CONTROLLER QUESTIONS DWP'S P.R. CONTRACT.

Byline: Beth Barrett and James Nash Staff Writer

Los Angeles City Controller Laura Chick ordered an audit Thursday into the Department of Water and Power's controversial $3 million a year contract with the public relations firm Fleishman-Hillard.

In a letter to DWP's acting general manager, Frank Salas, Chick said the audit will evaluate the DWP's oversight of the contract, and the firm's adherence to its terms and conditions.

Chick said she decided to audit DWP's award, handling and oversight of the P.R. firm's contract after her rejection last month of requests for payment for December and January invoices.

``One of my main concerns is that this is a very high-end, expensive contract that's been in place for a number of years now inside an agency that's come to ratepayers and said we need more money from you,'' Chick said in an interview Thursday.

``I'm concerned the city get a bang for its buck.''

Fleishman-Hillard officials did not return calls for comment. Salas also could not be reached for comment.

Chick said that while it is standard practice in the industry to bill by the quarter hour - which explains why DWP has been charged $50 to $100 for an e-mail, a fax or a voice mail - it is not acceptable for a public agency.

``When we need outside expertise, we need to negotiate in a hard-nosed way,'' Chick said. ``We need to change how we negotiate. It's too much money.''

Critics have long questioned the cost and scope of the public relations contract with the monopoly utility, especially now that DWP is seeking an 18 percent hike in water rates.

The agency also increased the size of its corporate communications budget for the 2003-04 year by $1 million, to $13.3 million. That includes 23 DWP employees paid from $41,154 to $108,242 a year.

Councilman Tony Cardenas, who chairs a council committee that deals with DWP, endorsed Chick's audit. Cardenas said the cost of the audit pales in comparison with the size of the Fleishman-Hillard contract.

``I think it goes hand in hand with the movement we saw in the council a couple of days ago (to scrutinize DWP),'' Cardenas said. ``Our proprietary departments need to show that they're spending money wisely.''

Councilman Greig Smith, who successfully got an outside fiscal evaluation of the DWP prior to raising water rates, is skeptical of Chick's plans, said his chief of staff, Mitchell Englander.

``I don't see what the intent of her audit is. We were asking for specific, quantifiable information. I think it's grandstanding on (Chick's) part.

Fleishman-Hillard, Los Angeles' largest public relations firm, also has a Harbor Department contract worth about $400,000. And, it has a contract authorizing work for up to $500,000 with Los Angeles World Airports, though company officials have said they've only billed for a fraction of that amount.

It also has contracts with other local government agencies.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com