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The Honolulu Advertiser
Posted on: Tuesday, May 19, 2009

Training seeks to prevent stimulus-cash boondoggles


By Sean Hao
Advertiser Staff Writer

State and federal officials this week are stepping up procurement training in anticipation of receiving $942 million in federal stimulus money over the next two years.

More than 1,200 people are expected to attend the training, which is mandatory for top-level state procurement specialists.

State Procurement Officer Aaron Fujioka said the intent of the statewide seminars is to give the state's key purchasing personnel an over-view of antitrust laws and penalties, and a primer on how to spot illegal behavior such as bid rigging and price fixing.

"How do you recognize it if you don't know what to look for?" said Fujioka. "It's training that highlights some things they should be aware of and what to recognize."

The state spends more than $1 billion a year on goods and services, including construction projects. That will be augmented by nearly $1 billion more in federal stimulus money that will be spent on highways and bridges, transit systems, clean-water projects, public housing improvements and affordable housing, among other things.

The concern is that the significant influx of money could dramatically increase the potential for economic crimes, according to the U.S. Department of Justice, which is hosting the seminars in conjunction with the state Procurement Office and attorney general's office. The seminars, which are not open to the public, will be held on O'ahu this week and on Neighbor Islands in June.

Ways to manipulate the procurement process include bid rigging, which includes practices such as bid rotation, where competitors take turns being the low bidder; bid suppression, where a competitor agrees not to bid; and complementary bidding, where a competitor agrees to bid high.

Local examples of antitrust violations include a federal investigation into airport bid-rigging that nabbed 10 state officials and private contractors. They were convicted in 2007 in a scandal that cost taxpayers more than $4 million. The activity involved hundreds of contracts being rigged through the submission of phony or inflated bids by companies for "small" airport repair jobs worth less than $25,000.

Fujioka said the typical procurement violations aren't so well orchestrated or elaborate.

"I think what probably goes on quite a bit is where government agencies and employees have preferred vendors and contractors, and preferential information is shared," he said. "I'm not sure all of it is so deliberate, or that the employee is getting any kind of kickback. They're facilitating the process to probably make their jobs easier."