AIRPORT DEALS RAISE ALARM, CHICK SAYS.

Byline: Beth Barrett and Rick Orlov Staff Writers

City Controller Laura Chick released a scathing report Monday on an audit of the Los Angeles airports department, calling for its contracting practices to be investigated by city, county, state and federal authorities.

In a 51-page review of the Department of Los Angeles World Airports, Chick said airport commissioners repeatedly sat on selection panels that recommended awarding millions of dollars in contracts without written justification, then later voted on the agreements.

The practice raised fears of potential conflicts of interest, fraud, misuse of power and inappropriate awarding of contracts, she said.

``These contracts are being given in an aura of secrecy, closed back-door deals, no documentation and no way to tell whether or not these dollars are being spent in the best interest of the airports, the people who use them, the people who live in the city and the city itself,'' Chick said during a City Hall news conference.

``This is no way to run a public agency.''

She said arrogance among airport officials created an environment like the one in the corporate world that culminated in scandals at firms such as Enron.

``It's the same kind of arrogance ... that those rules don't apply,'' Chick said.

Airport Commission President Ted Stein and other members of the seven-member panel did not return phone calls for comment.

Stein previously denied any wrongdoing after reports of a preliminary inquiry by the District Attorney's Office into the awarding of contracts for Los Angeles International Airport.

Chick said she turned over her initial findings to District Attorney Steve Cooley on Oct. 24. She also called on Monday for investigations by the city Ethics Commission, California Attorney General Bill Lockyer and the U.S. Department of Transportation.

In a printed statement, LAWA Interim Executive Director Kim Day said some of the audit's recommendations ``are without merit and paint a misleading picture of how contracting business is done at LAWA.''

``Working under the guidance of the city attorney, LAWA enjoys an excellent reputation for its contracting practices, and the department is proud that it is in accordance with the highest legal and ethical contracting practices,'' Day said.

City Councilwoman Cindy Miscikowski, whose district includes Los Angeles International Airport, called the five-month, $150,000 audit, conducted by the firm Sjoberg-Evanshenk of Sacramento, ``a red alarm going off,'' and said commissioners need to be barred from future contract-review panels.

``It's very, very serious - at the most-minimal level, on blatant appearance problems, and on a more serious level, perhaps worse,'' Miscikowski said.

City Councilman Bernard C. Parks also said the commissioners' practice of serving on review panels must be discontinued. ``I don't think you can serve two masters.''

Mayor James Hahn issued a printed statement: ``I look forward to working with the controller, the staff of Los Angeles World Airports and the City Council to further examine the audit's recommendations and to insure our airports are the most successful and safest in the world.''

City Attorney Rocky Delgadillo told Chick in February 2002 that commissioners could sit on contract-review panels, as long as they complied with conflict-of-interest and open-meeting laws.

Delgadillo could not be reached for comment Monday.

Auditors said members of the city attorney's staff - who act as the commission's legal counsel - had noted that evaluation panels lacked written justification to support their recommendations to the board.

``They also stated that, on several occasions, verbal recommendations were made to LAWA management to stop this practice and to develop sufficient documentation to support their decisions,'' wrote authors of the audit report.

The report concludes, ``We believe it is impossible for board members who are appointed by the mayor to avoid the appearance of a potential conflict of interest as they participate in the evaluation and selection of proposals, which would ordinarily be performed by department staff associated with the contract, followed by a recommendation to the full board for the approval of a contract award.''

Chick said the auditors found that, whenever commissioners sat on evaluation panels, there was poor documentation for recommending a particular contractor.

``What bothers me is, 10 out of 10 contracts we looked at are completely without explanation,,'' Chick said.

In one case, the LAWA staff recommended one firm as ``most qualified'' to win a $930,000 contract, but the board awarded the job to another firm.

``We found no documentation supporting the change from one firm to the other,'' auditors wrote.

The auditors also found that LAWA has not consistently followed its own leasing policies or related federal regulations.

``For example, the last rental-rate adjustment made at Van Nuys Airport was in 1990. As a result, the current 56 leaseholders are paying rates that have been obsolete for many years, at a loss of millions of dollars to the city,'' Chick said.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com

AUDIT HIGHLIGHTS

Here are highlights of a report released Monday on an audit of the Los Angeles World Airports department:

--The contracting environment at LAWA is ``ripe for potential abuse and conflict of interests.''

--LAWA's practice of including commissioners on proposal-evaluation and selection panels constitutes poor management practices, and it ``gives the appearance of a conflict of interest.''

--Sound business practices and policies are routinely ignored when commissioners are involved in the initial review, screening and selection of contractors.

--The practice of board members participating in contracting activities prior to the board's formal vote should be banned.

--A code of conduct should be established for commissioners and airport staff regarding contracting and other activities.

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AUDIT HIGHLIGHTS (see text)