Audit Chides Airports

Eighteen months after she found “potential illegal acts” in the Los Angeles airport department, the city controller said in a follow-up report Wednesday that the agency still lacks consistent guidelines for awarding contracts.

The absence of an ironclad policy for ranking potential contractors, conducting interviews and saving documents generated in the selection process creates “an environment ripe for abuse,” Controller Laura Chick said.

“I don’t have confidence that the culture has substantively changed,” she added.

The audit found that the airport agency has made some progress, such as installing an automated system to track contracts and eliminating a policy that allowed airport commissioners to sit in on interviews with potential contractors.

“We greatly appreciate the acknowledgment in the report that significant progress has been made,” Kim Day, executive director of Los Angeles World Airports, wrote in a June 17 letter to Chick. “We also acknowledge that areas remain for improvement, and we are focusing our resources on those areas.”

But one of the contracts reviewed by auditors wasn’t processed through the new system, prompting Chick to ask whether the oversight was intentional.

“It is troubling that airport management would circumvent the rules for a particular contract,” Chick wrote to Mayor James K. Hahn, the City Council and City Atty. Rocky Delgadillo. “It begs the question, why?”

The contract was a $2.3-million deal with engineering firm Daniel, Mann, Johnson & Mendenhall and a $9.3-million amendment for work on the LAX modernization plan.

The new audit reviewed 10 contracts executed from January 2004 to March 2005 by Los Angeles World Airports, which runs Los Angeles and Ontario international airports and Van Nuys and Palmdale airports.

Chick’s December 2003 audit found that the agency lacked a formal process for selecting bids on contracts and did not keep adequate records documenting its decisions. Kurt Sjoberg, the state’s former auditor general, conducted both audits.

The first audit led to criminal investigations -- ongoing -- into the city’s contracting practices. At the heart of the allegations was Chick’s assertion that firms had to make campaign contributions to receive contracts.

On Wednesday, Chick expressed concern over the revelation that the Airport Commission had received only Tuesday the results of a $400,000 report on how to rework its contracting processes that it had commissioned after her first audit.

“To me, this is one more example that’s stunningly expensive and wasteful, of the kind of stalling and obfuscating and lateral passing and smoke-and-mirror tactics that have been used to avoid and stall changing their culture and practices,” she said.

That 220-page study found that “a negative perception on the transparency” of the agency’s contracting process may contribute to the “surprising low number of responses” it receives to its requests for contract proposals.