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The Honolulu Advertiser
Posted on: Thursday, May 9, 2002

Contract system relations questioned

By Jim Dooley
Advertiser Staff Writer

More questions were raised yesterday about the use of a new state procurement system and about the relationship between the creator of the system and a roofing manufacturer who stood to gain from its use.

Also, the head of the state's Public Works Division admitted that his office violated procurement laws in awarding four roofing contracts last year by using the new procurement system known as PIPS.

Gordon Matsuoka, who oversees several hundred million dollars worth of state construction projects annually, repeatedly admitted that errors existed in the PIPS system database used to calculate which companies are best qualified to receive state construction contracts.

His testimony came at an administrative hearing in which a local roofing contractor is challenging the awarding of four contracts to other companies through the use of PIPS — the Performance Information Procurement System.

Under questioning, Matsuoka conceded there have been a series of problems in Hawai'i's administration of PIPS roofing contracts. The award of four roofing contracts through PIPS late last year violated state procurement law, Matsuoka testified. Even after those "inadvertent" violations were discovered and work on the jobs supposedly was stopped, Matsuoka said his office continued to use PIPS.

Matsuoka said he decided to use PIPS in 1998 for deciding who should get roofing contracts after he attended a presentation on the program conducted here by Arizona State University professor Dean Kashiwagi, who created the PIPS software.

According to documents introduced at the hearing yesterday, that presentation and at least two others made here by Kashiwagi were financed by Neogard Inc., a Mainland-based roofing material manufacturer that has helped underwrite Kashiwagi's research at Arizona State University.

Neogard has paid $75,000 a year in grants to ASU for Kashiwagi's research, and another $35,000 per year in side payments to Perf.-Pro Inc., a company headed by Kashiwagi's wife, according to invoices introduced at the hearing.

The Perf.-Pro payments were compensation for a series of "presentations" made around the country, including Hawai'i, by Kashiwagi about the PIPS system.

According to a letter from Kashiwagi to Neogard, the $35,000 payment was arranged in an "internal letter between myself and Neogard" in September 1997.

"The grant to ASU for $75,000 will not have this documentation. This is for the use of Neogard only," the letter said. It also said: "The grant proposal is written as loosely as possible to minimize control by the University."

The reason the grant proposal was written "loosely," Kashiwagi said, was "to reduce the risk on our research group. They understood that this was a prototype research project. A more defined requirement would force us to deliver a product that we may not be able to produce."

At one point, the state contracted with Kashiwagi to use his system to review bids and award contracts for roofing jobs on public buildings. But the state took that responsibility away from Kashiwagi's group after complaints were filed about his connections to Neogard, according to Matsuoka and Hawai'i PIPS coordinator Stephen Miwa.

Reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com.