UH bid process called unfair
By Jim Dooley
Advertiser Staff Writer
A group representing 130 construction firms says the University of Hawai'i was unfairly restrictive in seeking bids to install a multimillion-dollar telecommunications system at its new medical school.
A request for contract proposals prepared by the university and issued by the medical school general contractor, Hawaiian Dredging/Kajima U.S.A, required that bidders "be recognized members of an electrical or telecommunications union."
The union requirement, illegal in a federal contract, limits competition and drives up prices as a prerequisite to a state or local contract, said Gary Wiseman, executive director of the Honolulu chapter of the Association of Builders and Contractors.
The telecommunications contract was offered privately to companies selected by Hawaiian Dredging/Kajima, in a process that also limited competition, Wiseman said.
Three bids came in for the work, valued at $2 million to $5 million. Paul Costello, UH vice president for external affairs, had predicted before the Jan. 13 submission date that there would be "six or seven proposals" for the job.
Verizon Hawai'i Inc. received special permission from UH to bid for the contract, even though it planned the job and helped draw up the contract specifications. Verizon Hawai'i employees are members of the International Brotherhood of Electrical Workers.
Paul Costello, UH vice president for external relations, said the union requirement was included in the contract specifications because only unionized electricians are available in Hawai'i to perform some of the required work.
"The purpose of the union labor requirement stems from the fact that a unionized electrician will be on the John A. Burns School of Medicine project," Costello said in a written statement.
"There is potential of work stoppage or slowdown if Hawaiian Dredging/Kajima were to subcontract with both a union electrical and nonunion information-technology electrical subcontractor," Costello said.
He said nonunion companies were asked to submit bids with the understanding that they could enter into joint venture agreements with unionized firms. They also could seek and receive "union recognition" for individual projects such as the medical school, Costello said.
Such "project labor agreements" are outlawed in federal government contracts, and in state and local contracts involving federal money, under an executive order signed by President Bush in 2001, Wiseman said.
There is no federal money involved in the medical school construction work. The largest public works project since construction of the Hawai'i Convention Center, it is being financed by $150 million in state bonds.
Costello would not identify any of the three bidders for the telecommunications contract, saying that could not be released until after the contract is awarded, which should be in two weeks. But The Advertiser has learned that Verizon Hawai'i is one of the bidders.
"Verizon employees are among the most skilled and highly trained in the U.S. telecommunications industry," said Ann Nishida, Verizon Hawai'i media relations manager. "As such, we expect to be involved in many competitive bids. We expect the competition to be tough, but as always, we'll do our best to demonstrate our skills and capabilities so as to win the UH bid."
Arnold Kameda, a medical school technology expert involved in the contract offering, said he did not know why the union requirement was included in the bid specifications, and said he understood that IBM Corp. was interested but couldn't bid because it "didn't meet the union requirements."
Costello said IBM didn't have the required state contracting licenses to submit a bid. IBM spokeswoman Gretchen McWhorter did not respond to a request for comment.
Other state agencies don't require union recognition in contract specifications, but they routinely require that vendors pay their employees "prevailing wages" tied to union contracts in force in Hawai'i.
Aaron Fujioka, the state government's chief procurement officer, said the University of Hawai'i is exempt from the state procurement code, and said he was not familiar with the specifics of the medical school job.
But he said it is state policy to avoid placing "unique requirements" in contract specifications. "Overly restrictive" bid requirements "are contrary to the meaningful use of public funds," he said.
"The intent is to get the lowest possible price for the best possible product, and for that you have to make it a level playing field for interested vendors," Fujioka said.
Competitors have complained twice in the past year about UH contracts awarded to Verizon.
In June 2001, UH gave Verizon a $5.3 million job to wire student housing for cable television and Internet services. The work was added to a telecommunications contract awarded to Verizon's corporate predecessor, GTE Hawaiian Telephone, in 1988. Competitors said the university might have saved money on the job if it had been put out to competitive bid.
Similar complaints were made when the university short-circuited competitive bidding for the medical school telecommunications planning contract after Verizon offered to do the work without charge.
Normally, consultants who plan government construction contracts are not allowed to bid on the work, but the university gave Verizon special dispensation.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
Correction: A previous version of this story inaccurately reported that Verizon Hawai'i Inc. did not return calls requesting comment on bidding requirements for installation of a telecommunications system at the new University of Hawai'i medical school.
The story should have included a statement from Ann Nishida, media relations manager, who said: "Verizon employees are among the most skilled and highly trained in the U.S. telecommunications industry. As such, we expect to be involved in many competitive bids. We expect the competition to be tough, but as always, we'll do our best to demonstrate our skills and capabilities so as to win the UH bid."
