As the City and County of Honolulu faces numerous financial challenges during the next few years because of the global economic crisis and the loss of tax revenues, the city must re-evaluate the way it conducts business, especially when it comes to the procurement and construction of the $5.28 billion mass-transit system.

A Design-Build-Operate-Maintain contract allows the private sector to build the mass-transit system and minimizes risks to taxpayers relating to cost overruns and project delays. The contract determines the number of years the private sector will operate and maintain the system. The city would not bear the entire burden of paying for operating and maintaining the system for the length of the contract.

To facilitate discussion on this important issue, I introduced Resolution 09-03, which urges the administration to enter into a DBOM contract to develop and operate the rail project. The resolution further encourages the selected contractor to enter into project labor agreements with local labor unions to ensure that jobs and monies stay in Hawai'i.

The DBOM approach has the potential for saving the city money because it provides a fixed price for the construction work early in the design process. This fixed price provides the public an opportunity to see the real cost of the mass-transit system and provides transparency for the entire process. The DBOM approach has been proven to complete projects early, on time, or relatively close to the originally scheduled date. It is to the DBOM contractor's benefit to build a system that operates efficiently so operation and maintenance costs are manageable.

This approach offers significant advantages over traditional design-bid-build contracts in achieving environmental sustainability goals, including: energy efficiency, water efficiency and material conservation.

The DBOM approach has been used successfully to develop the Hudson-Bergen Light Rail system in New Jersey, the Las Vegas and Seattle Monorail systems and the Expo Line of the Vancouver Sky Train.

The Federal Transit Administration has recognized that the DBOM method provides cities with numerous benefits for transit operators. One benefit comes from executing a single contract with one entity at a pre-determined price. Maintenance of equipment will be with the contractor, and the contractor may be able to use its own credit rating to seek financing or put together a financing package for the project.

According to the FTA's Reports and Publications ("Lesson 43: DBOM Contract: Proper Delegation of Major Tasks"), the Hudson-Bergen Light Rail Transit System was conceived as a conventional design-bid-build project, but "was converted to a DBOM to advance the completion date and to place more ultimate responsibility for the project with the contractor."

The FTA's Contractor Performance Incentive Report ("Case Study 2, Hudson-Bergen Light Rail"), also notes: "The DBOM project delivery approach was selected because of the estimated eight years that would be saved compared to the traditional multiple design-bid-award-construct approach."

A U.S. Department of Transportation report to Congress showed the $300 million cost savings for the Hudson-Bergen Light Rail using a DBOM contract versus a traditional design-bid-build contract.

The administration and the Honolulu City Council will need to work together to ensure that taxpayer monies are being used efficiently and effectively in these hard economic times.

It has been reported that the half-percent transit tax collection for the mass-transit system could have a projected shortfall of $29 million in revenue collected for current 2009 fiscal year. Having an open and honest discussion on the advantages and disadvantages of the DBOM procurement method for the $5.28 billion mass-transit project will show how we can save money in the long run for this much-needed system.

Let's ensure that the project is built on time and within budget. Using the DBOM procurement method will successfully accomplish this goal.

City Councilman Donovan Dela Cruz wrote this commentary for The Advertiser.

Reach Donovan Dela Cruz at (Unknown address).