School Repair Firm Retained Despite Ethics Controversy

The Los Angeles Board of Education decided Monday to retain the management firm overseeing more than $1 billion dollars in school bond work despite its failure to report a state investigation of illegal campaign contributions by its precursor company.

After conferring with its lawyer in closed session, the board issued a terse statement saying no action was warranted even though it was “unhappy and concerned” that O’Brien Kreitzberg Inc. responded “no” on a disclosure form that asked whether the firm was the subject of any investigation.

By only issuing a mild rebuke, the board maintained the joint venture of 3DI/O’Brien Kreitzberg Inc. as the overall program manager for the construction and repair portion of the $2.4-billion Proposition BB bond approved by voters this spring.

However, board member David Tokofsky said there was “heated discussion” in closed session and that any future misstep by the firm would lead to termination of its contract.

Steven Soboroff, chairman of the citizen oversight committee that reviews all bond expenditures, said he was relieved that the issue was settled after weeks of apprehension over a possible change of management.

“We need all their energy focused on the project,” Soboroff said.

The joint venture has been fighting for its job since a company related to O’Brien Kreitzberg admitted in September to laundering political contributions and agreed to pay $40,800 in fines to the Fair Political Practices Commission.

In a questionnaire submitted in June, after it was selected by the Los Angeles Unified School District, O’Brien Kreitzberg answered no to a question asking whether the firm “or any of its current or past key people or affiliate firms” had been subject to investigations of alleged violations of federal, state or local law.

Disclosure of the connection raised calls for the dismissal of the joint venture and renewed demands that the district appoint an inspector general to review whether O’Brien Kreitzberg was truthful in its answer and to scrutinize all the district’s contracts.

“I would expect an inspector general would have issued a very tough report and very tough conditions,” said state Sen. Tom Hayden (D-Los Angeles), who had criticized the district for hiring O’Brien Kreitzberg despite its involvement in a bidding controversy that contributed to the resignation of former Metropolitan Transportation Authority chief Joseph E. Drew.

Hayden said the firm “is getting away with the same kind of behavior that they got away with at the MTA, so they’re learning a bad lesson, which is to lobby their way to the top.”

Although Supt. Ruben Zacarias has submitted a proposal to the board for an inspector general, the idea has been referred to committee, whose chairman, Tokofsky, said it looks like an “uphill battle” to win approval.

Deputy Los Angeles City Controller Timothy Lynch, a member of the bond oversight committee, said it “would be a big mistake” to let the proposal die.

“That would guarantee having the district under constant outside scrutiny,” Lynch said.

Company officials say they told the truth on the form because the company had no connection to O’Brien Kreitzberg & Associates, a company that illegally reimbursed its employees for the contributions to officials or campaigns in Los Angeles, Long Beach, San Diego and the Bay Area.

After the donations were made, O’Brien Kreitzberg & Associates split into two other companies, including O’Brien Kreitzberg Inc.

O’Brien Kreitzberg President Alan Krusi made a surprise appearance before the board Monday, defending the company’s answer on the district form.

In an impromptu discussion before the board went into a scheduled closed session, Krusi said he was sorry for the embarrassment the answer had caused the district and that, if he had it to do over again, he would probably have attached an explanation.

In other action, the board decided to hold a news conference Thursday to try to persuade the State Board of Education to reject State Supt. of Instruction Delaine Easton’s recommendation of CTB/McGraw Hill’s Terra Nova as the test to be taken by 4 million California students.

The district, which switched this year to the Stanford Achievement Test published by Harcourt Brace, would have to switch tests again or test its students twice, picking up the tab of about $2 million for the Stanford test, district officials told the board.

Deputy Supt. Ron Prescott said he believes the state may not choose the test recommended by Eastin.

Zacarias said he has joined the superintendents of several other large California school districts in protesting any requirement for a statewide test before there are statewide standards for what children should know.

Times staff writer Amy Pyle contributed to this story.