Audit Finds City’s Purchasing System Is Still Wasteful

If audits were lethal, the city of Los Angeles’ much-maligned purchasing and materials management system would be dead.

The latest documentation of the ills and inanities of that system, compiled by Deloitte & Touche, a management consulting firm, was unveiled Wednesday.

One of its findings was that the system for purchasing supplies is so fragmented and archaic that the city often spends more money processing a purchase order than it pays for the product or service.

But another Deloitte & Touche finding was that many of its findings were old hat. “The problems plaguing the system are the same problems that were highlighted 18 years ago,” the latest audit found.

Despite that bit of history, Mayor Richard Riordan and Councilman Joel Wachs pledged Wednesday to do their utmost to end the stalemate and implement the sweeping reforms recommended by Deloitte & Touche.

“It is totally doable,” Wachs said. “All it takes is the political will to bring the city’s Byzantine purchasing system into the 20th Century.”

And the stakes warrant the effort, the mayor added. A savings of $275 million could be realized in five years if the audit recommendations are enacted, Riordan said.

The Deloitte & Touche document is the fourth and most comprehensive of a series of recent reports and audits highly critical of the city’s purchasing and materials management systems.

It said the most important reform would be to have one city agency make purchases for all city departments, including the nearly autonomous water and power, airport and harbor departments, and to have that agency buy from a drastically reduced list of suppliers.

The result of such consolidation would save $27.8 million annually through economies of scale and volume discounts, the audit said.

The report also observed that at any given time the city has $250 million of supplies and equipment in storage in 174 warehouses.

Some of the stockpiled goods are “incomprehensible,” the report said. For example, the city’s Police Department has 16,000 small screw cap jars in its main warehouse--a 22-year supply of this product. Meanwhile, the city’s Recreation and Parks Department has 10,000 tapestry needles in a warehouse that it purchased in May, 1982.

The cost to the city of maintaining its excessive and dormant inventory is high--and could be cut by $10 million a year, the report found.