By HOWARD FINE
Staff Reporter
The Los Angeles City Council has agreed to launch an overhaul of the city’s contracting procedures to tighten standards and establish penalties for those companies that fail to deliver on time and within budget.
The motion, sponsored by Councilwoman Laura Chick after questions arose over Motorola Inc.’s handling of a Police Department technology contract, was approved earlier this month on a 12 to 0 vote. It asks city staff to report back to the council by the end of March on ways to tighten and standardize contract requirements.
Specifically, the motion calls for consistent guidelines among all city departments in the drafting of requests for proposals (RFPs) to ensure all bidders submit a detailed scope of work, and the development of methods to evaluate contractor performance. It also requires all contracts to include “meaningful penalties and sanctions” against companies that fail to deliver quality goods or services on time and within budget.
The penalties would include the ability to seek damages from the businesses themselves instead of their liability insurance companies.
“We need a way to protect against poor contract performance,” Chick said. “Right now, we don’t have all the tools we need to guard against cost overruns or against shoddy goods or services.”
So far, there is little organized opposition among the contracting community to the city’s move.
“It seems more like the exception than the rule for companies to come in on time and within budget,” said Mark Armbruster, an attorney and registered lobbyist who has represented several city contractors. “There is definitely room for improvement here.”
Also, he said, most contractors would welcome consistent and uniform contracting standards among city departments.
But, Armbruster said, toughening the performance standards could have the effect of raising bid costs slightly.
“Companies will err on the conservative side and tend to overestimate their dollar bid to cover the potential downside of cost overruns,” he said. “However, this might be better in the long run for the city because companies would have more incentive to keep their costs within their original estimates and not resort so frequently to change orders.”
Chick, who chairs the council’s public safety committee, said she had been mulling over changes to the city’s contracting standards for several years, but was pushed to action because of the recent Motorola flap.
In December, several city and Police Department officials voiced concern over Motorola’s handling of a $20 million contract to upgrade police patrol car computers. Police Chief Bernard Parks said in a Dec. 4 letter to the council that Motorola was behind schedule on its contract and was preparing to seek changes in the contract terms.
Motorola spokeswoman Pat Sturmon said the delays in the LAPD patrol car computer contract resulted from trying to incorporate the latest in computer upgrades as called for in the contract. She said the company has submitted new proposals to the LAPD that would speed up the contract timetable to make up for some of the lost time.
In December, the council’s Budget and Finance Committee approved a separate $51 million contract for Motorola for a new police radio system. But the Public Safety Committee and the full City Council voted to postpone action on the contract pending answers from Motorola about its contract performance and subcontractor hiring practices.
