August 18, 2004
Los Angeles Times
Probe of DWP Intensifies
The Los Angeles Department of Water and Power's contracting came under increased scrutiny Tuesday as the city attorney turned to private investigators to look into possible overbilling by the public relations firm Fleishman-Hillard and as the department's own auditors found flaws in its supervision of a contract with a community outreach company.
City Atty. Rocky Delgadillo said he has hired Public Interest Investigations to work on his probe into allegations by former Fleishman employees that they were encouraged to pad billings on work for the DWP.
"We are making good progress," said Chief Deputy City Atty. Terree A. Bowers.
Bowers confirmed that Delgadillo's communications director, former Fleishman employee Eric Moses, has been given a new assignment. Moses will work with attorneys in the field, he said, "to assist in how they communicate with the public."
"We believe this assignment will result in more residents knowing how to utilize the city attorney's office," Bowers said.
He declined to say if the new assignment was related to Moses' work with Fleishman, but did say that Moses has, from the start, been "walled off" from involvement in the city attorney's lawsuit against the public relations firm "for the integrity of the investigation."
Moses did not return calls for comment.
Bowers would not say whether Moses has been able to provide investigators with information on the allegations against Fleishman.
Another Delgadillo deputy, Matt Szabo, will serve as the spokesman for the city attorney's office, Bowers said.
In addition to the lawsuit, City Controller Laura Chick has launched an audit of Fleishman billings, and has hired the accounting firm Thompson, Cobb, Bazilio & Associates to assist her. Chick's auditors recently returned from a trip to Fleishman's St. Louis headquarters to gather documents.
Also, a federal grand jury has subpoenaed the records of the company, which has been paid more than $25 million to provide public relations services to the city during the last six years. Chick has singled out DWP managers for failing to properly oversee the Fleishman contract.
On Tuesday, an audit by the DWP concluded that there was lax supervision of a separate contract with the firm Lee Andrews Group, which was hired to provide advertising, communication, community outreach and media relations services.
On 13 jobs, the contractor spent $332,000 more than was authorized by task letters issued by the agency, according to Managing Auditor James Tan.
A task letter includes the scope of work to be done and the amount authorized to be billed on a specific project. Acting General Manager Henry Martinez said the problem was that agency managers did not write task letters fully covering the amount of work needed to be done.
In each case, new orders were issued to cover the excess costs, and the overall spending remained within the two-year $4.8-million contract, Martinez said.
Auditors found fault with the DWP's need to revise 42% of the task orders. In one case in which the bill exceeded the amount authorized, the invoice was denied by the DWP, but later when the task was revised, the work was rebilled, approved and paid.
"Task letters should not be revised for the purpose of allowing fees to be paid, which under normal circumstances would have exceeded maximum task letter limits," the audit recommended. "Any revisions made to a letter after the work is completed should not be applied retroactively in order to compensate prior billings."
Company representatives declined to comment Tuesday, saying Donna Andrews, the president of the Lee Andrews Group, was out of town and unavailable. The firm's contract with the DWP expired in May and has not been renewed.
Mayor James K. Hahn recently directed city officials to end outside public relations contracts, following controversy with Fleishman-Hillard.
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