Statement: LAWA Responds To Questions on LAX Capital Improvement Program Contracts/Invoices

Over the past several years, more than 25 modernization projects at a cost of $4 billion have been initiated and/or completed at LAX as part of Phase I of the LAX Capital Improvement Program.  LAWA has an equal number of new projects in various stages, ranging from planning to design and into construction associated with Phase II of the Capital Improvement Program.  The estimated cost of projects to be implemented over the next three years is approximately $2.4 billion.  

Implementation of the LAX Capital Development Program requires a significant team of professionals experienced in airport planning, design, construction, and construction management.   

A recent audit of Los Angeles World Airport’s (LAWA's) Capital Development Program by the Los Angeles City Controller evaluated the efficiency and effectiveness of processes for capital improvement projects.  As part of the audit, the use of consultants was reviewed.

The Summary of the Controllers Audit found overall, “while LAWA has succeeded in building an effective capital development organization under substantial pressures, opportunities exist to enhance the transparency and accountability of the process and reduce financial risks to LAWA.” 

A South Bay-area newspaper reporter is now questioning the use of consultants, and the nature of LAWA’s consultant contract agreements.  In the spirit of transparency, and to provide the public the benefit of LAWA's complete reply, below is the information provided to the reporter in response to questions asked.

• Why is it necessary to hire consultants for the ongoing LAX Capital development program?Can city employees not handle the work?

   

  By their nature, large airport capital programs require a range of experience, professional expertise, and staffing levels beyond those possessed by existing staff.  However, the increase in staffing is temporary in nature, and can fluctuate significantly over the life of the capital program.  For example, staffing levels required to implement previous and upcoming projects are projected at approximately 340 full-time staff.  There are currently only 121 LAWA staff members available for this work.  The balance of staff is consultants, who will be released from service when the current work load diminishes.  This allows LAWA to incorporate industry specialists at key points in the program without burdening City payrolls and pensions with long-term commitments to fill these short-term needs.

   

  In addition, there are many specialized technical aspects of an airport development program that require unique experience and/or skills that are not part of the City positions.  The LAWA program uses consultants for design and construction oversight for complex airport terminal and airfield systems, and for activation and commissioning activities that are essential to ensure proper and safe start-up and operation of new facilities.  LAWA recognized early on in the program that, because there had been no major design or construction in over 20 years at LAX, the current LAWA staff did not have the hands-on experience required to implement the program.  As the sixth busiest international airport in the world, LAWA decided it should retain experts with significant experience managing the design and construction of major international airport facilities that were of similar scale and complexity.  LAWA’s Airport Development Group (ADG) currently retains the services of Senior Design and Construction Managers who have this hands-on experience working on billions of dollars’ worth of aviation programs around the world.  They bring this experience and ‘’lessons learned’’ to the LAWA ADG program.  These professionals are providing significant training and mentoring of LAWA staff on the implementation and management of airport development projects, as well as helping the program through the peak of its implementation. 

   

  This is a standard practice throughout the aviation industry. 

   

• Does LAWA have internal guidelines for expense reimbursement that contractors must follow?

   

  Yes.  ADG provides Cost Reimbursable Guidelines as an Exhibit to each of its professional services contracts.  This document covers Transportation; Lodging & Meals; and Other Reimbursable Expenses such as supplies, computers, cell phones, vehicles, etc.  All invoices are reviewed and approved by ADG, LAWA Accounting Operations, as well as the City Controller’s Office to ensure compliance with these guidelines.

   

• I will first be examining contract No. DA 4415 for Parsons Transportation Group. Monthly invoices show that Parsons employs both Luci Woodard and Frank Woodard as senior project managers. Sources have told me that Luci and Frank are married and that Luci may have hired Frank for the project. Is this allowed under airport guidelines? Is it appropriate?

   

  Luci and Frank Woodard are married.  There is no guideline restricting married people working at LAWA.  Contrary to your sources, Luci Woodard did not hire Frank to work on this project.  Both Woodards have had a number of assignments on the LAX Development Program over the past five years.  Their work assignments and work histories at LAX are outlined below.

   

  Frank Woodard was first retained by LAWA ADG in June 2008 to serve as the Senior Design Manager for the project definition and design phases of the Bradley West (New Tom Bradley International Terminal) Project.  Mr. Woodard had 20 years experience serving as Design Manager and/or Project manager on similar (or larger) airport terminals in China, Thailand, Malaysia, and Colorado.  There was no one on the City or LAWA staff who had this depth and breadth of airport terminal experience.  Upon completion of his assignment, Mr. Woodard left the LAX program in early 2011.  In September 2012, LAWA senior management held a public workshop with the Los Angeles Board of Airport Commissioners (Board), where they discussed the next phase of capital development.  Upon receipt of direction from the Board to proceed with building the resources, LAWA Airports Development Group Deputy Executive Director Roger Johnson began working to recruit senior staff to assist with carrying out the work.  He contacted Mr. Woodard and asked him if he would be interested in returning to assist with the program, and Mr. Woodard did so in January 2013 to serve a 16-month assignment.  His assignment has been to develop and implement a higher level of Quality Control to the Design Phase, and to ensure that it is practiced consistently throughout the program.

   

  Ms. Woodard was retained by LAWA ADG in May 2010 to provide design and construction logistics management for the Terminal Improvement Program that included all terminals within the LAX Central Terminal Area, with the exception of the Bradley West Project (New TBIT).  Ms. Woodard has experience at other international airport programs with implementing systemic overhauls and developing new procedures to accommodate unusually large programs, and so was uniquely qualified for this assignment.  Upon completion of the assignment, she left LAX in March 2012.  In July 2012, LAWA asked her to return on a part-time basis to work with various LAWA departments to facilitate more efficient and cohesive transfer of projects.  LAWA ADG asked her to convert to full-time status and to take on the additional duties of overseeing the Project Controls Group, which includes contracts, invoices, cost and schedule activities.  She began full-time work in January 2013.

   

• Invoices clearly show that the Woodards live in an apartment paid for by the airport at Archstone Playa del Rey. Is this an appropriate use of city and airport resources? I ask the same question of the Woodards' free car and $400 monthly furniture allowance. I have similar questions about Justina Millina's[sic] Venice apartment.

   

  As stated above, the standard practice for major airport capital programs is to hire highly qualified individuals with unique airport capital program experience.  These individuals must relocate to the airport during their respective assignments. Based on the unique skills and experience of these senior individuals, it is typical and justified for senior airport consultants to receive reimbursement for living expenses rather than being paid moving expenses and cost-of-living adjustments.  In the case of the Woodards, LAWA evaluated a number of options relative to living and/or relocation expenses all of which are allowable under LAWA’s guidelines. These options were: 

  • Roll housing differentials into the base rate.
  • Invoice for temporary living expenses separately.
  • Provide relocation expenses (which would also require a geographical adjustment of the base salary rate), or
  • Reimburse for hotel and related travel expenses.

     

    Given the nature of the assignment, LAWA decided that the current method (reimbursement for a furnished apartment and one car) would be the most transparent and cost effective, and directed Parsons to invoice accordingly.

     

    Justina Millan’s most recent experience includes serving as the Program Controls Manager for $3 billion of the $6.4 billion Miami International Airport Development Program.  Ms. Millan has been brought on board temporarily to assist LAWA in evaluating our current program and project controls procedures. LAWA is compensating Ms. Millan for her temporary living expenses while here on an 11-month assignment.

     

• I'd like to better understand the hourly rates paid to Parsons consultants. It has been explained to me that Parsons is being paid an hourly rate and a multiplier of 2.41 on each hourly rate. It is my understanding that the multiplier should cover some expenses and profit for the company. Is this not true? Is it correct for Parsons to receive so many expense reimbursements?

   

  Under the terms and conditions of DA-4415, Parsons employees are compensated based on their raw billing rates times the corporate Field Overhead Rate.  Both of these billing components are pre-approved by LAWA prior to any work being performed by the company.  It should also be noted that ADG considers the overhead rate during the contract procurement process as one component of the selection criteria upon which contracts are awarded.

   

  Overhead rates are those general expenses incurred during the normal course of operating a business and are typically categorized as General & Administrative (G&A), Fringe Benefits, Overhead, or Payroll Burden.  LAWA reviews the firms’ proposed overhead rates to ensure that any unallowable expenses such as bad debt, alcoholic beverages, contributions, and entertainment are not included.

   

• I will also be writing about Contract No. DA 4324 with Pasley Management Group. In a recent Pasley invoice to Los Angeles World Airports, the company bills $20,944 for the work of Aida Morales, whose job is called "technical support." I have obtained an internal organization chart from LAWA. Ms. Morales is listed on this chart as “executive administrative assistant” to Roger Johnson. Can you tell me why an executive administrative assistant would bill at such a high rate?

   

  Notwithstanding how Ms. Morales may be identified on an internal organizational chart, Ms. Morales has over 15 years of experience providing executive technical and administrative support on major capital development programs throughout the United States.  Her technical knowledge of airport capital development processes, terminology, management systems and requirements are unique and provide a valuable benefit to the executive management team at LAWA.  In addition, Ms. Morales supports three ADG management executives including Mr. Johnson as well as supporting various executive policy meetings.  Her skill set and experience level is not matched within the City system and her billing rate is consistent with industry standards for the position she holds.

   

• Executives at Pasley bill at more than $300 per hour, according to invoices. Does that rate still make Pasley eligible to receive a free apartment? What about the furniture allowance of $400? Or the Toyota Camry that their consultants lease?

   

  The billing rates under the contract with Paslay Management Group do not include temporary living expenses.  As noted above, it is typical to reimburse living expenses for uniquely qualified senior consultants with significant airport development experience.  Regarding the vehicle lease in this case, based on a cost-benefit analysis it is more cost effective for LAWA to reimburse the consultant for a leased vehicle versus renting.

   

• A bill shared with the Los Angeles News Group suggests Pasley is billing $172.64 for monthly cable and internet at the Playa Del Oro. Is this appropriate under city guidelines?

   

  This expense is not precluded under City guidelines and is consistent with providing temporary living expense for a consultant.  Additionally, Internet access provides the ability for the consultant to work after normal business hours as needed to the benefit of LAWA.  The Internet is normally used on a daily basis to support LAWA.

   

• A source said LAWA is paying for "at least six" apartments for consultants living near LAX. Is this an appropriate use of funds?

   

  LAWA is currently paying for four leased apartments.  Based on the discussions above, this is an appropriate and allowable use of LAWA resources and consistent with our policies. 

   

• How many cars has LAWA leased or rented for consultants? Why are some cars leased while others are rented? It seems leased cars are considerably less expensive.