Consultants for LAUSD construction program scrutinized

Consultants working for the Los Angeles Unified School District’s school construction program cost taxpayers 70% more than if district employees had been used to do the same work, according to a draft internal audit obtained Thursday by The Times.

The audit also found that some consultants lacked required qualifications for their duties, and that those contractors have been improperly supervising and evaluating district employees as well as other consultants.

“The report suggests that we have to have a reorganization to develop a plan for the next 10 years,” said district Supt. Ramon C. Cortines. “We need both regular employees and consultants, and we’ve got to monitor that more closely.”

He said Chief Facilities Executive Guy Mehula has his “full faith” and has done “an outstanding job” managing what has grown to be a $20.1-billion school construction and modernization effort.

The confidential December audit has been the source of internal debate within the country’s second-largest school system. Top officials in the facilities division have contested some findings, prompting Cortines to seek an independent review by former banking executive William E.B. Siart, who oversees ExED, which assists charter schools with financing and business operations.

Among the auditors’ conclusions:

* Using district employees, where possible, instead of consultants could have saved $77 million in the period from July 1, 2006, to June 30, 2007.

* Consultants lacking the required minimum qualifications were hired or promoted.

* Eighty-four percent of consultants had been employed at the district for more than two years and 16% more than five years.

* One consultant, who was supervised by an outside company he used to work for, billed the district at $189 an hour for full-time work, even though he spent only one week a month in Los Angeles.

* Consultants overstepped their proper roles, making decisions about the hiring and compensation of district employees. Some consultants also controlled the payments of district funds to other consultants working for the same firm. In some cases, they even signed time sheets for payments to their own firm.

One of the consulting firms, TBI Associates -- the subject of a series of Times articles in 2007 that examined alleged time-card fraud involving the locally based company -- is not singled out in the audit and has denied wrongdoing. A yearlong criminal investigation into the fraud case is ongoing, according to the L.A. County district attorney’s office.

The findings should not be used to dismantle a system that fundamentally works, said civil rights attorney Connie Rice, a member of the appointed committee that oversees school bond spending. “For this kind of construction program, it makes sense to use consultants because the top-level people you need are not going to work for the district.”

She also defended the higher salaries, saying that they were needed to attract top talent and that the wages were still less than those for comparable jobs in the private sector. The result, she said, is a program that has probably saved hundreds of millions of dollars and resulted in high quality and reasonably rapid school construction.

In the audited year, the facilities division employed 1,277 consultants at $186 million. That number had dropped to 882 consultants by September 2008. Auditors said the facilities staff has addressed some of the oversight problems.

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howard.blume@latimes.com