The Florida Legislature

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1 The Florida Legislature OFFICE OF PROGRAM POLICY ANALYSIS AND GOVERNMENT ACCOUNTABILITY Summary RESEARCH MEMORANDUM Options for Reducing State Agency Costs for Cellular Telephones March 3, 2009 As directed by Ch , Laws of Florida, OPPAGA, in consultation with the Department of Management Services (DMS), developed recommendations regarding the prudent issuance and use of state-owned wireless communications devices, including cellular telephones, personal digital assistants, and other electronic devices. 1 As directed by law, we considered several factors in developing recommendations, including the need for wireless communications devices; accountability for the devices; necessary controls for prudent management of the devices; and cost-saving measures that could be implemented. While there is no existing single source for information about state-owned cellular telephones, personal digital assistants, and related electronic devices, agencies reported having approximately 41,000 wireless communication devices and spending nearly $17 million annually for their operation. Agencies frequently purchase these devices outside of state term contracts and thus are not maximizing the state s purchasing power to obtain the lowest prices. While some agencies have established internal policies and practices to manage wireless devices, these policies vary substantially. We recommend that the Legislature establish statewide policies governing wireless devices to provide necessary controls while allowing agencies reasonable flexibility. These policies should limit cellular phones and other wireless devices to employees with job responsibilities that match device capabilities; ensure that agencies monitor employee use and obtain cost effective service plans; and ensure that current procurement practices for wireless devices provide the most cost effective services. We also recommend that the Legislature direct agencies to improve reporting of wireless device costs via agency legislative budget requests so that lawmakers will have the information necessary to make decisions about future statewide telecommunications policies. 1 We did not examine agency wireless local area network equipment and services. Gary R. VanLandingham, Ph.D., Director 111 West Madison Street Room 312 Claude Pepper Building Tallahassee, Florida / FAX 850/

2 Page 2 Background In recent years, rapid technological advances have resulted in the widespread use of wireless communication devices that enable employees to be in ongoing communication with their customers, managers, and coworkers. These devices include those described below. Cellular telephones. These portable telephones do not use a wired connection but instead connect to a wireless carrier network using radio waves. Some cellular phones only provide calling features, while others have advanced features that include , messaging, web browsing, and audio and video services. Personal digital assistants (PDAs). These handheld devices have a variety of features that provide electronic planners, desk calendars, address books, and other organizational tools. Depending on their features, PDAs such as Blackberries provide and voice communication as well as send faxes, browse the web, and organize calendars and personal contacts. Aircard. These devices for laptops allow users to connect to a cellular network and provide roaming access to the internet and enable employees access to office computer networks. Aircards allow users to have internet access without having to rely on a telephone line or a wireless local area network. While cellular phones and other wireless devices are useful tools that can improve employee productivity, these devices and services can be costly and used inappropriately or with an inappropriate plan that does not match employee needs. For example, a South Carolina study found that some employees had underused cellular phones and that many devices were inappropriately used for personal use and internet downloads. Similarly, a Maryland study found that employees were not reimbursing the state for personal use of state cellular telephones and that service plans purchased by agencies did not provide sufficient volume discounts. To address such problems and control costs, several states including Georgia, Kentucky, Maryland, Minnesota, Mississippi, Montana, North Carolina, Washington, West Virginia, and Wisconsin have developed statewide policies governing the purchase, use, oversight, and monitoring of wireless services and devices. Florida currently lacks statewide policies governing cellular telephones and wireless devices. Instead, individual agencies may establish internal policies for wireless device purchasing, issuance, and use. The state also has not established a central tracking system that records information on the number of wireless devices used by state employees or agency expenditures for this technology. To collect this data, we surveyed executive branch agencies to identify the number of cellular phones, PDAs, and wireless devices they had purchased and were using. Agencies reported having nearly 41,000 wireless devices in use with cellular phones comprising the bulk of these devices (24,927, or 61% of the total, see Exhibit 1). There are wide variations in the number of devices used by agencies. For example, the Department of Corrections uses over 7,000 cellular phones, while 15 other agencies reported having fewer than 150 cellular phones. The Department of Health, Department of Children and Families, and Department of Transportation each reported having over 1,000 PDAs, while most other agencies reported having less than 100.

3 Page 3 Most agencies make relatively little use of aircards, but the Department of Highway Safety and Motor Vehicles uses over 1,500 of these devices, mostly in state trooper vehicles. Exhibit 1 State Agencies Report Using Nearly 41,000 Wireless Communication Devices 1 Cell Agency Phones PDAs Aircards Department of Corrections 7, Department of Health 3,153 1, Department of Transportation 2,808 1, Department of Children and Family Services 2,211 1,647 1,237 Department of Juvenile Justice 1, Department of Environmental Protection 1, Department of Agriculture and Consumer Services 1, Fish and Wildlife Commission Department of Business and Professional Regulation Department of Law Enforcement Department of Financial Services/IT Agency for Persons with Disabilities Agency for Health Care Administration Department of Highway Safety and Motor Vehicles ,554 Department of Community Affairs/Division of Emergency Management Department of Legal Affairs Florida Lottery Department of Elder Affairs Department of Management Services Department of Education Department of Veterans Affairs Department of Military Affairs Office of Financial Regulation Agency for Workforce Innovation Department of State Department of Revenue Parole Commission Department of Management Services/ Indep. programs Public Service Commission Department of Citrus Department of Community Affairs State Board of Administration Office of Insurance Regulation Total 24,927 8,001 8,012 1 Figures may include some devices that are not currently assigned to agency personnel, including surplus devices, those being returned to vendors, and/or devices that agencies plan to distribute on an as needed basis during an emergency. 2 Includes the Southwood Shared Resource Center, Public Employees Relations Commission, Florida Commission on Human Relations, Governor s Commission on Disabilities, and Office of Efficient Government Source: OPPAGA survey of state agencies.

4 Page 4 The Florida Accounting Information Resource System (FLAIR) maintains data on state agency expenditures, but does not have a unique expenditure category for wireless devices. As shown in Exhibit 2, FLAIR data indicates that identified wireless expenditures in Fiscal Year were $12.5 million for cellular phones and other services. Exhibit 2 also shows $4.2 million in aircard expenditures. However, agencies do not uniformly report all wireless expenditures and some may record aircard or other cellular costs in the telephone category along with SUNCOM services for local and long distance and other related spending. 2, 3 For example, the Department of State, which reported using 156 cellular telephones and wireless devices, reported less than $43,000 in cellular and aircard charges, while the Public Service Commission, which reported having only 53 wireless devices, reported more than $60,000 in these expense categories. Exhibit 2 shows that for agencies that identified spending for cellular/mobile services, the Departments of Health, Children and Family Services, Transportation, and Juvenile Justice had the highest spending for cellular services. Exhibit 2 State Agencies Reported Over $97.9 Million in Telecommunications Expenditures in Fiscal Year , 2 Agency Total Telephone Cellular/Mobile Aircards Department of Children and Family Services $14,907,298 $2,322,395 $768,576 Department of Health 14,464,228 2,590, ,611 Department of Education 9,716, ,987 37,402 Department of Corrections 7,945, , ,551 Department of Law Enforcement 7,408, , ,337 Department of Transportation 7,044,934 1,680, ,385 Department of Revenue 6,360,494 33, ,455 Department of Environmental Protection 4,083, , ,192 Department of Financial Services 3,630, , ,243 Department of Juvenile Justice 2,908, ,833 $102,103 Department of Agriculture and Consumer Services 2,498, , ,086 Agency for Workforce Innovation 2,294,176 60,454 3,983 Department of Military Affairs 2,096,625 62,290 Department of Highway Safety and Motor Vehicles 2,055, , ,354 Fish and Wildlife Commission 1,907, , ,416 Department of Business and Professional Regulation 1,572, ,990 50,361 Agency for Health Care Administration 1,334, , ,720 Department of State 1,333,914 9,635 32,548 Agency for Persons with Disabilities 1,033, ,530 35,651 Department of Community Affairs 888, ,446 43,820 Department of Legal Affairs 701, ,448 Florida Lottery 638,714 94,938 Department of Elder Affairs 570,415 51,506 11,836 Public Service Commission 303,584 59, Department of Veterans Affairs 102,247 13,884 2,876 Parole Commission 77,527 7,213 Department of Citrus 50,724 11,371 Total $97,930,023 $12,547,139 $4,286,147 1 The FLAIR system does not require agencies to separately identify spending categories within the broader group of telephone expenditures. Thus, some cellular spending may be included with overall telephone expenditures. 2 Figures for the Department of Management Services are not included in Exhibit 2. Department spending as recorded in FLAIR includes statewide SUNCOM and other DMS contract spending. Source: Florida Accounting Information Resource System (FLAIR). 2 The SUNCOM Network, under the Department of Management Services, is the state communications system for providing local and longdistance communications services to state agencies and other entities as defined by law. 3 These telecommunication costs do not include expenditures that would otherwise be identified under the broader heading of information technology or information technology equipment, rental or training.

5 Page 5 State agencies often obtain wireless devices from sources other than the state term contracts, which limits savings To obtain volume discounts by leveraging the state s purchasing power, the Department of Management Services has established state term contracts for cellular phones and other wireless devices. However, agencies often use other purchasing mechanisms to obtain these devices and their related service plans, which can increase state costs. State agencies use several purchasing methods to obtain wireless devices and service plans. DMS oversees state procurement and its Division of State Purchasing establishes statewide purchasing rules and negotiates contracts and purchasing agreements that leverage the state s buying power. These contracts and purchasing agreements also reduce the costs that individual agencies would incur if they had to negotiate separate contracts for goods and services. DMS has established a state term contract for cellular telephones as well as an alternative source contract with a different vendor. 4 The state term contract enables agencies to obtain free cellular phones and to pay only for the minutes used. The alternative source contract provides an across the board 25% discount for every service plan offered. DMS Division of Telecommunications manages statewide contracts for personal digital assistants and aircards. These contracts enable agencies to purchase devices and service plans from a variety of vendors. The division also oversees agencies use of aircards due to security concerns, because these devices access agency networks over the internet and can thus affect state networks. As PDAs and cellular phones do not present the same security risk, DMS does not monitor their usage. In addition to these statewide contracts, many agencies have established their own contracts for wireless devices. In part, this occurred because the state s original contracts did not offer some features desired by agencies. For example, the DMS cellular phone contract, which was initially established in 2004, did not offer comparable push-to-talk capability; push-to-talk enables one user to speak to many individuals at one time. Law enforcement agencies often use push-to-talk communications in emergencies when the person in charge needs to contact field personnel instantly. In addition, PDAs and aircards were not included under the 2004 state cellular phone contract because these services were neither widely used nor broadly available in Exhibit 3 shows that the nine state agencies that had the highest wireless device expenditures in Fiscal Year spent the bulk of these funds outside of the DMS contracts. These agencies recorded nearly $9.8 million in wireless expenditures in FLAIR, but only $958,834 of these funds were attributed to the DMS contracts. For example, the Department of Juvenile Justice reported nearly $950,000 in cellular phone expenses, but only $21,790 of these funds were spent through the DMS state contracts; the Department of Children and Family Services similarly reported purchases of $2.3 million for cellular services, with only $13,026 spent through the DMS contracts. 4 The state originally authorized a single source contract for cell phone (voice) services. Under a settlement agreement, the state authorized an alternative contracting source.

6 Page 6 Exhibit 3 State Agencies with the Highest Cellular Telephone Expenditures Make Limited Purchases Using the DMS Cellular Phone Contracts Agency/Department State Term Contract for Cell Phones Total Cellular Purchases as Identified in FLAIR1 Department of Children and Family Services $13,026 $2,322,395 Department of Environmental Protection 106, ,150 Department of Financial Services 620,420 Department of Health 617,677 2,590,019 Department of Juvenile Justice 21, ,833 Department of Law Enforcement 555,361 Department of Legal Affairs 64, ,448 Department of Transportation 135,744 1,680,303 Fish and Wildlife Commission ,332 Total $958,834 $9,728,261 1 Total FLAIR cellular expenditures may not include all agency cellular expenditures such as those for aircards and PDAs. Source: FLAIR and the Department of Management Services. While the agency contracts may have enabled state agencies to obtain devices and desired service features not initially available under the DMS contract, this practice limits the state s ability to leverage its purchasing volume and obtain the lowest prices. DMS officials also report that its current state contracts offer a wider range of devices and service plans, including push-totalk capabilities. Thus, there is a reduced need for agencies to develop their own contracts for wireless devices. The Legislature should establish statewide policies to govern wireless services and improve agency financial reporting for these devices As wireless devices are an important but expensive technology tool, the state should have general policies governing their procurement and use. These policies should restrict wireless devices to those employees who can productively use them to perform their jobs, ensure that agencies monitor employee use, and ensure that agencies use appropriate procurement methods to buy the devices. However, because agencies have differing needs for these devices, they should retain flexibility in choosing devices and service plans. The Legislature should also direct agencies to improve reporting of wireless device costs via agency legislative budget requests so that lawmakers will have the information necessary to make decisions about future statewide telecommunications policies. The Legislature should establish general policies governing wireless devices. Most agencies reported that they had established policies concerning the purchase of wireless devices (establishing required steps for purchasing orders), device assignment (usually requiring approval by a supervisor or agency director), and device use (prohibiting personal use). However, these policies vary and it would be useful for the Legislature to establish general statewide guidelines governing the devices. A statewide policy for wireless devices should include the following provisions.

7 Page 7 Wireless devices should be matched to job responsibilities. Agency policies that we reviewed often lacked specific criteria for determining which employees should be provided cellular phones and other wireless devices. Accordingly, we recommend that the Legislature establish a statutory policy that would generally limit assignment of wireless devices to employees who, as part of their official assigned duties, must regularly travel away from their regular work station; be immediately available to citizens, supervisors and/or subordinates; be available to calls outside of regular working hours; have access to the technology in order to productively perform job duties in the field; be available to respond to emergency situations; and/or have limited or no access to a standard phone. The Department of Health has similar criteria for wireless devices. Its policy dictates that only employees who log specified numbers of travel hours are eligible for Blackberries and other wireless devices, and that employees must have duties and responsibilities that require 24-hour availability to be issued wireless communication devices. 5 Agencies should establish mechanisms to ensure appropriate wireless device use by employees. Agencies should be directed to establish specific mechanisms to monitor use of cellular phone and other wireless devices. These mechanisms should enable agencies to monitor employee usage to avoid paying high overuse or underuse fees. 6 For example, the Department of Health has developed a Cell Phone Bill Verification System that enables account managers to run reports that compare current charges with other available service plans and determine whether the best available plan is being used. In addition, some agencies reported that they have recently reviewed and modified wireless device assignments for their employees. The Department of Transportation reported that it reviewed wireless device usage and reduced the total number of devices by 491 blackberries, cell phones, and pagers. Agencies also appear to be increasing the use of pooled plans. For example, the Department of Environmental Protection consolidated cellular and Blackberry accounts for three divisions in order to pool minutes and reduce costs. The Fish and Wildlife Conservation Commission reported that it consolidated all cellular phone plans to allow it to pool minutes across the agency. Moreover, instead of using costly aircards, some agencies reported that they directed employees to connect laptops to the internet via a tethered connection to a cell phone in lieu of using aircards. 7 The Legislature should direct all agencies to annually review their wireless device use to determine if savings can be achieved by reducing the number of devices in use or modifying cellular phone plans. 5 The Department of Health policy provides that in order to be eligible for a Blackberry, employees must travel more than 40 days per year; be in a leadership position as determined by the division director; must be in positions whose duties and responsibilities are less than 60% administrative in nature; and have duties and responsibilities that require them to be available 24 hours a day, seven days a week to make decisions of consequence or provide critical information in a real time environment and these decisions must be time sensitive such that they cannot be delayed until the next business day without a significant adverse affect on the mission of the department. Critical information is that information without which unnecessary death, injury, illness or other significant unwanted result will likely occur. This policy allows for other equipment options (cell phones, beepers, pagers, and aircards) for employees who do not meet the criteria listed above. 6 Officials with the Department of Management Services report that bucket and pooled plans can encourage consumption and may increase costs when users go over or under the number of purchased minutes. Unused minutes are lost and drive up the cost. 7 Currently, no agencies have adopted cellular phone allowances for their employees instead of providing an agency device. Agencies expressed concern that federal tax laws would require employees to pay personal taxes on the amount of the allowance.

8 Page 8 Agencies should ensure cost-effective procurement of wireless devices. We recommend that the Legislature direct agencies to take immediate steps to ensure that current procurement practices for wireless devices provide the most cost effective services. Given the varying needs of state employees, state agencies may legitimately require different wireless service plans and equipment for different groups of employees. For example, some agencies may need to procure unlimited plans for some employees who make extensive use of cellular phones, while other agencies may be able to more economically obtain per minute plans for their employees. However, all agencies should ensure cost-effective purchases and continue to assess improvements in services offered by state contracts. To ensure the most cost-effective use of wireless devices in an environment of rapidly changing technology, we recommend that the Legislature direct agencies to adopt consistent methods for reporting cellular and wireless device expenditures that will improve tracking of these costs within FLAIR and facilitate the collection of more uniform expenditure information for all state agencies. In addition, we recommend that the Legislature direct agencies to report annually, as part of the legislative budget process, the number of wireless devices in use by type; expenditures by type of device; total expenditures; and steps taken to contain associated costs, including a side-by-side comparison of services under the available state contracts. To address ongoing advances in technology and associated effects on enterprisewide operations, telecommunications policymaking could be consolidated Advances in technology continue at a rapid pace, as does the corresponding effect of technology in the workplace. For example, experts suggest that in the future, traditional desktop telephones may become obsolete as the workforce becomes increasingly mobile. According to the National Conference of State Legislature s innovation and convergence of existing technologies are radically expanding telecommunications services, blurring distinction between telephone and Internet services; between cable, wireless and satellite; between long distance and local service; and between telephone and other forms of communications.government and industry, working cooperatively, must continue to provide our citizens, businesses, and governments with the best telecommunications infrastructure in the world. To address these trends in the most costeffective manner possible, the Legislature may wish to consider consolidating the current structure for statewide telecommunications policymaking. Currently, three different state entities participate in the policymaking, procurement, and operations for state telecommunications. First, the Department of Management Services Division of State Purchasing manages the state s cell phone purchasing. Second, the department s Division of Telecommunication s manages the SUNCOM network; SUNCOM provides local and long-distance communications services to state agencies, political subdivisions of the state, municipalities, state universities, and nonprofit corporations. Third, the Agency for Enterprise Information Technology is legislatively mandated to oversee enterprise wide information technology policy. However, this division of responsibility no longer matches the technology that is available. For example, wireless devices are now widely

9 Page 9 available that offer telephone, , web browsing, and portable computing services; such devices could fall under all three of the state entities jurisdiction. This divided structure may result in differing priorities between the Department of Management Services and Agency for Enterprise Information Technology that could limit the state s ability to effectively leverage technology to maximize efficient services to citizens. In recent years, many states have centralized their information technology services; some of these initiatives have included telecommunications policy. For example, officials in California took steps in 2007 to bring state telecommunications under the direction of a new Department of Technology Services. Similarly, Georgia consolidated technology responsibilities under the Georgia Technology Authority. The authority s responsibilities include technology enterprise management for data centers, servers, mainframes, personal computers, and laptops, wide and local area networks, telecommunications and technology personnel as well as technology portfolio management of the state s technology investments. To facilitate cost-effective statewide changes as technology continues to evolve and as workers and workplaces become increasingly mobile, the Legislature may wish to consider consolidating telecommunications policymaking under a single entity.