LAUSD BIDDING PRACTICES ASSAILED; REPORT SAYS RULES SKIRTED ON PORTABLES.

Byline: Greg Gittrich Staff Writer

Breaking state law and disregarding warnings from supervisors, Los Angeles Unified School District officials bought more than $36 million in portable classrooms without competitive bidding, a report by the district's top investigator charged Thursday.

District officials refused to release the names of the staff members in the Facilities Services Division involved in the alleged misdeeds, but said no one had been fired.

The four-page report notes state laws governing competitive bidding are intended to ``eliminate favoritism, fraud and corruption'' in awarding contracts. The lax procedures employed to purchase the portable classrooms between July 1996 and August 1998 offered little assurance the district got the best price and put it ``at increased financial and legal risk,'' the report states.

The report, however, fails to detail whether any favoritism, fraud or corruption occurred or how much, if anything, the district overpaid for the bungalows. It addresses only the procedures used to buy the portables, noting they already were installed before purchase orders were even put through.

Don Mullinax, the district's director of internal audits and special investigations, could not be reached for comment.

While Mullinax does not name any officials in his report, he repeatedly refers to the general manager of the Facilities Services Division.

Beth Louargand held that post until last month, when she was demoted by Superintendent Ruben Zacarias. Despite the demotion, Zacarias ``starred'' Louargand's salary, allowing her to continue to take home the same pay. Financial documents list her salary at $144,242 a year.

According to the report, district officials ``ordered, received and installed portable classrooms without using the competitive bidding process and without properly completing purchasing documents. . . . Known vendors were provided with letters of intent and purchasing documents were generally prepared after the classrooms were installed.''

An urgent need

The general manager of the Facilities Services Division told the audit team the questionable procedures were followed because there was an urgency to acquire the portable units ``in sufficient quantity and time'' to meet the need for class-size reduction, the report states.

``Although these purchases may have been urgent, the School District did not declare, and receive approval of an emergency exemption to the Public Contract Code,'' Mullinax wrote.

Louargand could not be reached for comment. She had responded to Mullinax's charges in a June 30 message to her boss, David Koch, the district's chief administrative officer.

Louargand forwarded to Koch a letter written by Alvin Bowen, director of the portable housing unit.

``I can honestly state that to my recollection under no circumstance when a letter of intent had been issued, did we receive or install any portable buildings prior to the issuance of a purchase order,'' Bowen wrote.

The report also seriously misrepresented warnings from supervisors about the purchasing procedures,Bowen wrote. At the end of the correspondence, Bowen detailed a list of incidents that created a need to purchase the portable classrooms in an expedited manner.

Bowen could not be reached for comment. According to internal office correspondence obtained by the Daily News, confirmed by two district sources, Bowen is awaiting reassignment.

Brad Sales, a spokesman for the superintendent, referred all inquiries to Koch, the chief administrative officer.

Koch released a prepared statement:

``While it appears the District staff were well-intentioned in seeking to expedite the delivery and installation of portable classrooms to provide facilities for class size reduction efforts, the audit underscores how staff did not follow the normal acquisition process.''

Lynn Roberts replaced Louargand as the general manager of the Facilities Services Division on July 1, with approval from the school board.

Following procedures

Roberts has instructed her staff that standard purchasing procedures must be followed in ``all procurements and specifically that a purchase order must be issued before delivery of any good or services, including portable classrooms,'' Koch noted.

``Further, Ms. Roberts has restructured the branches within her Division, resulting in greater supervision, accountability and coordination.''

Mullinax specified the practice of avoiding competitive bidding dates back three years.

``Between July 1996 and July 1997, the district purchased at least 694 portable classrooms at a cost of about $36 million using other available contracts,'' he wrote.

According to the report, the questionable business practices had not gone unnoticed.

The district's Purchasing Branch repeatedly informed facilities officials that the purchasing procedures were ``contrary to policy,'' ``not good business practice'' and ``could be illegal,'' the report states.

In January 1998, the district controller directed staff in the Facilities Services Division to stop the questionable practices. Nevertheless, the division continued its practices, the report continues.

Mullinax's report included three examples in which the flawed procedures were used despite warnings from supervisors. Most notably, officials purchased or rented 102 bungalows between January 1998 and August 1998.

In July 1998, Koch told Louargand that ``installing buildings and equipment without a purchase contract would be considered poor business practices in any environment,'' the report notes.

``Even after these directives, on August 6, 1998, the Purchasing Branch received a requisition for five portable classrooms from the Facilities Services Division. The portable classrooms had already been delivered and installed at a school,'' the report states.

Acting alone?

Board member David Tokofsky - the only board member who would comment on the matter - said he was not convinced Louargand acted alone and should be held responsible.

``Beth Louargand would not have done anything without the approval of her supervisors and a majority of the Board of Education,'' Tokofsky said. Koch is Louargand's supervisor.

In a July 8 letter to Mullinax, Howard Friedman, senior assistant general counsel for the district, wrote that the contention that the competitive bidding process was not followed ``is somewhat misleading.''

Friedman defended the practice, arguing that Facilities Services Division officials intended to obtain the bungalows ``through `piggyback' contracts which allow school districts to obtain goods through lawful, usually competitively bid, contracts of public entities.''

``The deficiencies noted in the report,'' he wrote, ``appear to be more in the sequencing rather than the ultimate compliance with competitive bidding.''