Rail Protest Claims Ansaldo Bid to Cost Honolulu an Extra $900 Million
04/11/2011UPDATED 4/14/11 3:22 p.m.
Correction: An earlier version of this story inaccurately referred to the Ansaldo Honolulu proposal as worth $1.2 billion. The contract would guarantee Ansaldo $1.1 billion.
Honolulu will have to spend $900 million more over the 30-year life of its rail project because it picked the wrong company to operate the system, a losing bidder argues.
The claim against Ansaldo Honolulu came in a protest filed Monday by Sumitomo Corporation of America.
Mayor Peter Carlisle presented the Ansaldo proposal as being a good deal, and cited savings on the initial construction phase as a critical signal for watchful federal officials who have yet to guarantee $1.55 billion in funding for the $5.5 billion project.
City rail planners also emphasize they did not select the company based on a "low-bid" model. The losing bidders — both of whom protested Monday — are bringing up some concerns too late, and knew the criteria for evaluating bids when they made their proposals, said Honolulu Transportation Services Director Wayne Yoshioka.
"All the evaluation criteria, that was revealed to everyone," Yoshioka told Civil Beat on Monday. "They had an opportunity to make comments and ask for any changes at that time, and no one did. It's a little late to be talking about this stuff."
Yoshioka said he hadn't seen the protests, and was speaking generally about what he had already heard from the companies. A spokeswoman for the mayor said the protests would be reviewed "according to procurement law," but had no other comment.
In its protest, Sumitomo said the $574 million price Ansaldo Honolulu gives for the first phase of the contract is "illogical and lacks credibility." Sumitomo, which wanted $689 million for the same phase, alleges the city considered the design and build phase of the core systems contract as "significantly more important" than the price given for operations and maintenance. Ansaldo's bid of $1.1 billion covers design, build and operations and maintenance for the first five years after the 20-mile system is completed.
"This sort of financial manipulation is plainly improper," the protest reads. "Ansaldo's unreasonably low DB price should have been a red flag that resulted in a significantly lower score."
Instead, Sumitomo claims that Ansaldo was able to swing hundreds of points in its favor by shifting cost from the design/build phase to the operations and maintenance phase because the city heavily favored a lower design/build cost.
"DB was allotted 350 potential points and O&M was allotted only fifty," Kato and Fricke wrote. "By using imbalanced pricing, Ansaldo was able to manipulate the City's scoring system and net hundreds of additional points. The swing in points was so large that SCOA believes Ansaldo would not have been awarded the contract but for this imbalance."
Representatives with Ansaldo Honolulu have repeatedly declined Civil Beat's requests for interviews, but submitted a statement earlier this month defending the company's "solid track record of success, with a high degree of reliability."
Sumitomo and the other losing bidder, Bombardier, which was disqualified just before the city made its selection, had already publicly raised similar concerns about the city's procurement process for the core systems contract. An executive with Bombardier did not return a phone call requesting comment. Sumitomo, on the other hand, made its protest documents available through an attorney.
