Wednesday, November 17, 2010

Los Angeles Cancels Contract with Construction Program Consultants and Launches Ethics Investigation

The Los Angeles Unified School District has canceled a contract with a consulting firm hired to manage the District's $7 billion school construction program, while its Inspector General investigates a number of ethical issues raised through a whistleblower complaint. 
  • Reduction of Consultants?  Over the last decade, four key consultants have helped the district manage its school construction program.  After the District "ordered a reduction in the number of  highly paid outside consultants" due to a budget crisis, the four consultants left the District and formed a new company, Consilia, LLC.  The new company was then hired this fall by the District to manage $7 billion for a school construction program in a contract worth more than $3.7 million.  The District is investigating whether the order to reduce highly paid consultants was circumvented by the hiring of Consilia, LLC. "It looks funny," Superintendent Ramon C. Cortines said, "when we say we are reducing the number of consultants, then the consultants leave and we turn around and hire their consulting firm."
  • Competitive Selection?  A related issue under investigation relates to whether Consilia, LLC was selected through a proper selection process.  Some sources charge that the four consultants wrote the scope of work for managing the construction program, and then formed Consilia, LLC to carry out the program.  District officials have stated that Consilia, LLC was selected after a competitive request for proposals was issued for which three proposals were received.
  • Work as Subcontractor?  The District's Office of the Inspector General is also investigating whether the District permitted the hiring of Consilia, LLC as a subcontractor on a contract that violated a ban imposed by the District on using subcontractors on that contract.
Concerns About Cancellation:  A member of the District's construction oversight committee expressed concerns about the cancellation of Consilia's contract:  "The public needs to be worried about the $7 billion they just gave the district [through a 2008 bond meaure] because the people who know how to spend it have all just been fired," said civil rights attorney, Connie Rice.

More Information:   
Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

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