by Howard Blume | LA Times LA Now blog
April 21, 2010 | 2:49 pm -- Officials have abruptly halted work with the firm that managed environmental work in the $19.5-billion school construction program of the Los Angeles Unified School District.
The move arises from a critical district audit alleging that Palm Desert-based Questa Environmental Consulting repeatedly overcharged and that L.A. Unified managers looked the other way, resulting in more than $2.5 million in questionable billing.
The negative report comes in the wake of an unrelated indictment of a regional construction director on conflict-of-interest charges, tarring the nation’s largest school construction and modernization effort. Officials continue to characterize the overall construction program as clean and successful. To date, 87 of 131 new schools have been completed as well as thousands of modernization projects.
The audit from the office of the inspector general, quietly posted online earlier this month, accused Questa of billing for time unrelated to its district contract, charging higher hourly rates than justified and exceeding maximum annual billings, among other things.
The conduct was “so egregious,” said district Inspector General Jerry Thornton, that his office took the unusual step of recommending Questa’s termination as well as the discipline of two supervising district employees.
Thornton described the findings at Wednesday’s meeting of the district’s Bond Oversight Committee.
Questa had no immediate reaction to the public airing of allegations, but already had submitted a lengthy written defense to the auditors' original draft report. The company denied any wrongdoing.
“Questa did not falsely bill work,” managing partner Jon A. Sanchez wrote to the district. And, at all times, he added, district officials were aware of Questa’s actions, while guiding and supervising the company.
Auditors singled out two district managers for particular criticism. L.A. schools Supt. Ramon C. Cortines suspended them with pay March 1 for more than a month, district officials said. A district spokesman confirmed the substance of the action, though not the specific details. Both employees have since returned to work pending further possible disciplinary action.
An arraignment is scheduled for April 29 in the conflict-of-interest case, said Mark Fall, associate general counsel for L.A. Unified.
Cortines has asked L.A. City Controller Wendy Greuel to oversee an independent audit of construction-related issues in the nation’s second-largest school system. That probe is expected to cost about $100,000, Fall said.
L.A. UNIFIED FIRES OUTSIDE CONTRACTOR: An internal audit found numerous problems with billings from Questa Environmental Consulting, which managed the district's environmental work.
By Howard Blume, Los Angeles Times
April 22, 2010 -- The firm that managed environmental work in the Los Angeles school district's $19.5-billion school construction program was fired after an internal audit found numerous problems with its billing.
The district audit alleges that Palm Desert-based Questa Environmental Consulting repeatedly overcharged the L.A. Unified School District and that district managers were inattentive, resulting in more than $2.5 million in payments that should be repaid.
The negative report comes after a recent unrelated indictment of a regional construction director on conflict-of-interest charges, tarring the nation's largest school construction effort.
Officials continue to characterize the overall construction program as clean and successful. To date, 87 of 131 new schools have been completed as well as thousands of modernization projects.
The audit was quietly posted online earlier this month by the inspector general's office. It accused Questa, among other things, of billing for time unrelated to its district contract, charging higher hourly rates than justified and exceeding maximum annual billings. The company also allegedly allowed relatives to supervise each other and pocketed some cost savings that should have been passed on to the district.
"All of the allegations are serious and we're disputing every one of them," said Questa official Tom Watson. "We were part of the [school district] family for 10 years, and the team was dedicated to that program."
But district Inspector General Jerry Thornton characterized Questa's conduct as "so egregious" that his office took the unusual step of recommending Questa's termination as well as discipline for two supervising district employees.
Thornton described what he called a "totally unacceptable … lack of oversight" at a Wednesday meeting of a panel that reviews school bond spending.
He added, "I can candidly say that the district will make a demand for that money back."
L.A. Unified paid Questa $15 million during the three-year period examined, which ended in November 2008. Questa's work has been central to the building effort. The company has managed and coordinated the complex environmental reviews and approvals needed to move projects forward. To date, the quality of Questa's work has not been questioned.
Questa managing partner Jon A. Sanchez has asserted that officials were aware of the company's actions at all times. In a letter to the district, he also insisted that the hourly rates of employees were justified by their experience and qualifications.
Auditors singled out two district managers — Patrick Schanen and Edward Morelan — as "not concerned with issues of contract compliance by Questa and not interested in oversight or control over Questa's activities and billings."
"What Questa has done is troublesome," said Thomas A. Rubin, staff consultant for the bond oversight panel. "However, what has gone on internally with the district people is far more so."
L.A. schools Supt. Ramon C. Cortines suspended Schanen and Morelan with pay March 1 for more than a month. Both have since returned to work pending further possible disciplinary action.
Neither could be reached for comment.
Cortines also suspended work with Questa after he reviewed a draft of the audit. Questa had not yet had a chance to respond and has complained about lack of due process.
The audit also faulted former interim environmental director Yi Hwa Kim for not properly supervising her underlings. Kim directed the environmental office for more than two years, but returned this month to her prior role as deputy director with the arrival of a new top administrator.
Kim's predecessor, Angelo Bellomo, also was singled out for a role in a questioned activity. According to the audit, Bellomo authorized using Questa as a conduit to make $533,428 in unauthorized payments to other companies.
For auditors, this action represented the height of impropriety. Bellomo, now a county health official, could not be reached for comment.
But to Questa and some insiders, the district's hired auditor, Fullerton-based Nunez & Associates, grossly overreacted.
Most of the funds in question passed through Questa in response to an emergency at Del Amo Elementary in Carson that occurred shortly before the start of the 2006 school year.
Students and parents at the school had complained of noxious fumes, suspecting an adjacent industrial facility. Officials discovered instead that playground paving work had ruptured a gas line, leading to the potentially explosive underground accumulation of almost 1 million cubic feet of natural gas.
Then-Supt. Roy Romer authorized an emergency response. Bellomo, acting outside of the usual procurement process, relied on Questa and Watson, who had been a colleague when both were in private industry. Watson said the funding arrangement was a favor to the district, for which Questa made no money.
The swift Del Amo response later was cited as a success story at a 2008 state conference on school construction efforts.
The Questa audit revives a long-running debate over the use of contractors. Unions and auditors have faulted the construction program for over-using contractors and for allowing them to hire and evaluate other contractors. The indictment earlier this month concerns allegations that regional construction director Bassan Raslan oversaw the hiring of contractors who worked for his private company. That arrangement was detailed in a series of Times articles in mid-2007.
An arraignment is scheduled for April 29 in that case, said Mark Fall, associate general counsel for L.A. Unified.
The environmental work on school construction has been funded by school bonds, but is separate from the facilities division. That separation stems from the Belmont Learning Complex fiasco of the 1990s, when district safety staff was judged too subservient to the construction managers.
In this case, auditors allege a too-close relationship between the environment office and its favored contractor.
The environmental office accepted some audit findings, but denied internal misconduct, in a memo from interim director Kim. She also said auditors substantially overestimated how much money Questa should return.
●●smf's 2¢: I was going to post a few highlights/lowlights of the IG’s audit here - but I am instead going to recommend that you review it – or at least the Executive Summary - it contains some damning accusations and evidence.
- In addition to the criticism of Questa activities and operation reported in the story above,
- the report is specifically critical of the Office of Environmental Safety’s (OEHS) control and oversight of the Questa’s contract (OEHS is not part of the Facilities Services Division)
- and of the practice of Questa (and by extension, any outside) Consultants and/or Contract Employees performing Governmental Functions – essentially “governance by contract’.