Firm Pulls Plug on DWP

A city contractor shut down a computerized purchasing system that has saved millions of dollars at the Los Angeles Department of Water and Power after the agency cut off payments, officials said Wednesday.

The dispute has forced DWP to notify vendors that they must submit bids and sales proposals manually, by fax or over the phone for the time being.

The DWP stopped paying the contractor after it decided it should seek bids to determine whether better, less expensive systems are available.

“Technology is continuing to change, and I think it would be beneficial to see what other e-procurement systems are out there,” said Thomas Hokinson, assistant general manager of the DWP.

In addition, DWP Commission President Dominick Rubalcava said the city attorney’s office is looking into whether the agency is legally required to seek new bids rather than continue extending the contract with its operator.

The developer and operator of the Internet-based procurement system, OFS, the Business Doctors, pulled out its team of technicians and shut down the system last week after complaining that the DWP has not been paying its bills.

“We terminated our services when we pulled out our team because we haven’t been paid in nine months,” said B.J. Hawkins, president of the firm.

Hokinson said the DWP has paid for the company’s services through November, and had hoped it would continue to operate the system while new bids are sought.

The Times reported last month that DWP officials had shelved a request for $2.8 million to continue operating and expanding the automated system after council members criticized the cost and union leaders objected that city workers should be allowed to do some of the work.

Even though the DWP has already spent $5 million developing and operating a system for automating purchases, the system was incomplete, generally only allowing computer processing for requisition and purchase on contracts of $150,000 or less.

Additional money is needed to expand the system and continue its operation, but DWP officials said that with OFS’ contract expiring in November, it wants to reevaluate the system and see if other companies can do the work better and more cheaply.

Rubalcava said the goal is to continue the use of technology to expedite purchasing even if it means a new firm is brought in after competitive bidding. The system, once expanded, is expected to eventually save the DWP $25 million annually as work orders are processed faster and the agency identifies the best deals more easily.