Audit Finds City Wastes Supply Funds : Government: Purchasing system is more preoccupied with paperwork than prices and fails to follow up on vendors’ performance, report says. Workers blame hiring freeze.

The city of Los Angeles is so preoccupied with paperwork that it often pays little attention to getting the best buys on equipment and supplies, wasting an untold number of tax dollars each year, an audit has found.

The 41-page controller’s audit found that the city’s buyers spent most of their time consumed with filling out forms, rather than trying to locate the best buys for the city. It also found that the need for goods is determined haphazardly. And it concluded that emergency purchase requisitions are used in an apparent attempt to sidestep competitive bidding.

City Controller Rick Tuttle on Wednesday blamed the top management of the city’s Department of General Services, including General Manager Randall Bacon, for failing to improve the city’s purchasing system, which spends more than $200 million a year.

“The taxpayers are not well served by our city’s purchasing department,” Tuttle said. “There is a serious need for management to step in and overhaul many procedures.”

Bacon did not respond to telephone calls but one of his top deputies said the department disagrees with many of the findings of the audit.

The audit is just the latest broadside at the city’s procedures for purchasing supplies. Councilman Joel Wachs demonstrated earlier this year that the city often could get better buys on office supplies by simply walking across the street from City Hall to a discount store.

Frank Martinez, an assistant general manager with the General Services Department, said whatever inefficiency exists in the city’s purchasing department is due in large part to reductions in staff during a hiring freeze.

He also said that, although Tuttle blames centralized purchasing officials for inefficiency, other city officials have been pushing to turn control of buying over to individual city departments. The overall cost of such inefficiency was not determined.

The audit found that:

* The General Services Department, which directs purchasing for 55 city departments, keeps a list of more than 10,000 vendors, but seldom removes businesses from the list for poor performance. Even companies that were dumped were not blocked from returning later to bid on new contracts.

The city’s market research section is developing plans to weed out companies that do not provide services as promised. Meanwhile, the audit said, “the quality of goods delivered, accuracy of the vendors’ billing and the vendors’ attitude will remain unchecked and contribute to inefficiency.”

Martinez argued, however, that individual city departments should be responsible for reporting on companies that fail to deliver goods as promised.

“They are the ones who get the items,” he said. “They are the only ones who are going to know if the contract hasn’t been honored.”

* City buyers do not adequately track the costs of the goods they purchased and, although most contracts include provisions allowing price increases, few include allowances for prices to drop.

* Emergency purchasing provisions were misused, costing the city an estimated $489,000 in fiscal 1992-93.

Many goods were purchased under emergency rules, at an added cost of about 10%, although the items were not really needed to stave off a public health threat, to prevent work crews from going idle or under other emergency conditions.

Sometimes purchases were made under the rules in an apparent effort to avoid competitive bidding that is usually required for purchases of more than $25,000.

* The purchasing department failed to order many items in the proper quantities and could have obtained better prices if more of the supplies had been ordered.