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DWP MAY REDO WAY OF BUYING $10 MILLION E-SYSTEM SHUT DOWN.

Byline: James Nash Staff Writer

After spending five years and nearly $10 million to develop a computerized system for buying products and services, Department of Water and Power officials said Tuesday they are thinking about starting over.

The utility's e-procurement system was shut down July 23 over a payment dispute with the company that developed it, Inglewood-based OFS, The Business Doctors.

Now, DWP officials are considering whether to sever ties with the company and find another firm to automate much of the nearly $900 million in contracts the agency awards each year.

Thomas Hokinson, the DWP's assistant general manager in charge of contracting, said computing giant Oracle Corp. and other companies already have expressed interest. The DWP also may work with other city departments to develop an in-house procurement system.

``We are looking at what our options are,'' Hokinson said. ``What we want to do is see what is out there.''

The impasse with OFS came after the DWP refused to pay a $2.7 million ``task order'' to expand the e-procurement system to include large professional-services and construction contracts.

Since the system was shut down, the DWP has reverted to a manual operation of soliciting and awarding bids.

The OFS system has saved the utility nearly $7 million over three years by streamlining procedures and opening bids to a larger number of companies, according to DWP documents. OFS claims it has saved the DWP about $30 million.

OFS President B.J. Hawkins said that, while the DWP should look at competing proposals, it makes no sense to walk away from the program that he contends was working well.

``I find it strange that, with an award-winning contract where they've saved $30 million, that they want to go out to bid and spend more money,'' Hawkins said. ``But maybe that's how business is done in that arena.''

City Councilman Tony Cardenas, who chairs a committee that heard an update on the OFS impasse, said he's troubled that the DWP entered into an open-end contract without a guarantee that it could continue using the OFS software.

``We are not using our attorneys and we are not using common sense as far as writing contracts that protect the taxpayer or, in this case, the ratepayer,'' Cardenas said.

The DWP has formally found OFS in breach of its contract, which was set to expire in January 2005, Hokinson said. Hokinson declined to comment on what actions, if any, the department might take against the company. Officials in the Los Angeles City Attorney's Office declined to comment.

James Nash, (213) 978-0390

james.nash(at)dailynews.com
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Publication:Daily News (Los Angeles, CA)
Date:Aug 11, 2004
Words:432
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