Council OKs Ballot Measure on Purchasing

Tired of paying $300 for a $125 answering machine and $24.45 for computer diskettes that retail at $6.59, the Los Angeles City Council on Friday took the first step to becoming a smarter buyer.

The City Council voted 12 to 0 to place a measure on the April ballot to sweep away a series of costly and cumbersome City Charter restrictions on the city’s system for purchasing supplies and equipment.

The reformers, led by Councilman Joel Wachs and encouraged by Mayor Richard Riordan, contend that the overhaul of the purchasing system--which will also require a series of mayoral directives and council-approved ordinances to implement--will save the city about $70 million a year. The city currently spends about $750 million a year on supplies and equipment.

“This will dramatically reform the city’s antiquated purchasing system,” Wachs promised at a news conference Friday where he unveiled the highly technical charter amendment plan.

To enliven the subject, Wachs brandished a giant 750-watt light bulb and asked: “How many city employees does it take to screw in a light bulb?” The answer, he said: “One to screw it in; 29 to purchase it.”

More than two dozen sections of the City Charter would be affected by the measure. The amendments would, for example, permit the city to negotiate the bid price on purchases, remove the panoply of bureaucratic approvals now required for a department to enter into any contract of $500 or more and, in recognition of the computer age, allow the city to eliminate the paper trail and electronically pay its invoices and advertise for bids on computer bulletin boards.

One big saving would come by enabling the city to piggyback its purchases with those of other government agencies to get volume discounts.

For example, the city currently buys its gasoline from petroleum distributors and pays the middleman’s markup. However, if the city and county of Los Angeles joined forces, they could buy gasoline directly from refineries, saving money in the process, said Bob Jenson, a management analyst in the city’s Department of General Services.

But the charter now forbids the city to participate in such a joint bid because the county contracts are negotiated, not competitively bid, Jenson said. The proposed charter amendments would change that.

“It is believed that, by consolidating its purchasing power with other governmental agencies, the city will save at least 1.5% of our total purchases, or $10.5 million,” according to a recent city report signed by city purchasing agent Randall Bacon.

The city also expects to save $8.5 million by paying its vendors more quickly. Now it may take weeks for the city to pay a vendor because of a cumbersome and often duplicative accounting process. By being slow to pay, the city cannot get the discounts many vendors offer to customers who pay their bills early, usually by electronic transfers.

Also, if the city gained a reputation of paying quickly, it would induce more vendors to compete for city business. The increased competition alone would save the city $9.5 million, according Bacon’s report.

“Our system makes vendors jump through so many hoops that they don’t want to do business with the city,” Riordan said. The loser is finally the city, he added.

Finally, the reform package would enable the city to do some after-bid price negotiations with vendors to replace its present rigid competitive bid method of buying. “Now when we open the sealed bids, it’s over,” Jenson said.

“We want to be able to throw the three best bidders in a room and say ‘Here’s what you guys bid, now really give us your best price,” Jenson said.

Many of the reforms will do away with controls originally erected to protect the city against fraud and favoritism in the awarding of purchase contracts. Still, Rick Tuttle, the city’s controller, said Friday he was satisfied that enough controls would remain to keep the system honest.