School Jobs Awarded Without Bidding : Education: The practice conflicts with a policy of seeking competitive prices. A number of L.A. district executives worked at times for the agency that got $6 million worth of contracts.

Without seeking competitive bids, the Los Angeles Unified School District has awarded about $6 million in computer-related contracts to an educational research agency with close ties to several former district officials.

Between 1973 and 1990, Southwest Regional Laboratories (SWRL) of Los Alamitos received 23 district contracts, primarily for testing student achievement in reading and mathematics.

All the contracts conflicted with the longstanding district practice of seeking competitive prices whenever a project is large in scope and costs exceed $15,000. Also, one printing contract, for $145,000, required competitive bidding under state law but instead was awarded directly to SWRL, records show.

One school executive was on retainer to the nonprofit research firm’s Board of Directors for more than a decade, and at least four others--including a future superintendent--joined the organization or took leaves of absence to work there.

Officials told The Times their connections to SWRL were proper and widely known among district staff. They said they took pains to avoid conflicts of interest and did not extend special treatment to the agency.

“It was so well known that the top staff of the school district had been involved in organizing SWRL that people felt it was almost a part of the school district,” said former Associate Supt. Jerry Halverson.

Halverson was a paid legal adviser to the agency’s board while employed as the chief counsel to the school district. However, key district personnel, including current Supt. Bill Anton, said they were unaware of Halverson’s ties to the agency. And state conflict-of-interest records show that the lawyer did not disclose his connection to the agency for almost a decade.

The SWRL pacts illustrate how school officials have handled some lucrative contracts for professional services. The Times recently reported that the district paid $250,000 for public relations work during the current financial crisis and earlier awarded $1.4 million in computer contracts to a politically connected consultant.

SWRL was founded in the mid-1960s by educational institutions from California, Arizona and Nevada as a quasi-governmental educational research agency. The group is independently run by a board of directors appointed by regents from the University of California and other founders.

Records and interviews show that Los Angeles school district officials helped set up SWRL and, in some cases, established personal business relationships with the agency:

- Former Schools Supt. Jack Crowther was a founding director of SWRL in the mid-1960s and served without pay until he retired from the district in 1971, two years before SWRL’s first contract with the school district.

- The deputy director of the school district’s contracts division, William H. Hein Jr., left the district in the mid-1960s to work for SWRL as general counsel and director of administration.

- Administrator Harry Handler was a founder of SWRL and in the 1970s took two leaves of absence from the district--totaling about three years--to work as a SWRL researcher. Handler later served as schools superintendent from 1981 to 1987.

- Halverson, legal adviser to the school district, helped form SWRL and stayed on for about two decades as part-time counsel to the agency’s board.

- Owen L. Knox, a former district administrator, took a leave from his job and was given part-time employment by SWRL for a year in the early 1970s while he worked on his Ph.D. The job predated SWRL’s first contract.

- Another schools administrator, James Taylor, now retired, went to work as SWRL’s personnel director in the early 1970s and returned to the district a year later.

And several Los Angeles Unified School District teachers worked during summers as SWRL researchers.

The management of SWRL changed in the mid-1980s. A recent statement from the current management said SWRL staff “are proud of their involvement with LAUSD and believe that their efforts made a difference. . . . LAUSD got what it paid for and . . . the costs involved were fair and reasonable.”

SWRL officials said they could not locate salary records for former district administrators who worked for the agency.

Taylor could not be reached for comment. Other former LAUSD officials said they received payment comparable to or below their district salaries.

At its peak in the early 1970s, SWRL employed a staff of about 200. To house the organization, the federal government built an 88,000-square-foot office complex with printing facilities in Los Alamitos. Now the staff of 70 occupies a fraction of the space.

SWRL was one of 20 similar laboratories initially financed by federal National Institute of Education research grants.

After that money dried up, most of the labs folded by 1980. But SWRL survived primarily on National Institute of Education contracts until 1985 and since then has competed for a variety of state, local and federal contracts.

At the Los Angeles school district, SWRL never was required to compete.

The school district first contracted with SWRL in 1973, paying the agency $2,500 for use of a reading and writing program. SWRL later obtained a series of annual contracts and extensions for other projects, the largest a three-year, $776,000 accord in 1985.

The school district accounted for 14% of SWRL’s revenue between 1979 and 1990. In 1986, district contracts made up 76% of SWRL’s income.

California law allows government agencies to bypass competitive or negotiated bidding procedures to obtain specialized services, such as legal work.

But, according to its traditional practice, the district at a minimum checks the prices and qualifications of more than one contractor when it appears the work will grow into a long-term project involving hundreds of thousands of dollars.

In each SWRL contract, district officials exempted the agency from competitive bidding requirements on grounds that it had “unique qualifications” and a history of having “worked closely with LAUSD.”

Halverson and others said that even though they did not check with other research organizations, they believed SWRL was the only agency that could perform the work.

SWRL primarily wrote computer-related tests to measure student achievement and identify problems of individual students.

Many teachers thought the SWRL tests, combined with two lengthy state examinations, cut unnecessarily into teaching time, said Floraline Stevens, former director of research and evaluation for the school district.

The SWRL tests were eliminated in an attempt to decrease the “paperwork overload” on teachers, Stevens said.

Later, SWRL was given a computer contract to translate the results of a statewide test into a form that was more understandable to district teachers and administrators.

The ties to SWRL at times were awkward, Halverson said, particularly when Handler became superintendent and had to go before the Board of Education “annually to recommend a renewal of a (SWRL) contract.”

The board, which approved all the contracts, was “real sensitive” to anything involving SWRL and was aware that Handler had worked for the agency, Halverson said.

Records show that Handler, as a deputy superintendent in 1978, presented to the board a staff recommendation for approval of SWRL’s first big contract, which ultimately totaled $488,000.

Handler later wrote a letter to Dick Schutz, then executive director of SWRL, informing him of the contract’s approval. Hein, the former schools official, signed the contract for SWRL.

Six months later, the contract was increased by $145,000 for printing of test materials by SWRL.

Under state contracting law, such printing work was supposed to go out for competitive bid. Despite reminders from other district officials, Handler’s staff missed the deadline for initiating the bidding process, according to a note by Kingsbury T. Jackson, head of the district’s contracts division at the time.

Jackson told The Times he put the handwritten note in the district file “to cover my ass.”

“I was always trying to make sure that anything that was done was done legally,” he said.

Handler said he had no memory of the 1979 incident and did not extend any special treatment to SWRL. Other officials who were involved could not be reached for comment.

Knox, while on leave to work on his doctoral degree, was employed part-time demonstrating SWRL’s kindergarten reading program to other school districts.

After returning to the Los Angeles district, Knox said, he introduced SWRL staff to other school officials. “SWRL had several interesting programs,” including one in African-American language study, he said.

Halverson worked part-time as legal adviser to the SWRL Board of Directors from its founding in 1966 until shortly before retiring from the school district in 1987.

The lawyer was to be paid a monthly retainer based on minimum fees being paid by Los Angeles County for legal work, according to current SWRL officials.

But Halverson said he worked without pay until the 1970s and then received retainers of $1,200 to $1,800 a year. Records show he did not start reporting the payments on state-required conflict of interest forms until about three years before retiring in 1987.

Asked why he did not disclose the earlier payments, he said, “I don’t know.”

Records show Halverson was included on the interoffice distribution lists for copies of key SWRL contracts. According to district files, he also discussed at least one of the contracts with the county counsel’s office.

Halverson said he was aware of “potential conflicts” so he had the county counsel’s office review SWRL contracts instead of doing it himself.

“I was very conscious of someone saying the school district or someone on the staff is giving favored treatment to SWRL because the school district fathered that organization and staff has worked for it and has a financial interest in its success,” said Halverson. “. . . Maybe in retrospect, I could have handled it differently.”

Halverson’s successor, Richard Mason, reviewed many of the SWRL contracts when he was with the county counsel’s office. He said Halverson did not influence any decision or contract reviewed by him. “We don’t believe there was a conflict,” Mason said.

In the mid-1980s, one of Halverson’s subordinates, John K. Nagata, complained to him about SWRL’s performance. At the time, Nagata said, he was unaware of Halverson’s relationship with the contractor. “How could he do that?” said Nagata.

Nagata said he believed SWRL had maneuvered the district into becoming so dependent on its work that officials had to renew the agency’s contracts each year.

He alleged that SWRL had withheld key computer information from employees so that school officials could not replicate SWRL’s work. He said he also thought the company kept changing the achievement testing requirements just enough to force new contracts.

Halverson did not impede Nagata but did nothing to address the complaint, according to both men.

After Halverson and Handler retired in 1987, Nagata gradually cut back on work awarded to SWRL. The last proposed contract, for $224,000, was pulled from the school board agenda in 1990 by Nagata. “It wasn’t worth the expense they were trying to charge us,” he said of the proposal.

SWRL officials said they were told the only reason for canceling the contract was a shortage of funds.