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Costs Rise for Major Santa Monica City Contracts, Report Finds
Santa Monica Real Estate Company, Roque and Mark
Roque & Mark Real Estate
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Santa Monica, CA 90404
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Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Niki Cervantes
Staff Writer

December 13, 2016 -- Modifications and extensions hiked final costs for major Santa Monica City contracts by almost 50 percent, resulting in nearly $30 million in cost increases, according to the first report of its kind released by the City.

Closing 21 contracts of $500,000 or more with vendors, the City either modified, issued change orders and/or extended the agreements as many as seven times, adding a total of $28.5 million to the final price tags.

Some contracts doubled in cost, while a contract to track the city's homeless increased nearly fourfold.

The November 30 report by Araceli Esparza, the City’s Purchasing Services Manager, said the document was Santa Monica’s first attempt at tracking the complete “life cycle” of big contracts.

Esparza said other cities also take stock in the same way, noting the closeout report is considered a “best practice” and “ensures that the contract was for its intended purpose, the contract file is closed out, and all remaining budget encumbrances are released.”

The report, which was sent to the City Council last week, explains what the projects were meant to accomplish and, when applicable, why they were extended and the cost involved.

Almost half of the contacts that closed out did so at the original cost and without extensions or changes.

The rest, though, included several alterations that boosted initial costs.

The single biggest percentage increase on the list was for the new software and use of the database created for the City’s Homeless Management Information System.

Used by more than 250 people helping Santa Monica’s homeless population (728 individuals in the January 2016 homeless count), the City’s software-related contract with Bowman Systems was for $120,770 in 2008.

After four alterations, the contract’s cost reached $471,594 –- a 74 percent increase -- when it was closed out in February of this year.

The agreement covered start-up services, Esparza’s report said, and “will assist with a system-wide unduplicated count of persons accessing services; system-wide tracking of all services and client outcomes; and collection and querying capabilities.”

Included in the report were contracts for a wide-range of services, including renovating public restrooms ($562,400 for Hotchkiss Park and Marine Park), establishing a mobile command center for police ($657,509 with no changes), replacing artificial turf at the Airport Park sports field ($741,355, with no changes) and buying Knoll office furniture for City staff.

The contract with Knoll was voided due to problems with the original price provided. A new $620,000 contract with a different provider is in place.

About half of the contracts in the report remained unchanged. Of the 12 contracts that rose in cost, the average increase was about 35 percent, the Lookout found.

Among them was a 2009 contract for $11,656,854 for off-street parking operations to Central Parking (now SP+ Corp.) that had reached $33,291,828 when it was closed out in December of 2015.

The cost of a City contract to process and accept merchant credit cards jumped 62 percent over its five-year life to $8.8 million via three modifications. Transfirst was picked again this August to continue the service with a five-year $12.4 million contract and a three-year renewal option, the City said.

Designing bus shelters and “refreshing” the Big Blue Bus system’s brand also turned out to be much costlier down the road, the report indicates.

Started in 2009, the $599,900 contract for Lorcan O'Herlihy Architects cost $1,009,092 after seven modifications. It ended in March.

“The term was longer than anticipated due to additional design scope (design of new stop locations) related to revised bus routes in response to the new Expo line; changes in the seat design in response to community comments; and unforeseen conditions such as buried infrastructure (old pipes), tree roots and coordination with private development plans,” Esparza said.

The report showed laws requiring workers on housing projects funded with state and/or federal money also drove cost increases.

Between 2009 and last December, costs for the work done by Comprehensive Housing Services Inc. jumped from $250,000 to $566,985, with six modifications, or almost 56 percent, the report indicated.

The wage monitoring involved workers constructing ten affordable housing buildings (with 459 apartments). The firm specializes in that service.

“These developments are funded with various local, state and federal monies that require the payment of prevailing wages and, to the greatest extent feasible, the provision of opportunities for job training and employment to lower-income and minority residents,” the report said.

Non-compliance could lead to fines against the City, require the City to make payments to construction workers to rectify underpayments and withdrawal of project funding, the report said.

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