UH speeds $44M in bids

By Jim Dooley
Advertiser Staff Writer

For six months, the University of Hawai'i has stopped advertising for bidders on its construction projects, and has asked a select group of contractors to bid on nearly $44 million of work.

Other divisions of state government have been following similar expedited procurement practices to promote economic activity after the Sept. 11 attacks, but those involve contracts worth no more than $250,000.

At the university, President Evan Dobelle is embarking on an unprecedented level of fast-tracked construction work, exercising the autonomous purchasing authority granted by the Legislature in 1998. On Oct. 31, Dobelle signed a waiver that eliminated the need for advertisements and sealed competitive bids on all construction projects.

The reason was to help "stimulate the state's economy," according to an Oct. 11 memo from UH Vice President Eugene Imai. The memo said construction projects "must meet a stringent requirement" of starting construction within six months of the money's being appropriated for the work.

Imai told Dobelle in an Oct. 29 memo that following "normal procurement and construction requirements providing for formally advertised invitations for bids would place an enormous time constraint in meeting this six-month implementation time frame."

Dobelle signed the waiver two days later.

Procurement experts say fast-tracking construction projects, particularly large ones, may be more expensive, but the university says they haven't been.

It has heard from contractors upset about the new system.

"Sure, there's been complaints from people that feel the process is closed, but the goal is to get the money out there quickly, so we deal with contractors we know can get the job done right," said Paul Costello, UH vice president for external affairs.

State Rep. Jerry Chang, D-2nd (S. Hilo), said some contractors have called the new system "a major problem in the University of Hawai'i's procurement system."

Chang said contractors complained to him "they are not made aware of projects that they might be qualified to, and desire to, bid on until it is too late."

He said in tough economic times "we need to expose ourselves to the broadest spectrum of qualified bidders and products in order to obtain the best products and services at the least cost."

State Rep. Charles Djou, R-47th (Kahalu'u, Kane'ohe), said he also worries about the new system.

"I agree with what Evan Dobelle is trying to do, but I actually have a very serious concern that this has gone too far," Djou said. "The bureaucracy takes far too long sometimes, but you don't want to (be) fostering sweetheart deals, either."

Allan Ah San, who oversees construction projects for the university, said the list of who gets contacted for work is drawn up by university personnel and outside consultants, such as architects and engineers hired to design project plans and specifications. Depending on the size of the job, Costello said, procurement officials ask three to 10 contractors to submit competitive proposals or price quotes.

Contracts are usually, but not always, awarded to the low bidder, Ah San said. Other factors are the contractor's "schedule for completing the work, the management team, and in some cases references," he said.

Costello and Ah San said the lists change for each job, so new contractors are offered the chance to make proposals on new jobs.

"We're trying to spread it around," Costello said.

About $36 million in jobs have yet to be awarded, but nearly $8 million in contracts already have been handed out under the non-advertised system. Those include:

• A $2.1 million contract to replace the air conditioning system at Moore Hall on the Manoa campus, awarded Feb. 4 to Fujikawa & Associates Inc.
• A $2.9 million job awarded to Shioi Construction Inc. Feb. 25 for renovating the Wa'ahila Ridge faculty housing complex in Manoa Valley.
• Two jobs to Standard Electric Inc. worth $215,175 and $129,500. Standard is the only company to have received more than one contract under the relaxed contract award procedures.

Aaron Fujioka, chief procurement officer for all state departments except UH, said publicly advertising jobs and requiring contractors to submit competitive sealed bids "is the best way to ensure fairness and equitable treatment of all competing parties. It increases public confidence in the system because there's more openness."

Fujioka said the traditional system "maximizes the purchasing value of public funds, and you tend to get a better product overall."

He said his office is asking the Legislature this year to extend the waiver that allows the state to use the informal bid procedure for purchases of less than $250,000, but only for repair and maintenance of public schools.

Dobelle's procurement waiver expires June 30, and university officials say the expedited procurement probably will continue after that, but the university likely will cap the value of the contracts at the $250,000 threshhold followed by the rest of the state.

"We're going to make some changes, probably go with new threshholds," Costello said.