Meeting_Body
OPERATIONS, SAFETY, AND CUSTOMER EXPERIENCE COMMITTEE
APRIL 16, 2026
Subject
SUBJECT: OFFICE OF THE INSPECTOR GENERAL (OIG) Fiscal Year 2024 Billings Report Supplement to Metro Transit Security Performance Audit for Fiscal Years 2023 and 2024 (Report No. 25-AUD-06)
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE Office of the Inspector General (OIG) Fiscal Year 2024 Billings Report Supplement to Metro Transit Security Performance audit for Fiscal Years 2023 and 2024.
Issue
ISSUE
On February 23, 2017, the Metro Board passed a motion directing the Office of the Inspector General (OIG) to conduct an annual audit of each law enforcement services contract to determine how key performance indicators measure up against actual performance metrics. The audit is to ensure that Metro is receiving the services it is paying for.
Background
BACKGROUND
Metro is the region’s principal agency for multi-modal transit operations. Metro operates transit service from 11 geographically distinct bus divisions, four light rail lines, and two subway lines. In addition, critical rail infrastructure includes Union Station, 7th Street/Metro Center, and Willowbrook/Rosa Parks Station. Critical bus infrastructure includes the Harbor/Gateway Station and El Monte Transit Center. In 2017, Metro awarded three separate 5-year firm fixed unit rate contracts to the LAPD, the LASD, and the LBPD (“Contractors”) for transit law enforcement services to support day-to-day operations across Metro’s entire service area.
Discussion
DISCUSSION
Findings
The overall objective of this audit is to evaluate transit security billings for the period of FY 2024 for services performance provided by each of the three law enforcement contractors (LAPD, LASD, and LBPD), and Metro’s System Security and Law Enforcement (SSLE) Department. The specific review areas covered by this audit include Billings, Payments, and Use of Budgeted Funds for each Law Enforcement Contract. Other aspects of services provided by the law enforcement agencies in FY 2024 were included in the primary report issued on June 3, 2025, 25-AUD-06, Board Report number 2025-0421. We reviewed the budget and billings for each of the law enforcement agencies to identify the nature and scope of budget variances. To accomplish this objective, we completed the following procedures:
• Obtained, reviewed, and evaluated the Fiscal Year 2024 (FY 2024) budgets, billings, and payments for each law enforcement agency, including (1) summarized budget-to-actuals for each agency and (2) identified any budget variances.
• Verified by sample testing of monthly invoices that each of the three law enforcement agency billings complied with their respective contract sections regarding billings for services.
Considerations
While there have been improvements in compliance and oversight over time, this report notes several continuing issues of concern relating to reporting and contract oversight and Contractor billings.
Below is a summary of the more significant findings.
• The daily target minutes that LASD used in the calculation of monthly credit amounts did not meet the service levels required under contract.
• A miscalculation was made in February 2024 resulting in a credit due to Metro
• The Cost Allocation Plan rates used by LAPD to bill Metro were not current and resulted in an overbilling.
For FY23 and FY24, we reviewed a sample of three invoices for each contracted law enforcement agency. Our audit identified the following overbilling amounts based on the three months sampled across the entire audit period (FY23-FY24):
• LASD: $1,897,301.28
• LAPD: $1,606,730.22
• LBPD: $230,272.82
LASD concurred with the audit in that the daily target minutes used in the calculation of the credit amount did not meet the service levels promised. They also said three 2-deputy 56 hour units were not included in their billings. Their Contract Law Enforcement Bureau (CLEB) will conduct an analysis of contracted service minutes and calculate a revised billing amount for the audit period.
LASD agreed a miscalculation was made on the February 2024 invoice resulting in a $9,870 credit to Metro.
LAPD billed Metro with cost allocation plan (CAP) rates for FY19. The City’s Office of the Controller had published lower CAP rates for FY23 and FY24 however, did not inform or adjust the CAP rates used to bill Metro for LAPD services.
A reconciliation is necessary to determine the entire amount due to Metro for overbillings during FY23 and FY24.
The audit found billing discrepancies with LBPD related to Paid Time Off, mathematical errors in fully burdened hourly rates and other direct costs were not supported or allowed by the contract.
The invoice testing for each law enforcement contract resulted in findings of overbilling using only three months of invoicing and likely indicates additional funds due to Metro when all invoices are audited, potentially 4 times the amount. We have engaged our contracted auditor to review the remaining invoices for FY23 and FY24 to determine any additional overbilling or underbilling for the full audit period.
RECOMMENDATIONS
The Office of the Inspector General is providing 10 recommendations to improve/strengthen the controls over billing, payments, and use of budgeted funds for each law enforcement contract.
Metro should review the remaining FY 2024 invoices not tested and calculate any additional credit amount owed by LASD, LAPD and LBPD to Metro.
We recommend that Metro collaborate with LASD to review Fiscal Year 2024 invoices to ensure that all calculations align with the authorized service framework.
Metro should negotiate a change in contract language with LAPD and utilize the published CAP rates for future billing and invoicing.
Equity_Platform
EQUITY PLATFORM
It is the opinion of the OIG that there is no direct equity impact by production of this audit alone. However, failure to act on our recommendations could lead to providing less equitable service or not promoting equity in our operations to the best and highest level reasonably possible.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
While this item does not directly encourage taking transit, sharing a ride, or using active transportation, it is a vital part of Metro operations, as it contributes to fiscal responsibility and reports on miscellaneous expenditures of the Los Angeles County Metropolitan Transportation Authority (Metro). The Metro Board has adopted an agency-wide VMT Reduction Target, and this item supports the overall function of the agency and is consistent with the goals of reducing VMT.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendations in this report support the following Strategic Plan Goals:
Goal 2.1: Metro is committed to improving security.
Goal 5.2: Metro will exercise good public policy judgment and sound fiscal stewardship.
Goal 5.6: Metro will foster and maintain a strong safety culture.
Next_Steps
NEXT STEPS
Metro management should:
• Complete the Schedule for Tracking Metro’s Proposed Actions in Response to the recommendations in the report as determinations are made on implementing the recommendations; and
• Periodically report to the Metro Board on the status of actions taken to implement the recommendations.
Attachments
ATTACHMENT
Attachment A - Final Supplemental Report on Fiscal Year 2024 Billings of Metro Transit Security Performance audit for Fiscal Years 2023 and 2024
Prepared by: Anthony Alvarez, Senior Auditor, (213) 244-7331
Yvonne Zheng, Senior Manager, Audit, (213) 244-7301
George Maycott, Senior Director, Special Projects (213) 244-7310
Reviewed_By
Reviewed by: Karen Gorman, Inspector General, (213) 922-2975
