Posted on: Sunday, August 3, 2003

Construction firms await word on military bids

By Dan Nakaso
Advertiser Staff Writer

The Army, Navy and Air Force are each expected this month to select the companies they want to build a collective $2.2 billion worth of military housing on O'ahu, representing one of the largest construction sweepstakes in Department of Defense history.

The six companies — or groups of companies — have spent hundreds of thousands of dollars on their applications just to get this far.

"We're all waiting with bated breath this August," said Kathryn Thompson, director of development for Connecticut-based CEI Investment Corp. Thompson also has the title of program manager and director for American Communities Hawaii LLC, a hui of companies that along with CEI Investment applied for the Army and Navy projects.

"We would be very disappointed if we didn't get it and we'd be very, very elated if we got one," Thompson said.

Much of the public effort over the past few months has focused on trying to get Hawai'i's small businesses trained and educated to compete for subcontract work from primary contractors. At the same time, the six contenders for the primary contracts have been waiting anxiously in private.

"Obviously this would be a very big opportunity for us as a company," said Thomas Henneberry, chief operations officer of Cleveland, Ohio-based Forest City, a finalist for the Navy's contract.

The projects involve 16,756 new and renovated homes at Hickam Air Force Base, around the Navy's Pearl Harbor and at the Army's Schofield Barracks, Wheeler Army Airfield, Helemano Military Reservation, Fort Shafter, Tripler Army Medical Center and Aliamanu Military Reservation.

The work is possible because of the Pentagon's new thinking since 1996 to divert officer and enlisted housing allowances into developers' hands so they can get projects launched sooner.

Under the old system, the Department of Defense estimates it would take 30 to 40 years — at a cost of $30 billion — to upgrade the 168,000 military homes around the country that have been deemed "inadequate."

Developers used to get a lump-sum payment after their work was finished, then left the operations up to the military.

Now, in perhaps the most significant change, the developers commit to maintaining and managing the homes for 50 years despite the possibility that enlistments might fall and bases could close.

The names of the final companies selected for the O'ahu projects are supposed to remain private for 30 to 45 days while Congress reviews them.

But The Advertiser last week learned the names of the contenders that include billion-dollar, publicly traded companies with offices spread across the Mainland and in other countries. Most are based on the Mainland. A few have developed partnerships with local companies.

American Eagle Communities Hawaii LLC, a joint venture of Shaw Environmental & Infrastructure and CEI, also includes Gentry Homes. J.A. Jones has partnered with locally based Sheldon Zane Development. And Forest City's proposal includes Honolulu-based Construction Management & Development Inc.

The other companies still in the running for one, two or all three projects are Parsons, Avalon Development; El Paso, Texas-based Hunt Building Company; and California-based Actus Lend Lease.

Actus Lend Lease is one of only two companies bidding without a partner for the jobs. But much of the money Actus Lend Lease has spent applying for all three jobs went to Honolulu's Group 70 for architectural work, said Lucien Wong, the company's Honolulu-based regional vice president.

Actus Lend Lease and Fluor Hawaii LLC have been the only two companies to announce publicly their intentions to bid on the projects. Each sponsored forums aimed at helping local small businesses compete for sub-contracting work.

Fluor Hawaii LLC, which included Hunt Building Co., recently was turned down for the Army and Navy contracts. Hunt remains a contender for the Air Force contract.

Wong, of Actus Lend Lease, still hasn't gotten all of the bills from the June 17 forum his company sponsored, but he estimates that food and other costs were between $5,000 and $10,000.

"It was important to get the word out," Wong said. "There's a lot of misinformation going around about some of this work not going to local businesses. We thought it was also important that they also hear from some of the developers."

Part of Actus Lend Lease's message is that it's a mix of Mainland and local, civilian and military.

While the company is based in California, it has been working on Hawai'i projects for more than 25 years.

Wong was vice president and general manager of Hawai'i Kai for Kaiser Development Co. and president of the commercial division for Castle & Cooke Hawai'i. He notes that his three children went to high school in Hawai'i.

At the same time, Actus Lend Lease's Honolulu employees include former military people, such as retired Marine Corps Col. Richard Crawford, the ex-base commander of Marine Corps Base Hawai'i in Kane'ohe.

For now, Actus is still in the running for all three contracts. And the stakes are high, Wong said.

"I can tell you a lot of money has been spent," he said. "A lot of money. If we got the selections, we'd be very happy. Very, very happy."

Or as Democratic Rep. Neil Abercrombie's spokesman, Mike Slackman, put it: "There's a lot at stake. Even for companies of that size, big bucks are involved."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.