PLUG PULLED ON DWP'S COMPUTER-BID SYSTEM.

Byline: James Nash Staff Writer

A computer system intended to save the Los Angeles Department of Water and Power millions of dollars a year on purchases and reduce the possibility of ``pay to play'' bidding was shut down by the company that developed it because the utility hasn't paid its bills, officials said Tuesday.

The company, OFS, The Business Doctors, pulled the plug Friday on the DWP's e-procurement system - touted as a model for streamlining the billions of dollars in contracts city agencies dole out each year.

The firm, paid about $32 million to develop the automated bidding program, did not receive the money owed it to refine the system and train DWP employees to use it, said B.J. Hawkins, president of Inglewood-based OFS.

``They haven't paid us since December of last year,'' Hawkins said. ``We have a team of network engineers, system engineers, supporting the DWP with no funds. We're a small company and we cannot continue to provide services with no funding.''

DWP officials did not return calls for comment Tuesday.

Dominick Rubalcava, president of the DWP's five-member oversight commission, said the utility has experienced problems with electronic procurement and said officials are evaluating whether to change their approach.

``I don't think there's a clear answer right now,'' Rubalcava said. ``The matter is being evaluated by staff as well as (attorneys).''

In April, the DWP's procurement chief cited the e-procurement system as an innovation that has allowed the DWP to save time and money on about $120 million of the approximately $883 million in contracts that the municipal utility awards each year.

Albert A. Stephens, the DWP director of supply chain management, told a special city panel on contracting that the automated procurement system gives small businesses more opportunity to compete for DWP business and makes the process more open.

``I see that the level of competition increases because of that transparency and visibility. E-procurement has opened up the competitive process.''

In an e-mail last week to contractors using the automated system, DWP officials said bids for products and services again would be taken manually but did not offer an explanation of what had happened.

The DWP has phased in e-procurement since 1999 in a series of contracts with OFS. The most recent contract, dated May 2003, increased the DWP's annual cost from $2.3 million to $5.1 million.

Hawkins said the disputed $2.7 million bill was a ``task order'' under the 2003 contract, not a new contract.

Using the e-procurement system, companies can enter bids for a variety of products - including tape measures, electric drills and bungee cords - as well as professional services. Electronic procurement helps the DWP find the lowest cost for products and services, while at the same time granting preferences to businesses owned by minorities and women, as well as those based in Los Angeles.

Stephens did not say how much money the system has saved the DWP, but documents obtained from the utility under the California Public Records Act show a total savings of $6.9 million in the past three fiscal years. The DWP did not provide numbers for the current fiscal year.

Hawkins estimated the total savings to the DWP at $30 million. She also said the automated, objective nature of e-procurement virtually eliminates any possibility of city officials awarding contracts for political reasons - the crux of pay-to-play allegations in Los Angeles World Airports contracting.

James Nash, [phone]

james.nash(at)dailynews.com