CITY CONTROLLER GREUEL RELEASES LATEST REPORT ON COMMODITY PURCHASES; REVEALS CITY LOST UP TO $700,000 IN POTENTIAL SAVINGS
(Los Angeles) – The City’s chief accountant, City Controller Wendy Greuel, released a review of the City’s commodity purchases and found that the City paid 77% more than other jurisdictions across the country for commonly used commodities such as brakes and rotors, oil and lubricants, janitorial supplies, uniforms, tires, electrical supplies and copy paper, costing the City more than $700,000 in potential savings.
“What’s clear is that the City does not always obtain the best price for goods, which ultimately impacts the City’s bottom line and wastes taxpayer dollars,” said Greuel. “With the City of Los Angeles facing up to a $200 million budget deficit next year, every penny of potential savings needs to be accounted for. The City cannot continue with business as usual, and this review should be used as a blueprint to revisit how the City operates.”
Annually, Los Angeles spends over $460 million on commodity purchases and has over 500 active commodity contracts.
“With over 32,000 employees and 4 million residents to serve, the City has significant purchasing power that should make suppliers willing to offer their best pricing for the opportunity to be an exclusive provider to the City of Los Angeles. However, my review reveals that’s not the case,” added Greuel.
Findings show the City paid more for a variety of items. For example, the City purchased specific brand items when less expensive items of similar quality were available. The City also requires delivery of purchases for many items within one or two days after receipt of the order, even if these items are not needed immediately, driving up costs. Additionally, the City purchased specific items as required by warranty, even after the warranty expired.
Greuel also found that the City’s General Services Division, which oversees competitively bid contracts for supplies and equipment, needs to improve its procurement practices. Some of the recommendations Greuel said GSD should implement include:
· Determine where changes can be made to ensure commodity solicitations result in the best price for the City and identify changes to departments’ ordering practices that will optimize savings for the City;
· Ensure specific brands are not required, whenever possible;
· Determine whether contracts for selected commodities should be renewed or re-solicited and ensure solicitations for commodities result in a sufficient number of bids so that the city’s prices are the lowest; and
· Consider requesting pricing for different delivery schedules to ensure the best price options are selected.
Controller Greuel has conducted more than 50 audits and uncovered nearly $125 million that the City has lost to wasteful spending, fraudulent activity, and abuse of City resources over the last two years. For more information, log on to the Website of Los Angeles Controller Wendy Greuel: http://controller.lacity.org/index.htm