Metro Rail Expenditures

With regard to your article (Nov. 6) and subsequent editorial (Nov. 7) on the results of our audit of one of the Metro Rail contractors, some clarification is in order.

The audit of Tutor & Saliba-Groves was initiated by the Los Angeles County Transportation Commission to ensure the propriety of corporate overhead charges made to the Metro Rail project. Our audit has questioned some $2.7 million worth of corporate overhead costs incurred by the contractor during 1990. In fact, only a small fraction of these questioned costs were charged to the Metro Rail project. Further, of this fraction, the contractor has previously agreed to repay the great majority. Of the remaining questioned costs, our position is to disallow payment on all items.

The taxpayers are protected from overpaying Metro Rail contractors in a number of ways. First, all construction contracts are awarded to the lowest priced contractor via competitive bidding. Second, in the great majority of those cases where changes need to be made to a low-bid contract, the overhead charges are limited by explicitly defined contract ceilings. Third, in those exception cases where a necessary change in the work permits a contractor to charge actual overhead costs, the LACTC retains the right to audit and adjust those overhead charges to ensure that they meet strict allowability rules.

Metro Rail construction expenditures will always be proper, justified and fair compensation for work performed. This most recent audit is, in fact, an example of our successfully effecting one of these safeguards. In this case, as always, no improper charges will be paid for. Contractors who repeatedly violate our rules risk eligibility for future contracts.

ED McSPEDON, President/CEO

Rail Construction Corp./LACTC