In 1998, city officials struck a deal to split the money from a new fine on scofflaws with the firm that collected parking ticket payments. But for seven years, city officials failed to ask for their share. Now, the firm is $20 million richer and city officials want the windfall back.
But it may be too late.
The city Department of Transportation has negotiated a tentative settlement with Affiliated Computer Services, which took over the contract three years ago from a unit of Lockheed. But Robert Andalon, a department official, said the deal may provide the city with only "several million dollars" in free services.
Elected city officials are angry that the lapse went uncorrected for seven years and the full amount may not be recovered.
"The loss of these kinds of public funds is staggering," said Councilman Antonio Villaraigosa, chairman of the City Council's Transportation Committee, which will take up the proposed settlement next week. Villaraigosa said transportation officials failed to follow procedures.
The head of the city union that represents parking ticket officers said the mix-up should lead the city to take over the collection of its parking fines, so the city can keep all of the money.
"We'll see an international company give something back to the city? In my lifetime?" asked Julie Butcher, leader of Service Employees International Union Local 347. "This is money that went to line Lockheed's pockets instead of lining the streets with asphalt."
The snafu is related to a contract approved in 1997 by the City Council with Lockheed Information Management Services to process and collect parking citations. The contract was taken over in 2002 by Affiliated Computer Services, which bought the information management unit from Lockheed.
In 1998, a city parking administrator approved an amendment to the contract to give Lockheed more incentives for collecting delinquent parking tickets.
Under the amendment, Lockheed was allowed to collect an 18% special collections fee on the fines taken in when the city seized a vehicle having five or more unpaid citations.
Under the agreement, Lockheed could keep up to $2.5 million, but would provide services to the city for revenue over that amount, said Wayne K. Tanda, general manager of the Department of Transportation.
Officials said the department never required Lockheed to provide any additional services, leaving Lockheed with $20 million or more in extra cash. And the city paid Lockheed $2.3 million for additional services that should have been covered by the agreement.
An internal investigation found that the City Council, not transportation officials, had the authority to approve the agreement. Tanda said that because of that, the deal was not legally binding.
Tanda blamed the lapse on "a loss of continuity of key DOT staff." He said the parking administrator who approved the deal retired shortly afterward, as did one of his key assistants. A second parking administrator retired a year later.
A fourth parking administrator saw the agreement and raised alarms a few years ago.
"When she became aware of the letter of agreement she consulted with the city attorney's office and was advised that [it] was probably not legally enforceable," Tanda wrote. "No further action was taken, and the general manager was not consulted."
Tanda said the amendment represented a "significant revision to the scope of work and the payments to the contractor," and therefore should have been approved by the general manager, subject to approval of the council.
"The contract required this procedure. This was not done," Tanda wrote in a report to the City Council. "Due to an extraordinary set of circumstances involving the departure of key DOT staff, compliance with the letter of agreement did not occur," Tanda wrote.
Officials with Affiliated Computer Services did not return calls.
Mayor James K. Hahn has asked the city administrative officer to review the proposed deal before extending the firm's contract for another five years.
"The mayor, more than anything, wants to make sure the taxpayers get the best possible deal and get what they are entitled to," said Sahar Moridani, a spokeswoman for the mayor.