by David Corrigan
HONOLULU, Hawaii – An official examination of the procurement practices of the Department of Transportation’s Airports Division has revealed that a “dependence on and accommodation of contractors subverts the public interest.”
The report, issued by the Hawaii State Auditor, asserts the division surrendered oversight and management responsibilities to contractors, and found a pattern of recurring violations and questionable practices.
LINK: Procurement Examination of the Department of Transportation
Lots of taxpayer money was tied up in these contracts in fiscal years 2009 and 2010; approximately 30 percent of the department’s total procurements of $417 million and $467 million in goods and services, respectively.
For example, when the division hired Parsons Transportation Group, Inc. to manage its 12-year, $1.7 billion modernization of the Honolulu International Airport in 2006, the division also removed itself from parts of the decision making process, surrendering key oversight and management responsibilities. The auditor says “this disengagement resulted in questionable allowances to the program manager,” such as the provision of rent-free facilities and the reimbursement of $570,000 in office renovation expenses and $21,000 for “team-building” training.
On the neighbor islands, the Airports Division failed to do a cost analysis for the construction of field offices for projects at the Hilo, Lihu‘e, and Kahului airports. The eventual amount paid for the construction of one individual field office was nearly $1 million, “almost 30 times the amount we estimated it should have cost.”
Of the Hilo Airport Project, the auditor wrote:
| We found that Airports entered into separate competitive sealed bid contracts for three projects at the Hilo International Airport, Lihu‘e Airport, and Kahului Airport, each of which included specifications for the construction of pre-engineered structures to be used as field offices. Because the field offices were meant to be used for multiple projects, Airports should have separately procured their construction rather than bundling them with the large construction projects. Separate procurement of the field offices would have encouraged competition and likely resulted in lower bids by other vendors. Further, Airports could not provide us with any cost analyses for constructing pre-engineered structures versus buying or renting trailers, thus raising additional questions as to the economic benefit of constructing new field offices. Ultimately, Airports paid $182,518 for Hilo’s field office; $125,000 for Lihu‘e’s office; and $973,586 for Kahului’s office, totaling nearly $1.3 million.
The first contract was for a terminal roof replacement at Hilo International Airport, which was awarded to Isemoto Contracting Company, Ltd., in May 2002. The total contract amount was $10.9 million, of which $182,518 was listed as the cost of constructing a field office. The second contract was for heliport improvements at Lihu‘e Airport and awarded to Miller/Watts Constructors, Inc., in March 2006, for $7.8 million. The bid listed $125,000 for constructing a field office. Specifications for both contracts stated that “[t]he preengineered structure shall be a single-story, field office with conference room, toilet, and sink counter, approximately 1,056 square feet (24’ x 44’),” and identified a specific kit home model as acceptable without further approval — the “Huaka Gable” model by HPM Building Supply. The third contract was for Phase II of explosive device system integration improvements at Kahului Airport, which was awarded to Bodell Construction Company in April 2008 for $24.7 million. The bid included multiple line items related to a “new construction management office” totaling $820,419. That contract’s specifications similarly stated the necessary dimensions and requirements for a pre-engineered structure and named the “Lauhala” kit home model by HPM Building Supply as acceptable. According to the Airports Engineering Program manager, the decision to construct new field offices and bundle their construction with each of the three projects was based on the recommendation of the project manager for each project. The manager claimed that Airports initially performed a cost analysis in 2002 when it developed the project scope and specifications for the Hilo project, and determined it was preferable to build a pre-engineered structure rather than rent a modular trailer office. However, management was unable to provide this cost analysis and could only provide a document from HPM Building Supply setting forth its packaged home prices as of February 2002, which included the Huaka Gable model. Airports personnel also stated they had obtained quotes from Hawai‘i Modular Space for various trailer configurations and compared them to the packaged home prices. However, they could not provide any documentation of the quotes received or the comparison performed. The Engineering Program manager further stated that cost analyses were not done for the Lihu‘e and Kahului projects. Instead, Airports relied on the information it obtained for the Hilo field office in 2002, and only made telephone inquiries at the time of the Lihu‘e and Kahului projects to verify the costs. |
In another instance, the division did not procure a new security contract in a timely manner, allowing the original contract to be extended three times, exceeding the original term limit by 16 months and $37.7 million
The department did not disagree with nor dispute any of the auditor’s findings. In the official letter of response, DOT Director Gelnn Okimoto wrote:
 Glenn Okimoto, DOT Director |
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STORY SUMMARY
by David Corrigan HONOLULU, Hawaii – An official examination of the procurement practices of the Department of Transportation’s Airports Division has revealed that a “dependence on and accommodation of contractors subverts the public interest.” The report, issued by the Hawaii State Auditor, asserts the division surrendered oversight and management responsibilities to contractors, and found a […]