County Sticks With Firm Named in U.S. Fraud Investigation

Los Angeles County supervisors refused Tuesday to rescind a multimillion-dollar contract with a firm that was named last week as a target of a federal investigation into allegations of fraud in a military contract.

The board, despite protests from labor unions and other critics, stood by its decision to award Holmes & Narver Inc., an architecture, engineering and construction management firm based in Orange, an $80-million vehicle fleet management pact.

“The situation is that they have no irregularities and no pending (criminal) action against this firm,” said Supervisor Mike Antonovich in voting to uphold the contract.

The seven-year agreement--the largest single contract the county has granted in its program of using private companies for public services--was awarded last week to Holmes & Narver on a 3-2 vote. And Supervisor Kenneth Hahn, one of the two board members to oppose the contract, sought Tuesday to revoke the deal.

“I think this is the biggest turkey the county has gotten into, and we’re going to be hurt by this,” said Hahn, arguing that the contract should be withdrawn until the allegations against the firm are completely dispelled.

Holmes & Narver has been accused of possible criminal activity in the management of a $250-million service contract at Redstone Arsenal, the Army’s missile headquarters in Huntsville, Ala. The General Accounting Office, the investigative arm of Congress, had investigated allegations of inflated billing under the contract, including a 262% overcharge for lubrication and oil changes for the Army base’s vehicles.

Holmes & Narver is a joint contractor at Redstone with Morrison-Knudsen Corp. of Boise, Ida., and both firms are being investigated by the Army Criminal Investigations Division.

A spokesman for the GAO said Tuesday that the agency’s probe has been completed and the findings turned over to Army investigators.

In a written statement to board members, the president of Holmes & Narver assured supervisors that the allegations involved subcontractors and “corrective action has been taken where warranted.” The statement added, “There has been no evidence of any wrongdoing (by Holmes & Narver).”

In backing the company, county officials said they made their own inquiries and found no evidence that Holmes & Narver engaged in illegal activity and that the county would closely monitor the fleet management contract. Richard B. Dixon, the county’s chief administrative officer, also told supervisors that federal investigations concluded so far have determined no wrongdoing.

The American Federation of State, County and Municipal Employees said that if portions of the federal probe remain under way, the county contract should be rescinded. The union, which represents many of the 192 county employees who are affected by the Holmes & Narver contract, has complained that county workers could lose their jobs because of fleet maintenance responsibilities going to a private company.