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FOR IMMEDIATE RELEASE
August 10th, 2010
CITY CONTROLLER RELEASES WASTE, FRAUD AND ABUSE INVESTIGATION SHOWING CITY’S TRANSPORTATION DEPARTMENT UNUSED EQUIPMENT COST THE CITY $855,000
Taxpayer Dollars Wasted Because of Mismanaged Contract
(LOS ANGELES) – Continuing her efforts to reduce waste, fraud and abuse in City government, City Controller Wendy Greuel released a waste investigation of a City Department of Transportation (LADOT) contract for Automated Vehicle Locator Systems (AVLS) today, which found that the Department wasted at least $855,000 of taxpayer dollars and exceeded the original contract by nearly $2.5 million.
“This investigation revealed significant issues of waste and financially irresponsible decisions by LADOT, which in some cases defy comprehension,” said City Controller Greuel. “We cannot allow this type of wasteful spending to occur, if we want to rebuild the City’s credibility with the public.”
LADOT first contracted with Integrated Systems Research (ISR) in 2001 to lease AVLS for the City’s parking enforcement vehicles. The Controller’s investigation found that currently only 11% of the City’s vehicles have a fully functional AVLS.
“This investigation was conducted based on a tip to the Controller’s Waste, Fraud and Abuse Unit,” said City Controller Greuel. “I want to thank the tipster who took the initiative to contact us about this contract and report what has been found to be significant waste. And I want to encourage people, if they see or know of something that is wasteful, to call and help us shed light on what’s going on.”
A more troubling finding is that LADOT had the option in May 2006, to purchase the devices for $1, but inexplicably decided to continue leasing the equipment – at an additional cost of $577,584 to taxpayers over the past four years. Though the Department claimed it needed to continue leasing so that ISR would provide software upgrades, the audit shows that no upgrades have been provided since 2006.
Other audit findings include:
- LADOT has continued to pay for the monthly equipment lease and air service for 178 AVLS units which have been in storage since 2008. At a monthly cost of $7,462, this is a total of $141,773 in wasted City funds.
- LADOT lacks an adequate inventory control to properly account for AVLS equipment and cannot account for 44 units.
- The department’s original contract for $1.57 million has been amended seven times, which has resulted in the City spending more than $4 million to date.
- When LADOT was notified that its existing AVLS air carrier was leaving the industry and that it would need to change providers, it amended its contract requesting $213,110 in new hardware and software to accommodate the change in service. Yet the contract’s warranty explicitly stated that ISR would cover these costs.
The wasteful contract first came to light through a tip to the Controller’s Waste, Fraud and Abuse hotline – 866-428-1514 orhttp://controller.lacity.org/Report_Waste_Fraud_and_Abuse/index.htm
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