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L.A. Official Questions Vigilance on Contracts

Controller Laura Chick asks 'Who's minding the store?' after audit finds $3-million overbilling.

May 30, 2003|Jessica Garrison | Times Staff Writer

A company hired to provide computers to the city of Los Angeles overbilled the city by nearly $3 million -- and no one in the bureaucracy noticed, according to an audit the city controller's office released Thursday.

What's more, Controller Laura Chick said, the city routinely fails to enforce the terms of its contracts with outside agencies, estimated at being worth more than $1 billion a year.

"Who is minding the store?" Chick asked.

"My audit showed that the city wrote a great contract," she said. "However, the contract is not worth the paper it is printed on if we don't enforce its provisions."

Chick said the audit of the contract with El Segundo-based En Pointe Technologies was "only the beginning.... A whole new system of contract monitoring has to be invented in this city."

The city's practice is that individual departments are responsible for monitoring their own contracts. Ultimately, Mayor James K. Hahn's office has authority over the departments.

In light of Chick's audit, Deputy Mayor Matt Middlebrook said the mayor's office would stress to general managers that they need to exercise "greater vigilance" in monitoring contracts.

Still, he said, most city contracts are properly executed.

Chick said she plans to release more than half a dozen additional audits of contracts in the next few months.

"I know we will be uncovering millions of dollars of waste as we go forward on this contract-monitoring campaign," she said.

Under the City Charter, the controller has the authority to monitor the performance of city departments.

Hahn said Chick's campaign is especially appropriate, given the strain on the city's budget.

A day before the audit was released, the City Council voted to delay Hahn's bid to hire 320 more police officers, expressing concern that the city might not be able to afford them.

"Every dollar saved is money that can go toward funding our highest priorities, such as putting more police officers on the street," Hahn said in a statement.

Chick said she had chosen the En Pointe contract as the first to audit because the $87 million paid to the company since June 1997 made it one of the city's largest.

En Pointe was hired to provide computers, printers and other technology to offices around the city. According to the contract, the company was supposed to bill the city a fixed amount more than what it paid the manufacturer for each piece of equipment.

Instead, according to the audit, the company used a variety of different mark-ups, which resulted in overbilling the city by $2.9 million. En Pointe also failed to pass along $500,000 in manufacturers' rebates, according to the audit.

A spokeswoman for En Pointe said the company disputes the audit findings and "believes it will be able to resolve this matter to the satisfaction of the city controller."

City Atty. Rocky Delgadillo said his office would work to recover money from En Pointe.

But Chick said an equally pressing issue was that city officials failed to make sure they were getting what they had paid for.

"No one asked the question, and no one noticed," she said.

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