City Settles Suit Over $6-Million Research Ship : La Mer: Council agrees to pay $185,000 to the builders of the custom vessel, ending a two-year dispute over the final payment of $205,000.

After two years of legal wrangling, the Los Angeles City Council has agreed to pay $185,000 to the builder of a custom-made oceanographic vessel that now has cost the city more than $6 million.

The settlement, approved behind closed doors by the council, gives the ship’s San Diego builder, Knight and Carver Custom Yachts Inc., almost the entire $205,000 it sought two years ago when it sued the city for the final construction payment on the ship, dubbed La Mer.

Settlement of the suit seems to validate Knight and Carver’s claim that it was only following the instructions of city employees and the ship’s designer--a company owned by a former port commissioner--when it built the 85-foot vessel for the Bureau of Sanitation.

“The settlement shows that they (city officials) had no case from the beginning,” said Meri Knight, vice president of Knight and Carver. “I just think it’s a real shame that we spent two years of wasted time and wasted money trying to get what was due us in the first place.”

Officials with the city Board of Public Works and sanitation bureau declined to discuss the settlement. So did several council members. But one, Councilman Joel Wachs, angrily chastised the city departments for their handling of the case.

“The whole thing is mind boggling,” Wachs said. “And what it says to me is . . . that this (city department) does not have any controls over how it spends money.”

Six years ago, the sanitation bureau and Board of Public Works set out to build a new vessel for monitoring water quality in Santa Monica Bay. The ship, designed to replace an aging vessel plagued by maintenance problems, was expected to cost $1.5 million.

But over the years, the costs to design and build La Mer soared. Several other government agencies, including Los Angeles County, all spent less to buy their ships than the $1.1 million Los Angeles paid one firm to design La Mer and oversee its construction. That firm is Rados International Corp., whose chairman is former Los Angeles Harbor Commissioner Robert Rados Sr.

After winning the contract to build the vessel, Knight and Carver spent almost two years on La Mer’s construction. City records show that construction cost reached $4.1 million, including $546,000 for changes ordered by the city or Rados International.

But after taking delivery of the vessel, city officials withheld the final payment of $205,000 from Knight and Carver, claiming shoddy workmanship by the company. That claim was disputed by Knight and Carver, which then sued the city.

During the legal proceedings leading to the settlement, La Mer’s price tag has continued to increase.

Records show the city not only spent $47,000 for a consultant to review Knight and Carver’s work, but also at least $553,000 for repairs sanitation officials claim were needed to make La Mer seaworthy. Those repairs--deemed excessive by Knight and Carver--were done by San Pedro Boatworks, a company owned by Rados’ nephew, Andy Wall, under a competitively bid contract originally valued at $85,000.

The six-year saga of La Mer has prompted City Controller Rick Tuttle to successfully push for a city policy that restricts city departments from significantly increasing the value of competitively bid contracts after they have been awarded.

Meantime, Wachs said this week that he will use the example of La Mer to urge the council to take a closer look at the sanitation bureau’s spending. Wachs has a proposal to transfer 5% of the bureau’s $830 million sewer fund to pay for 650 new police officers.

“The La Mer contract . . . is just one example of what is wrong with the (sanitation bureau’s) system,” Wachs said. “It is a department out of control.”