Meeting_Body
CONSTRUCTION COMMITTEE
OCTOBER 15, 2025
Subject
SUBJECT: OFFICE OF THE INSPECTOR GENERAL CONSTRUCTION CHANGE ORDER SPOT CHECKS
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE Office of the Inspector General Construction Change Order Spot Check Report for the period June 1, 2025, to August 31, 2025.
Issue
ISSUE
On January 25, 2018, the Metro Board directed the Office of the Inspector General (“OIG”) to conduct random spot checks on change orders for the construction projects listed in the quarterly program management report to ensure that the CEO Delegation of Authority to approve Construction Change Orders Policy is performing in the manner desired by the Board of Directors.
Background
BACKGROUND
The OIG’s Construction Change Order Spot Check Program (“Spot Checks”) focuses on approved change orders and modifications that exceed $500,000. The four change orders in this report were selected from the Program Management Quarterly Major Project Status for the period of June 1, 2025, to August 31, 2025. The OIG gathers the data, reviews all the change orders over $500,000, and selects change orders from the major projects. The information for the Spot Checks was collected from the Program Management Information System (PMIS), which is the department’s database system. Also, virtual meetings and telephonic interviews were conducted with Metro Program Management, Project Control, and Procurement staff from each involved project office.
For each Spot Check, we summarized:
• Description of the change order,
• Change order detail,
• Scope of Work,
• Budget,
• Schedule (Time to execute the change order),
• Safety, and
• Recommendations (lessons learned are identified starting with this report).
Metro’s Program Control department has provided informal responses to this report before its issuance, and they are asked to provide written responses to the recommendations in this OIG Spot Checks Report within 30 days after this Report is issued. Included with this report is a spreadsheet with the status of responses concerning previous OIG Spot Check Report recommendations (Attachment B).
Discussion
DISCUSSION
Spot Checks Performed in this Quarter
Spot Check #1 - The Purple Line Extension Section 3 Tunnel Project
This OIG Spot Check report pertains to the Purple Line Extension Section 3 Tunnel Project (Contract C1151 MOD 00035.1), Additional abandonment depths for the partial removal of Geotechnical Instrumentation beneath the surface.
Change Order Detail
See Attachment A Spot Check #1 table.
Summary #1
Scope of Work - This change order of $1,147,493 is for MOD 00035.1. This modification compensates the Contractor for unexpected labor and material costs related to the partial removal of various geotechnical instrumentation that was installed beneath the surface of the Purple Line Extension Section 3 Tunnel Project. These instruments were installed at 75 locations along the tunnel alignment, at depths of up to 120 feet, for the purposes of monitoring earth movement and groundwater during construction activities.
Under the executed 2017 contract, partial removal of these instruments was specified to a depth of 8 feet below the surface. This type of work generally required shallow excavations of 2 to 3 feet and was planned to be done manually with shovels, followed by a bentonite/cement mixture to seal the boreholes.
In 2021, the State of California and the Los Angeles County Department of Public Health updated their standards for decommissioning these types of monitoring wells. The revised guidance increased the required abandonment depth to 20 feet below the subsurface to prevent vertical contaminant migration and protect groundwater.
Under the current Memorandum of Agreement (MOA) with the City of Los Angeles, METRO is required to comply with any State regulatory changes adopted after the six months of the MOA execution. Therefore, the updated 2021 abandonment standards applied. Meeting these updated requirements significantly expanded the scope and complexity of the abandonment effort, now requiring additional labor, more materials, and specialized excavation equipment at all 75 locations.
Budget - This change order for MOD 00035.1 was negotiated to the amount of $1,147,493 to account for the additional 12 feet of depth required for abandonment and partial removal of the geotechnical instrumentation. The Contractor's Cost and Scheduled Proposal (CSP) was $1,156,311.10, and the Independent Cost Estimate (ICE) was $1,267,057. The ICE is $110,745.90 (8.74%) over the CSP, and the negotiated amount is $119,564 (9.44%) less than the ICE. The project staff stated that funds for this change order are within the Life-of-Project budget.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The modification was awarded on July 2, 2025, and the staff completed all signature approvals within five workdays. Under the prior Board approval method for change orders, assuming presentation at a September Board meeting date, it would have taken a total of fifty-five workdays to complete the transaction.
Safety - The Purple Line Extension Section 3 Project has 2,054,927 Project hours through July 2025, with a Total Recordable Injury Rate (TRIR) of 2.34 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .58 (the Bureau of Labor Statistics National Average is 1.5).
Recommendations/Lessons Learned - No recommendations by the OIG.
Spot Check #2 - The Purple Line Extension Section 3 Transit Project
This OIG Spot Check report pertains to the Purple Line Extension Section 3 Transit Project (Contract C1204 MOD 00004), Extension of the valet and shuttle services contract at the Veterans Affairs (VA) Hospital campus.
Change Order Detail
See Attachment A Spot Check #2 table.
Summary #2
Scope of Work - This change order of $1,180,408 is for MOD 00004. This modification is related to the Purple Line Extension 3 (PLE3) Transit Project (C1204) and Metro’s Memorandum of Understanding (MOU) with the Veterans Affairs (VA) Hospital. This contract extension fulfills Metro’s agreement with the VA Hospital to ensure a smooth transition for patients, visitors, and staff whose access has been affected by the PLE3 construction on the VA Hospital campus.
The modification addresses the reduced on-site parking at the VA Hospital campus by continuing transportation services for hospital patients from July 1, 2025, through December 31, 2025. It provides valet service for 250 vehicles daily, and two shuttles that make multiple stops across the 400-acre VA Hospital campus, connecting the remote parking lot to the hospital entrance. These services are essential to maintaining access, minimizing disruption, and upholding Metro's commitment to the VA Hospital during construction activities.
Budget - This change order for MOD 00004 had an agreed-upon amount of $1,180,408. The Contractor’s Cost and Schedule Proposal (CSP) was $1,180,408, and the Independent Cost Estimate (ICE) was $1,279,000. The ICE is $98,592 (7.71%) over the CSP and the agreed-upon amount. The project staff stated that the Contractor's proposal was reasonable and that funds for this change order are within the Life-of-Project budget.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The modification was awarded on May 30, 2025, and the staff completed all signature approvals within three workdays. Under the prior Board approval method for change orders, assuming presentation at a July Board meeting date, it would have taken a total of thirty-one workdays to complete the transaction.
Safety - The Purple Line Extension 3 Project has 65,784 Project hours through July 2025, with a Total Recordable Injury Rate of 3.04 (the Bureau of Labor Statistics National Average is 2.4) and a Days Away, Restricted or Transferred (DART) rate of 3.04 (the Bureau of Labor Statistics National Average is 1.5).
Recommendation/Lessons Learned - No recommendations by the OIG.
Spot Check #3 - The Purple Line Extension Section 2 Transit Project
This OIG Spot Check report pertains to the Purple Line Extension Section 2 Transit Project (Contract C1120 MOD 00255), Full resolution of the Contractor's claim of construction-related costs for the Overhead Plenum Exhaust Systems at the Century City Station (CCS), and the Beverly Drive Station (BDS).
Change Order Detail
See Attachment A Spot Check #3 table
Summary #3
Scope of Work - This change order of $7,861,404 is for MOD 00255. This modification pertains to the Purple Line Extension Section 2 Project (C1120) to resolve the Contractor's claim for construction-related costs (labor, equipment, and materials) that were necessitated by the revision of the Overhead Plenum Exhaust (OPE) systems at the Century City Station (CCS) and the Beverly Drive Station (BDS). This change order was settled following the recommendations made by the Dispute Review Board (DRB) on September 27, 2024, which include the following scopes of work:
1. Emergency Ventilation System Upgrades
2. Back-of-House Cast-in-Place (CIP) Concrete
3. Concourse Structural Steel Plenum and Fireproofing
4. Elimination of Smoke Chimneys
5. Architectural and Framing Modifications
6. Fire-Rated Separations, Expansion Control, and Acoustic Modifications
7. Access Modifications
Budget - This change order for MOD 00255 was negotiated to $7,861,404. The Contractor’s Cost and Scheduled Proposal (CSP) was $8,491,900, and the Independent Cost Estimate (ICE) was $8,012,770. The ICE is $479,130 (5.64%) less than the CSP, and the negotiated amount is $151,366 (1.89%) less than the ICE. The staff stated that funds for this change order are within the recently amended Life-of-Project budget.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The Contractor and Metro agreed on the Scope of Work on September 27, 2024. The modification was awarded on June 23, 2025, and it took the staff fifteen workdays to complete all signature approvals. Under the prior Board approval method for change orders, assuming presentation at the September Board meeting date, it would have taken a total of sixty workdays to complete the transaction.
Safety - The Purple Line Extension 2 Project has 5,691,744 Project hours through July 2025, with a Total Recordable Injury Rate of 2.25 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .42 (the Bureau of Labor Statistics National Average is 1.5).
Recommendations/Lessons Learned - Ambiguity in the project definition drawings caused misalignment between the design intent and construction execution. The drawings for the OPE system lacked essential details, leaving the Contractor to interpret conditions that were not fully defined. This gap resulted in delays, disputes, and costly adjustments.
(Consider) continuing the Program Management practice of early contractor involvement and use design review meetings with the contractors to help identify these gaps, differing interpretations, or omissions, to effectively align the design intent with Metro expectations and field implementations.
Spot Check #4 - The LAX/Metro Transit Connector Project
This OIG Spot Check report pertains to the LAX/Metro Transit Center Station Project (Contract C1197 MOD 00057), Improving the slip resistance on the Terrazzo finish.
Change Order Detail
See Attachment A Spot Check #4 table.
Summary #4
Scope of Work - This change order of $1,118,635 is for MOD 00057. It pertains to the LAX/Metro Transit Center Station Project. It was issued to address latent ambiguity in the original contract’s technical specifications related to slip-resistance requirements for terrazzo walking surfaces.
During project delivery, and after the terrazzo flooring was installed, Metro and the contractor identified that the contract did not clearly define the measurable performance criteria for slip resistance. Following a formal contract review, management determined that the specifications lacked sufficient detail to enforce compliance, with no potential for cost recovery.
To address this gap, the scope of work for this modification includes all necessary labor, equipment, and materials to achieve the required slip resistance on the terrazzo flooring throughout the station. These improvements are crucial in preventing slips and falls in public, high-traffic environments.
Budget - This change order MOD 00057 was negotiated to $1,118,635. The Contractor’s Cost and Scheduled Proposal (CSP) was $1,129,095, and the Independent Cost Estimate (ICE) was $1,058,968. The ICE is $70,127 (6.21%) less than the CSP, and the negotiated amount is $59,667 (5.64%) over the ICE. The staff stated that funds for this change order are within the Life-of-Project budget.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The modification was awarded on June 10, 2025, and the staff completed all signature approvals within two workdays. Under the prior Board approval method for change orders, assuming presentation at the September Board meeting date, it would have taken a total of sixty-eight workdays to complete the transaction.
Safety - The LAX/Metro Transit Connector Project has 1,577,260 Project hours through July 2025, with a Total Recordable Injury Rate (TRIR) of 1.27 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .0 (the Bureau of Labor Statistics National Average is 1.5).
Recommendations/Lessons Learned - There was ambiguity in the technical specifications and the pre-acceptance portion of the contract. Slip resistance standards (e.g., R11, R12) were not clearly defined expectations, and performance testing requirements (such as friction testing) were not incorporated into the pre-acceptance process.
(Consider) incorporating full-size mock-ups for finishes with performance criteria (e.g., safety, slip resistance, durability) before installation begins. Currently, mock-ups are typically reviewed for aesthetics but may not include other criteria. Provide more detailed language regarding technical specifications and the pre-acceptance phase of the contract.
FINANCIAL IMPACT
This report will have no financial impact on the Agency beyond what is described above.
Impact to the Budget
For all of the construction change orders reviewed, Metro stated the funds are within the approved budget and will utilize the contingency funds to cover the cost from the Life-of-Project budget.
• Spot Check #1) $1,147,493 Purple Line Extension Section 3 Transit Project
• Spot Check #2) $1,180,408 Purple Line Extension Section 3 Transit Project
• Spot Check #3) $7,861,404 Purple Line Extension Section 2 Transit Project
• Spot Check #4) $1,118,635 LAX/Metro Transit Connector Project
Equity_Platform
EQUITY PLATFORM
In the opinion of the OIG, we considered whether these change orders presented any equity-related issues on their face. The OIG did not receive any data concerning community impacts. The OIG observed no obvious disparate impacts created by these change orders on small businesses or low-income persons or by the performance of the work in a manner that impacted a disadvantaged community beyond what is typical and usual when conducting any construction.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
While this item does not directly encourage taking transit, sharing a ride, or using active transportation, it is a vital part of Metro Program Management, Safety in construction, and effective financial management. Because the Metro Board has adopted an agency-wide VMT Reduction Target, and this item generally supports the overall function of the agency, this item is consistent with the goals of reducing VMT.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The Office of Inspector General reviews large change orders over a calendar quarter and makes recommendations as appropriate to support Metro’s Strategic Plan Goal #5: Provide responsive, accountable, and trustworthy governance within the Metro organization and CEO goals to exercise fiscal discipline to ensure financial stability. The OIG mission includes reviewing expenditures for fraud, waste, and abuse in Metro programs, operations, and resources. For each selected change order reviewed, the OIG evaluates whether there are red flags of fraud, waste, or abuse taking place. We report the details of the significant change orders and make recommendations consistent with the OIG's Construction Best Practices report dated February 29, 2016, and supplemental report in 2023, more particularly focusing on safety, lessons learned, improving efficiencies, and prudent spending.
Next_Steps
NEXT STEPS
The OIG shall provide, every quarter, an ongoing spreadsheet of recommendations to Program Management and Program Controls. Program Management and Program Controls agree to respond to the recommendations of the OIG within 30 days. The OIG continues to meet periodically to discuss reports, recommendations, and the status of implementation of the recommendations with Project Management and receive updates. The list of OIG recommendations and Metro management responses is an attachment to this OIG report (Attachment B).
Attachments
ATTACHMENTS
Attachment A - Change Order Details for Spot Checks in this report
Attachment B - OIG Recommendations and Responses Tracking Sheet
Prepared by: Stuart Bermudez, Construction Specialist Investigator, (213) 244-7324
Reviewed by: Karen Gorman, Inspector General, (213) 244-7337
