Meeting_Body
CONSTRUCTION COMMITTEE
APRIL 15, 2026
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 December 1, 2025, to February 28, 2026.
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 December 1, 2025, to February 28, 2026. 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 2 Transit Station Project
This OIG Spot Check report pertains to the Purple Line Extension Section 2 Project (Contract C1120 MOD 00271.1), Additional Work- Improvements to Metro’s Cellular Infrastructure.
Change Order Detail
See Attachment A, Spot Check #1 table.
Summary #1
Scope of Work - This change order, MOD 00271.1, in the amount of $486,020, is for additional scope of work under the Purple Line Extension Section 2 (PLE2) Transit Station Project (C1120) to support the design, procurement, and installation of enhanced cellular infrastructure within the tunnel segments and associated station areas. This work includes integration with the distributed antenna systems (DAS), conduit routing, cabling, and supporting infrastructure to establish reliable cellular connectivity throughout the underground PLE2 corridor.
The scope defined in this modification was not included in the original C1120 Contract award, as these system requirements were identified subsequent to contract execution. This effort aligns with a Metro CEO directive mandating the activation of full cellular service coverage at all Metro stations and transit corridors prior to revenue service operations on opening day.
Budget - This change order for MOD 00271.1 had an agreed-upon amount of $486,020 for scopes of work that weren't captured in the original contract. The initial Contractor's Cost and Schedule Proposal (CSP) was $486,020, and the Independent Cost Estimate (ICE) was $524,153. The ICE was $38,133 (7.85%) over the CSP, and the negotiated amount is $38,133 (7.28%) 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 January 29, 2026, and the staff completed all signature approvals within one workday. Under the prior Board approval method for change orders, assuming presentation at a March Board meeting date, it would have taken a total of thirty-four workdays to complete the transaction.
Safety - The Purple Line Extension Section 2 (PLE2) Project has 6,138,874 Project hours through December 2025, with a Total Recordable Injury Rate (TRIR) of 2.15 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .39 (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 1 Transit Station Project
This OIG Spot Check report pertains to the Purple Line Extension Section 1 Transit Station Project (Contract C1045 MOD 00276), Procurement, Fabrication, and Delivery - Entry Portal Signage.
Change Order Detail
See Attachment A Spot Check #2 table.
Summary #2
Scope of Work - This change order in the amount of $1,155,659 is for MOD 00276. This modification is related to the Purple Line Extension 1 (PLE1) Transit Station Project (C1045). This change order is for the fabrication and delivery of permanent entry portal signage for several Metro system stations along the PLE1 extension corridor. The signage is essential to enhancing station visibility and passenger navigation.
The scope of work encompasses all materials, manufacturing processes, quality assurance measures, and logistical coordination necessary to produce and transport the completed signage components to their respective station locations in accordance with the project's design specifications and schedule requirements.
Budget - This change order for MOD 00248 was agreed to in the amount of $1,155,659. The Contractor's Cost and Schedule Proposal (CSP) was $1,155,659, and the Independent Cost Estimate (ICE) was $1,659,073. The ICE was $500,414 (30.34%) over the CSP, and above 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 February 10, 2026, and the staff completed all signature approvals within ten workdays. Under the prior Board approval method for change orders, assuming presentation at an April Board meeting date, it would have taken a total of forty-seven workdays to complete the transaction.
Safety - The Purple Line Extension Section 1 Transit Project for the C1045 contract has 11,211,308 Project hours through December 2025, with a Total Recordable Injury Rate of .80 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .08 (the Bureau of Labor Statistics National Average is 1.5).
Recommendation - No recommendation by the OIG.
Spot Check #3 - The LAX Airport Connector Transit Station/96th Street
This OIG Spot Check report pertains to the LAX Airport Connector Transit Station/96th Street Station (Contract 1197 MOD 00079), Excusable Delays - Extension of Substantial Completion Project Milestones.
Change Order Detail
See Attachment A, Spot Check #3 table.
Summary #3
Scope of Work - This change order in the amount of $5,000,000 is for MOD 00079. This modification pertains to the LAX Airport Connector Transit Station/96th Street Project (C1197). This modification compensates the Contractor for the 125-day extension of the substantial completion and project milestones resulting from Metro sequenced station modifications and design changes.
Background & Basis for Cost
Throughout the project, numerous changes were introduced through Requests for Information (RFIs) and approximately one hundred Design Bulletins by Metro. Under the Design-Bid-Build, lowest-responsive-bidder delivery model, these changes created inherent exposure to additional costs. The Contractor proceeded in good faith, implementing change-related work continuously rather than establishing hold points to negotiate each change individually before proceeding - an approach that preserved the project schedule and efficiency.
Cost Justification
The cost captured in this modification reflects a fair and reasonable evaluation of all outstanding changes. Stopping work to formally negotiate pricing for each individual change directive would have introduced significant overhead and delay costs that would likely have exceeded any savings achieved through the standard change order execution process.
There was no formal Notice of Intent to Claim (NOIC) or formal claim submitted for this modification. It was structured as a comprehensive merit-based adjustment rather than a settlement, consistent with guidance from Vendor Contract Management.
Budget - This change order for MOD 00079 was agreed upon in the amount of $5,000,000 for excusable delays caused by Metro project management, providing a 125-day extension of the substation completion schedule at $40,000 per day. This modification has been reviewed and approved on its merits by Vendor Contract Management and County Counsel.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The modification was awarded on February 06, 2026, and the staff completed all signature approvals within nineteen workdays. Under the prior Board approval method for change orders, assuming presentation at the March Board meeting date, it would have taken a total of thirty-eight workdays to complete the transaction.
Safety - LAX Airport Connector Transit Station/96th Street Project for the C1045 contract has 11,211,308 Project hours through December 2025, with a Total Recordable Injury Rate of .80 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .08 (the Bureau of Labor Statistics National Average is 1.5).
Lessons Learned - Excusable delays caused by design changes during construction are an inherent reality of large-scale infrastructure projects. In this case, many such changes were intentionally initiated by various Metro departments to improve long-term quality and functionality - including upgrading to direct fixation track (rails are fastened directly to the concrete base slab using specialized rail fasteners and eliminating ballast), adding bus chargers, enhancing signage, and designing flexible-use spaces. Rather than indicating management failure, these changes show a commitment to delivering a better final product.
The Airport Metro Connector/96th Street Station project exemplifies effective project management on a complex Design-Bid-Build contract. Throughout construction, the team maintained disciplined oversight through a formal change management process, regular coordination meetings with the contractor, thorough risk assessments with contingency planning, and experienced, properly resourced staffing.
Most notably, the project was completed well within the original Life of Projects budget - a clear sign of strong cost control, disciplined change management, and effective stakeholder coordination. Despite numerous design changes, the contractor's decision to proceed with change-related work rather than establishing hold points for individual pricing negotiations helped preserve schedule momentum and prevented larger delay costs. It also demonstrates effective partnering skills and mutual trust. The comprehensive evaluation at substantial completion reflected a practical, merit-based resolution strategy - not a sign of management failure. This outcome shows that, even amid the natural complexities of a major transit project, careful planning and proactive leadership can deliver outstanding results.
Recommendation - Incorporate the lessons learned from this section into sections PLE2 and PLE3 and other capital projects if appropriate.
Spot Check #4 - The Metro G Line Bus Rapid Transit Project
This OIG Spot Check report pertains to the Metro G Line Bus Rapid Transit (BRT) Improvement Project (Contract PS85661000 MOD 00015). Additional Work - Metro B Line Fiber Optic Procurement and Construction Improvements.
Change Order Detail
See Attachment A Spot Check #4 table.
Summary #4
Scope of Work - This OIG Spot Check report pertains to the Metro G Line Bus Rapid Transit (BRT) Improvement Project under Contract PS85661000. The change order in the amount of $22,706,280 for MOD 00015 is for communication improvements along the Metro B Line corridor. The scope of work encompasses the procurement and installation of a new fiber-optic backbone extending approximately 35 miles to enhance communication infrastructure and system reliability across the corridor.
This scope of work encompasses two primary elements:
1) Furnish and deliver 288-strand single-mode metal-clad aluminum interlocking armor fiber optic cable and cable clamps for installation in the B Line tunnel between North Hollywood Station and Union Station, including the Union Station Gateway building.
2) Provide all labor, material, equipment, and services for fiber optic cable construction per B Line Fiber design under EWP 4, per Attachment G Part D. This includes installation and testing of a redundant 288-strand fiber optic cable (one cable strand per tunnel bore) for a total of approximately 35 miles of cable.
Budget - This change order MOD 00015 was negotiated in the amount of $22,706,280. The Contractor's Cost and Schedule Proposal (CSP) was $25,567,524, and the Independent Cost Estimate (ICE) was $28,201,358. The CSP is $2,861,244 (12.60%) over the negotiated amount, and the ICE was $5,495,078 (24.20%) over the negotiated amount. 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 December 22, 2025, and the staff completed all signature approvals within sixty-three workdays. Under the prior Board approval method for change orders, assuming presentation at the March Board meeting date, it would have taken a total of eighty-nine workdays to complete the transaction.
Safety - The Metro G Line Bus Rapid Transit (BRT) Improvement Project has 265,906 Project hours through January 2026, with a Total Recordable Injury Rate (TRIR) of 1.88 (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).
Lessons Learned - The project team demonstrated effective construction management practices by implementing preventative measures upon early identification of schedule risks associated with this change order. These actions reflect industry best practices in proactive risk management and resource planning.
Preventative Measures Implemented by the Project Team:
1. Advanced Procurement Strategy Upon recognition of a potential material procurement risk, the project team executed an accelerated procurement action ahead of the planned schedule baseline. This measure effectively neutralized material availability as a schedule driver, ensuring that all required materials were on hand and staged prior to mobilization. This action is consistent with sound construction management practice of eliminating controllable risks before they manifest as schedule impacts.
2. Critical Path Schedule Management - We learned that the project team is maintaining active oversight of the project schedule, continuously evaluating progress against established milestone dates. Schedule performance is being monitored at the activity level to enable early detection of variance and provide sufficient lead time for corrective action.
3. Risk Management - In addition to mitigation efforts, the project team has formally documented and maintained all identified risks within the Project Risk Register in accordance with the project's risk management plan. Each risk was evaluated and categorized by the probability and impact.
Recommendation
It is recommended that the procurement of track allocation windows and Maintenance of Way (MOW) support be classified as the highest-probability schedule risk at the initiation of any change order involving track access requirements. Given that MOW access is an externally controlled variable and a critical path dependency, it is imperative that relevant operations and maintenance stakeholders be engaged at the earliest practicable stage of the change order process to initiate the necessary coordination efforts and to secure the required work windows within the established project milestone constraints.
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) $486,020 Purple Line Extension Section 2 Project
• Spot Check #2) $1,155,659 Purple Line Extension Section 1 Transit Project
• Spot Check #3) $5,000,000 LAX Airport Connector Transit Station/96th Street Project
• Spot Check #4) $22,706,280 Metro G Line Bus Rapid Transit 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 report 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
