DWP'S NEW BOSS LOOKS TO OUTSIDERS TO FUEL THE UTILITY.

Byline: RICHARD NEMEC Local View

AS the private sector knows all too well, the 1990s will be remembered as the decade of the consultant. So it should not be surprising that local government also can't get along without high-priced, outside advisers.

Proprietary departments within the city of Los Angeles, which by definition are revenue producers aloof from taxpayer support, would seem an interesting place to look for consultants. The $2 billion-plus Department of Water and Power, the nation's largest municipal utility, has proven fertile ground for outside helpers, even under its often acerbic new general manager, David Freeman.

In setting the sprawling DWP on a new tack as the electric industry develops more competitive markets, Freeman repeatedly has chastised the municipal utility's recent past in which it ``never met a consultant it wouldn't hire.'' The largest example was a two-year, $27 million consulting deal (February 1995-February 1997) with a branch of Ross Perot's European consulting firm.

Nevertheless, Freeman, himself, has quietly hired his own set of consultants - albeit not at the $10 million or $20 million level - to help put together a new strategy and management team. Although not well-known, Freeman, who has a long and successful track record in government-run water and power organizations spanning four decades, has drawn on some of his past colleagues to try to jump-start DWP's preparation for a brave new electricity world that looms just around the 20th century.

Ironically, some of the consultants Freeman has hired would be unnecessary if the City Council would follow through on the will of local voters who in November 1996 approved a charter amendment that allows DWP to make its 15 top jobs under the general manager exempt from the civil service system. As a result, Freeman is free to recruit talent from around the nation or the globe for that matter. The problem, however, is that nine of those positions still haven't been approved by the council.

But that hasn't stopped Freeman from bringing in some new talent.

In at least two cases he has called on colleagues from his past experience heading the Sacramento Municipal Utility District, a state-chartered, countywide government utility covering the state capital and its surrounding communities in Sacramento County.

For DWP's No. 2 position, chief operating officer, Freeman tapped Mahmud ``Mo'' Chaudhry, a former high-level manager at SMUD with 30 years of experience in the electric industry. Chaudhry, who was first brought on board in January as an executive adviser to Freeman, replaces career city employee Harry Sizemore, who retired April 1.

A second move by Freeman was the naming of SMUD, itself, to a year's consulting contract at the interesting price of $99,000 to help DWP get its solar photovoltaic program going, something that its sister government-run utility in the north has been doing for a number of years going back to when Freeman headed that utility. (The $99,000 figure is just under the $100,000 limit requiring Board of Water and Power Commissioners approval. And there is some speculation that SMUD may get separate $99,000 deals for helping DWP in two other areas in which it needs help - energy efficiency and electric vehicle transportation programs, two areas that Freeman has stressed wherever he has worked over the past three decades.)

In the areas of energy efficiency and marketing, both of which promise to be important parts of the deregulated electric industry, Freeman has had to get around a lack of City Council approval for newly exempt senior management jobs by contracting for short-term increments with two incumbents he intends to put in those jobs once they are blessed by the elected council.

In other instances, Freeman has terminated contracts worked out by his predecessors only to turn around and ink a contract with another consultant. That is what he did in the case of the controversial advertising public relations deal with the Los Angeles office of international PR firm Fleishman Hillard, which now has a one-year, $3 million contract to develop an advertising plan and report on progress to the DWP governing board by July 1.

Freeman shortly after joining DWP canceled an advertising program and contract with a national firm that had been retained by his predecessor. Overall, Freeman claims his consultants have helped him get rid of $15 million in consulting contracts he inherited when he took over the top spot at DWP.

Within weeks of his taking over, Freeman lined up the management/accounting firm of Coopers and Lybrand, which he had used in his previous assignment with the state of California, to help develop his strategic action plan, which was recently approved (belatedly) by the City Council. In the case of this consulting arrangement for $592,000, separate work in financial analysis, reorganization, customer service and assessments of DWP's telecommunications and computer assets were completed in a matter of months and the consulting relationship ended in March.

Clearly, Freeman, like his predecessors, finds consultants a necessary part of doing business these days. We can only hope that as he did on the strategic plan assignment he keeps the consulting contracts short and focused. And the City Council could do its part by rapidly approving the rest of the new exempt positions so the DWP can move into the more competitive future with a full complement of senior leadership within the vast department.