Cunliffe Inquiry Grows With Fuel Pact Queries

An investigation into the troubled General Services Department and its suspended general manager, Sylvia Cunliffe, has widened with Los Angeles officials checking to see if the city needlessly lost thousands of dollars a month on a fuel supply contract.

City Administrative Officer Keith Comrie, whose staff has reviewed allegations of favoritism by Cunliffe in the renting of city-owned property, said Tuesday that investigators are now looking into the selection of Gale Barstow Inc. as the department’s chief petroleum supplier.

$10-Million Contract

The department has a $10-million-a-year contract with Barstow. This year, the Paramount-based firm is supplying the city with 12 million gallons of gasoline and diesel fuel.

Comrie, along with the City Council’s chief legislative analyst, is investigating allegations that the General Services Department was remiss in not including a price-constraint clause--used by other government agencies to hold down costs--in its contract with Barstow.

Comrie said investigators are checking reports, published in the Daily News, that the Barstow firm could be charging the city up to $8,000 a month more than Los Angeles County pays for the same petroleum products. A restraint clause is in effect in Barstow’s contract with the county.

The City Clerk’s tax and permit division is also investigating whether the department had failed to require the company to obtain a Los Angeles business license, thus incurring more losses, possibly $28,000 in taxes over six years.

“If I had been apprised of that contract, we would have investigated to determine if a tax was due,” said Donald DeBord, chief of the tax and permit division. “Why we were not apprised of that, I don’t know.”

Hal Barstow, president of the petroleum supply company, said he was unaware of any tax obligations by his firm and is cooperating with the city to determine if any tax payments are due. He also defended his company’s contract that the General Services Department awarded last September.

“We complied with all the bid requirements,” Barstow said, “and we have complied with the contract since day one.”

Investigators began investigating the details of the Barstow contract last week, Comrie said. They also will look at the agency’s petroleum products administration office, which administered the contract and which is headed by Cunliffe’s sister, Iris Werling.

Questions have been raised by Councilman Ernani Bernardi and others over the awarding of the Barstow contract and the absence of a price restraint clause--which ties the price of fuel to a firm’s refinery cost.

“If that’s true, the city could have lost a significant amount of money,” said Comrie. “But we won’t know that until we look into it.”

Declines to Comment

Werling declined to comment and referred all questions to John Cotti, the department’s acting general manager.

Cotti said he was confident of Werling’s administrative ability although he would not discuss her handling of the Barstow contract.

“As far as I know, she is a competent employee,” Cotti said. “She met all of the testing requirements to have that position.”

Cotti also praised the work done by the Barstow firm.

Cunliffe, who was placed on paid 45-day leave two weeks ago by Mayor Tom Bradley, could not be reached for comment. She has been suspended while investigations are under way into charges of mismanagement and favoritism under her management.

Makes No Judgment

Bradley told reporters Tuesday that he put Cunliffe on administrative leave “without making a judgment as to impropriety or malfeasance on her part.” He also explained that his recent directive telling employees not to speak with Cunliffe was in the “best interest” of investigators.

The mayor declined to discuss the Barstow petroleum flap “without having all the facts on that contract.”

In this latest investigation, city officials were asked by Councilman Ernani Bernardi to look into the Barstow contract following complaints lodged by a competitor, Gasco Gasoline Inc.

Gasco, an Oxnard firm, had lost out on the city fuel contract and contended that Barstow had “manipulated the prices” in order to secure the contract. Shortly after winning the bid, Barstow--with no restraint clause to limit its rates--raised its prices for fuel, according to a letter to Cunliffe from Ben C. Larner, a Gasco executive.

Was Low Bidder

Gasco had been the low bidder in the original competition last July. The bid was based on the city’s estimate that it would need 12 million gallons of regular unleaded gasoline, 740,000 gallons of unleaded premium and 4.1 million gallons of diesel fuel.

City officials, however, recalculated the volume of fuel needed by the city, and changed the total to an estimated 12.5 million gallons--after the bid specifications had been sent to suppliers.

When new bids were submitted in September, Barstow’s bid for 28.9 cents a gallon for regular unleaded gasoline was the lowest bid--five cents below Gasco and about 10 cents below the industry average and county prices for the week. That price also was reportedly eight cents less than the firm had been charging the city.

Bernardi, referring to the rebidding process and Barstow’s increase in prices after it had the contract, said, “That disturbed me.””I think we need to know what’s going on.”