GREUEL CONTROLLER - Los Los Angeles, CA 90012 Tony M. Royster, General Manager & City Purchasing Agent

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Text of GREUEL CONTROLLER - Los Los Angeles, CA 90012 Tony M. Royster, General Manager & City Purchasing...

  • May 11,2011

    WENDY GREUEL

    CONTROLLER

    Honorable Antonio R. Villaraigosa, Mayor Honorable Carmen Trutanich, City Attorney Honorable Members of the City Council of the

    City of Los Angeles

    Cell phones and smart phones have become a large part of our daily routine - we use them for personal and professional use, and we strive to achieve the most value for the services we receive. The same logic should be applied in a business setting, including maintaining an accurate count of cell phones. Unfortunately, the City of Los Angeles did not even know how many cell phones it had! Each department kept count of its own phones; however, until I conducted an audit, no one knew the city had nearly 12,000 cellular devices.

    My audit shows that the City wasted money on unnecessary cell phone costs, and could have saved as much as $1 million by optimizing cell phone plans. This is unacceptable.

    Management of city cell phones is decentralized by department, without any citywide oversight or accountability. Simply put, nobody is minding the store. Nobody is holding departments accountable nor is anyone providing guidance on $4.8 million worth of cell phone contracts.

    The audit, which focused on a sample of 7 city departments, including some with the highest cell phone costs, suggests that as much as $1 million could have been saved with a little diligence. It identified 563 cell phones that had zero usage for two or three consecutive months, at a total cost of about $46,000 in recurring charges. The audit also found that departments inadequately monitored usage, leading to poor plan selection and unnecessary costs of over $28,000 in extra charges for directory assistance and the like, within only a 3 month period. Without close monitoring, these extra charges could amount to over $100,000 in a year.

    200 N. MA I N STREET, SU ITE 300, LOS ANGELES, CA 90012 • (213) 978-7200 • HTTP://CONTROLLER.LACITY.ORG

    AN EQUAL EMPLOYMENT OPPORTUNITY- .AFFIRMATIVE ACTION EMPLOYER

  • Further, without centralized oversight of cell phone contracts and individual departments failing to ensure that cell phone carriers complied with requirements to "optimize" the plans to fit the departments' usage, the City regularly paid more for cell phones than necessary. If the optimization reports provided by only 4 departments are reflective of what could be achieved citywide, the potential savings could have ranged from $375,000 to nearly $1,000,000.

    The audit brought to light that current policies for issuing cell phones to city employees are not appropriate for today's workforce and recommends that ITA determine more cost effective options. Other options are not only viable, but are in practice in other cities throughout the nation. Issuing stipends rather than cell phones to most employees who are required to be available by mobile devices could save the city $1.2 million immediately.

    My audit provides an immediate path towards cost savings and better oversight through recommendations on managing cell and smart phone usage. As an additional cost savings option, I encourage others to follow my lead in giving up their City cell phones- depending on the cell phone plan, it may not cause staff to incur any additional costs but will provide real cost savings for the City.

    As the Mayor and Council continue deliberations on reducing the City's budget deficit, we need to constantly review what the City does and how we do it. We need to take the opportunity to focus on our core services and gain a better understanding of a luxury versus a necessity. Each and every proposed efficiency should be evaluated to determine what services taxpayers should be paying for, especially during these financially challenging times.

    Sincerely,

    /{}!}fte~~,/ WE~YGREUEL City Controller

  • WE:NDY GRE:UE:L

    CONTROLLER

    May 11, 2011

    Robert "Bud" Ovrom, General Manager Department of Building & Safety 201 N. Figueroa, Suite 1000 Los Angeles, CA 90012

    Olga Garay, General Manager Cultural Affairs Department 201 N. Figueroa Street, Suite 1400 Los Angeles, CA 90012

    Randi Levin, General Manager and Chief Technology Officer Information Technology Agency Room 1400, City Hall East 200 North Main Street Los Angeles, CA 90012

    Enrique C. Zaldivar, Director PW/Bureau of Sanitation 1149 South Broadway, 9th floor Los Angeles, CA 90015-2213

    Ladies and Gentlemen:

    June Lagmay, City Clerk Room 360, City Hall 200 North Spring Street Los Angeles, CA 90012

    Tony M. Royster, General Manager & City Purchasing Agent General Services Department 111 East First Street, Room 701 Los Angeles, CA 90012

    Charlie Beck, Chief of Police Los Angeles Police Department 100 West First Street, Suite 1072 Los Angeles, CA 90012

    Enclosed is a report entitled "Audit of Citywide Cell Phone Usage." A draft report of this report was provided to your Department on April 22, 2011. Comments provided by your Department at the exit conference were evaluated and considered prior to finalizing this report.

    Please review the final report and advise the Controller's Office by June 13, 2011 on planned actions you will take to implement the recommendations.

    200 N. MAIN STREET, SUITE 300, LOS ANGELES, CA 90012 • (213) 978-7200 • HTTP://CONTROLLER.LAC!TY.ORG

    AN EQUAL EMPLOYMENT OPPORTUNITY- AFFIRMATIVE ACTION EMPLOYER

  • May i 1, 201 i Page 2

    If you have any questions or comments, please contact me at (2 i 3) 978-7392.

    Sincerely/ jJ b.- ;::-J~/v-- FARID SAFFAR, CPA Director of Auditing

    Enclosure

    cc: Reverend Jeff Carr, Chief of Staff, Office of the Mayor Miguel A. Santana, City Administrative Officer Gerry F. Miller, Chief Legislative Analyst Marsha L. Brown, President, Board of Building and Safety Commissioners York Chang, President, Cultural Affairs Commission John Mack, President, Police Commission Gerald Chaleff, Executive Officer, Office of the Chief of Police Cynthia M. Ruiz, President, Board of Public Works Independent City Auditors

  • City of Los Angeles Office of the Controller

    AUDIT OF CITYWIDE CELL PHONE USAGE

    May 11,2011

    Wendy Greuel City Controller

  • TABLE OF CONTENTS

    EXECUTIVE SUMMARY .................................................................................... 3

    CONTROLLER'S ACCOUNTABILITY PLAN ................................................................ 8

    INTRODUCTION AND BACKGROUND ..................................................................... 11

    SECTION 1: CELL PHONE ISSUANCE ................................................................... 19

    SECTION II: SELECTION OF CELL PHONE PLANS AND CONTRACTS ............................... 28

    SECTION Ill: MONITORING CELL PHONE COSTS ..................................................... 31

    SECTION IV: CONTRACT OVERSIGHT .................................................................. 35

    APPENDIX A: RANKING OF RECOMMENDATIONS ..................................................... 38

    2

  • EXECUTIVE SUMMARY

    The Controller's Office has completed an audit of citywide cell phone usage. The primary objective of the audit was to assess the efficiency and effectiveness of the City's oversight and management of cell phone usage and identify opportunities to reduce cell phone costs. The audit focused on evaluating the criteria used by departments to assign cell phones to individual users, how departments select the most cost-effective phone plans and vendor contracts and how effectively City departments monitor cell phone usage for appropriate business use.

    The audit was performed in accordance with Generally Accepted Government Auditing Standards and covered activities from June 2010 through October 2010. Fieldwork was conducted between October 2010 and April 2011 and focused on a representative sample of seven City departments, which included departments with the highest cell phone costs, as well as smaller departments:

    BACKGROUND

    • City Clerk m Cultural Affairs Department m Department of Building and Safety m General Services Department "' Information Technology Agency Ill Los Angeles Police Department "' Public Works, Bureau of Sanitation

    City employees may be assigned a cell phone for use in the course of their employment when it provides an economic, efficient, and secure solution to the City's business needs.

    Since the City lacks a centralized inventory of City-issued cell phones, the Controller's Office requested all City departments, including the offices of elected officials and the three proprietary departments, to report the number of cell phones, smart phones (e.g., Blackberrys) and aircards 1 assigned to their employees or under their control. Surveyed

    1 Aircards are wireless broadband data devices that enable users to access the Internet with their laptops.

    3

  • departments and offices reported a total of 11,791 cell or smart phones2 and 4,099 aircards Citywide. For Council-controlled departments, there are approximately 6,500 cell phones issued to 32,000 employees. For some departments, many of the cell phones are used only for the "push-to-talk" feature, which works much like a walkie- talkie, and the cell phone feature itself is not used.

    Wireless devices are provided under multiple contracts for cell phone/pager equipment, services, accessories and messaging. Sprint, AT&T, Verizon and T-Mobile