Private Bid to Cool L.A. Schools Was Over Budget

A consortium of energy companies that boasted it could air-condition hundreds of Los Angeles schools faster and cheaper has failed to win recommendation for the $200-million job because it bid nearly $50 million higher than the district’s estimate, officials said Tuesday.

The rejection of Energy Alliance only heated an already boiling debate that pitted traditional government contracting practices against the private sector. The consortium castigated the school district for inflating its bid with demands for millions of dollars of work that have nothing to do with air conditioning.

After reviewing the proposals of Energy Alliance and three other bidders, a committee of school officials and outside experts has recommended that the Los Angeles Unified School District perform the massive air-conditioning work with its own management team, officials disclosed Tuesday. The team, consisting of a program manager and 10 project managers, was hired in June to administer more than $1 billion in school repairs approved by voters last spring.

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The 10-member evaluation committee unanimously concluded that the four outside bidders could do the work faster than the district’s team--but all at higher cost.

The Energy Alliance touched off the unusual bidding in May with an unsolicited proposal to the district. Ever since, proponents of the consortium’s business-oriented “fast-track” have criticized school officials for taking too long to analyze the offer and for slowing down the relief to students sweltering in classrooms.

District officials said the firm’s final offer was $264 million, about $100 million more than the bid announced by its executives in August.

Energy Alliance program manager Michael Dochterman said the consortium actually lowered the cost of air-conditioning work, only to see its bid soar when it added required utility upgrades at more than 100 schools and trenching to lay conduit for future technology systems.

“That is a huge job, and it is a job the school district has never had an estimate on,” Dochterman said. “They don’t have a clue what that’s really worth.”

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The failure of any of the outside bidders to win a recommendation brought an angry response from Steven Soboroff, Mayor Richard Riordan’s appointee to a blue-ribbon committee set up to oversee spending of the $2.4-billion Proposition BB school bond approved by voters in April.

“This has been my fear from Day 1,” said Soboroff, who has repeatedly accused school officials of delay and deception to stave off innovative proposals from the private sector.

“All of a sudden this memo would come out of the fog like a David Copperfield illusion.”

But the district committee, which included experts on deregulation, law, construction and accounting, recommended that “the current process with the project management firms should be maintained,” facilities director Beth Louargand said in a memo made public Tuesday.

In addition, the committee found that Energy Alliance--a private-public concern including the Los Angeles Department of Water and Power and the parent firm of the Gas Co.--had made a $46-million miscalculation in its price. After correcting the mistake, Energy Alliance still came in $48 million over the district’s current budget of $216 million, officials said.

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Confusion over the bidding process was further compounded Tuesday when the district’s new business czar, Hugh Jones, stepped in to say he wanted to conduct his own analysis of the bids before passing the committee’s recommendation on the Board of Education, which will decide whether to accept one of the four new bids.

Jones said he wanted to compare the bids on price, work included, quality of equipment, energy conservation and involvement of local business. He said the review would take five to 10 days.

Energy Alliance’s Dochterman praised the intervention as a businessman’s attempt to “cut through the politics.” And Soboroff said he will press at today’s Proposition BB oversight committee meeting to have all four bids immediately opened for public inspection and comparison with the budgets of the district’s management team, headed by program manager 3DI/O’Brien Kreitzberg.

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In the past, however, Soboroff has encountered resistance to his plan of having the committee examine the proposals in detail. Other members said they considered that a responsibility for experts.

The district began design work on air conditioning at 300 schools soon after Proposition BB passed, planning to spread the work over three years. In May, Energy Alliance put forward a “fast-track” plan to wrap it all up in 14 months for less money.

District officials insisted that other firms be allowed to bid against the alliance. The resulting 11 proposals were initially trimmed to seven, of which only four submitted formal bids last month.

The other three bidders are PG&E; Energy Services/CH2Hill, New West/Rogers Corporate Alliance and New Energy Ventures.

Soboroff said he expected that one of the “fast-track” bids should be chosen, and that the district’s management team should focus its efforts on other repair jobs. However, the management team not only continued working on air conditioning, but speeded up the effort.

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In September, the district’s project managers reported to the board that they were getting the work done for 20% to 30% less than budget, bringing the bottom line close to the Energy Alliance $159-million proposal.

Dochterman said Tuesday that the alliance’s price for the air-conditioning work alone has actually come down again, to $149.6 million.

But the evaluation committee used the firm’s price for all the work.