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The Honolulu Advertiser
Posted on: Tuesday, April 20, 2010

Canceled contract cost keeps rising

Advertiser Staff

The cost to the city of canceling a rail transit insurance contract is expected to climb to $70,000.

The City Council tomorrow will consider setting aside an additional $20,000 to pay an outside law firm to fight off legal challenges relating to a canceled $1.68 million rapid transit insurance-related contract.

The city already has spent $49,500 of a $50,000 contract awarded to the law firm McCorriston, Miller, Mukai, MacKinnon, which is defending the city.

The city awarded a risk-management program contract to Marsh USA last summer. Losing bidder Aon Risk Services protested that award. The city later denied Aon's protest, but canceled the award to Marsh anyway following the discovery of "irregularities" in the contract award process.

Marsh and Aon have both protested the city's actions.

So far, $635,000 has been spent or set aside for legal fees associated with the rapid-transit project. That amount could climb as more contracts are awarded and, if construction proceeds, the city moves ahead with property condemnations to acquire needed right of way.