LOS ANGELES — Los Angeles World Airports needs to reform its bidding process to move forward on its multi-billion dollar efforts to modernize Los Angeles International Airport, according to a city controller's audit released Monday.
The report called into question the competitive bidding processes used by LAWA in $593 million in contracts struck for goods and services at LAX.
“LAWA must scrutinize and reform its bidding processes,” said Controller Ron Galperin. “Otherwise, we have no way of knowing whether we are getting the best value for our money, which is what the competitive bidding process was created to ensure.”
KH Consulting Group, which conducted the audit for the controller’s office, did not find malfeasance, but said the findings call for closer scrutiny of LAWA’s bidding processes. KH recommended an overhaul of the airport system’s contracting processes in its audit.
In its review of the $539 million in contracts for goods and services awarded in fiscal year 2014-15, KH found LAWA received only two bids on 28% of its solicitations and only one bid on 30% of its requests for proposals.
The consultants did not review construction contracts awarded for the multi-billion modernization.
In some cases, LAWA was limited in its ability to obtain at least three bidders, because the Federal Aviation Administration only approves one vendor to provide specific projects. Even with that caveat, the auditors said there is room for improvement.
The consultants advised that LAWA investigate the causes for the low number of bidders, take actions to ensure that specifications are biddable and that bids are responsive.
The report also warned that the airport is not prepared to handle increasing traffic congestion as it embarks on the second phase of modernization that involves ground transportation improvements. Plans include building a people mover to connect the city’s rail system to the airport.
Since 2007, LAWA has spent $5.2 billion of the $8.5 billion proposed in a multi-year modernization project, the largest capital improvement project in the city’s history. The second part of the modernization project is a comprehensive redevelopment of the ground transportation system. The airport plans to use a design-build-finance-operate-maintain delivery method.
Passenger traffic soared to 75 million in 2015, growth of more than 10 million over the past decade, resulting in a record average of 75,690 vehicles a day entering the central terminal area.
The consultants recommended that LAWA engage in proactive traffic management planning and create a unit specifically focused on traffic engineering.