Meeting_Body
CONSTRUCTION COMMITTEE
JANUARY 14, 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 September 1, 2025, to November 30, 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 September 1, 2025, to November 30, 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 LAX/Metro Transit Connector Project
This OIG Spot Check report pertains to the LAX/Metro Transit Center Station Project (Contract C1197 MOD 00071). Design Modification to the Photovoltaic (Solar Power System).
Change Order Detail
See Attachment A Spot Check #1 table.
Summary #1
Scope of Work - This $1,120,314 change order, MOD 00071, pertains to the LAX/Metro Transit Center Station Project (C1197). It compensates the Contractor for additional labor, materials, and equipment required due to unforeseen conditions encountered during the installation of the Photovoltaic (PV) system in the landscape area.
The modification was initiated following a Metro design directive, issued after field verification confirmed that the basis-of-design solar panel model specified in the original contract documents had been discontinued and was no longer commercially available from the manufacturer.
The revised scope of work includes structural modifications to existing support elements and the fabrication and installation of additional structural members to support the replacement PV panel specifications. The total cost of the modification includes all labor, materials, and equipment necessary to complete the system installation and achieve full system integration within the designated area.
Technical Issue:
The original design specified manufacturer-specific mounting embeds engineered for the discontinued panel model. Upon evaluating alternative solar panel manufacturers, it was determined that the existing embed configuration is incompatible with the mounting hardware and structural connection requirements of the available replacement panels. The dimensional tolerances, load-transfer mechanisms, and attachment-point locations differ significantly across manufacturers, preventing direct substitution.
Required Modifications:
1. Structural Rework: Remove and/or modify existing embedded anchor systems installed based on the original panel specifications
2. Additional Structural Members: Install supplementary structural steel components and foundation elements to accommodate the revised mounting requirements of the replacement PV panel model
3. System Integration: Ensure all modifications maintain structural integrity, meet load requirements, and comply with applicable structural and engineering standards
Schedule Enhancement:
To mitigate schedule impacts and improve the overall project completion timeline, the construction methodology was revised. The foundation work was executed using a revised embed system that allowed for independent construction sequencing. This approach enables parallel work activities and reduces dependencies on the critical path. Steel components can be fabricated, delivered, and installed on a separate timeline, improving construction efficiency and reducing field coordination conflicts.
Budget - This change order for MOD 00071 had an agreed-upon amount of $1,120,314, which included costs that weren’t captured in the Contractor's Cost Scheduled Proposal (CSP) and aligned with the Independent Cost Estimate (ICE). The CSP was $1,055,610, and ICE was $1,287,001. The ICE is $231,391 (21.92%) over the CSP, and the negotiated amount is $166,687 (12.95%) 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 October 23, 2025, and the staff completed all signature approvals within twenty-four workdays. Under the prior Board approval method for change orders, assuming presentation at a December Board meeting date, it would have taken a total of forty-eight workdays to complete the transaction.
Safety - The LAX/Metro Transit Center Station Project has 387,164 Project hours through May 2025, with a Total Recordable Injury Rate (TRIR) of 2.06 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .1.55 (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 Station Project
This OIG Spot Check report pertains to the Purple Line Extension Section 3 Transit Station Project (Contract C1152 MOD 00158). Construction costs resulting from design changes to the power and communication distribution systems for both bicycle hubs at the UCLA and the Veterans Affairs (VA) Hospital Station.
Change Order Detail
See Attachment A Spot Check #2 table.
Summary #2
Scope of Work - This change order in the amount of $760,999.51 is for MOD 00158. This modification addresses construction costs for the Purple Line Extension 3 (PLE3) Transit Station Project (C1152) for both bicycle parking facilities (bike hubs) at the UCLA Station and the VA Hospital Station. During the final design phase, Metro Planning introduced scalable revisions to the electrical and communication distribution systems and added cabinets to house the access control equipment. These scope elements were not incorporated into the base contract.
Potential Cost Savings That Could Have Occurred:
1. Early Identification: Providing these requirements for bike hub access equipment during the initial bike hub planning could have avoided administrative costs of processing separate modifications and potentially secured better pricing through competitive bidding as part of a larger scope.
Budget - This change order for MOD 00158 was negotiated to the amount of $760,999.51. The Contractor’s Cost and Schedule Proposal (CSP) was $789,406.90, and the Independent Cost Estimate (ICE) was $877,910.92. The ICE is $88,504.02 (11.21%) over the CSP, and the agreed-upon amount is $116,911.41 (13.32%) 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 October 30, 2025, and the staff completed all signature approvals within eleven workdays. Under the prior Board approval method for change orders, assuming presentation at a December Board meeting date, it would have taken a total of twenty-five workdays to complete the transaction.
Safety - The Purple Line Extension 3 Transit Project for the C1152 contract has 3,024,123 Project hours through November 2025, with a Total Recordable Injury Rate of 1.22 (the Bureau of Labor Statistics National Average is 2.3) and a Days Away, Restricted or Transferred (DART) rate of .20 (the Bureau of Labor Statistics National Average is 1.5).
Recommendation/Lessons Learned - Earlier identification of construction task sequencing and its alignment with the project definition drawings could have resulted in cost savings.
Spot Check #3 - The East San Fernando Valley Transit Corridor Project
This OIG Spot Check report pertains to the East San Fernando Valley Transit Corridor Project (Contract C1220 MOD 00012). Incorporating the self-performed work by the Los Angeles Department of Water and Power into the design work schedule.
Change Order Detail
See Attachment A Spot Check #3 table.
Summary #3
Scope of Work - This change order in the amount of $918,581 is for MOD 00012. This modification pertains to the East San Fernando Valley (ESFV) Transit Corridor Project (C1220). The Los Angeles Department of Water and Power is self-performing an underground electrical duct bank installation within the three-mile underground segment of the ESFV LRT alignment, extending from San Fernando Road to south of Parthenia Street.
The Los Angeles Department of Water and Power (LADWP) is self-performing this work under a separate agreement with Metro, rather than including it within the contractor’s initial design scope. During the development of this contract, Metro and LADWP leadership agreed not to move forward with the proposed undergrounding of electrical lines, which was later changed when LADWP came under new leadership. As such, the original contract did not account for the level of effort required for the coordination and integration of this third-party utility work into the final project design.
This modification provides compensation to the contractor for the additional professional design and coordination services necessary to integrate the LADWP electrical duct bank into the project design.
The scope of work includes:
• Design Plan Integration: The Contractor will incorporate the LADWP electrical duct bank design into the current project design documents and utility profile plans. This work includes reviewing and integrating the LADWP designs to identify any conflicts with existing or proposed infrastructure, coordinating with other utility systems shown in the project plans, and evaluating constructability impacts that may affect sequencing, access, or construction methods.
Budget - This change order for MOD 00012 was negotiated to amount of $918,581. The Contractor's Cost and Schedule Proposal (CSP) was $1,011,149, and the Independent Cost Estimate (ICE) was $779,906. The ICE is $231,243 (22.87%) under the CSP, and the negotiated amount is $138,675 (17.78%) over the ICE.
Potential Cost Savings That Could Have Occurred:
1. Early Identification: The three-mile underground duct bank design was initially agreed not to be included in the scope of the Design Work. Earlier recognition of the agreement between Metro and LADWP could have allowed this scope to be negotiated into the original design contract, but it would have had a significantly greater impact on the overall project budget. The original undergrounding agreement would have resulted in a higher cost because it was expected that Metro would be responsible for all related undergrounding costs and schedule impacts. Metro leadership resumed negotiations with LADWP in 2024, and now the undergrounding is being done at LADWP’s expense, resulting in a reduction of risk for Metro. If the original agreement had remained in place, the project could have prevented the additional administrative expenses associated with processing a modification.
Schedule - The CEO Delegation of Authority process was utilized for this change order. The modification was awarded on October 31, 2025, and the staff completed all signature approvals within nineteen workdays. Under the prior Board approval method for change orders, assuming presentation at the December Board meeting date, it would have taken a total of twenty-six workdays to complete the transaction.
Safety - The East San Fernando Valley Light Rail Transit Line Project C1220 contract has 303,065 Project hours through October 2025, with a Total Recordable Injury Rate of 1.33 (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 and lessons learned - No recommendations by the OIG.
Spot Check #4 - The Rail-to-Rail Active Transportation Corridor Project
This OIG Spot Check report pertains to the Rail-to-Rail Active Transportation Corridor Project (Contract C1166 MOD 00166.1), Consolidation of three previous change orders (CO-00003, CO-00003.1, and CO-00003.2 for unforeseen subsurface conditions within the public right-of-way.
Change Order Detail
See Attachment A Spot Check #4 table.
Summary #4
Scope of Work - This change order in the amount of $537,294.30 is for MOD 00166.1. It pertains to the Rail-to-Rail Transportation Corridor Project (C1166). This contract modification consolidates and supersedes three previous change orders (CO-00003, CO-00003.1, and CO-00003.2) into a single comprehensive agreement between LA Metro and the Contractor to address unforeseen subsurface conditions within the public right-of-way.
Budget - This change order MOD 000166.1 had an agreed-upon amount of $537,294. The Contractor’s Cost and Scheduled Proposal (CSP) was $537,294, and the Independent Cost Estimate (ICE) was $631,750. The ICE is $94,456. (17.58%) over the CSP, and 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 October 17, 2025, and the staff completed all signature approvals within twenty workdays. Under the prior Board approval method for change orders, assuming presentation at the December Board meeting date, it would have taken a total of thirty-two workdays to complete the transaction.
Safety - The Rail-to-Rail Transportation Corridor 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 - Program Management assessed risks and possible public impacts, including traffic effects, and determined it was acceptable to proceed without exploring subsurface conditions in the public right-of-way.
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) $1,120,314 LAX/Metro Transit Connector Project
• Spot Check #2) $760,999.51 Purple Line Extension Section 3 Transit Station Project
• Spot Check #3) $ 918,581 ESFV Transit Corridor Project
• Spot Check #4) $537,294.30 Rail-to-Rail Active Transportation Corridor 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
