Reforms Slow for City Contracting

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Efforts to reform the way the city doles out contracts and curb the political influence of contractors appear to be stalling.


Proposals to ban contractors and their lobbyists from making political contributions to city officials are stuck in a City Council committee. The creation of a database of all city contractors is at least eight or nine months away. Additional proposals by Mayor Antonio Villaraigosa that would rein in the political influence of contractors have yet to be introduced to the council.


What’s more, one of the two reforms the council did pass this year requiring contractors to disclose their political contributions is not being enforced because of a lack of staff.


The only contracting ethics measure now in full effect is a ban on city commissioners sitting in on staff contracting discussions. That was first enacted in an executive order from former Mayor James Hahn following revelations that airport commissioners routinely sat in on staff contract meetings.


“With Hahn gone from the mayor’s office, contracting reform seems to be on the back burner,” said Bob Stern, president of the Center for Governmental Studies, a government watchdog group. “There needs to be pressure applied on many fronts to move these things forward and that pressure just isn’t there.”


Those familiar with the reform efforts cite several reasons for the loss of momentum: the transition between two mayoral administrations, bureaucratic inertia and the sheer complexity of trying to craft effective reforms.


There has been some progress in reforming contract procedures. Besides the ban on city commissioners sitting in on staff contracting discussions, the process is more efficient, with bidders receiving regular updates on the status of the contract and more outreach to small businesses.


Some of the changes are in attitude. At last week’s meeting of Department of Water & Power board, commissioners sharply criticized staff members for allowing a contract with CH2M Hill Cos. Inc. for cleanup of dust in the Owens Valley to spiral out of control.


Weeks earlier, the LA Weekly had reported that while the initial contract was projected to run $120 million, actual costs had reached $415 million. The story also noted that CH2M Hill has made $42,000 in contributions to city candidates and officeholders since 2000.


The board decided to seek an outside auditor to review CH2M Hill’s work and questioned several other DWP contracts. “This is exactly the kind of oversight that commissioners should be exerting over contracts,” City Controller Laura Chick said last week.


But Chick warned that problems with contracting still exist. She recently noted that a contractor had come to her claiming that the commission at one of the city’s three proprietary departments extended a bid deadline and ultimately awarded the business to a last-minute bidder who had scored lower in staff rankings than the original bidders. All this, Chick said, was without public explanation. (She declined to reveal names.)


Such maneuverings were at the heart of the “pay-to-play” allegations that dogged the Hahn administration and led to ongoing federal and county investigations. Shortly after the pay-to-play scandal broke at Los Angeles World Airports, Hahn proposed banning contributions and fundraising by city contractors, as well as from lobbyists. These were among a package of proposals he sent to the City Ethics Commission, which then forwarded the package to the council this past January.


But the former mayor’s package met with resistance. Chick said that Hahn’s proposed ban does not include subcontractors and companies that are party to land use agreements. Others said that the proposals were more symbolic and intended to deflect criticism.


Whatever the case, the proposed bans on fundraising and contributions from contractors and lobbyists have sat in the Council’s Rules Committee for nearly a year.


Bill Mabie, spokesman for Council President Alex Padilla, said the contracting and lobbying reforms have been held up because the committee is set to take up a proposal from Councilmembers Greuel, Bill Rosendahl and Eric Garcetti for public financing of city election campaigns. “If that goes through, it would render moot many of the issues raised in the contracting proposals,” Mabie said..


City Hall watchers say that the proposals got caught up in the mayoral campaign. Villaraigosa put forward his own ideas and a standoff ensued. The new mayor’s proposals would require city departments to identify all no-bid contractors, ban contributors from receiving no-bid contracts and mandate immediate posting of agreements held by contractors who make political contributions.


Villaraigosa spokesman Joe Ramallo said the mayor’s proposals are being developed. The priority has been on changing the culture inside City Hall. “The mayor has appointed commissioners that are reform-minded,” Ramallo said. “That’s the most effective way to make sure contracts are awarded fairly.”


Any clampdown on contributions from contractors depends on being able to identify them. And that requires a comprehensive database.


Other major U.S. cities, including New York and Chicago, have had such databases for several years. New York’s database includes all contractors with more than $100,000 in city business over a 10-year period; Chicago’s is all-inclusive.


But L.A. lacks a database, despite years of attempts to set one up by the City Ethics Commission. “We gave up that battle long ago,” said commission executive director LeeAnn Pelham.


Hahn renewed the effort in early 2004, in the midst of the federal investigations, but no timeline was ever given and little progress was made during the rest of his term.


The database project is now in the hands of the City Administrator’s Office, where staff members are trying to decide whether to use existing contract management software or to start from scratch. An even thornier problem is getting the city departments to submit their contract data.


Jim House, chief administrative analyst for budget support, says it will be at least mid-2006 before a database is ready. “We’re going into budget season and that takes priority,” House said.


But Stern said that Villaraigosa has the power to move the database proposal forward. “If he wanted this done, he could say so and it would become a priority and get done,” he said.


Greuel said: “We need to move quickly on this. I will ask the city departments to provide this contract database information yesterday.”


Without the database, Pelham said it’s difficult for the City Ethics Commission to enforce the contractor disclosure law now on the books.


But her more immediate concern is a city hiring freeze in effect for three years (ending this past June) that has left her department with only 20 people, down eight positions.


Pelham said there is plenty of blame to go around for the stalling of the contracting reforms. “We all have to do a better job in getting the database up and the laws passed and implemented,” she said. “Or else instead of public trust, there will be increased public cynicism in city government.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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