The city needs to improve the way it documents commuter rail contract awards to improve transparency and public confidence in the project, according to a study by city auditor Les Tanaka.

The audit, released yesterday, found that the award of two train project contracts to Parsons Brinckerhoff and a third to a firm founded by former Parsons employees complied with procurement laws.

However, Tanaka had several suggestions on how to improve the process for awarding contracts as the city prepares to begin building the $5.5 billion train in December.

Tanaka recommended the city consider whether it adequately solicits competition for transit projects. That's because fewer than three bids were received for all three contracts awarded before the audit.

Parsons Brinckerhoff was awarded two train-related contracts worth $96.2 million. InfraConsult LLC, which was formed in 2006 by three former Parsons Brinckerhoff executives, was awarded a third contract worth $11.5 million.

Parsons Brinckerhoff is a New York-based engineering firm that has been active in Hawaii since the 1960s. It had a major role in designing H-3 Freeway.

Though Tanaka's audit found that the contracts awarded to Parsons Brinckerhoff and the firm formed by its former employees complied with procurement laws, it said it found some flaws in the process.

"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," the audit said.

The audit also raised questions about whether the city's push to begin construction in December could reduce transparency and accountability over the project.

City officials, in a response contained in the audit, said that concern was speculative and unfair. They also said the city already has implemented some audit recommendations, including providing more detailed documentation within contract files and expanding efforts to encourage competition.

Last week, Mayor Mufi Hannemann awarded the first construction contract for the rail line. The $482.9 million contract went to Kiewit Pacific Co. and was $90 million less than the $570 million the city had anticipated spending. The contract covers construction of the first 6 1/2 miles of the 20-mile project. The first phase will run from Kapolei to Pearl Highlands near Leeward Community College.

The Keiwit Pacific contract was not part of the audit released yesterday.

FAVORITISM DENIED

According to the audit, two unidentified contractors said they were reluctant to bid on projects because of the city's 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, in its response , said that it met all legal requirements when soliciting bidders for the three contracts.

"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.

The city also rejected any allegations or perceptions 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.