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The Honolulu Advertiser

Posted on: Sunday, June 26, 2005

The worst-laid plans

 •  Chart (opens in a new window): Government projects gone awry

By Mike Leidemann
Advertiser Staff Writer

A pothole patcher that doesn't work. Police radios that can't be heard in times of need. A rescue boat stuck in dry dock. GPS devices installed on, then removed from, city trucks. Ditto for electronic bus-pass readers.

A $260,000 rescue boat ...
... needed $140,000 in repairs six years after it was purchased.

Advertiser library photo

A $20 million system ...
... for police communications didn't work effectively. Another $20 million was spent.

Advertiser library photo

A $156,000 pothole patcher ...
... uses a type of asphalt not available here. Attempts to sell the machine have failed.

Advertiser library photo

$10,000 worth of rumble strips ...
... on the Pali Highway were removed after five months because of noise complaints.

Advertiser library photo

Doesn't anything work right in this town?

Now-you-see-them, now-you-don't rumble strips on Pali Highway. A softball stadium where no spectator can see the whole field. Another stadium that needed $50 million to repair. A freeway ramp that — oops — was built too high.

Really, doesn't anything work right in this town?

"Actually, there's a heck of a lot more being done right than wrong," says state Comptroller Russ Saito, who oversees hundreds of government projects every year. "You just never hear much about all the things that go right."

Still, observers inside and out of government say there's a perception — fair or not — that Hawai'i has more than its share of poorly planned and implemented projects that end up costing taxpayers millions of dollars.

Who or what is to blame?

Critics say that decades of Hawai'i government dominated by one party with historic ties to local unions and a "pay-to-play" system of awarding contracts to political friends and contributors have created a culture in which there's little competition and less oversight.

That has resulted in a string of embarrassing revelations through the decades about public-works initiatives gone awry.

Some of them, like rusting Aloha Stadium that cost $50 million to repair or the H-1 Freeway ramp with two supports built 6 feet higher than the others, have become part of Island lore.

Others, like the million-dollar city contracts for GPS devices in parks department vehicles, the troubled police-radio system, or the electronic bus passes that had to be altered or canceled because of performance problems, are as current as last night's news.

"It all comes down to a lack of accountability," said Richard Rowland, president of the Grassroot Institute of Hawai'i, a public-policy think tank. "When things go wrong in the private industry, there's always someone who has to answer for it. That's not true in government."

In the private sector, there's always another grocery store, restaurant, computer salesman or building contractor to turn to when the customer is dissatisfied, critics say.

"With the government, you can't do that," said Adrian Moore, executive director of the national Reason Foundation, who teaches a Georgetown University class in managing government projects. "With government, it's hard to change. You can devote your whole life to changing government and still not see the results."

Lack of accountability

The field of the University of Hawai'i-Manoa softball stadium had to be raised 4 feet to make up for a design error that left views obstructed from 90 percent of the stadium's seats. Later, a state Department of Accounting and General Services official admitted the department is so understaffed, it reviews only about one-fifth of the plans it receives.

Advertiser library photo • July 9, 1999

The problems are highlighted in Hawai'i, where a strongly entrenched bureaucracy protects government jobs, many people said.

"The system — civil service and procurement — causes delays. Often no one seems to be really in charge," said former Gov. Ben Cayetano.

As lieutenant governor, Cayetano said, he once asked a janitor to change a light bulb in his office bathroom. "Because the light bulb was affixed more than 6 feet high, the janitor, very politely and somewhat apologetically, told me I had to call an electrician. In the end, I changed the bulb myself," Cayetano said.

A more telling example came when Cayetano tried to move 1,000 state jobs to Kapolei to speed development there.

"I had about 300 grievances filed against me," Cayetano said. Ultimately, the state prevailed in court, only to have the Legislature pass a bill this year requiring an employee's consent before the employee can be moved.

Blaming union workers and the collective bargaining system for cost overruns and other problems is nonsense, said Randy Perreira, deputy executive director of the Hawai'i Government Employees Association.

"Often the lack of accountability occurs at the top level," he said. "Errors happen in both the private and public areas. A lot of the errors are made by contractors and it's the oversight that's missing."

In many of the most notorious Hawai'i projects, private contractors have been at fault. The problems with Aloha Stadium, the UH softball stadium, police radios, bus pass readers, H-1 Freeway and others grew out of work by outside contractors.

"The government isn't a very good shopper," the Reason Foundation's Moore said. "By law, they have to go out and accept the lowest price. If everybody shopped like that, we'd all be driving 1993 used Hyundais."

At its worst, the state's contracting system rewards friends and political contributors, critics say.

"If there are two competing low bids, there's a perception that a contractor who knows someone is going to get the work," said Rep. Kirk Caldwell, D-24th (Manoa), head of the House Labor and Public Employment Committee. "You've got to have extra-close supervision in government to avoid those kinds of things."

Another problem involves a lack of oversight once the contract is signed.

After the 1999 UH softball stadium fiasco came to light, an official at the state Department of Accounting and General Services admitted that the office was so understaffed it would be lucky to review about 20 percent of all plans that it sees.

"When something goes wrong, it's almost always related to project management," said Saito, who spent most of his career in private business before joining the government two years ago. "It may be true of every organization. You never feel like you have enough resources to do the job properly. Once a problem gets beyond the design review, it's very hard to spot a problem."

Duty to the public

Two columns for the Pai'ea Street ramp over the H-1 Freeway were built 6 to 7 feet too high and had to be torn down and rebuilt.

Advertiser library photo • Jan 24, 1979

Many people said Hawai'i's government record probably is no worse than private business, but noted that more media attention is given to government screw-ups when taxpayer money is wasted.

"The difference with public projects is that we have to tell people when things go wrong," said Transportation Director Rod Haraga.

By contrast, businesses fail, lawsuits are filed and money is lost in the private sector at least as often, but the problems don't become newsworthy unless they reach monumental proportions, as with the Enron Corp. or a major airline bankruptcy.

"We've had our share of screw-ups, but they're much more rarely reported," said Robbie Alm, a senior vice president for Hawaiian Electric Co. "The only time you hear about problems in the private business is when they end up in litigation."

In the private sector, the failures are seen as part of the entrepreneurial system, said Caldwell, the House Labor Committee head.

"We're almost proud of that. People invest their money knowing there are risks involved, so there's less cause to complain when something goes wrong. In the government, the fiduciary responsibility is to the public," he said.

To safeguard public money, government has responded with a number of laws and regulations that often slow down the system and ironically end up costing even more money.

"Because the public wants its politicians to spend its money wisely, there are all kinds of built-in safeguards to prevent corruption and misuses of money," Cayetano said.

That creates almost as many problems as it solves, said Alm, a former chief of the state's Department of Commerce and Consumer Affairs.

"Now, you've got a process so cumbersome that there's no room for flexibility," he said. "In the private sector, we can work with a contractorlike partners and make changes whenever they're needed. The state doesn't have that luxury."

Search for fixes

Trials allowing bus riders to use a pass like a debit card proved so problematic that the program was never offered to the general public.

Advertiser library photo • May 4, 2004

Despite a problem that's been around for decades, there are signs that government is trying to deal with the issue and reduce the number of future problems.

Observers say better management, increased oversight, use of performance-based standards, effective budgeting and other measures are being used to cut down the number of projects that don't turn out well.

The HGEA's Perreira said government should consider changing the procurement process so that the lowest bidder doesn't always win the contracts.

"If there are problems, we have to accept a system that isn't solely based on price," he said. "We need to do things efficiently, but the government can't always be run as a bottom-line-oriented business."

Alm wants to see a system that gives the government and contractor more freedom. "I wish there was far more encouragement to be more entrepreneurial," he said. "You need a system that eliminates the abuse and still encourages more freedom."

The Reason Foundation's Moore said the state needs to incorporate other strategies.

Nearly $50 million had to be spent on repairs to the $32 million Aloha Stadium after its steel beams rusted more than planned.

Advertiser library photo • July 21, 1999

"It takes a lot more than a vote-the-bums-out mentality. Nobody thinks that's a very good strategy for increasing accountability," he said. "Performance actually matters. A lot of people in government are doing a pretty good job. When they do something right, they should get a bonus."

And when government departments and agencies do a good job, they should be rewarded with an increased budget. Those doing a lousy job should see their budgets cut, Moore said.

Government agencies also are using outside, private management first to supervise large government contracts, ensuring that the work is done effectively.

The state Transportation Department, where some of the most publicized problems have occurred, says it is working hard to prevent more problems.

Several key changes have been made to operating procedures, including training more workers in procurement policy, and providing more oversight of work in progress and more inspections before a contractor's work is accepted and paid for, Haraga said.

"That's one of the lessons we learned in the past," added department spokesman Scott Ishikawa. "Now we make sure everything is tested and working well for months before we sign off on it."

Saito added that the government also is taking steps to weed out poorly performing contractors. "We can use the processes already in place to not select them again," he said.

Reach Mike Leidemann at 525-5460 or mleidemann@honoluluadvertiser.com.

• • •

What's the solution?

"I hate to use the word 'privatize,' but that would be one way of getting people off the dime. If you spend your own money, you're more careful; if you spend money that just comes out of the ether, there's no accountability."

Jack Schneider
president, JS Services, an employee-leasing company

"It's just life. In any system you're going to have gains and losses. People make mistakes. We're probably not worse than anywhere else. It's just inevitable that things go wrong sometimes."

Jon Nelson
mortgage broker, Kailua

"The government's objective should be (to) get the best service possible for its customers — the taxpayers — at the lowest possible cost."

Richard Rowland
Grassroot Institute of Hawai'i

"We've got the money, but we just can't get enough engineers to do all the work. We've got to encourage more kids to study civil engineering and pay them enough to stay in Hawai'i."

Rod Haraga
DOT director

"They should give us more warning about what they're going to do. We always hear about the money after it is wasted. It might be better to put in a school than a new fountain, but nobody tells us what they're doing first."

Tama Kaleleiki
horticulturist, Hilo

"If you want to fix the problems, listen to the lowest person on the totem pole. Government supervisors are so afraid of losing their jobs, they don't want to hear suggestions from anyone below them. But those are the people who know what's really going on."

Irma O'Toole
historical researcher, Kane'ohe

"I don't think there's enough true openness in the bidding process. There are rules, but they're not always being followed. There's more favoritism here than elsewhere."

Gloria Katz
retired school psychologist

"If we were to show you all of the state projects that have won awards, that have been well-designed, come in on time and under budget, they would overwhelm all the problems you hear about."

Russ Saito
state comptroller