Panel irate over DWP contracts

A Los Angeles City Council panel Tuesday berated officials with the city’s Department of Water and Power over their handling of contracts that have been awarded to companies that recently employed the DWP’s No. 2 official, Raman Raj.

Council members said the utility should have done more to publicly disclose potential conflicts faced by Raj and show that the issue had been carefully reviewed.

The issue was first raised three months ago by The Times, which reported that the DWP had moved to award or extend lucrative contracts with three former Raj clients since he was hired in December as the agency’s chief operating officer.

In May, council members sent one of those contracts back to the DWP for more review, saying they wanted to know why they had not been told of the potential conflict or how it had been addressed.

DWP General Manager H. David Nahai responded with a letter last week informing the council’s Energy and Environment Committee that Raj, who ran the DWP while Nahai was in Israel with Mayor Antonio Villaraigosa recently, has no involvement in the review or award of contracts -- and therefore faces no conflict.

But Councilman Richard Alarcon said the chief operating officer should have been extra careful in informing elected officials and DWP board of commissioners about his extensive consulting work.

“This isn’t an administrative assistant. We’re talking about a COO,” or chief operating officer, Alarcon told Nahai. “And if he doesn’t know that red flags will be raised about potential conflicts of interest in this case . . . then I don’t think he should be COO.”

Raj, 58, is only one recent example of a “revolving door” between city government and the private sector, having served as a consultant to DWP contractors before getting a job at the utility. Last week, The Times reported that the head of the city’s primary pension agency left in May to work for a company that had received favorable treatment by the agency only three months earlier.

At the DWP, Nahai told council members that he would return to the panel with a new process for reviewing potential conflicts.

“Clearly, in the future, we need to do something differently,” he said.

The council is scheduled to vote later this week on nearly $5 million in contracts with two companies that retained Raj last year. More contracts are headed to the council in coming weeks.

Hours after Tuesday’s committee meeting, the DWP board postponed a decision to award up to $10.3 million to another former Raj client -- Itron Inc., which is slated to provide the DWP with water meter equipment. Nahai asked for the delay so he could address the council’s questions.

In his letter to the council committee, Nahai said his agency had erected an “ethical wall” around Raj to seal him from his former clients. Yet hours before the vote on Itron, DWP board President Nick Patsaouras said no one had informed him that Itron is another former Raj client.

The written report on Itron submitted to the DWP board did not mention Raj’s work on behalf of the company before he joined the utility.

“This has been handled sloppily,” Patsaouras said.

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david.zahniser@latimes.com