Airport Pact Identified as Audit Target

Los Angeles City Controller Laura Chick on Wednesday identified for the first time one of the airport contracts she had asked prosecutors to investigate.

Chick said that a recent audit of the city’s airport department found that its officials could not provide a “sound rationale” for why the agency awarded a $930,000 contract in June to Chicago-based Ricondo & Associates instead of Cincinnati-based John F. Brown Co.

She added that the contract seemed to have been awarded in an “atmosphere ripe for fraud.”

Airport department officials disputed Chick’s contention, saying she had her facts wrong. Officials at both companies declined to comment.

A spokesman for the Los Angeles County district attorney’s office said officials could not discuss the matter because it was part of an ongoing investigation.

The Los Angeles County Grand Jury is looking into possible corruption involving Los Angeles World Airports’ handling of lucrative outside contracts, sources familiar with the probe said. Last month, a former agency executive, a deputy mayor and a lobbyist were called to testify before the panel.

Chick made her comments Wednesday during and after a hearing by the City Council’s Audits and Governmental Efficiency Committee, which is looking into the findings in her audit.

The document, which was released Dec. 15, said the airport department lacked a formal process to evaluate and select bids on lucrative airport contracts, and kept inadequate records on decisions to hire one firm over another.

The department operates Los Angeles International Airport, Ontario International Airport and the Van Nuys and Palmdale airports. It administers 434 revenue-generating contracts valued at about $346 million.

The audit cited the $930,000 contract as an example of the agency’s contracting problems, but did not name the companies involved.

At a news conference to announce the audit, Chick went beyond the findings in the document and declared that she had concerns about “potential conflict of interest, fraud, misuse of power and inappropriate award of contracts” at the airport department. She also said she had heard rumors about a pay-to-play environment in Los Angeles, in which contractors make contributions to political campaigns in exchange for preferential treatment.

Chick said that she had asked local, state and federal authorities to investigate, but she had declined to provide specific examples of suspected wrongdoing or name specific companies until Wednesday’s hearing.

At that hearing, Chick said she thought that the $930,000 contract should be discussed in closed session because the matter may be part of a broader investigation, but council members and the city attorney said it could be discussed publicly.

According to Chick’s auditors, airport department staff recommended in early 2003 that commissioners give the contract for financial services to Brown Co. But the contract was never awarded.

Instead, according to auditors, airport staff in April asked Ricondo to submit a proposal, and awarded it the contract in June.

Chick and her auditors told council members that they were troubled that airport officials could not provide any rationale for why they had switched companies.

But in a letter to Chick last week, and again Wednesday, airport department officials disputed that version of events. Officials had not made a last-minute switch, but instead wanted to put the contract out for competitive bidding, they said.

Though some employees may have recommended going with Brown, the matter never came before the citizen commission that oversees the airport department, or reached the desk of Paul L. Green, the airport department’s chief operating officer, officials said.

“This appears to me to be an ill-conceived criticism,” said Airport Commissioner Peter Weil. He also criticized Chick for “inferring incompetence, neglect or wrongdoing where none is present.”

During the two-hour hearings, the airport department’s interim executive director, Kim Day, stressed that airport officials “want a transparent process.”