Local firms want in on military boom

By Dan Nakaso
Advertiser Staff Writer

Some 200 to 300 local small businesses expect to compete next month for subcontracting work to build military houses on O'ahu, but many aren't qualified, local businesses were told yesterday.

One of the Mainland firms hoping to get the general contract for the project advertised an unrelated subcontracting job recently, and 10 of the 12 local companies that applied didn't even fill out the forms properly, said Gregg Yamanaka, outgoing chairman of the Chamber of Commerce of Hawai'i's small business council.

"The construction industry is about to really have a boom on O'ahu," Yamanaka said. "... Many of us are not prepared."

At stake is a share of $2.2 billion in military construction money to build or renovate 16,756 homes for all branches of the military in the next 14 years. Under a new formula devised by the Department of Defense, private developers will build, maintain and manage military homes for 50 years.

Five companies or consortiums of companies from the Mainland are waiting to hear which will win the first primary contract to be awarded in Hawai'i by the Air Force, possibly as early as the middle of August.

The construction money "will help to revitalize our economy," said state Rep. Brian Schatz, D-25th (Makiki, Tantalus). "What share of those federal dollars will the local guys get?"

Yesterday's forum before a packed crowd of 250 at the state Capitol Auditorium was the second organized by the Chamber of Commerce of Hawai'i and the Building Industry AssociationiHawai'i to address the gap between what primary contractors need and the readiness of local small businesses.

A survey conducted just before the start of the forum revealed that 63 percent of the participants believed it was "very important" to get subcontracting work from the primary contractors. And 71 percent considered themselves "very qualified" to meet performance requirements.

But the standards the primary contractors will require for the so-called privatized housing will be higher than the military imposes under its current housing construction program, Yamanaka said.

The 50-year time frame to maintain the homes means the primary contractors' reputations "and a lot of money" are at stake, Yamanaka said.

Much of the forum was spent going over the need to have business plans, detailed construction procedures, proof of occupational safety training and quality assurance and audit programs. "This is not business as usual," Yamanaka said.

As a result, he said, the primary contractors will need subcontractors who have management and operational systems in place to ensure they can deliver dependable service for decades.

"They want us to survive," he said. "They need us to be around. ... But roughly two-thirds of us are in the same boat, and we need to bring ourselves up to speed."

He and others encouraged the small businesses to attend another session Aug. 19 to get more information about what companies will need to qualify for the subcontracting work.

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