Posted on: Friday, September 12, 2003
Military housing proposed delay worries local industry
By Dan Nakaso
Advertiser Staff Writer
A group of state legislators wants to postpone going forward with $2 billion worth of privatized military housing contracts on O'ahu, raising concern among small business leaders that Mainland companies might get an edge in the anticipated subcontracting boom.
Business leaders' anxiety was only exacerbated this week when the Navy unexpectedly delayed an announcement about its billion-dollar housing contract.
The issue centers on wages for workers building and renovating 2,000 former Navy homes at Iroquois Point and Barbers Point, one piece in a large-scale project to "privatize" military housing projects. Developer Fluor Hawai'i contends it is not bound by the Davis-Bacon Act, which sets labor standards, including wages.
In response, state Sens. Cal Kawamoto and Carol Fukunaga and Rep. Ken Ito have asked Hawai'i's congressmen to postpone all O'ahu components of what has been called the largest military construction project of its kind.
"I asked them to either further delay or rescind the contracts until such time as we can straighten out all of these rules that we have," Kawamoto said. "I'm concerned that we're going to have another Mainland company coming in here and circumventing Davis-Bacon and the prepaid medical care act and workman's comp rules."
He has yet to hear back from Hawai'i's congressional representatives. Their spokesmen could not immediately comment yesterday.
Gregg Yamanaka, recent chairman of the Chamber of Commerce of Hawai'i's small business council, called the legislators' request "a shame."
"Every delay is going to work against the local subcontractors," Yamanaka said. "... Otherwise, Mainland subcontractors are going to get all of the work."
Issues such as salaries and benefits will be among the details to be worked out later by each military branch, he said.
But officials from Fluor and competitor Actus Lend Lease — which won the Army's $1.7 billion contract to build and renovate 7,700 homes — said the massive Army, Navy and Air Force projects would be built in accordance with Davis-Bacon and state regulations.
Actus Lend Lease is still in the running for the Navy and Air Force contracts. Fluor Hawai'i is a 10 percent partner, along with Hunt Corp., in the Air Force bid.
The so-called privatized military housing projects create 50-year partnerships between private developers and the military. But the $80 million Iroquois Point and Barbers Point agreement "was an outright lease and an outright sale," said Roy Yee from Fluor Hawai'i.
Tom Swain, a spokesman for Actus Lend Lease, said, "they have a right to do anything with it, as any other developer would. It is not privatization."
Fukunaga said she had heard similar claims, "but there is some discrepancy. Our objective is really to get this discrepancy cleared up as soon as possible, because we agree it would be a good thing for the state of Hawai'i."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
