CONTROLLER ORDERS AUDIT OF CONTRACTS.

Byline: Mariel Garza Staff Writer

After uncovering a bungled contract that cost the city's Harbor Department nearly $3 million, City Controller Laura Chick announced Thursday that she intends to scrutinize how the city's semi-autonomous departments - harbor, airports and water and power - contract for services.

More than two years ago, the city contracted with a company called Historic Railway Restoration to build two replicas of the Pacific Electric Red Cars to run a 1.5-mile stretch along the port area to boost tourism.

But the Red Cars are still unfinished and the Harbor Department has paid the contractor the full amount of the contract plus $366,000 - a total of about $2.9 million.

``The city spends millions and millions a year,'' Chick said. ``I'm not at all arguing that we don't need outside assistance. We do, for a lot of different things. But are we getting what we're paying for?``

Chick's audit will include all contracts entered into by the Harbor Department, Los Angeles World Airports, and the Department of Water and Power in the last two fiscal years except for construction contracts and the lease of terminals.

``In a nutshell, what we're looking at is every aspect, from front to back, always under the overarching purpose of: Are dollars being spent well, wisely, fairly and appropriately?''

Chick said the three proprietary departments, compared to other municipal departments, are less scrutinized by the City Council but spend extremely large amounts of money on contracting.

In this particular case, Chick's audit of the contract found no wrongdoing, just ``deficiencies and significant project management issues related to the award and the management of the contract.''

``I applaud Laura Chick for doing this,'' said Councilwoman Janice Hahn, whose district includes the harbor, adding that the new harbor advisory committee will help oversee the department's spending in the future. ``It pointed out a problem with how the Port of Los Angeles does RFPs (requests for proposals).''

Hahn said that in this case the department was trying to get something done for the community and was hasty in handing out the contract.

Matt Middlebrook, spokesman for Mayor James Hahn, said the Mayor's Office supports Chick's audit.

Harbor Department officials declined to comment on the audit of the Red Car contract, saying they hadn't yet had a chance to review it.

Chick's findings weren't a surprise to harbor neighbors who have notified her office of at least two other questionable contracts, said Andy Mardesich, a neighborhood activist and a leader in the Harbor Area secession movement.

``I think it's appropriate that she do it,'' Mardesich said. ``This is not first case nor will it be the last case of mismanagement.''

``We will certainly cooperate with the Controller's Office,'' said Nancy Castles, spokeswoman for Los Angeles International Airport. She said the airport administration's intention has always been to comply with city policies when awarding contracts.

Staff Writer Harrison Sheppard contributed to this report.