DA PUTS FOCUS ON LAUSD; BID PROCESS TARGETED.

Byline: Terri Hardy Daily News Staff Writer

The Los Angeles County District Attorney's Office served several search warrants Thursday in a stepped-up investigation into possible bid-rigging by LAUSD employees involving Proposition BB school repair money.

Evidence was gathered at sites off and on Los Angeles Unified School District property as part of a probe into whether school employees improperly awarded more than $1.8 million in painting contracts.

``Our ongoing investigation centers on allegations of bid-rigging with regard to painting contracts and the possible involvement of low-level district employees in improperly awarding those painting contracts,'' said district attorney's spokeswoman Victoria Pipkin.

The Daily News reported three months ago that there was a questionable pattern in how the painting jobs were awarded by the LAUSD's technical services unit.

Records showed that a handful of contractors received most of the work, costs skyrocketed and painting jobs were sometimes duplicated. The work was awarded through informal contracts known as ``B letters'' that do not require competitive bidding and advertising.

LAUSD spokesman Brad Sales said the district was aware that the warrants had been served.

``We are cooperating with the DA's office investigation,'' Sales said. He would not comment further, citing the ongoing probe.

The district attorney's Consumer Protection Division launched an inquiry into the LAUSD's contracting practices almost a year ago, after receiving complaints from the Southern California Painters and Allied Trades Council 36.

The council was appointed by the LAUSD two years ago to police the district to ensure that workers were being paid the prevailing wage. It found some wage abuses and misuse of B contracts, which are intended for emergencies or very small jobs.

In December, district attorney's officials seized records from the LAUSD. But no discernible progress was made until a frustrated contractor met in January with members of a citizens watchdog group that oversees the expenditure of $2.4 billion in Proposition BB funds.

The whistle-blower confirmed the suspicions of BB members, who for months had raised questions about the B letters but were stonewalled by district officials who refused to answer questions or provide documents.

BB committee members said money was being wasted because the LAUSD circumvented competitive bidding.

On Thursday, members of the committee said they were encouraged by the serving of the search warrants.

``It's evidence that a thorough investigation is proceeding,'' said Tim Lynch, deputy controller for Los Angeles and a BB committee member. ``And it's useful for those who think that they can engage in defrauding the public to know that eventually, government will catch up to you.''

Steve Soboroff, chairman of the committee, said the benefits of oversight had been proved.

``Not only do we provide new ideas to do things faster and cheaper,'' he said, ``but we've created a place for whistle-blowers to go, where they know they will be heard.''

In a review of the LAUSD's B-letter contracts, the Daily News found multiple contracts were often authorized on top of projects with an unusually low competitively bid project - usually to the same contractor.

The LAUSD also would split large repair jobs, issuing several B contracts for amounts that fell just below the threshold requiring formal competitive bids, usually $15,000.

``Inspectors had the means to issue favors and use their favored contractors through these B letters,'' said Tony Segall, an attorney for the Southern California Painters and Allied Trade Council 36, which went to court to stop the LAUSD from using B contracts.

LAUSD officials at the time admitted that no other oversight measures for B contracts by the district were in place, except to ensure that the jobs were paid with the correct funding source. But they defended the use of B contracts, saying it is a quick and cost-effective way to get Proposition BB repairs under way.

They denied doing anything illegal, saying that issuing several B contracts for one job is allowed under the district's own policies. However, the district agreed to require two top administrators and the head of a construction management team overseeing BB work to sign off on the B contracts.

``The district has been working with us in trying to fix the system,'' said Segall of the trades council, which has since dropped its lawsuit. ``The current policy is that B letters will only be allowed in emergency situations.''