State probe finds procurement law 'clearly violated'
By Jim Dooley
Advertiser Staff Writer
State officials "clearly violated" procurement laws by awarding three large school roofing contracts and acting in a manner than was "inattentive, incompetent or indifferent," but there is little that can be done to punish or penalize them, a state hearings officer has found.
Managers in the state Department of Accounting and General Services acted "intentionally, knowingly and in bad faith," but punishment provisions in the state procurement code "assume misconduct by contractors rather than by government agencies," the hearings officer, Richard Marshall, wrote in his ruling released Wednesday.
Marshall said amendments to state procurement law are "sorely needed" because of "the lack of realistic sanctions to punish governmental misconduct and/or compensate persons exposing such misconduct."
State Comptroller Glenn Okimoto, whose department awarded the three contracts through a new purchasing system called the Performance Information Procurement System, or PIPS, said yesterday he could not comment until he and his staff had time to review the ruling.
The progress of the case had been closely watched by many in the construction industry because of complaints that the PIPS system enabled a select group of contractors to win the majority of school construction work, even when they weren't the low bidders.
For Hi-Tec Roofing Services Inc., the company that protested losing the bids on the three school roofing contracts and several others awarded, it was an empty victory. Hi-Tec had argued that the state's use of PIPS, and the manipulation of data used to award the jobs, froze the company out of competing for roof repair work.
Marshall ruled there was not enough evidence to support Hi-Tec's argument that it would have won one of the contracts except for flaws in how PIPS is used.
"Hi-Tec fought for a principle and in that sense, it is pleased with the decision. But its injury will never be corrected," Matt Tsukazaki, attorney for the company, said yesterday.
Marshall did rule that Tsukazaki's legal bills to Hi-Tec must be paid by the state.
Late last year, Hi-Tec protested the award of 10 roofing contracts through PIPS. Six of the contract awards were halted, pending the outcome of the protest procedures, as required by state law. But four jobs went ahead and three were completed.
In testimony before Marshall this past spring, officials of the Department of Accounting and General Services, which awards public school construction and repair contracts, said problems with the contracts could be attributed to bureaucratic snarls rather than faults with the PIPS system.
Marshall said in his ruling that the best description of the state's handling of contracts from October 2001 to early January 2002 "would likely include descriptive adjectives such as inattentive, incompetent, or indifferent."
But after Jan. 9, when the department's managers knew what had happened with the three contracts, there were "misrepresentations ... to the state procurement officer, after-the-fact creation and issuance of award letters and contracts," Marshall said.
The actions "strongly connoted that they were done by the (state) intentionally, knowingly and in bad faith," the ruling said.
Marshall ruled that other claims by Hi-Tec about unfairness in the PIPS contract award system weren't an appropriate subject for him to review.
"Mr. Marshall highlighted the problems with the PIPS program and made it very clear that a deeper investigation is required by the appropriate authorities," said Tsukazaki, Hi-Tec's lawyer.
The state has created an advisory committee to study the PIPS system and report its findings to the Legislature next year.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
