DWP Wants $2.8 Million for Upgrade

The Los Angeles Department of Water and Power spent $2.8 million three years ago to install a computerized purchasing system to help save money.

Then it spent $2.2 million more on upgrades.

Now, with city officials complaining that bills are still not being paid fast enough, the department has decided it needs to spend another $2.8 million.

On Tuesday, the head of the DWP withdrew that proposal from consideration by the agency’s board after City Council members questioned the increase.

Councilman Tony Cardenas, who chairs a committee overseeing the DWP, said he wants an explanation.

“We in government have a horrendous track record when it comes to implementing information technology contracts,” he said. “Anything that is doubled or more causes concern.”

Candido Marez, a member of the city’s Small Local Business Advisory Committee, also criticized the additional cost.

“It’s an outrage,” he said, after complaining to the council Tuesday that he is being harassed by DWP managers for criticizing their spending. “They already have an in-house system, and now they are going to spend millions more.”

Frank Salas, the DWP acting general manager, said he pulled the item from the board agenda because the union representing DWP workers has objected that private contractors continue to run parts of the purchasing system that could be operated by city employees.

However, DWP officials defended their recommendation to extend the contract with OFS, The Business Doctors, saying it will increase savings by speeding the processing of contracts and the payment of bills.

“It’s a system that works,” Salas said, adding that he plans to reintroduce the contract when the union issues are resolved.

The original $2.8-million contract and a subsequent change order adding $2.2 million to the cost have provided a system that allows for automation only from requisition through the awarding of purchasing contracts. It’s also limited mostly to contracts under $150,000.

The $2.8-million upgrade recommended by Salas would not automate the payment of bills, but it would automate bidding and purchasing on contracts larger than $150,000.

And it would help address concerns voiced by City Council members last week that the DWP has so far this fiscal year missed $1.8 million in discounts offered by vendors on bills that are promptly paid.

The agency has taken advantage of only 55% of the discounts available under contracts with vendors.

Albert Stephens, the DWP’s director of supply chain management, estimated that the expanded system would save the DWP at least $25 million annually.

Councilman Greig Smith wants the DWP to improve its payment of bills but has concerns when costs increase so much, said chief of staff Mitchell Englander.

“He wants to know if they can fix it, how much is it going to cost and how come it is escalating so much,” Englander said.

Stephens said the original project was meant as an interim system to be hooked up with another automation project that never was approved. The upgrades are needed to make the computerized system completely functional, he said.

Meanwhile, the criticism went both ways Tuesday as the agency board delayed approval of a City Council proposal to transfer $60 million in surplus DWP money to the city general fund to balance the city budget.

Board President Dominick Rubalcava said he was tired of council members taking money from the agency and then criticizing the DWP for its financial practices.

Deputy Mayor Doane Liu said an analysis has been done by the DWP management that shows the agency can spare the $60 million. And Rubalcava said he expected the board would eventually approve the transfer.