City Agency Overpays for Some Goods, Audit Asserts

A management audit of the General Services Department, one of the largest agencies in Los Angeles city government, has disclosed that the city may be squandering millions of dollars a year by paying inflated prices for office equipment and other basic supplies.

The audit report by the City Administrative Office, a copy of which was obtained Wednesday by The Times, is critical of a variety of the General Services Department’s practices and calls for a “fundamental and comprehensive reordering” of the city’s purchasing policies. The CAO said it would be possible to save as much as $6.6 million a year from the $131 million now paid to city suppliers.

The report, which was completed in December, is the most comprehensive review of the General Services Department since it was created in 1979. The agency handles a wide range of city functions, including custodial services, building maintenance, security in city buildings and the leasing and managing of city-owned property.

The agency also oversees the purchase of about 65,000 different items used by city workers. According to the CAO report, the General Services Department “is paying higher prices for basic commodities” than a number of other public agencies and should be able to cut by 5% the average price it pays for these commodities.

Variance of Prices

For example, in a sample of 20 items--ranging from pencils to automobile tires--the CAO auditors found that the city was paying higher prices in 14 cases when compared to other cities, counties or school districts.

Rolls of adhesive tape that cost the city $7.75 a dozen, for instance, were bought by the Los Angeles Unified School District for $6.84 a dozen, while the City and County of San Francisco paid $2.98 for the same product, the report said.

Calling the audit a “complex report,” Sylvia Cunliffe, general manager of the General Services Department, said Wednesday that she had not yet read it closely, but she challenged the conclusion that the city may be wasting money on its purchases.

“(They’re) not necessarily comparing the same quality or quantity of items,” Cunliffe said of the examples in the audit, which now goes to the mayor and City Council.

Cunliffe also said her department is constrained by the City Charter to seek competitive bids. But the CAO report maintained that her agency could improve its process of soliciting bids and “obtain better prices and more reliable vendors.”

In addition to recommending “a significant change in all phases of the (purchasing) operation,” CAO auditors also found that:

- Rental agreements and documents are “haphazardly maintained and often incomplete” in the leasing of city-owned property, including the Los Angeles Mall.

- Department management is “propped up with too many informal, makeshift relationships” that have hampered control over the massive agency. “Anxiety and frustration levels seem high among top and mid-level managers,” the report said in calling for an executive officer to run the day-to-day affairs of the agency.

- Seventeen months after the department had requested contract bids to provide custodial work for a pilot project at the Central Library and another city facility, no contract had been signed. The audit called for the CAO to more closely monitor private contracts for city services.

Cunliffe, whose department has a $163-million operating budget and 1,800 employees, said the lengthy delay in awarding the custodial contract could be traced to objections from organized labor and other unexpected problems, including last year’s library fire.

Other problems in the department were the result of short staffing and low budgets, she said, adding that she regarded it as “a vote of confidence” that the auditors agreed on a need to bolster her staff.