DWP bypassed bidding for lobbying contracts, Greuel says

The Los Angeles Department of Water and Power repeatedly bypassed its competitive bidding process when it awarded $480,000 in contracts to lobby Sacramento decision-makers, according to a report issued by City Controller Wendy Greuel.

DWP executives issued four no-bid contracts for state lobbying over the last two years, two of them to Mercury Public Affairs, a firm that includes former state Assembly Speaker Fabian Nunez as one of its partners. No public debate or vote by the utility’s five-member Board of Commissioners was required under DWP contracting rules because each agreement was $150,000 or less.

Greuel, who is running for mayor in the March 5 election, said the city utility had “lax controls” over the lobbying contracts and failed to require that two of the firms prepare reports showing what they had accomplished. Mercury also was paid $50,000 for a month of work to help secure passage of legislation on power plant upgrades that had been withdrawn on the first day of the firm’s contract, the report found.

“DWP should have terminated” the contract, Greuel wrote.

The inquiry, which was conducted with help from the city Ethics Commission, was launched last year after Greuel’s office received a tip alleging that the lobbying work was awarded in exchange for favors. But no evidence of “a ‘pay to play’ arrangement” was found, her report said.

Mercury received DWP lobbying contracts worth $50,000 in 2010 and $150,000 in 2011, both focused on state government. The firm also received a no-bid, nine-month contract worth $141,000 in 2010 for lobbying at the federal level, which was not examined in the controller’s report.

The DWP said the no-bid contracts were reviewed and approved by the city’s lawyers. The three lobbying firms helped shape costly state regulations dealing with greenhouse gas emissions and pollution of ocean plant life caused by coastal power plants, utility officials said. “Their effective advocacy contributed to favorable outcomes that will save LADWP’s customers in excess of a billion dollars,” the DWP said in a statement.

Mercury Managing Director Roger Salazar said his firm provided strategy for dealing with water quality regulators, as well as state lawmakers. “The legislative process doesn’t always end with the pulling of a bill,” he added.

The DWP’s hiring practices for outside lobbyists attracted scrutiny in 2009 after high-level officials proposed a contract worth up to $2.4 million with Conservation Strategy Group, a Sacramento-based firm that planned to use Mercury and a second company as subcontractors.

The deal would have included the involvement of Nunez, author of the state’s landmark 2006 climate change law. But it was scuttled after DWP commissioners raised questions about the cost. The agency already was paying $15,000 to its in-house lobbyist Cindy Montanez, a former Assembly member who is now a City Council candidate.

DWP officials subsequently began using simple purchase orders instead of competitive bidding procedures to hire lobbying firms. The utility awarded a one-year, $130,000 agreement to Weideman Group in 2010 and a one-year, $150,000 agreement to Conservation Strategy Group in 2011.

Mercury received its $150,000 contract in April 2011, during the same week that Nunez contributed $3,000 to three of Mayor Antonio Villaraigosa’s legal defense funds and $1,000 to a separate officeholder account. The defense funds were set up to pay nearly $42,000 in ethics fines levied against Villaraigosa.

Salazar said there was no link between the contracts and the donations from Nunez. “Any insinuation that they are connected is absurd and irresponsible,” he said.

Last month, the DWP’s board awarded a Sacramento lobbying contract worth $1 million annually to KP Public Affairs. That vote was taken after a competitive search process.

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david.zahniser@latimes.com