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The Honolulu Advertiser
Posted on: Friday, May 7, 2010

City says contracts proper

By Sean Hao
Advertiser Staff Writer

A complaint that some city contracts including three rail deals may have violated procurement law are unfounded and politically motivated, city spokesman Bill Brennan said yesterday.

Former governor Ben Cayetano had forwarded a complaint about city procurement activities to the state attorney general's office and the U.S. attorney's office. The state Procurement Office is looking into the complaint, which alleges that the city relied on an invalid rule in awarding contracts in situations when there were fewer than three competitors.

It also alleges that the city awarded contracts to competitors that did not rank highest among those vying for a contract.

City officials yesterday denied that any contracts were inappropriately awarded. Brennan said the charges were an attempt by Cayetano to help former congressman Neil Abercrombie 's bid for governor. Mayor Mufi Hannemann is a potential competitor for that office.

"What we have here is an ex-governor, backing a retired congressman, hiring an attorney during an election year to file a complaint about contracts that were awarded years ago and that have since been found by both the state courts and the city auditor to be in compliance with federal, state and local procurement requirements," Brennan said. "The Honolulu rail transit project is too important for this city and for this state to become politicized by the ex-governor and those he backs."

The complaint of suspected city procurement violations was filed about two weeks ago by local attorney John McLaren on behalf of Cayetano. State Procurement Office administrator Aaron Fujioka, who has acknowledged looking into the complaint, said yesterday that there was no update concerning that issue.

Cayetano, who has criticized Hannemann's handling of the rail project, said the complaint was driven by an apparent pattern of violations of procurement law and the manner in which contracts were awarded.

"It's no secret that I support Abercrombie," Cayetano said. "One reason I got involved ... I see all this stuff and the problem with this town (is when) people think they're getting screwed, nobody says anything. That's why we we're doing what we did."

Abercrombie campaign spokeswoman Laurie Au said the city was attempting to point the blame for the alleged violations elsewhere.

"When questions of corruption arise, it's standard to point fingers at other people," she said in an e-mail. "The only issue is, 'Is it true?' "

Cayetano said Hannemann politicized rail by allowing a conflict of interest to exist among project contractors. One of the project's largest contractors is Parsons Brinckerhoff, which has an $86 million deal with the city. The other major contractor is InfraConsult LLC, which has a $36.7 million deal to manage the rail project for the city. InfraConsult was founded in part by former Parsons Brinckerhoff employees.

And the train project is run by the city transportation department, which is led by director Wayne Yoshi-oka, a former Parsons Brinckerhoff engineer.


"There's no question in my mind that the whole project is politicized the whole way they set up the structure with InfraConsult getting this huge contract to oversee Parsons (Brinckerhoff) and with Yoshioka, a Parsons employee going to the city to be head of DTS," Cayetano said. "You've got to be blind not to see the conflict in that thing."

Contracts with Parsons Brinckerhoff and InfraConsult were investigated in 2009 by then city auditor Les Tanaka. His audit found that the contracts complied with procurement law.

The complaint became public this week after McLaren sent a version to City Councilwoman Ann Kobayashi. Kobayashi forwarded the complaint to other council members an action that made the document publicly available.

The letter alleges the city failed to negotiate a contract with the top-ranked bidder in 72 cases over several years. However, that analysis was based on online procurement records. At least some of those records list contract bidders alphabetically, rather than by the highest-ranked bidder, which could have caused confusion about which bidder was the top-ranked.


According to the complaint, the city awarded a contact to Parsons Brinckerhoff even though another bidder ranked higher . The city yesterday said that Parsons Brinckerhoff was the top-ranked bidder for that deal.

"Allegations that we failed to negotiate with the first-ranked respondents was based on false assumptions," the city said in a news release.

In another case, the complaint alleges that a bidder won without being on a formal list of bidders competing for the contract. The city yesterday sad it has not had the opportunity to look into all of the cases highlighted in he complaint. However , all contracts were awarded to the top-ranked bidders, Brennan said.

Brennan said the city is wiling to provide access to all contract files in question to clear up the matter.

Another main complaint is that the city allegedly inappropriately awarded 13 contracts in cases where there were fewer than three competitors for each deal. Three of those contracts involved the city's planned $5.3 billion East Kapolei-to-Ala Moana rail project. The complaint claims the city waived the minimum three-bidder requirement by relying on an administrative rule adopted in 1995. That rule has no basis in law because of legislative changes made in 1995 and 1997, said Cayetano, who's an attorney.

"The law was changed and the underlying law and rule are in conflict," he said. "As any lawmaker knows, it's the law that is supreme."

City spokesman Brennan said the rule in question was adopted while Cayetano was in office.

"It is the rule and we're required to follow the rules," Brennan said. "If (Cayetano) ... suddenly has a problem with a rule that was promulgated under his watch, he has no one but himself to blame."