L.A. Unified Faces Probe of Contracts

On dozens of occasions, Los Angeles school officials apparently evaded competitive bidding requirements by breaking Proposition BB renovation projects into smaller jobs, records show.

The practice, which occurred in the Los Angeles Unified School District’s facilities services division, is being investigated by the Los Angeles district attorney as a possible violation of state law requiring all but the smallest public works projects to go to bid, sources said.

A Times computer analysis of the district’s contracting records found many instances in which several contracts were cut into pieces to keep them below the threshold, generally $15,000.

More than 20 companies received two to more than 10 contracts on the same or similar jobs, often just under the $15,000 limit.

What remained unclear Friday was whether the packaging of jobs by the district was merely an expedient device to show quick results from the $2.4-billion bond approved by voters in April or whether district employees were manipulating the process on behalf of certain contractors.

Based on the advice of school district general counsel Richard K. Mason, a spokesman for the facilities services division said he would only answer questions delivered in writing.

A response to a list of questions submitted by The Times was not received by deadline.

“The whole thing stinks,” said Steven Soboroff, chairman of the citizens oversight committee appointed to keep watch on Proposition BB spending. Soboroff has been a harsh critic of the facilities division’s performance in BB work, contending that it has moved too slowly and planned too much of its work behind the scenes.

The contracting flap comes as Los Angeles schools Supt. Ruben Zacarias is reported to be close to announcing a reorganization that would remove the facilities services division from direct supervision of the BB contracts.

The district attorney’s office confirmed that it is in the preliminary stage of reviewing records of the district’s non-bid contracting. It declined to elaborate except to acknowledge that such inquiries are “not usually management audits,” but concern “alleged violations of civil and criminal consumer laws.”

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A spokeswoman for the district attorney’s office declined to say what precipitated the investigation.

However, an official for District Council 36 of the Southern California Painters and Allied Trades said the union filed a complaint concerning what it believes are violations of the prevailing wage law.

Grant Mitchell, business manager for the union, said it has also filed a civil lawsuit seeking to stop the district’s practice of bidding work out in increments under $15,000.

Mitchell said the union contends that the small job bidding procedure was being used to feed work to favored contractors who are not required to pay the prevailing wage on jobs under $15,000.

“We believe there are about five contractors that do all the work,” Mitchell said. “There is a bidding scheme.”

Mitchell said the union also alleges that the informal bidding allows low bidders on large projects to increase the value of their contracts by adding new contracts incrementally after the large one is paid.

Mason, the district’s counsel, said the district is cooperating in the investigation and is reviewing the painters union lawsuit.

According to school district sources, Zacarias’ reorganization of BB work would put the district’s business czar in place of facilities director Beth Louargand. Louargand now supervises the BB program manager and 10 regional project managers hired to oversee the bond work contracting.

Although the business czar position has been vacant since the resignation of Hugh Jones early this year, interviews to refill the position created by Zacarias last summer as part of his reform program are nearing completion, sources said.

Soboroff said the contracting practices validates his repeated contention that the district was meddling in the contract process.

“Somebody is picking out what needs to be done, who bids on it, who gets the award, how it gets inspected and how it gets paid,” he said. “It’s never seeing the light of BB oversight.”

An example of the practices found by The Times’ analysis was a single painting company, Majestic Painting & Decorating, which received seven contracts of $14,000 to $14,700 and two smaller contracts for painting classrooms and the exterior of Blythe Elementary School in Reseda.

The company did not return a telephone message seeking comment.

Another company, Beta Investments & Contracts, received six contracts, each for $7,250, on a $124,000 security grill installation at Cleveland High School in Reseda and four more contracts, each for $12,400, as part of a $442,880 air-conditioning installation at Riverside Drive School in Sherman Oaks.

A Beta employee who declined to give his name told The Times that the four contracts at Riverside were different jobs because they were on different parts of the campus.

In a statement released Friday, L.A. Unified attorney Mason asserted that state law allows the district to break up a job by issuing informal contracts “on a building-by-building basis.”

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The contracts were issued under a device called either an “A” letter or “B” letter, depending on the amount of the contract. “A” letters cover contracts of up to $2,000. “B” letters are used to award contracts of up to $15,000 for alterations, improvements and painting or $50,000 for repairs, according to a policy directive issued by the school district’s facilities services division.

“The law also prohibits splitting jobs to avoid the limits,” the undated directive said. “These limits are absolute.”

According to the directive, contracts up to the $15,000 threshold can be issued without permission, thus eliminating time-consuming procedures of advertising the bids, waiting for responses and evaluating the bidders. Contracts over $15,000 require sealed bids, and bid and payment/performance bonds.

The directive said that telephone bids may be taken for B letters up to $15,000, and that there should be at least two bids and that those bids should be recorded.

Soboroff said he has nothing against the use of expedited contracting in general.

“I think [“B” letters] serve a great purpose. I’m all for pushing the edge of the envelope. But this is not the edge of the envelope. It’s outside the whole thing.”