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# LA’s General Services Department: If It’s Broke … Fix It
April 05 2012
Written by Lisa Cerda.
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VOICES - City Controller Wendy Gruel released her “Review of the City’s Commodity Purchasing” audit on March 20. The City spends over $460 million on commodity purchases each year through its Supply Chain Services Division, the General Services Department (GSD). Considering that we have over 32,000 employees, they spend $143,750 per employee. Or, with LA’s 4 million residents, that would be $115 per person.
Commodities that are commonly purchased for use by the City include tires, uniforms, paper, vehicle parts and fluids, and electrical and janitorial supplies. The audit covered purchases made during FY 2009-10. It reviewed a sampling of products, looked at price comparisons, the amount of bids, and whether contracts should be renewed.
Key findings:
• The City paid more for many commonly used items than other jurisdictions, including two of the City’s proprietary departments.
• GSD’s procurement practices and compliance with City policies did not always ensure that the City obtained the best prices.
The audit also looked at how five of the seven commodity contracts require delivery of items within one or two days after receipt of the order. Vendors are likely to consider the quick delivery requirement as a factor in setting higher prices. As a result, the City may be paying a premium for expedited deliveries.
Using brand names certainly may contribute to the high costs, and our auditor’s suggestion to seek cost comparisons for like products was a natural conclusion. However, missing from this analysis was the consideration of a fundamental principle of accounting. Don’t spend what you don’t need too.
Buying annually, uniforms and their components, may have been a perk of a robust economy, but it’s time to rethink the status quo. Do they really need a new top of the line, yellow raincoat each year? I bet if you asked the employees in uniform, if they could find some cost saving remedies, you would have a greater saving than suggested by our auditors. I think City employees would prize keeping their jobs, versus receiving that annual monogrammed tote or raincoat.
Certainly the audits price comparison of city’s purchase price versus county’s purchase price will net a substantial saving annually, but it does nothing to curb the unnecessary spending. It does not ask if the spending is even necessary.
Where is the incentive program for department managers to increase productivity and decrease costs? Why slip real business practices and solutions into audit recommendations that are summarily dismissed anyway?
Real savings could be had by replacing the management and administrative personnel who’ve allowed this extraordinary mismanagement and lack of oversight to occur.
*(Lisa Cerda is an occasional contributor to CityWatch, a community activist, Chair of Tarzana Residents Against Poorly Planned Development, and former Tarzana Neighborhood Council board member.)* –cw
Tags: City Controller, Wendy Greuel, Commodity Purchasing audit, vendors, city vendors
CityWatch
Vol 10 Issue 28
Pub: Apr 6, 2012
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