City decisions to award two out of three train project contracts to Parsons Brinckerhoff and a third to a firm founded by former Parsons employees complied with procurement laws, according to an audit released today.

However, the city needs to improve the way it documents the basis for contract awards to improve transparency and public confidence in the project, according to a study by city auditor Les Tanaka. The auditor also recommended the city consider whether it adequately solicits competition for transit projects. That’s because less than three bids were received for all three contracts awarded prior to the audit.
New York-based engineering firm Parsons Brinckerhoff has been active in Hawaiçi since the 1960s and had a major role in designing H-3 Freeway. The firm has received two train-related contracts worth $96.2 million. InfraConsult LLC, which was formed in the summer of 2006 by three former Parsons Brinckerhoff executives, receive a third contract worth $11.5 million.
Those awards to Parsons Brinckerhoff and a firm formed by its former employees have raised concerns that the city doesn't do enough to solicit competition, but the audit found that all three contract awards complied with procurement laws.
“However, we also found lapses in the time allotted for needed reviews, enforcement of some contract terms, and vulnerabilities within the contracts themselves that could lead to increases in contract costs,” according to the audit.
The audit also raised questions whether the city’s push to begin construction of the $5.5 billion train in December could reduce transparency and accountability over the project. The city said that concern was speculative and unfair.
The city also said it already has implemented some audit recommendations including providing more detailed documentation within contract files and expanding efforts to encourage competition for contract solicitations.
According to the audit, two unidentified contractors said they were reluctant to bid on projects because of the city's past contractual relationship with Parsons Brinckerhoff.
“Perceptions of contractor favoritism persist among the public and for some within the engineering industry, due to the award of two contracts to PB Americas, a firm that has been awarded city projects for several decades,” the audit said. “This perception was further reinforced by the project management support consultant award to former PB Americas employees who comprise InfraConsult.”
The city maintained that it met all legal requirements when soliciting bidders for the three contracts in question.
“The lack of more offers is ... a reflection of the reluctance of potential offerers to participate in the city’s procurement process because of a lack of resources or personal bias,” the city said in it’s response contained in the audit.
The city also flatly rejected that Parsons Brinckerhoff has received preferential treatment.
“The suggestion that one firm and its employees, both current and former, are given preferential treatment in competitive procurement is incorrect,” the city said.