Audit Calls MTA’s Oversight of Rail Projects Inadequate : Transit: Report criticizes board for ‘micro-managing.’ It urges hiring of more staff to monitor contractors.

An independent audit commissioned by the Metropolitan Transportation Authority has found that oversight of virtually every aspect of the agency’s rail construction--from design to safety to quality--is inadequate and recommends that the MTA immediately increase its staff to better monitor contractors and consultants whose costs have spiraled out of control.

The study, released Wednesday, also recommends that the MTA hire a strong executive officer to take charge of construction and enforce accountability in the agency’s construction division, saying its members have been too eager to pass the buck when problems occur. More emphasis must be placed on safety and quality, and the MTA’s board of directors must “step back from micro-managing issues,” said the detailed--and highly critical--audit of one of the county’s most powerful agencies.

MTA officials swiftly pledged to implement the recommendations in the report, which was commissioned last summer after tunneling beneath Hollywood Boulevard caused the famed thoroughfare to sink and prompted the federal government to temporarily withhold funding for the project.

The audit follows an internal investigation that concluded that the MTA awarded an $80-million contract to a company with apparent conflicts of interest and inside information on the contracting process.

“From here on out we have a clear map on how to restructure the MTA,” said Los Angeles Mayor Richard Riordan of the study by the Arthur Andersen Co. Riordan is a member of the MTA board.

“It’s clearly a fair report,” said MTA Chief Executive Officer Franklin E. White, whose staff was criticized for being too trusting of its contractors and too intent on “fixing the blame versus fixing the problem.”

The audit recommended that the MTA solve its problems by hiring more staff, even as the cash-strapped agency announced Wednesday that it expects to lay off 234 employees in the next fiscal year to close a $97.6-million operating shortfall. White said the money to add 70 employees in the construction division--a 50% increase--would come from the agency’s capital funds rather than its deficit-ridden operating budget.

The positions would help the MTA keep better track of its construction projects and contractors, which have won more than $900 million in jobs so far from the agency, the report said. Many of the functions now performed by contractors and consultants--such as quality assurance, contract administration and cost control--would be absorbed in-house.

“We’ll have a better capability to make sure people are doing what we’re paying them for,” said White, who acknowledged that finding employees well-versed in rail construction will be difficult.

The most urgent hire is of a “strong construction leader with extensive hands-on rail construction/tunneling experience,” the study said. MTA officials said they expect to name a new executive officer for construction within 30 days.

Some of the audit’s harshest criticism was reserved for the MTA’s 13-member Board of Directors, which the report characterized as making “politically charged, rather than fact-based” decisions. Few if any board members have a good working knowledge of construction and transit issues, yet the board often second-guesses MTA staff and micro-manages projects with sometimes-costly results, the study found.

“The MTA board’s micro-managing style appears to be largely responsible for the staff’s current low level of self-esteem and morale,” the report said. The board’s second-guessing has caused “significant delays, additional costs and a continuing erosion in the capability of the staff.”

County Supervisor Mike Antonovich, chairman of the MTA board, challenged the allegation of micro-management. Many unwise decisions were made not by the MTA but by its now-defunct subsidiary, the Rail Construction Corp., which operated almost autonomously from the MTA, Antonovich said.

In September, the MTA board disbanded the Rail Construction Corp. in favor of a construction committee that answers directly to the board.

Antonovich said a task force launched Wednesday to implement the audit’s recommendations will review the agency’s progress every three months.