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iAUDIT! - Most people are familiar with the woes of one of America’s once-great manufacturers, Boeing. In January, a plug door blew out of a 737 mid-flight. Miraculously, nobody was sitting in the adjacent row and the plane landed safely. That was one in a string of mishaps, some fatal, that have plagued Boeing in recent years. As an April 2024 article in Atlantic magazine describes, a toxic mix of outsourcing, and lax contract management created an environment that allowed poorly made parts to find their way into potentially hundreds of planes. A key sentence in the article quoted lead Boeing engineer L.J. Hart-Smith’s warning to Boeing’s executives about the then-new 787: “With outsourcing came the possibility that parts wouldn’t fit together correctly on arrival. “In order to minimize these potential problems,” Hart-Smith warned, “it is necessary for the prime contractor to provide on-site quality, supplier-management, and sometimes technical support. If this is not done, the performance of the prime manufacturer can never exceed the capabilities of the least proficient of the suppliers.” From new stories after the door blow-out, we now know Boeing provided almost no on-site quality control at is outsourced plants.
Hart-Smith summarized the problem with Boeing’s approach; by outsourcing design and manufacturing to multiple providers, the company put itself at the mercy of a long chain of suppliers who may or may not have been capable of achieving the quality required of a modern commercial jetliner. Quality control was a particularly weak point. A failure at any one point in the process endangered the entire plane. The bolts that were supposed to secure the plug door to the fuselage on the damaged 737 were never installed, and record-keeping was so poor nobody knows when or how the mistake occurred. Boeing’s obsession with short-term profits meant contract oversight and quality inspections were subordinated to producing as many planes as possible, regardless of problems.
Los Angeles’ homelessness programs suffer from the same problems as Boeing. The City is at the end of a long chain of providers, none of which are accountable to the other. Poor performance, sloppy data management, and questionable expenditures are the norm. Let’s consider how getting a homeless person into housing is supposed to work. The City may contract with LAHSA or directly with a provider for street outreach. For the moment, let’s assume its LAHSA. LAHSA performs little direct outreach; it contracts with a relatively small number of favored nonprofits. So, before any services are rendered, the City is already dealing with two contractors: LAHSA and a provider. That does not include other providers such as street medicine or mental health crisis response teams.
What metrics are used to measure the provider’s performance? Most contracts pay by the contact hour, or by a percentage of clients referred for services. The operative word is “referred”. A referral can be as simple as completing a set of forms to establish eligibility for housing. A referral is an action, and that action is not housing someone. Reviewing a performance report on the City’s website, (page 5 of 13), we see it takes five “engagements” before someone is referred, but we don’t know what happens to them after that because it isn’t measured. We also see the three top services provided to clients include such things as distributing food and drink, passing out service brochures, COVID education and PPE, and supplying personal hygiene items. None of these actions are directly related to getting people into housing or shelter. Also of note, people referred to “higher levels of care” are not tracked in the Homeless Management Information System (HMIS) so there’s no way to tell what happens to them. Given the high incidence of mental illness and substance abuse in the unhoused community, not knowing what happens to people needing more intense care is a major problem.
Next, let’s suppose an outreach team has managed to get someone into a transitional living facility. Again, we may see multiple providers involved. For example, the City may pay a provider to manage the facility’s operations. According to LAHSA’s Scope of Required Services (SRS) for Interim Housing, the provider is responsible for maintaining a safe and secure environment for clients, and must enter updated service data into the HMIS. The facility operator may use sub-contractors for specific services, and once again LAHSA is supposed to be the coordinating agency, ensuring providers are meeting their contract obligations. So now, to the minimum of two contractors for street outreach, we can add at least two more, LAHSA and the facility operator, plus any number of specialty providers.
What metrics are used to measure interim housing performance? Turning back to the quarterly performance reports, we see on page 10 of 13, there are several measures, including the number of enrollments into time-limited subsidized housing and permanent supportive housing. However, the key measures—actual exits to permanent or temporary housing—are zero, and they have been zero since the beginning of the fiscal year. In fact, unless a client dies while in interim housing, LAHSA has no idea what happens to most of the people who exit its facilities; the “Exits to Unknown” category numbers well into the hundreds over the fiscal year. All of the other programs in the performance report, including such high profile ones like Tiny Homes and Project Homekey, show no placements for transitional or permanent housing. The combined cost of these programs is well over $100 million per year (Tiny Homes alone costs about $76 million), yet nobody has been housed. Apparently, the City thinks it is perfectly acceptable to pay providers who fail to do the one thing they are supposed to do—get people into stable housing.
The list of contractor failures in L.A. and elsewhere is too long to detail in this column, but a few examples include:
- HOPICS, a nonprofit that is supposed to provide rent subsidies for recently homeless people, did such a poor job managing the $140 million program and its subcontractors, hundreds of people are in danger of being evicted for non-payment. And yet LAHSA and the County continues to grant the organization lucrative no-bid contracts.
- The State Attorney General sued Shangri-La and Step Up, two nonprofits that were supposed to provide housing and services in three California counties for $114 million for questionable financial practices. The organizations were supposed to provide 500 supportive housing units through the state’s Project Homekey, but have provided none.
- An April 2024 article detailed misuse of public funds by the San Francisco nonprofit Home Rise, which spent as much as $244 million of taxpayer money on employee bonuses, social events, and other questionable expenses, while leaving many of its homeless housing units empty.
- Back in L.A., Urban Alchemy, a street services nonprofit with a shady history, is being investigated by the City Controller after one of its employees was caught on video using a power washer to force a homeless person to move off the sidewalk in January 2024. Despite the investigation, the City continues to grant no-bid contracts to the organization, most recently in June; Urban Alchemy now has contracts with the City worth more than $19 million.
- One of the programs included in the quarterly performance report noted above, is Safe Parking. Safe Parking LA, (SPLA),a nonprofit that manages safe parking sites, In its March 2024 progress report, SPLA claims a 41 percent placement rate from the LAX lot on La Cienega. However, its own performance reports dispute that claim. From October 2023 through April 2024, the monthly performance reports show 167 clients served, with 18 attaining permanent housing and 6 interim housing, for a total of 24 housing actions. 24 is 14 percent of 167, nowhere near the 41 percent claimed. Indeed, the highest percentage was March 2024, with seven permanent housing and no interim housing placements, or just under 32 percent of 22 clients served that month. Unless the placements were phenomenally higher in July, August and September 2023, the 41 percent placement rate cannot be supported. Regardless of what number SPLA may claim, the City performance reports show no permanent placements from the program to date in fiscal year 2023-24.
These are just a few examples of how grossly mismanaged homelessness services are in L.A. and throughout the state. Just like Boeing, the City, County and state abdicate their responsibilities for delivering cost effective services to the homeless by contracting those services with virtually no oversight. Like Boeing’s malfeasance, LA’s poor management costs lives. If one of the infamous 737 Max-9’s were to crash, it could kill as many as 193 people. Six homeless people die on LA’s streets every night; that’s the equivalent of a 737 crash every 32 days.
(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program. He focuses on outcomes instead of process.)
