Airport Staffers Told Auditors of Flaws in Bidding
By AMANDA BRONSTAD
Staff Reporter
L.A. Mayor James Hahn’s executive order prohibiting city commissioners from sitting in on the selection of contract bidders sidestepped the issue of poor documentation at Los Angeles World Airports, a problem underscored by airport executives who participated in a recent audit of the airport.
City Controller Laura Chick’s audit, which reviewed 25 contracts, found that in all the cases in which commissioners sat on panels, the selection process did not have “adequate documentation.”
On Jan. 5, Hahn issued an executive order that prohibits commissioners from sitting in on evaluation and selection panels. But in interviews with auditors, obtained from the audit’s background documents, several airport executives said that LAWA has an unwritten rule limiting documentation.
Karen Sisson, chief financial officer of LAWA, told auditors on Sept. 3 that “there is definitely an understanding at LAWA that the selection process is to not be documented for contracts that have the potential to pose threats of litigation,” according to a summary of her comments that was used as background material for the audit.
She said it was “unwritten” policy at LAWA not to document high-risk contracts, such as those in construction, consulting or concessions, audit papers say.
She could not say where the informal policy originated but noted the City Attorney’s office recommended that detailed and supporting documents “not be kept in order to protect the city’s interests,” audit papers say.
Sisson did not return phone calls seeking further comment.
City Attorney spokesman Eric Moses said contracts should always be substantiated with documentation.
“For there to be no appearance of impropriety, and to protect the city from all costs from appeals and other litigation, the more documentation you have, the better,” Moses said.
Assistant City Attorney Tim Hogan told auditors on Dec. 3 that the staff of the City Attorney’s office would never have recommended against documentation, audit papers say.
In fact, according to a summary of his comments, he told auditors that he “consistently finds that contract files do not contain sufficient documentation to support the awarding of decisions made by LAWA management, particularly on high-cost/high profile contracts.”
He said he repeatedly recommended that LAWA management and the Board of Airport Commissioners retain rating and scoring sheets for proposal evaluations, formalized notes and ratings during interviews and other supporting documentation in contract files, audit papers say. His recommendations “were repeatedly turned down by management and the board, who stated that ‘documentation is not required,'” the memo says.
Documents key issue
Detailed documentation could better explain LAWA’s contracting procedures, which several government agencies have questioned in the past few months. Specifically, improved documentation of the evaluation and selection panel could reveal panel members’ comments about the bidders and the reasons for approving the contracts, which has been at issue.
Former senior executives of LAWA have told the Business Journal that the political interests of commissioners, who sit on several evaluation panels, appeared to influence the awarding of contracts. At the time her audit was released, City Controller Chick said she has been looking at contract procedures because of what she called rumors about a “pay-to-play” environment at the airport. Pay-to-play refers to the awarding of contracts based on candidates’ political contributions.
Chick stopped short of saying any illegal activity has occurred at the airport, and the City Attorney’s office has reiterated that the practice of commissioners sitting in on review panels is not illegal. LAWA officials have denied wrongdoing.
Chick turned over the findings of the audit to L.A. District Attorney Steve Cooley, California Attorney General Bill Lockyer and the U.S. Department of Transportation.
The recommendations of the City Attorney’s office were highlighted in the City Controller’s 51-page audit, conducted by Sjoberg Evashenk Consulting LLC. The audit found that 16 of the 25 contracts reviewed lacked “adequate data to support evaluation processes and the ultimate decision for award,” and 10 of them had commissioners participate in the selection panels.
There were only three well-documented contracts with requests for proposal in which commissioners did not participate in selection panels, the audit says.
Hahn’s executive order, while preventing commissioners from sitting in on selection panels, does little to address the documentation problems at the airport, said City Councilman Bernard Parks.
“His executive order is narrowly structured and does not include many concerns of the audit,” Parks said. “What Laura Chick’s audit hit on very strongly is that there are rules and regulations and what are viewed as best practices through the city. I don’t think that was the intent of the order. It was narrowly focused on the one aspect of commissioners participating in the selection process.”
Hahn spokeswoman Shannon Murphy said the executive order addresses documentation issues because it calls for “uniform best practices” in contracting procedures at all city departments. She declined to comment further.
Airport’s Defense
LAWA spokesman Paul Haney declined to comment about the specific statements made to auditors regarding documentation. But in a document sent to the City Controller’s office on Jan. 7, LAWA challenged the accuracy of the audit’s findings. Of the 25 contracts reviewed in the audit, nearly half were dated before the audit’s three-year period, LAWA wrote.
City Controller spokesman Rob Wilcox said the contracts were still active during the three-year period.
LAWA also defended its documentation procedures, saying that airport executives send reports to the Airport Commission that detail the evaluation and selection process of each contract. That report is also prepared and approved by the City Attorney’s office before it is submitted to the Airport Commission, LAWA wrote. Once it is submitted to the Airport Commission, the document is made public.
“The report contains background information regarding the specific project, a listing of respondents and the reasons for the selection,” LAWA wrote. “The report also ranks the proposals. We believe this documentation of the evaluation and selection process that is available for public review and comment is not only adequate but also necessary to ensure transparency in LAWA’s contracting process.”
LAWA noted, however, that “there have been some instances where some reports are more comprehensive than others. The (Airport Commission), itself, on several occasions has instructed LAWA staff to write more fully detailed reports as this is the one vehicle they have from which to make (sic) informed decision.”
In audit background papers dated on Aug. 27, Kim Day, interim executive director of LAWA, said there are no formal rules or procedures for documenting contractor selections. And Richard Janisse, former deputy executive director of business development at LAWA, told auditors that evaluation panel members do not formally document how each bidder is ranked, audit papers say. No records document the final vote on the contractor, nor how that contractor was chosen, he said. Janisse, who resigned in November, did not return phone calls.
In a Nov. 6 letter responding to auditor Kurt Sjoberg’s requests for comment, Ted Stein, president of the Airport Commission, said rating sheets are not required and may not be appropriate in every contract. Further, he added, panel members typically make contract decisions by keeping notes during the selection process, audit papers say.
Stein did not return phone calls seeking further comment.
‘I’m not at all surprised’
The documentation problems at LAWA are not new. In a 1999 industrial survey conducted for the mayor’s office, the chief legislative analyst and the city administrative officer recommended LAWA streamline its contracting procedures to include, among other things, better documentation.
“It was hit or miss. There were some groups doing more documentation than others,” said Gayla Kraetsch Hartsough, president of KH Consulting Group, which conducted the audit. “I’m not at all surprised with the findings today.”
On Jan. 6, the City Council approved a motion to analyze the contracting procedures at all three proprietary departments but requested that LAWA specifically report on its contracting procedures. The motion had also requested the City Attorney to draft two ordinances, one prohibiting commissioners from participating in the evaluation and selection panels and the other prohibiting commissioners from engaging in any political fund-raising activities on behalf of an elected official. The City Ethics Commission is scheduled to discuss the fund-raising motion on Jan. 13.
Two City Council committees are expected to address the motions. Councilwoman Wendy Greuel, chairwoman of the audits and governmental efficiency committee, said committee members would review the City Controller’s entire audit, including documentation.
Councilwoman Cindy Miscikowski, a member of the Commerce, Energy and Natural Resources committee, said several other city departments have more detailed contracting procedures. In some cases, members of the selection panel rate contractors without knowing who they are rating, she said. A rating sheet accumulates points, and the contractor with the highest points is recommended to the commission, she said.
“The cumulative is, three raters rate it, discuss how they totaled it, why they ended up with this contractor selected, and you can see their notes on the rating sheets,” she said. “It’s quite detailed. That’s the documentation that the auditor said is clearly missing.”
