LA28 to award billions in Olympic contracts. City officials worry local businesses won't get a slice

The Olympic and Paralympic Games will cost billions of dollars to put on, and lucrative contracts will be up for grabs to provide things like cleaning services, construction, catering, and IT services for the month-long spectacle.

L.A. public officials want that money to stay local, but many of them say a new procurement plan released by Olympic organizing committee LA28 could end up leaving out businesses in the city of Los Angeles.

"You could have a scenario where no L.A. business does any business with LA28," Council President Marqueece Harris-Dawson said at a council committee meeting Tuesday.

That's a problem for the city, which is the official Olympic host and the financial backstop for the Games. City Council members say business owners in the city should benefit the most from the money flowing into the Games. The Olympic contracts are worth up to $4 billion in total, according to LA28.

The dispute is yet another sign that the relationship between city government and the private organizers of the 2028 Olympics is fraying. In recent months, the two sides have clashed over an overdue agreement about what services the city will provide for the Olympic Games, and the city's potential financial exposure.

LA28's plans for Olympic contracts raises the perennial question about the coming Olympic Games: who in the city will actually benefit from the mega-event that will take over the region in the summer of 2028. It also indicates the limits of the city's ability to influence LA28's decision-making.

John Reamer, who leads the city's contracts department, said Tuesday that his staff did not review the procurement plan before it was released, and questioned if the relationship between the city and LA28 was a true "partnership."

"[I believed] that LA28 would allow us to give input, and they would take that input, and we would discuss that input and we would agree upon that input and it would be part of the plan," he said.

City officials want more commitments for L.A. businesses

LA28 says it's aiming to keep 75% of its spending in the Greater L.A. area, and put 25% towards small businesses. The report says it will prioritize "hyperlocal" businesses in the city of L.A., but makes no explicit promises. Instead, it identifies "local" as anywhere in L.A., Orange, Riverside, San Bernardino and Ventura counties.

At a council committee meeting on the Olympics Tuesday, multiple members criticized that plan as too broad — pushing LA28 to instead make guarantees to businesses in the city of L.A.

" Los Angeles stands alone in terms of its commitment, its investment and the amount of risk that we're bearing," Harris-Dawson told LAist. "We think every possible avenue ought to be pursued to make sure you leave the people whole, if not better, off, than they were before this started."

LA28 CEO Reynold Hoover told the council Tuesday that LA28 would give L.A. city businesses preferential treatment when awarding contracts.

"When all else is equal between two competing suppliers, we will prioritize City of L.A. suppliers," he said.

Hoover said that focusing exclusively on businesses in the city of L.A. would limit competition for those contracts — and that he wouldn't commit to a plan that would limit LA28's ability to secure the best contract that would be financially responsible.

"If I focus solely, first and foremost, on the city of L.A. for small business, then I am artificially reducing the pool of competition, placing greater risk on the city taxpayers and placing greater risk on the backstop of the city of L.A.," Hoover said.

Council president Harris-Dawson pushed back.

"We'd rather you pay nominally more to a business in the city, than to save $25," Harris-Dawson said. "If you just go for a straight, 'We want the cheapest person in the five-county area,' I can tell you already, you're going to be using a bunch of businesses where the land is cheap and there's no regulation."

Councilmember Hugo Soto-Martinez echoed those concerns, saying that the minimum wage and cost of living in L.A. are higher — meaning that businesses in Los Angeles may charge more.

"The city of L.A. is the financial back-stop to everything that you are doing. And I don't think that has resonated or permeated through you or this whole board that I just frankly don't trust" he said. "We have to go to our constituents and say that we are fighting for them to make sure that they're going to get as much business as they can out of this event."

Millions on the line for the city

The dispute over opportunities for local businesses represents one of many areas where the city and LA28 are at odds.

An important agreement that will dictate which services the city of Los Angeles will provide and how it will be reimbursed is more than six months late. Last week, city councilmember Monica Rodriguez penned a public letter warning Hoover that the Olympics could "bankrupt" the city if that agreement doesn't include adequate protections for the city.

The major concern is who will pay security costs for the Olympics, including LAPD overtime.

The federal government has allocated one billion dollars to security costs for the mega-event, and has put the Secret Service in charge of security planning. Despite those plans, city officials are concerned about who will be left with the bag if the federal funding doesn't come through, or if it doesn't cover all of the city's security costs.

Rodriguez warned that if it isn't changed, the current draft agreement could leave L.A. vulnerable to spending hundreds of millions even if LA28 turns a profit.

Expensive ticket prices are also a sore spot for the city council. Olympics tickets cost up to $5,500 and the cheap $28 tickets went fast in the locals-only pre-sale. Every ticket included a 24% service fee.

Councilmember Katy Yaroslavsky asked Tuesday how much of the service fee would be going to LA28 — a figure that Hoover said he didn't know.

"The tickets are not affordable," she said. "A dollar, which would have actually helped us do some of the things that we know we need to do to get ourselves ready as a city for the Olympics, feels like a drop in the bucket compared to a 24% surcharge."