$77M in contracts frozen
By Jim Dooley
Advertiser Staff Writer
Two military construction contracts worth approximately $77 million have been frozen pending the results of an FBI criminal investigation into two related companies that received the work last month.
One contract, worth $54.95 million, went to Nan Inc. for the design and renovation of four historic buildings at Quad C at Schofield Barracks. The other, worth $22.5 million, was awarded to a joint venture that includes Nan Inc. and JHL Construction Inc. It involves renovation of a building at Kalaeloa owned by the Hawaii National Guard.
Jennifer Goto-Sabas, chief of staff of U.S. Sen. Daniel Inouye's Honolulu office, said last week she had been told by the FBI that the contracts were frozen pending the outcome of the criminal investigation.
"They didn't go into detail, but it's got to be serious for them to intercede in contracts that have been awarded," Goto-Sabas said.
Patrick Shin, owner of Nan, which also does business as Ocean House Builders, could not be reached for comment. His nephew, James H.B. Lee, owner of JHL Construction Inc., also was unavailable for comment.
Numerous phone calls to the FBI about the investigation were not returned last week.
Nan has received more than $100 million in military construction projects here in recent years.
In 2000, the company was honored by the U.S. Small Business Administration as one of the best small business contractors in the country.
That year, the company received more than $18 million in military construction contracts here as a participant in the SBA's 8(a) program, which helps minority- and women-owned small companies land government contracts.
The company won so many contracts that it was graduated from the 8(a) program four years early.
"I became too big and successful," Shin told The Advertiser two years ago. He was then living in a $3 million mansion on the slopes of Diamond Head and owned a collection of expensive automobiles that included a Lamborghini and Dodge Viper.
Shin said hard work, sacrifice and marketing savvy helped him get ahead.
"You've got to get one job and do really well," he said. "If you do well and you give a good price, they remember you and they ask for you again."
JHL Construction is now a participant in the 8(a) program, SBA officials said yesterday.
In the fiscal year that ended Sept. 30, JHL received at least six construction contracts worth $10.7 million, according to SBA official Michael Youth. That did not include the $22.5 million contract awarded Sept. 24 to the JHL-Nan joint venture for the National Guard building at Kalaeloa.
Youth said the SBA is "aware that an investigation is ongoing" involving JHL, but he would not elaborate.
The basis for the investigation is unclear, but one Mainland businessman said he had written to federal contracting officials here to complain that Nan used materials on at least two local jobs that did not meet construction specifications.
Joe Braunschweig, owner of Aluminum Window Systems, based in Kent, Wash., told The Advertiser last week that after Shin learned about one of the letters, sent Feb. 2, 2002, to the Navy Public Works Center at Pearl Harbor, Shin called him and demanded that he withdraw the letter.
"If I did not, he stated he would contact every contractor and agency on the Island and would destroy my company," Braunschweig told the Navy in a follow-up letter on March 18, 2002.
"I questioned him as to why he was so angry, as it was the responsibility of the window supplier and manufacturer to supply the specified product," Braunschweig wrote in the March 2002 letter.
"He then coldly informed me 'to withdraw the letter by Monday or (he) would (expletive) kill (me)," Braunschweig wrote.
Braunschweig sent copies of the correspondence to the offices of Sens. Inouye and Daniel Akaka, as well as the two U.S. senators representing Washington state.
The Navy informed Braunschweig in April 2002 that it had tested the windows alleged to be substandard and "confirmed your findings. We directed the contractor to comply with the requirements of the specifications and the contractor has agreed to replace all the glazing that does not meet with the requirements of the specifications," the Navy told Braunschweig.
Braunschweig said last week he had not spoken with the FBI about Shin or Nan's work.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
