State probes airport's construction contracts
By Jim Dooley
Advertiser Staff Writer
The state attorney general's office is conducting a criminal investigation into the awarding of millions of dollars in small construction contracts at Honolulu International Airport.
The investigation, which began last month, centers on alleged favoritism and kickbacks in hundreds, if not thousands, of repair and maintenance contracts at the airport worth less than $25,000 each, The Advertiser has learned.
One contractor received as much as $3 million in work in one year at the airport, all for jobs priced under $25,000 each, according to sources familiar with the contracts. The sources, who asked not to be identified because the investigation is still ongoing, said a small group of contractors consistently receive work while other companies have never landed a job in years of trying.
Attorney General Earl Anzai disclosed the existence of the investigation after The Advertiser independently began looking into how the contracts are awarded and who has been receiving them.
Anzai declined to discuss details of the case and blocked release of airport construction contract records for the past fiscal year that The Advertiser sought under the state's open records law. He cited an exception to the law that closes public records involved in an ongoing criminal investigation.
Under state procurement law in effect until last October, construction jobs worth less than $25,000 are awarded under informal bidding procedures intended to simplify and speed up the process of getting the work done. At least three contractors are contacted by telephone and asked to submit price quotations for the small jobs. The lowest qualified bidder is supposed to get the work.
Some contractors are alleged to have conspired with each other and with state personnel in submitting inflated bids for airport work, sources said. And there is evidence that unacceptably high bids from non-existent or unwitting companies were inserted into state files to justify the award of contracts to favored firms, according to sources familiar with the investigation.
Some winning companies or their subcontractors allegedly kicked back cash, food, free home repairs, airplane tickets, sporting event tickets and political contributions to state personnel, according to sources.
Records show that some small jobs, like fixing a foot-long crack in concrete flooring with epoxy fill, cost the state as much as $8,000 when the work should have cost no more than a few hundred dollars, sources said.
And the records indicate that small repair tasks were made the subject of separate and overpriced purchase orders, when some of the work should have been batched together under one lower-priced job, according to sources.
In October, the limit on small construction jobs was raised from $25,000 to $250,000. The Legislature approved the temporary measure to generate additional government spending after the Sept. 11 attacks and subsequent economic slowdown in Hawai'i.
Sources said the small construction kickback system at the airport stopped before the higher $250,000 limit was imposed.
That's because an internal examination of small construction contract awards was ordered in August by then-Airports Administrator Jerry Matsuda.
Matsuda, who retired last year, said in a recent interview that he discovered problems in small construction contract awards last summer and ordered an internal investigation by Transportation Department auditors and quality control technicians.
"I'm the guy that started the investigation. It's still going on, as far as I know," Matsuda said.
He declined to discuss specifics of the investigation, other than to say it was conducted by departmental auditors and quality control technicians.
Results of the internal departmental probe were forwarded to the attorney general's office for further investigation, Matsuda said. That referral is believed to have occurred last month.
Dennis Hirokawa, maintenance superintendent at Honolulu International Airport and the man who oversees the small contract award system, said he did not know about the attorney general's investigation and was unaware of any problems in the contract awards.
"It's supposed to go to the lowest bidder," Hirokawa said.
Asked about alleged inflated bids and contract kickbacks, Hirokawa referred questions to Department of Transportation Director Brian Minaai. Minaai could not be reached for comment despite repeated phone calls.
The small repair and maintenance budget at the airport has skyrocketed in recent years and now stands at approximately $7 million annually.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
