By Connie Llanos, Staff Writer | LA Daily News | http://bit.ly/awgYah
11/21/2010 - Amid increasing scrutiny over the use of subcontractors in Los Angeles Unified's $20billion building program, district officials have canceled a second contract in as many weeks over concerns about how it was awarded.
The contract would have paid a former LAUSD executive $90,000 over 66 days to provide a state-required description of what educational features and services will be provided by the district's next round of school construction, funded through voter-approved bonds under 2008's Measure Q.
While the contract amount is relatively small, some district officials say the crackdown on questionable contracts sends a strong message against influence peddling and wasteful spending in challenging financial times.
But other observers with a long history in LAUSD's decade-old building program said too much nit-picking could jeopardize the massive construction program by ridding it of its most capable people.
The latest contract to be canceled had been awarded to Kathi Littmann, a former executive in LAUSD's Facilities Department, which runs the building program.
The contract was awarded without a competitive bidding process. Because of inconsistencies with district policy in awarding work orders, Littmann's contract had to be reissued at least twice over the last four weeks to try to bring it in alignment with policy, according to district documents obtained by the Daily News.
The "lump sum" task order - which is a less descriptive work order reserved for smaller projects - was reissued once because Littmann was hired as a subcontractor, despite a district ban on subcontractors for that contract.
A third attempt to get the contract approved - using a different company name and making Littmann a direct contractor - was stopped last week by LAUSD Superintendent Ramon Cortines.
"They tried to end run me ... but I'm not going to hire someone knowingly when we are laying people off," Cortines said. "I have made it very clear that when we hire consultants it will be because they have a specialty, but there was no justification here ... I know this individual and I like her, but I don't know what her specialty is here."
Littmann, who worked for the district on three occasions over the last 11 years, said she submitted a proposal to the district to perform work only after being requested to do so by the district.
Littmann said she was not aware of the various attempts that were made to get her contract approved, adding she was upset to have her name linked to a mishandled contract.
"They (LAUSD facilities staff) jumped through hoops to convince me that they'd crossed their T's and dotted their I's ... otherwise I wouldn't have engaged," she said.
The sloppy handling of her contract made Littmann wonder if the district's construction program was falling into the chaotic state it was in during the late 1990s.
Also last week, Cortines canceled another contract after similar irregularities were disclosed in a report by the district's watchdog, the Office of the Inspector General.
Prompted by whistle-blowers in LAUSD's construction program, the inspector general's investigation focused on a pool of $65 million in building contracts. It found that the Facilities Department had increased its $65 million authorization by $31 million without school board approval; failed to slash total costs of new contracts by 20 percent as promised; and hired subcontractors to do work even though the use of subcontractors had been banned.
The report paid special attention to a $3.7 million lump sum task order for Consilia LLC, a company owned by four longtime district construction consultants.
That contract was supposed to pay for construction planning for Measure Q. Littmann's would have been a complementary contract, joining the description of classroom needs and goals to the long-term plans for the bricks and mortar construction.
Cortines canceled the Consilia contract because it listed the company as a subcontractor, which violated district policy.
Littmann's contract was not mentioned specifically in the inspector general's report, but it was part of the $65 million in contracts the report focused on.
James Sohn, LAUSD's chief facilities executive, said he was not aware of the various attempts to issue Littmann's contract. But Sohn said he did ask for the contract to be placed on hold to allow for further review and input from the board of education.
"Since then we've decided to not move forward with the contract," he said Friday, noting the contract had become "too much trouble."
"This is one out of hundreds of contracts ... we spend $120 to $150 million a month," Sohn added. "I am not undervaluing the fact that it is a lot of money, but in the context of what we do, it's a small percentage."
A former middle school teacher and former head of LAUSD's new construction, Littmann helped create the educational descriptions that have been used by the district to fulfill state requirements for most of its new construction program.
Construction for Measure Q is not expected to start until about 2016, due to delays in accessing the money caused by the economic downturn.
Littmann said she encouraged the use of subcontractors in the early part of the decade to boost competition and curb nepotism.
"The reason we set up a system of subcontractors was to allow small firms to get a piece of the pie," she said. "When someone says they want to remove the middleman, it's usually because they want to move money somewhere else."
Connie Rice, a prominent civil rights lawyer and longtime member of LAUSD's bond oversight committee, said she was also concerned that in a rush to eliminate all consultants, the district was losing some of its best talent.
"We have dismantled the A-team that helped build all of these schools," Rice said in an interview last week. "What happens to Measure Q? We see the money wasted ... because there is no one left that knows how to spend it."
Rice also said that she was concerned to see more decisions in facilities driven by board members.
"We had to create a completely independent separate structure for facilities to get their work done," Rice said. "We had to get away from incompetence of the district. ... Could you imagine if the district had been handling the bond money?"
"They couldn't even get their people paid right," she said, referring to a payroll problem that plagued the district for about a year.
LAUSD board member Steve Zimmer though, disputed those claims.
"In questioning these processes, I am not trying to control the bond money. I'm trying to ensure a modicum of transparency, legality and validity," Zimmer said.
Zimmer also said that labor agreements had been reached with district employee unions, who accepted furloughs and pay cuts to help the district cinch its budget deficits over the last two years. Zimmer said those agreements assured labor groups that consultants would be let go before district employees were laid off.
But he added that in these latest cases, the concerns had been more with the way the consultant contracts were handled than the hiring of the consultants.
Cortines, too, denied that the latest irregularities are indicative of deeper problems within the district's construction division.
"I think we are finally getting to the bottom of some of these issues," Cortines said. "People need to know that it can't be business as usual."