours could better align services with costs than using number of property accounts. 6 If the need for development costs continue and these costs are only allocated to consortium members, there may come a time when, from a cost standpoint, it would no longer be advantageous to be a consortium member. Additional development costs paid by Jackson and Deschutes counties have resulted in similar purchase costs per account as compared to non- consortium members’ purchase prices. 9 ORCATS Costs and Consortium Agreement Report November 2007 ii FINDINGS Starting at Page Consortium members could improve compliance with some aspects of the consortium agreement by: Documenting formal voting results to determine project development priorities; Holding lead counties responsible for providing user documentation; Holding consortium meetings for all members at least four times a year; and Formalizing new consortium agreements in a timely manner. 11 The consortium agreement could be improved by: Documenting agreement between members to share information pertinent to ORCATS costs and services. Clarifying ensuing conditions if Polk County decides to leave the consortium; and Clarifying who is responsible for the cost of fixing programming “bugs.” 13 Methods for holding the designated contractor accountable could be strengthened. 14 There is currently no formal agreement between the consortium and Helion. 15 Increased participation of county information technology staff could improve efficiency in the ORCATS development process. 16 ORCATS Costs and Consortium Agreement Report November 2007 Page 1 DESCHUTES and JACKSON COUNTY JOINT INTERNAL AUDIT of ORCATS COSTS and CONSORTIUM AGREEMENT 1. INTRODUCTION AND BACKGROUND 1.1 Audit Authority The internal audit was conducted in accordance with Deschutes County Code 2.14 and Jackson County codified ordinance 218. The audit was initiated by Deschutes County to determine if their Oregon Counties Assessment and Taxation System (ORCATS) costs were comparable with what other consortium members were paying for support to the designated contractor (Helion), and whether the allocated costs were consistent with the consortium agreement. Deschutes County internal audit invited Jackson County internal audit to participate in the audit since both counties have internal audit functions and are consortium members. The other consortium counties do not have internal audit functions. Deschutes and Jackson internal audit programs have coordinated and collaborated throughout the audit process. This report is being issued as a joint work product supported by both internal audit organizations. 1.2 Audit Objectives The objectives of the audit were to: · Determine if costs assessed to Deschutes and Jackson Counties agree with amounts specified in the ORCATS consortium agreement. · Determine if the methodology used to allocate support costs to Deschutes and Jackson Counties is reasonable. · Review the current ORCATS pricing structure and determine if it is comparable to the ORCATS purchase prices paid by Deschutes and Jackson Counties. · Determine if general consortium practices and procedures have complied with agreement terms. · Determine if the consortium agreement terms are clear and complete. · Determine if the ORCATS designated contractor (Helion) has been held appropriately accountable for completing various programming aspects in a timely manner and within stated cost estimates. · Determine if there are other issues needing to be addressed in future consortium agreements. 1.3 Audit Methodology and Scope The designated contractor cost and service data for the period of July 2000 through October 2006 were reviewed, however, the audit focused on fiscal years (FY) 2002-03 through 2005-06, as Jackson and Deschutes Counties began conversion to ORCATS in FY 2001-02. Internal county assessment and taxation ORCATS Costs and Consortium Agreement Report November 2007 Page 2 and information technology staff costs related to ORCATS were not reviewed and therefore, were not included in the cost information or analyses. In addition, the audit focused primarily on the assessment component of the ORCATS system. A glossary of terms is included in Appendix A1 . Audit procedures included: · Reviewing and analyzing Helion invoices to address costs assessed to each county; · Reviewing and analyzing Helion services provided using detailed time information by employee, date, and project; · Reviewing ORCATS consortium meeting minutes that were available online; · Reviewing Deschutes and Jackson Counties’ contracts with Helion; · Reviewing intergovernmental agreements among the ORCATS consortium members; and · Other procedures as deemed appropriate. The Helion invoice information received for Deschutes, Jackson, and Tillamook Counties was exclusive to ORCATS, but the information received for Polk County was not. Helion provides other, non-ORCATS related services to Polk County, and all services are billed together as one lump sum amount. For this reason, ORCATS payment information for Deschutes, Jackson, and Tillamook Counties was obtained from invoice information, while payment amounts for Polk County were obtained from the December 2001 consortium agreement. The audit was conducted in accordance with Government Auditing Standards issued by the United States General Accountability Office. 1.4 Noteworthy Accomplishments The ORCATS program continues to be developed and enhanced, and the consortium provides an avenue for counties to direct development and share in the costs. The consortium and Helion are commended for taking steps to address many of the issues identified during the course of the audit. 1.5 Privileged and Confidential Information No information was omitted from this report for privileged or confidentiality reasons. 1.6 Background Information The ORCATS Assessment and Taxation (A&T) system assists assessors in developing and preparing tax statements for the taxing districts in their county. In addition, the system assists taxation departments in the collection and remittance of tax payments to the associated taxing districts. ORCATS Costs and Consortium Agreement Report November 2007 Page 3 Polk County began developing an A&T program for its own use approximately 15 years ago, which later became the basis for the ORCATS system. Some information technology employees left Polk County to form Helion Inc., the designated software developer for ORCATS. In December 2001, Deschutes, Jackson, Tillamook, and Polk Counties entered into an intergovernmental agreement to share in the enhancement and completion of ORCATS. Consortium counties receive revenue from the sale and distribution of the program to other counties, although ownership of the program remains with Polk County. Sales revenue is divided 50% to Polk County, 20% to Tillamook, and 15% each to Jackson and Deschutes. Tillamook receives a larger percentage than Deschutes and Jackson because they joined Polk County in the development of ORCATS prior to creation of the consortium. The last consortium agreement expired June 30, 2006, but the counties continue to operate under the terms of that agreement. The consortium is currently in the process of amending and extending this agreement to cover the period of July 1, 2006 through June 30, 2008. The consortium agreement provides a framework for how the participating counties will work together. The agreement also specifies that Helion is the designated contractor unless mutually agreed upon by the counties. There is no formal agreement between the consortium and Helion, although the consortium agreement requires each consortium county to have individual personal service contracts with Helion for support functions. The service costs have traditionally been separated into four areas: maintenance/development, general support, additional support or development, and other services such as Oracle support that some counties choose to obtain from Helion. Base Maintenance/Development Costs The four consortium counties each contribute equally to an annual base maintenance/development cost, which is used to: · Maintain the system; · Assist the counties in identifying new requirements or functionality; · Enhance the A&T program to the mutual benefit of all counties; · Enhance the A&T program to meet Oregon’s statutory requirements; · Fix programming “bugs 1”; and · Provide installation support for all related upgrades to the A&T program. 1 Primarily used to describe the mishandling of a task by the program. ORCATS Costs and Consortium Agreement Report November 2007 Page 4 Under the consortium agreement, each of the four counties votes to determine project development priorities. Each member county has two votes, one for assessment and one for taxation as it relates to software development priorities. A majority opinion is used to prioritize how development monies are used. General Support Each county also receives general support time from Helion. These services typically provide: · Technical phone support to county staff; · On and off site support; · Assistance in processing, fixing and extracting data; · Assistance in performing calculations; and · Assistance in developing and performing reports. Additional Support The counties can also purchase additional support and/or development hours beyond the base hours. Additional development hours can be used by counties to further develop ORCATS to meet their individual needs. These individual developments become part of the ORCATS system and any county can use the development if they desire at no additional charge. Appendix A2 shows Helion costs by service area for the period of FY 2003-04 through FY 2005-06 for each county. 2. AUDIT FINDINGS 2.1 Cost Compliance with ORCATS Consortium Agreement · The amounts paid by Deschutes and Jackson Counties to Helion through FY 2003- 04 agree with the amounts specified in the consortium agreements. · The amounts paid after FY 2003-04 were specified in contracts between Helion and each county, but the contracts did not indicate how the costs were determined. The consortium agreements also did not specify how costs were determined. The December 2001 consortium agreement specified the total amount each county would pay to Helion for conversion, development, and support for the period of January 2002 through June 2004. Invoice information shows the amounts invoiced agree with the amounts specified in the December 2001 consortium agreement, except that Helion agreed to a reduced payment from Deschutes County in FY 2002-03 that coincided with a delay in the implementation of their ORCATS system. There was an amended contract between Helion and Deschutes reflecting the change. ORCATS Costs and Consortium Agreement Report November 2007 Page 5 Amounts to be paid for years after FY 2003-04 have not been specified in a consortium agreement other than a $280,000/year base development cost to be shared equally among the consortium members. In FY 2003-04, the $280,000 base development charge was increased by $48,000 for additional development and management costs. The September 2004 consortium agreement states the base development amount could be changed if mutually agreed upon by the counties. The consortium agreement was not amended to reflect this additional charge; however, the increase was shared equally and was reflected in the Helion personal services contracts. Table 1 shows FY 2003-04 ORCATS cost allocations for development, management, and base support by county. Table 1: FY 2003-04 Cost Allocations for Development, Management and Support by County County Helion Payment Per Agreement* Mgmt Cost Added after Agreement Signed Total Less Development Cost Less Mgmt Cost Equals Base Support Charge Polk $97,750 $12,000 $109,750 $70,000 $12,000 $27,750 Tillamook $97,750 $12,000 $109,750 $70,000 $12,000 $27,750 Jackson $149,000 $12,000 $161,000 $70,000 $12,000 $79,000 Deschutes $133,000 $12,000 $145,000 $70,000 $12,000 $63,000 Total $477,500 $48,000 $525,500 $280,000 $48,000 $197,500 * Amounts from the December 2001 consortium agreement. Although the agreement specified the total amount each county would pay to Helion for January 2002 through June 2004, it did not explain the methodology used to determine the support charges for each county. The consortium members approved the support charge for each county, but neither the Jackson County nor Deschutes County Assessment and Taxation staff could recall the specific formula used to determine the amounts. Helion provided information indicating the support charges were based on a flat $20,000 per county plus 50 cents per property account. Table 2 shows FY 2003-04 support charge calculations using the number of property accounts provided by Helion 2. Table 2: FY 2003-04 Actual Consortium Charges by County Compared to Formula County Number of Property Accounts Number of Accounts X .50 Flat Support Development & Management Costs* Total per Formula Actually Charged** Over or (Under) Variance Polk 32,000 $16,000 $20,000 $82,000 $118,000 $109,750 ($8,250) Tillamook 29,000 $14,500 $20,000 $82,000 $116,500 $109,750 ($6,750) Jackson 118,000 $59,000 $20,000 $82,000 $161,000 $161,000 $0 Deschutes 86,000 $43,000 $20,000 $82,000 $145,000 $144,996 ($4) Total 265,000 $132,500 $80,000 $328,000 $540,500 $525,496 ($15,004) *$12,000 additional management costs + $70,000 base development **Amounts for Tillamook, Jackson and Deschutes are based on invoices. Amounts for Polk are based on the December 2001 consortium agreement. 2 The number of property accounts provided by Helion was based on an estimate of the number of accounts from each county. ORCATS Costs and Consortium Agreement Report November 2007 Page 6 Actual allocations differed slightly from the formula provided, but the counties did agree to the amounts to be paid, and entered into personal service contracts with Helion for those amounts. RECOMMENDATIONS: · If the counties mutually agree to an increase in costs that have been specified in the consortium agreement, amend the consortium agreement to reflect the change, or obtain written documentation of the counties mutual agreement in some other format. This will help ensure a proper record on cost agreements between the counties is maintained. · If the consortium agreement specifies unequal payment amounts for the counties, document the methodology for determining the amounts in the consortium agreement so all counties can verify their payment amount is correct. This will help eliminate future confusion over cost allocations. Note: The proposed consortium agreement, for FY 2007-08 costs, specifies all counties will be paying a flat dollar amount per service hour, with each county determining the number of hours needed. This should help alleviate confusion over allocation of costs. 2.2 Reasonableness of Methodology Used to Allocate Support Costs · The methodology used to allocate base support costs did not include enough support hours to sustain the needs of larger counties. · A methodology using anticipated direct service hours could better align services with costs than using number of property accounts. Best business practices for cost allocation indicate costs should be allocated consistent with the benefit received or effort expended, such as on hours of service. The support allocation formula as shown in Table 2 allocates support costs partially on number of property accounts. This is based on the premise that larger counties require more support than smaller counties. Graph 1 compares each counties number of property accounts to base support hours received for FY 2005-06. The graph shows the R 2 - coefficient of determination (how well the line matches up with the data) between property accounts and base support hours allocated is a poor .29 (1 is perfect). ORCATS Costs and Consortium Agreement Report November 2007 Page 7 Graph 1: FY 2005-06 Correlation of Base Support Hours and Number of Property Accounts R2 = 0.2909 - 500 1,000 1,500 2,000 2,500 3,000 - 20,000 40,000 60,000 80,000 100,000 120,000 Property tax accounts (ODR 05/06) Ho u r s o f s u p p o r t Hours support Linear (Hours support) The correlation is low because the amount of support hours included in the base cost pool has not been sufficient to meet the needs of Deschutes and Jackson Counties. As a result, Deschutes and Jackson counties have been purchasing additional support hours to obtain the amount of support required. Graph 2 shows FY 2005-06 property accounts and total support service hours received (base and additional support hours purchased separately by Deschutes and Jackson Counties) for the four consortium counties. As expected, larger counties do appear to require more support hours in total. Graph 2: FY 2005-06 Property Accounts and Service Hours by County - 500 1,000 1,500 2,000 2,500 3,000 Tillamook Polk Deschutes Jackson Su p p o r t h o u r s ( C o l u m n s ) - 20,000 40,000 60,000 80,000 100,000 120,000 Pr o p e r t y t a x a c c o u n t s - O D R 0 5 / 0 6 ( L i n e ) Add'l hours Base hours # of Accounts Graph 3 indicates when total support hours are included (both base and additional), the R 2 - coefficient of determination improves to a more reasonable .93 (1 is perfect). ORCATS Costs and Consortium Agreement Report November 2007 Page 8 Graph 3: FY 2005-06 Correlation of Total Support Hours (Base and Additional) and Number of Property Accounts R2 = 0.9327 - 500 1,000 1,500 2,000 2,500 3,000 - 20,000 40,000 60,000 80,000 100,000 120,000 Property tax accounts (ODR 05/06) To t a l h o u r s o f s u p p o r t Hours support Linear (Hours support) Graph 3 indicates using a flat rate per account could be a reasonable allocation method if total support costs (base and additional) were allocated on number of accounts. Currently each county has been charged $20,000 plus 50 cents per account with additional support charged at $63 per hour. Not including additional support hours needed in the methodology has caused an inequity in the effective hourly support rates charged to consortium members. Under optimal conditions, the effective hourly rate should be the same for all counties. Table 3 shows that when cost allocations are calculated on base service hours, the smaller counties are charged a lower effective support cost per hour. Table 3: FY 2005-06 Actual Cost per Base Support Hour County Base Support Actually Charged* Base Support Hours Received Actual Support Cost per Hour Tillamook $27,750 754 $37 Jackson** $87,149 1,103 $79 Deschutes** $69,360 1,203 $58 Subtotal $184,259 3,060 $60 (Average) * Based on invoices for Tillamook, Jackson and Deschutes. ** Jackson and Deschutes Counties purchased 1,200 additional support hours at approximately $63 per hour. Helion currently tracks service hours by county, therefore the cost of services provided could be more closely tied to the benefits received by using total number of support hours anticipated to be needed by all consortium members in the allocation methodology. ORCATS Costs and Consortium Agreement Report November 2007 Page 9 RECOMMENDATIONS: · The consortium should consider basing support costs directly on hours of service required, which would more directly match costs with services received. Note: The proposed consortium agreement, for FY 2007-08 costs, states that each county will purchase a minimum of 300 hours of support service at a $75/hour rate. Additional support can be purchased in blocks of 150 hours at a $75/hour rate. Additional development services can also be purchased in blocks of 150 hours at $75/hour. These proposed changes should provide a closer correlation between support costs paid and support services received. This places the burden on the counties to determine how many hours they will need in the ensuing year. · If the consortium seeks to utilize a more indirect cost allocation methodology such as using property accounts, the consortium should consider including total anticipated support hours needed by the counties. Again, this would more closely match costs with services received. When utilizing an indirect approach, it would be beneficial to periodically monitor the costs versus benefits received by each county. · Regardless of approach, the methodology should be clearly communicated to and approved by a majority of consortium members. This will help ensure all members understand how costs are allocated. 2.3 Sales Prices of ORCATS Program · If the need for development costs continue and these costs are only allocated to consortium members, there may come a time when, from a cost standpoint, it would no longer be advantageous to be a consortium member. · Additional development costs paid by Jackson and Deschutes counties has resulted in similar purchase costs per account as compared to non-consortium members purchase prices. The current ORCATS pricing structure for non-consortium member sales since 2004 is summarized in Table 4 . ORCATS Costs and Consortium Agreement Report November 2007 Page 10 Table 4: Current Sales Price Methodology for ORCATS Property Accounts Sales Price formula 0 – 5,000 $20,000 5,001 – 10,000 $20,000 + $6/account 10,001 – 30,000 $50,000 + $3/account 30,001 – 50,000 $110,000 + $2/account 50,001 – 100,000 $150,000 + $1/account Above 100,000 $200,000 + $.50/account · A discount of 25% is given to smaller counties to make it affordable. · A 25% discount is given to counties converting from a competitor (Avenir). A number of new counties (non-consortium) have purchased the ORCATS system since the consortium was formed. These counties include Jefferson, Umatilla, Hood River and Columbia. Table 5 compares the ORCATS purchase price per account for Deschutes and Jackson Counties, as well as other non-consortium members, using the number of property accounts for the fiscal year in which they purchased ORCATS. Table 5: ORCATS Sale Information and Comparison by Cost/Account County Fiscal Yr (FY) Number of accounts at purchase * Purchase Cost Cost/ account Add'l Helion development costs paid** Less share of ORCATS sales Net costs after development and sales Net Costs/ account Consortium: Jackson 2000-01 108,950 $ 146,500 $ 1.3 $ 353,000 $ (34,520) $ 464,980 $ 4.3 Deschutes 2000-01 79,184 $ 127,000 $ 1.6 $ 353,000 $ (34,520) $ 445,480 $ 5.6 Non- Consortium: Jefferson 2003-04 13,546 $ 68,433 $ 5.1 $ 68,433 $ 5.1 Umatilla 2004-05 41,920 $ 136,050 $ 3.2 $ 136,050 $ 3.2 Hood River 2005-06 11,522 $ 54,000 $ 4.7 $ 54,000 $ 4.7 Columbia 2006-07 28,068 $ 107,000 $ 3.8 $ 107,000 $ 3.8 * Property accounts per Oregon Department of Revenue for 2000-07. Actual number of accounts used in calculation in year purchased may have differed slightly. **Development costs included $70,000 per year development cost + $12,000 management cost for FY 2003-04 thru FY 2006-07 plus $25,000 SQL cost in FY 2005-06. (70,000+12,000)*4 +25,000=$353,000 The initial purchase cost per account was lower for Jackson and Deschutes; however, after taking into consideration additional Helion development and management costs, the net cost per account for Jackson and Deschutes is slightly higher than for some non-consortium members. As consortium members continue to develop the software, Jackson and Deschutes cost per account (as well as that of other consortium members) may at some point outpace non-consortium members. Under sound business practices, the consortium members should not have higher prices per account than non-consortium users 3. The continued development costs might appear to be a disincentive to being a consortium member, however, consortium members share in revenue from sales, and vote to determine future development 3 Under the current pricing schedule for non-consortium users, Jackson and Deschutes counties could purchase into ORCATS at a cost per account of $1.9 and $2.3 respectively. ORCATS Costs and Consortium Agreement Report November 2007 Page 11 priorities. It is difficult to place a dollar value on these consortium benefits. ORCATS sales revenue to date has been relatively insignificant compared to the additional costs of development and management. Deschutes and Jackson County Assessment and Taxation staff place great value on the ability to direct development of the ORCATS program to meet the county’s specific needs. The counties anticipate future development may be necessary due to legislated tax changes. If this occurs, the consortium will need to have a process in place to share future development costs among all users. RECOMMENDATIONS: · The consortium should review the pricing structure to ensure that it does not become a disincentive to being a consortium member. This will preserve and enhance the benefits of consortium membership. · The consortium should address how they will share annual maintenance costs as well as future development for legislative changes among users (consortium and non-consortium). This will help ensure all counties are aware of future financial responsibilities to the ORCATS system. 2.4 Compliance with Consortium General Practice and Procedure Terms Consortium members could improve compliance with some aspects of the consortium agreement by: · Documenting formal voting results to determine project development priorities; · Holding lead counties responsible for providing user documentation; · Holding consortium meetings for all members at least four times a year; and · Formalizing new consortium agreements in a timely manner. Voting The consortium agreement states representatives from each county will cast votes to determine project priorities for the designated contractor. Consortium voting appears to be somewhat informal and is not always documented. Documenting voting results would validate and clarify project priorities, especially when new projects come up that the consortium votes to move ahead of prior priorities. User Documentation The consortium states, “The county designated as the lead county for a project will be responsible for providing user documentation and initial testing for that project.” The lead county is the primary contact for a particular development project. Few counties have had time to write user documentation. At the February 2007 ORCATS meeting, the counties discussed hiring a technical writer to complete/update the user documentation, but the counties decided against it. The lack of up-to-date documentation could ORCATS Costs and Consortium Agreement Report November 2007 Page 12 make it more difficult for users to learn the system, and could cause the program to appear less attractive to other potential purchasers. Frequency of meetings The consortium agreement states, “At least four meetings are to be held each year, with all members of the counties, in a mutually agreed upon location unless the counties agree no meeting is necessary.” Based on ORCATS meeting minutes provided, it appears the counties met twice in FY 2001-02, once in FY 2002-03, twice in FY 2003-04, once in FY 2004-05, once in FY2005-06, and once so far in FY 2006-07 (as of 6/20/2007). The consortium members may have agreed additional meetings were not necessary, but it does not appear that the consensus or reason for not meeting more frequently was documented. Meeting more frequently would help ensure all members have accurate up-to-date information regarding ORCATS project status and priorities. If member counties want to avoid travel time, conference calls would be an acceptable way to hold meetings provided meeting minutes are recorded and distributed. Formalizing new consortium agreements in a timely manner The consortium agreement states, “In January 2006, the parties agree to meet to formalize a new agreement.” This meeting did not take place until after the current agreement had already expired, and the consortium is currently operating without an agreement. The counties are currently working to amend the expired agreement and extend it until June 2008. RECOMMENDATIONS: The consortium should: · Document voting results for development priorities in meeting minutes. This will help alleviate confusion when new projects are voted to be of a higher precedence over previous priorities. · Encourage lead counties to develop written documentation for their projects in a timely manner. This will help ensure adequate documentation is maintained for users and potential buyers. · Meet four times a year, or hold telephone conferences in lieu of meetings as long as meeting minutes are recorded and distributed. This will help ensure all consortium members have current information regarding ORCATS projects and priorities. · In the future, develop and formalize consortium agreements before the existing agreement expires. This will prevent the consortium from operating without a valid agreement. ORCATS Costs and Consortium Agreement Report November 2007 Page 13 2.5 Clarity of Consortium Agreement The consortium agreement could be improved by: · Documenting agreement between members to share information pertinent to ORCATS costs and services. · Clarifying ensuing conditions if Polk County decides to leave the consortium; and · Clarifying who is responsible for the cost of fixing programming “bugs.” Sharing of Consortium Records The consortium is made up of government organizations, which must encourage sufficient oversight and transparency of business activities to foster sound decision-making. To allow for proper oversight and transparency of consortium costs and activities, open sharing of each member’s records pertaining to the consortium should be encouraged. The most recent consortium agreement does not provide for open access to member records. When the auditors requested ORCATS invoice information for all consortium counties, Helion requested that each county authorize the release of their information prior to providing the data to the auditors. This created an additional work step, which could have been avoided. RECOMMENDATION: The consortium members should agree in advance to share information relating to their individual ORCATS costs and services received. This should improve transparency of costs and aid in decision-making by all of the counties. Clarifying Ensuing Conditions if Polk County Decides to Leave the Consortium The current agreement allows Polk County to exit the consortium and immediately sell the software without restriction or consideration of the development contributions of the other consortium members. The agreement states if Polk County leaves the consortium, 100% ownership is transferred to the remaining consortium members, but this does not appear to include the right to sell ORCATS, as later the agreement states non-Polk county members will not distribute the program. It would appear the remaining members could continue to develop ORCATS through Helion, but this could result in Helion maintaining two version of the ORCATS program (one for Polk County and one for the remaining members of the consortium). RECOMMENDATION: The consortium agreement should clarify conditions if Polk County were to leave the consortium, including relationships with Helion, the right to sell the program, and whether there would be any sharing of sales for a term of years in consideration of development contributions by the other members. Clarification will improve the completeness of the agreement. ORCATS Costs and Consortium Agreement Report November 2007 Page 14 Programming “Bugs” The consortium agreement that expired June 30, 2006 stated development costs would include fixing programming bugs. There has been a lack of clarity as to which bugs should be the responsibility of the contractor to fix without further payment or use of development hours. It is common practice to require the programmer to bear the cost of fixing programming errors that result in the program not functioning as intended. However, some “bugs” are the result of differences in data between the counties, which require additional work to accommodate data from all counties. It may not be reasonable to require the contractor to bear the cost of fixing these kinds of “bugs.” RECOMMENDATION: The consortium agreement should define the various types of programming “bugs,” and clarify which types the contractor will be responsible for fixing without further payment or use of development hours. This will clarify the contractor’s responsibilities. In addition, county members should work with the contractor to identify and correct bugs within a specified period during product development. Note: The proposed consortium agreement states Helion will be responsible for fixing all bugs identified within 45 days or within a specified project timeline as established by mutual agreement between Helion and the lead county. 2.6 Designated Contractor Accountability · Methods for holding the designated contractor accountable could be strengthened. Under best business practices, an agreement is a way to clarify expectations on deliverables, costs, and timeframes. Many businesses use service level agreements (SLA’s) as a formal contract between the business and service provider. SLA’s help to clarify expectations on timeliness, quality, and costs. There currently is no agreement between the consortium and Helion, so there are no stated criteria on which to determine if the contractor is providing services in a timely, cost effective manner. Helion’s current method of development does not lend itself easily to establishing total costs or timelines for completion of projects. Helion uses the Rapid Application Development approach. Under this approach, developers create a prototype based on rudimentary requirements from the client. The client then reviews the prototype and makes recommendations for improvements. This process is repeated until the client is satisfied with the program. ORCATS Costs and Consortium Agreement Report November 2007 Page 15 The software industry has shown that the positive aspects to this approach outweigh the negatives, which include not being able to estimate time or cost requirements for completing the project, because the developers keep working on the project until the client is satisfied with the product. RECOMMENDATION: The consortium should consider implementing some method of holding the contractor responsible for completing projects in a timely and cost effective manner. This will clarify expectations on costs and timeframes. Note: The proposed consortium agreement for FY 2006-08 states the designated contractor will complete small projects (less than 20 hours) on a not to exceed time and materials quote. Larger projects will be completed on a fixed bid quote. The proposed consortium agreement also requires the designated contractor to provide a monthly report to all members identifying project status and time estimates. The contractor (Helion) has already hired a project manager to track projects. The contractor does not sign the consortium agreement, but provided the contractor complies, the proposed agreement should provide a means for holding the designated contractor accountable for completing projects within specified costs and timeframes. 2.7 Other Issues to Consider · There is currently no formal agreement between the consortium and Helion. · Increased participation of county information technology staff could improve efficiency in the ORCATS development process. Designated contractor status Helion is identified in the consortium agreement as the designated contractor; however, there is no formal agreement between Helion and the consortium. In its absence, it is more likely there could be a lack of consistency in treatment of individual counties whether intentional or not. Under sound business practices, consortium members should be treated equally by the contractor. Although the proposed consortium agreement addresses many of the issues identified in this audit, Helion does not sign the consortium agreement. RECOMMENDATIONS: The consortium should consider ways to assure the designated contractor is held accountable to the consortium members in an equal and consistent manner. Although this could be a separate legal agreement, it is possible this could be incorporated into the Personal Service Contracts between each county and Helion. Areas to be considered are: ORCATS Costs and Consortium Agreement Report November 2007 Page 16 · Require Helion to invoice ORCATS charges separately by category (maintenance/development, general support etc). This will provide more accurate and comparable information on the true costs of developing and supporting ORCATS for all counties. Note: The proposed consortium agreement requires non-ORCATS services to be billed separately. · Grant Helion permission in advance to provide all consortium members access to each members’ records that are pertinent to ORCATS. This should improve cost transparency and aid in decision- making by all of the counties. · Require Helion to prepare fixed bid quotes for development projects over 20 hours. This will provide a means for evaluating if Helion is providing services in a timely and cost effective manner. Note: This is included in the proposed consortium agreement. · Specify that Helion should work with county members to identify and correct bugs within a specified period during product development. This will clarify Helion’s responsibility relating to “bug” fixes. Note: This is included in the proposed consortium agreement. · Require Helion to prepare monthly service level reports for requesting counties with sufficient detail to monitor projects and support received. This will provide a better means for monitoring contractor progress. Note: T his is included in the proposed consortium agreement Increased participation of county information technology staff in ORCATS development The consortium members are primarily made up of assessors and tax personnel who have limited time to oversee or provide input on developing a software system. As a result, the consortium has relied heavily on the designated contractor to guide the decision makers in making development decisions. There are numerous IT best practices regarding management of software development life cycles. Management is expected to implement a process to ensure good working relationships with third party implementers and handle any problems that arise during development. Lack of such oversight of the designated contractor could result in inefficient design and implementation of the software system, and inefficient use of resources. Involvement of the county’s information technology staff during ORCATS development could result in more efficient design, implementation, and use of county resources. ORCATS Costs and Consortium Agreement Report November 2007 Page 17 RECOMMENDATION: The consortium should encourage each county to involve appropriate County information technology staff during planning, development and implementation of ORCATS. Increased interaction with the counties’ information technology staff will help ensure design and implementation is efficient considering each county’s IT environment. ORCATS Costs and Consortium Agreement Report November 2007 Page 18 3. RESPONSES FROM MANAGEMENT {Auditor comments included for clarification are italicized} 3.1 DESCHUTES COUNTY MANAGEMENT October 25, 2007 To: David Givans, Deschutes County Internal Auditor Deborah Taylor, Jackson County Internal Auditor From: Scot Langton, Deschutes County Assessor RE: Deschutes and Jackson County Joint Internal ORCATS Audit response Thank you for the time and effort that you both put into your audit of the ORCATS Assessment and Taxation software consortium. Your report has many valuable observations which should assist ORCATS counties to improve both their working relationships and the software product. A number of your recommendations on an individual county level have been attempted to be addressed in the current Deschutes County FY07/08 personal services contract. Helion Software, Inc. was receptive to implementing a number of changes to this year’s contract; including separating maintenance from enhancements, detailed time reports, and a fixed bid process for county approved enhancements. I believe that each of your recommendations warrant further discussion and consideration for implementation by the ORCATS consortium members; and will propose that this be a discussion topic at the next consortium meeting. Assessor’s Office Scot Langton, Assessor 1300 NW Wall St, Suite 200 Bend, Oregon 97701 (541) 388-6508 FAX: (541) 330-4629 www.co.deschutes.or.us ORCATS Costs and Consortium Agreement Report November 2007 Page 19 Date: October 31, 2007 To: David Givans, Deschutes County Internal Auditor Deborah Taylor, Jackson County Internal Auditor From: Marty Wynne, Finance Director and Treasurer RE: Deschutes and Jackson County Joint Internal ORCATS Audit response Thank you for conducting the audit of the ORCATS Assessment and Taxation software consortium. I appreciate the opportunity to respond to the report and all of your time and effort. Your observations and analysis should pave the way for a number of improvements related to the contracts involved, as well as future costing and pricing strategies and methodologies. I hope this report will be used as an impetus for all of us move forward in a positive manner utilizing our collective experience to make improvements both to the ORCATS system and to how the consortium functions. Thanks, again. Finance Department Marty Wynne, Finance Director and Treasurer 1300 NW Wall St, Suite 200 Bend, Oregon 97701 (541) 388-6559 FAX: (541) 749-2909 ORCATS Costs and Consortium Agreement Report November 2007 Page 20 3.2 JACKSON COUNTY MANAGEMENT DEPARTMENT OF ASSESSMENT DANIEL G. ROSS Jackson County Assessor 10 South Oakdale Room 300 MEDFORD OR 97501 October 25, 2007 To: Deborah Taylor, Jackson County Internal Auditor David Givans, Deschutes County Internal Auditor From: Dan Ross, Jackson County Assessor RE: Deschutes and Jackson County Joint Internal ORCATS Audit response Thank you for allowing me to provide input throughout the process of your audit on the ORCATS Assessment and Taxation software consortium. The report has identified some valuable changes, many of which, have already been implemented in the proposed changes to the ORCATS contract and the HELION personal services contracts. These changes should assist ORCATS counties to improve communication and the software product. Another issue that needs to be discussed further, related to the benefits of being a CONSORTIUM member. It is very valuable to be in control of how the program will grow and change to be able to direct HELION on how we want their resources to be utilized. As a group we made a conscious decision to sell the program at a discount to other counties and especially to the small group of 11 counties consisting of mostly eastern Oregon counties with the idea that if you convert one, it will be easy to convert the others. Most importantly these new counties would share in any statewide changes such as a Measure 50. These recommendations warrant further discussion by the ORCATS consortium members as we work on the new ORCATS contract this winter, to be implemented July of 2008. What is stated in the Audit “sound ORCATS Costs and Consortium Agreement Report November 2007 Page 21 business practices” may truly not be beneficial in the larger scheme. This program has the potential of eventually sharing future costs among many more counties or even all of the state. ORCATS is, in the opinion of ORCATS assessors, the most stable, affordable and flexible assessment and taxation program in Oregon. It was written in Oregon for Oregon. In 2001, both Deschutes and Jackson County turned and ran as fast as we could away from a large, inflexible and a very costly assessment and taxation program. My fear is now with the proposed changes that we now become them. Thank you for this opportunity to respond. ORCATS Costs and Consortium Agreement Report November 2007 Page 22 3.3 POLK COUNTY MANAGEMENT ORCATS REVIEW 11/05/07 Dean Anderson Polk County Audit Limitations (page 1) : Within the Audit Scope Section, please consider including the following language: a) the audit does not include County staff as part of the investment analysis, and b) the audit does not distinguish County investments that contribute towards core ORCATS software development, addressing County data issues, and the customization of software to meet County- specific needs. The audit states that larger counties require more support because these counties purchase more. Using dollars spent as a way to justify need does not appear to be a good idea. As an example, many tasks that Jackson and Deschutes pay Helion to do are performed by Polk County IT staff. Historically, Polk County also paid for an additional Helion support person, but after performing a cost/function analysis, we determined that Polk County staff could handle these tasks internally. {Auditor comments: The audit scope statement was revised to address comments in a) and b). The audit only reviewed Helion costs and services and not services provided internally by county assessment and taxation and information technology staff. Contracted services were analyzed based upon explained methodology and effective rates per service hour and not purely by total cost. Services analyzed relate to services purchased and not those provided within each county.} Cost Determination (page 4 ): “The consortium contracts were also silent on the process.” As stated in previous comments, this statement is fairly confrontational and implies some type of conspiracy. I provided information relating to cost determination in earlier e-mails to you and verified my comments with the Jackson County Assessor that, “cost determination was agreed to by the partners at an ORCATS meeting. Unfortunately, this information was not documented.” Please consider the following language: “Cost determination was informally agreed upon on by the ORCATS partners and was not documented.” {Auditor comments: The informal nature of the process was the reason behind the finding/recommendation to formalize these understandings.} ORCATS Costs and Consortium Agreement Report November 2007 Page 23 Polk County Costs (page 5) : As stated in earlier communication, please use the numbers provided by the Polk County Administrator (e-mail dated 8/23/06). “The Polk County Based investment is approximately $93K plus $20K - $30K.” The number included in the table is the amount referenced in the contract. However, it does not represent investments made by Polk County as part of our Helion services agreement. {Auditor comments: These costs were presented in Appendix 2} Bugs : Please consider the following language for bug fixes: “County members should work closely with the contractor to test and correct bugs within a specified time limit during a testing phase of product development.” {Auditor comments: The recommendation was expanded to include this additional comment, which has already been addressed by Helion in the latest service contract.} ORCATS Costs and Consortium Agreement Report November 2007 Page 24 3.4 TILLAMOOK COUNTY MANAGEMENT From: Tim Lutz Sent: Thursday, October 18, 2007 Subject: RE: Internal audit report of ORCATS now ready for comment To all: I found the audit to be reasonably thorough, accurate, and thoughtful. It made a number of good suggestions which I believe the Consortium needs to discuss and if possible implement. When that time comes, Tillamook will participate. Respectfully, Tim Lutz Assessor/Tax Collector ORCATS Costs and Consortium Agreement Report November 2007 Page 25 3.5 HELION INC. MANAGEMENT November 1, 2007 Response to DESCHUTES AND JACKSON COUNTY JOINT INTERNAL AUDIT of Oregon Counties Assessment and Taxation System (ORCATS) COSTS and CONSORTIUM AGREEMENT Below are each of the report’s recommendation followed by our responses. Many of the recommendations don’t directly affect Helion but as they would improve communication, we strongly support them. As for many of the other proposed recommendations, they had already been instituted by Helion prior to the release of the audit findings. We at Helion strive to consistently improve our business processes and relationships with our clients. We take any recommendations to heart and appreciate the opportunity for a response. Murray Giesbrecht President Helion Software, Inc. Audit Recommendation Responses: (Helion responses in Italic and underlined ) · If the counties mutually agree to an increase in costs that have been specified in the consortium agreement, amend the consortium agreement to reflect the change, or obtain written documentation of the counties mutual agreement in some other format. This will help ensure a proper record on cost agreements between the counties is maintained. No Opinion · If the consortium agreement specifies unequal payment amounts for the counties, document the methodology for determining the amounts in the consortium agreement so all counties can verify their payment amount is correct. This will help eliminate future confusion over cost allocations. Note: The proposed consortium agreement, for FY 2007-08 costs, specifies all counties will be paying a flat dollar amount per service hour, with each county determining the number of hours needed. This should help alleviate confusion over allocation of costs. This was already put into the 2007-08 Personal Service contracts by Helion. ORCATS Costs and Consortium Agreement Report November 2007 Page 26 · The consortium should consider basing support costs directly on hours of service required, which would more directly match costs with services received. Note: The proposed consortium agreement, for FY 2007-08 costs, states that each county will purchase a minimum of 300 hours of support service at a $75/hour rate. Additional support can be purchased in blocks of 150 hours at a $75/hour rate. Additional development services can also be purchased in blocks of 150 hours at $75/hour. These proposed changes should provide a closer correlation between support costs paid and support services received. This places the burden on the counties to determine how many hours they will need in the ensuing year. Helion has already put into the 2007-08 Personal Service contracts. · If the consortium seeks to utilize a more indirect cost allocation methodology such as property accounts, the consortium should consider including total anticipated support hours needed by the counties. Again, this would more closely match costs with services received. When utilizing an indirect approach, it would be beneficial to periodically monitor the cost versus benefits received by each county. Helion will probably never want to go back to an indirect approach for the support portion again. Since it is nearly impossible to hit the mark to divide the time according to payments and since Helion directly reports the time used for each county there would always be a dispute about fairness. · Regardless of approach, the methodology should be clearly communicated to and approved by a majority of consortium members. This will help ensure all members understand how costs are allocated. Agree · The consortium should review the pricing structure to ensure that there is not a disincentive to being a consortium member. This will preserve and enhance the benefits of consortium membership. Since Helion does not participate in the sale of the software we do not have a direct opinion. We of course want to continue to see ORCATS grow and would want the sales price to be competitive. We would also like to note that the findings take a very simplified view point. One of the major advantages of being a consortium member is the ability to direct how the support funds coming from consortium and non-consortium members is used. ORCATS Costs and Consortium Agreement Report November 2007 Page 27 · The consortium should address how they will share annual maintenance costs as well as future development for legislative changes among users (consortium and non-consortium). This will help ensure all counties are aware of future financial responsibilities to the ORCATS system. Agree · Document voting results for development priorities in meeting minutes. This will help alleviate confusion when new projects are voted to be of a higher precedence over previous priorities. Helion has already implemented procedures to do this. · Encourage lead counties to provide written documentation for their projects. This will help ensure adequate documentation is maintained for users and potential buyers. Disagree. Helion believes that the Consortium would be much better served by having a full time Technical Writer. This would provide consistency and easy accountability. The Technical Writer could be employed by Helion or one of the counties at the Consortium’s expense. {Auditor comment: The auditors agree this would be a more consistent approach. This was brought up at a consortium meeting and was voted down by the consortium counties. The consortium should consider documentation as an expected cost for developing a system for sale and consider the cost recovery in the sales price and renewals.} · Meet four times a year, or hold telephone conferences in lieu of meetings as long as meeting minutes are recorded and distributed. This will help ensure all consortium members have current information regarding ORCATS projects and priorities. Agree · Develop and formalize consortium agreements before the existing agreement expires. This will prevent the consortium from operating without a valid agreement. Agree. Helion waited for many months to see what the consortium agreements would say and this has delayed implementation of County Personal Services contracts as well as invoicing for services already provided. ORCATS Costs and Consortium Agreement Report November 2007 Page 28 · The consortium members should agree in advance to share information relating to their individual ORCATS costs and services received. This should improve transparency and aid in decision-making by all of the counties. Helion will gladly share contract relevant records with all counties if that is the Consortium’s decision. · The consortium agreement should clarify conditions if Polk County were to leave the consortium, including relationships with Helion, the right to sell the program, and whether there would be any sharing of sales for a term of years in consideration of development contributions by the other members. Clarification will improve the completeness of the agreement. Although Helion has no direct interest in this decision we believe that it would make any transition easier if were documented. · The consortium agreement should define the various types of programming “bugs,” and clarify which types the contractor will be responsible for fixing without further payment or use of development hours. This will clarify the contractor’s responsibilities. Note: The proposed consortium agreement states Helion will be responsible for fixing all bugs identified within 45 days or within a specified project timeline as established by mutual agreement between Helion and the lead county. The idea that it is “common practice to require the programmer to bear the cost of fixing programming errors that result in the program not functioning as intended” only applies if the programmer was working under a fixed bid or in the event of gross negligence. It is not common practice to require a programmer to fix bugs when they are working hourly. To do so would be the same as the County requiring a county staff person to fix any typing errors on there own time. Helion has already changed development methodology to provide fixed bids for projects over 20 hours and will be responsible for those bugs found within 45 days. · The consortium should consider implementing some method of holding the contractor responsible for completing projects in a timely and cost effective manner. This will clarify expectations on costs and timeframes. Note: The proposed consortium agreement for FY 2006-08 states the designated contractor will complete small projects (less than 20 hours) on a not to exceed time and materials quote. Larger projects will be completed on a fixed bid quote. The proposed consortium agreement also requires the ORCATS Costs and Consortium Agreement Report November 2007 Page 29 designated contractor to provide a monthly report to all members identifying project status and time estimates. The contractor (Helion) has already hired a project manager to track projects. The contractor does not sign the consortium agreement, but providing the contractor complies, the proposed agreement should provide a means for holding the designated contractor accountable for completing projects within specified costs and timeframes. This was already put into the 2007-08 Personal Service contracts by Helion. · The consortium should consider ways to assure the designated contractor is held accountable to the consortium members in an equal and consistent manner. Although this could be a separate legal agreement, it is possible this could be incorporated into the Personal Service Contracts between each county and Helion. Areas to be considered are: o Require Helion to invoice ORCATS charges (by type) separately from other non- ORCATS services the contractor may provide to counties. This will provide more accurate and comparable information on the true costs of developing and supporting ORCATS for all counties. Note: The proposed consortium agreement requires non-ORCATS services to be billed separately. Helion will provide invoices in whatever manor the Consortium decides. o Grant Helion permission in advance to provide all consortium members access to each members’ records that are pertinent to ORCATS. This should improve transparency and aid in decision-making by all of the counties. Helion will provide information as directed by the Consortium. o Require Helion to prepare fixed bid quotes for development projects over 20 hours. This will provide a means for evaluating if Helion is providing services in a timely and cost effective manner. Note: This is included in the proposed consortium agreement. This was already put into the 2007-08 Personal Service contracts by Helion. ORCATS Costs and Consortium Agreement Report November 2007 Page 30 o Specify that Helion will fix any programming bugs or deficiencies noted within the first 45 days. This will clarify Helion’s responsibility relating to “bug” fixes. Note: This is included in the proposed consortium agreement. This was already put into the 2007-08 Personal Service contracts by Helion. o Require Helion to prepare monthly service level reports for requesting counties with sufficient detail to monitor projects and support received. This will provide a better means for monitoring contractor progress. Note: This is included in the proposed consortium agreement Helion has already implemented procedures to do this. · The consortium should encourage each county to involve appropriate County information technology staff during planning, development and implementation of ORCATS. Increased interaction with the counties’ information technology staff will help ensure design and implementation is efficient considering each county’s IT environment. Helion has always encouraged as much county IT participation as the county is willing to give. ORCATS Costs and Consortium Agreement Report November 2007 Page 31 APPENDIX A – Additional information A1 – Glossary of frequently used terms Word Description A&T Assessment and Taxation Bugs Primarily used to describe programming bugs, which is the mishandling of a task by the program. Consortium Having to do with the members who, by intergovernmental agreement (IGA), maintain and develop ORCATS. Consortium members are Polk, Tillamook, Jackson and Deschutes. Designated contractor Helion Inc. has been the designated software contractor since inception of the consortium. General Support (Base/ Additional) This service covers day-to-day operation of the ORCATS system with individual counties. This service is provided solely by the designated contractor. Base support is the service identified and allocated by the Consortium. Additional support is the added level of support requested and paid by individual counties. Invoices (or charges) Billings by Helion to individual counties for services being provided. Lead County The consortium county assigned to direct and test a particular ORCATS enhancement. Maintenance / Development (Base/ Additional) This service covers development of the software to add additional functionality, enhancements and fix unintended programming errors. This service is provided solely by the designated contractor to the Consortium (Base). Additional programming can also be performed for counties (Additional). Management Fee Additional fee added to cover Helion overhead and supervision. Non- consortium Pertaining to non-members of the consortium who have purchased the ORCATS system. ORCATS Oregon Counties Assessment and Taxation System Property accounts The number of property accounts for the county. ORCATS Costs and Consortium Agreement Report November 2007 Page 32 A2 – Helion invoiced costs for each county by type of service and year The graph below shows Helion ORCATS charges by county for FY 2003-04 through 2005-06. In addition to the base development and support costs, Jackson and Deschutes have contracted for additional support services from Helion. Deschutes has also contracted for Oracle support with Helion, while the other counties have provided this service in house. In FY 2005-06, the consortium decided to develop ORCATS to run in a SQL environment, and the four counties agreed to divide the $100,000 cost evenly. Helion invoiced support by County by type - 50,000 100,000 150,000 200,000 250,000 300,000 03/04 04/05 05/06 03/04 04/05 05/06 03/04 04/05 05/06 03/04 04/05 05/06 Polk Jackson Deschutes Tillamook In v o i c e d a m o u n t ( $ ) Oracle SQL Support+ Service not available Note : Due to lack of documented information on Polk costs, the graph only shows FY 2003-04 costs which were obtained from the December 2001 Consortium Agreement. Polk estimates they incurred $113,000 to $123,000 in Helion ORCATS costs for FY 2005-06. A3 – List of Recommendations Implementing audit recommendations will improve the effectiveness of the consortium and designated contractor agreements. It is recommended the counties consider the following recommendations for the consortium and in dealings with the designated contractor: RECOMMENDATIONS Applies to 1. If the counties mutually agree to an increase in costs that have been specified in the consortium agreement, amend the consortium agreement to reflect the change, or obtain written documentation of the counties mutual agreement in some other format. This will help ensure a proper record on cost agreements between the counties is maintained. ORCATS/ Consortium Counties ORCATS Costs and Consortium Agreement Report November 2007 Page 33 RECOMMENDATIONS Applies to 2. If the consortium agreement specifies unequal payment amounts for the counties, document the methodology for determining the amounts in the consortium agreement so all counties can verify their payment amount is correct. This will help eliminate future confusion over cost allocations. ORCATS/ Consortium Counties 3. The consortium should consider basing support costs directly on hours of service required, which would more directly match costs with services received. ORCATS/ Consortium Counties 4. If the consortium seeks to utilize a more indirect cost allocation methodology such as using property accounts, the consortium should consider including total anticipated support hours needed by the counties. Again, this would more closely match costs with services received. When utilizing an indirect approach, it would be beneficial to periodically monitor the costs versus benefits received by each county. ORCATS/ Consortium Counties 5. Regardless of approach, the methodology should be clearly communicated to and approved by a majority of consortium members. This will help ensure all members understand how costs are allocated. ORCATS/ Consortium Counties 6. The consortium should review the pricing structure to ensure that it does not become a disincentive to being a consortium member. This will preserve and enhance the benefits of consortium membership. ORCATS/ Consortium Counties 7. The consortium should address how they will share annual maintenance costs as well as future development for legislative changes among users (consortium and non-consortium). This will help ensure all counties are aware of future financial responsibilities to the ORCATS system. ORCATS/ Consortium Counties 8. The consortium should document voting results for development priorities in meeting minutes. This will help alleviate confusion when new projects are voted to be of a higher precedence over previous priorities. ORCATS/ Consortium Counties 9. The consortium should encourage lead counties to develop written documentation for their projects in a timely manner. This will help ensure adequate documentation is maintained for users and potential buyers. ORCATS/ Consortium Counties 10. The consortium should meet four times a year, or hold telephone conferences in lieu of meetings as long as meeting minutes are recorded and distributed. This will help ensure all consortium members have current information regarding ORCATS projects and priorities. ORCATS/ Consortium Counties ORCATS Costs and Consortium Agreement Report November 2007 Page 34 RECOMMENDATIONS Applies to 11. In the future, the consortium should develop and formalize consortium agreements before the existing agreement expires. This will prevent the consortium from operating without a valid agreement. ORCATS/ Consortium Counties 12. The consortium members should agree in advance to share information relating to their individual ORCATS costs and services received. This should improve transparency of costs and aid in decision-making by all of the counties. ORCATS/ Consortium Counties/ Helion 13. The consortium agreement should clarify conditions if Polk County were to leave the consortium, including relationships with Helion, the right to sell the program, and whether there would be any sharing of sales for a term of years in consideration of development contributions by the other members. Clarification will improve the completeness of the agreement. ORCATS/ Consortium Counties/ Helion 14. The consortium agreement should define the various types of programming “bugs,” and clarify which types the contractor will be responsible for fixing without further payment or use of development hours. This will clarify the contractor’s responsibilities. ORCATS/ Consortium Counties/ Helion 15. County members should work with the contractor to identify and correct bugs within a specified period during product development. ORCATS/ Consortium Counties/ Helion 16. The consortium should consider implementing some method of holding the contractor responsible for completing projects in a timely and cost effective manner. This will clarify expectations on costs and timeframes. ORCATS/ Consortium Counties/ Helion 17. The consortium should consider ways to assure the designated contractor is held accountable to the consortium members in an equal and consistent manner. Although this could be a separate legal agreement, it is possible this could be incorporated into the Personal Service Contracts between each county and Helion. Areas to be considered are: · Require Helion to invoice ORCATS charges separately by category (maintenance/development, general support etc). This will provide more accurate and comparable information on the true costs of developing and supporting ORCATS for all counties. · Grant Helion permission in advance to provide all consortium members access to each members’ records that are pertinent to ORCATS. This ORCATS/ Consortium Counties/ Helion ORCATS Costs and Consortium Agreement Report November 2007 Page 35 RECOMMENDATIONS Applies to should improve cost transparency and aid in decision-making by all of the counties. · Require Helion to prepare fixed bid quotes for development projects over 20 hours. This will provide a means for evaluating if Helion is providing services in a timely and cost effective manner. · Specify that Helion should work with county members to identify and correct bugs within a specified period during product development. This will clarify Helion’s responsibility relating to “bug” fixes. · Require Helion to prepare monthly service level reports for requesting counties with sufficient detail to monitor projects and support received. This will provide a better means for monitoring contractor progress. 18. The consortium should encourage each county to involve appropriate County information technology staff during planning, development and implementation of ORCATS. Increased interaction with the counties’ information technology staff will help ensure design and implementation is efficient considering each county’s IT environment. ORCATS/ Consortium Counties/ Helion {END OF REPORT}