 This is Think Tech Hawaii, Community Matters here. Aloha and welcome to Eyes on Hawaii. I'm your host, Carol Cox. Today's topic is procurement woes, and many of you out there can understand procurement and government and the role the government plays in safeguarding our monies and spending it wisely because most of the money that they have is taxpayers' money. So we're going to talk about, in length, to flesh out some of the things that happen in a very unique situation here. We had one contractor to recently default on many contracts, contracts within the county of Hawaii, contracts with the city and county of Honolulu, upwards of five or six, and there's even more now as we go in a small time period. So we're going to talk about that, and so hold on to your purses here and your purse strings because we have some waste going on that we're all suspicious of and concerned with, and when I say waste, whether it's intentional or not, but it's poor management. So what is this all about? Specifically, there is a solar building as part of a consent decree being built at Camel Industrial Park at the H-Power facility owned by the city and county of Honolulu. This H-Power, as you see this picture here, is an actual building that has been structured but the contractor, PSI, Performance Systems Inc. defaulted on this building, erecting this building and completing it. So the city never spoke one word to the public. We couldn't find any documents saying that they were defaulted or anything. So this project cost some nine million dollars. Now what does that mean? The contractor, PSI, defaulted on this particular contract, but at the same time he defaulted on others pretty much. And so the city, and one of the things that we'll tell you that it's one thing that if we don't know but when we begin to ask questions, it is very, their tight mouth and tight fisted the city is not wanting to provide these documents. And what you see here is the second picture here is a facility called the KHE Transfer Station. The KHE Transfer Station sits at Middle Street and Nimitz. And if you look closely, you'll see the symbol PSI, sticker on the piece of equipment there. That was an excavator to be used. And we'll go into greater details as to what was to be done at each job site. But again, nine point seven million dollars estimated for that one contract at H-Power. Another possibly two to three million at KHE Transfer Station. So you can imagine starting to add up. And KHE Transfer Station was one million, the estimated cost was one million five hundred thousand dollars for that particular project. And something's just kind of strange about the whole thing that why would the city and county of Honolulu allow for a person to get as many contracts? And they say that they vetted him and he's compliant with all the rules and participating in bidding. But something's wrong here. We didn't hear anything. And how could one person get several contracts as we will point out later on as we go? The other one was at Kuhel Street. And that Kuhel Street was up in Palolo. The original bidder was two million eight hundred and seventy three thousand. But that person pulled out once they won the bid and the city then for some reason gave the business or the contract to performance system. Because it was a second lowest bidder of three million four hundred and fifty seven thousand nine hundred and one dollars. So this folks, you don't ever want to be caught in a predicament as the people at Kuhel and Wild Mile Street. You just don't as we'll go through and show you the streets are collapsing potholes sinkholes along the street. Many of the citizens there and homeowners there think that the sinkhole is attributed to the sewage water flowing underneath and eroding away. The city has a different saying that it's slippage and geological slippage that's occurring. This house here is about to fall over and the foundation has split. The walls were tilted. And why would the city and county of Honolulu award a contract if you have a slipping heel that is basically in motion? So is it good use of our money? Should they fix the problem? The sliding of the heel or condemn that area? Why would you spend three million dollars on a slope that you know is moving and that you know is eroding away and you just continue to hand out money? And then that party that originally gets the contract withdrawal declines and then it handed to PSI who in turn defaults on it. So I can understand this situation where he would default in this case because you have a mountain and some of the pictures will show. The sidewalks, the water, the storm drains are busting up breaking due to the tension. And there's actually monitors there, geological monitors or sensors to determine and measure the movement. You have water bubbling out of the middle of the street and flowing down and flowing on the houses and washing out walls. And the city elected to continue to go ahead and pay for that contract. It probably would have been one of the worst waste of money that you could possibly imagine because if the heel slide is sloping and slipping and eroding away, why would you pay the road? You would think more so human safety, the safety of the people, maybe consider condemning it or doing something or finding the cause. But there is a many lawsuits that's flying back and forth up there now and unfortunately the homeowners like you or myself are suffering from having to fight now the city. The other contract was Uwalu wastewater pump station in Wahiwa owned by the city and county of Honolulu. And that contract was for 2.4 million to 2.7 million. It was awarded to PSI. PSI defaulted on this contract. And what was supposed to take place at this site is this building, the cement, the asphalt, all of that was to be demolished and hauled away in a new building place there with new driveways and what have you. But the city, again, it takes lots of money to plan these things. So we are paying city workers to plan, draw plans, address these issues, get the money allocated, put out the bids, hand it to and get a winning bid and then it goes into default. What happened to all that work that exists? If you were a contractor and would you come on the tail of another contractor who has started to work or didn't start to work or what have you, would you accept the responsibility or the liability of the earlier contractors work? So that puts the city in a dilemma and the city apparently what we find is really not addressing that and the difficulty in getting information. Now we've gone to budget and fiscal services and they did in fact provide documents. But when asking questions of the environmental services and others, they refuse to respond to in writing questions or anything. We did receive responses from the city as well as a state on a few questions. But the main question that we wanted to ask, they wouldn't answer and having no part in talking or discussing it. I understand things are in litigation but we want to see the documents leading up to how did you vet this person? We also have some concerns, these concerns based on the number of contracts and how they were awarded. We would like to see if they were consistent with the laws and procurement laws and rules of the city and county of Honolulu and the state. The Honolulu site should have been all of that removed by now, but it was not and the taxpayer once again work is not being done. It's stalled. Now it has to go back through the process, deal with the bonding agencies and the security companies as well as the new contractors, a finding one that's suitable. So the people's business is not getting done. That is a big problem. The other one is the fire department at Waipahu, the maintenance charge, facility maintenance or automobile or fire maintenance facility. There was a contract there. The actual contract, the estimated cost would have been $800,000. The basic bid was $484,927 and that was won by Performance System Inc. So something unique here called R.I. in that the second bid or RAF's, S.E.N.O.A. bid at $840,000, $40,000 higher than the estimated cost that the city has, but the PSI bid at nearly $400,000 less than the estimated amount. So we hope to look at this more and deeper and dig deeper and find out how could one party get so many contracts, how could they be vetted, and then in turn default in such a fashion leaving all of the city work undone and exposing the taxpayers to a higher cost and loss of revenues. Now, I'm not here to defend businesses, local businesses or anything, but there are certain laws that require you to use Hawaii-made products in some of these contracts. Now, did they get done? Well, some did. In this process of defaulting, I'm looking at a letter from one of the people, vendors, that provided a service to the contractor on KHA transfer station hauling dirt, bringing gravel, trucking, and what have you. That party had to follow legal action, and I understand now he did recover. But what about the other vendors that are hired by or subcontracted by PSI, let's say, who defaulted? How are the, is the city exposing these companies, local companies, to this kind of work? Where is the oversight? We didn't find much of oversight in this, especially when you have this number of defaults. And this document here is from travelers. You can't see much of it, but what this is, it's the first step in identifying that there's default, notifying the city. Many of these cases, the city had no knowledge. They claim, we understand, that they were working on it. But we look at the documents. We don't see any real actions in a hurried manner to understand why and how is it possible that this company can get this number of contracts. At one time, basically. And he has federal contracts as well. And the performance of those. So we're going to talk more extensively about what is going on with these contracts. And we're going to take a little trip to the big island, because there, too, was a contract with some $16 million, as we were told by the city and county of Hawaii. And an estimate of between $16 million or maybe a little more. But we don't have the specific facts we've made a request for that. So what does that mean? There's a lot of moolah just floating in the air around here. And so you default on a $16 million contract on the big island. And then you, we understand that there are another agency within the city and county of Honolulu. But also a state agency. And we'll talk about that. This is Eyes on Hawaii. I'm Carol Cox, your host. We'll be back in a minute. We'll take a break. Hello. This is Think Tech Hawaii, raising public awareness. It's our baby's brain development. Push! Read aloud 15 minutes, every child, every parent, every day. Welcome back to Eyes on Hawaii. I'm your host, Carol Cox, on the thinktechhawaii.com. If you want to go and listen to some of the shows, or view some of the shows, or send an email, go to Jay at thinktechhawaii.com. And you can catch all of the shows and many other hosts that are hosting shows. You're a really great subject. So, and thank you for joining Eyes on Hawaii with me. Again, we were talking about, or I'm talking about procurement and waste of money. Taxpayers' money, not just any money, but taxpayers' money. And this is the city and county of Honolulu. We were talking about granting contracts to a contractor who defaulted on at least five city contracts in the basic same period of time. So, not only did the city and county of Honolulu get the sting of default, the state of Hawaii did also. The Ma'i'i, Palawua Bridge in Miley. This is, we've seen an aerial shot. We shot the bridge, low-level bridge over the stream there at Miley. And the conditions are horrendous. I personally walked and photographed the entire bridge underneath over it and what have you and it's it does not appear safe and in reading some of the documents and studies that this bridge is vulnerable and when you look at the amount of traffic more than 30,000 cars that transit that within a day or so they say or week or what have you but it's substantial. But when you look at the structure of the bridge as well as the concrete spaulding the exposed rebar this contractor PSI accepted the contract bid it wanted and proceeded to build a staging ground the staging ground consists of two containers two trailers and the black cloth to keep from runoff but this is give you an example you see this bus city bus traveling over this bridge and then and this bridge mind you is the Maipolo or Paula or bridge and this bridge in my opinion in my observation is not safe and the tide the high sand and what have you but 16 million dollars they walked away so I have a statement here from the State Department of Transportation Mr. Tim Sakahara and then thank you for the opportunity to respond to your inquiry performance systems Inc. notified HDOT March 29th 2017 that it would not be able to complete the Maipolo or bridge improvement project. Prior to its selection of the bidding process the company was verified to be in good standings that could be but it's apparently some it suffered some incident or some activities that caused it to not deliver the work causing the people's business to be put on hold and then causing probably more than likely a greater expense. Moving forward the surety company will be responsible for the completion of the project under the specification and satisfaction of the state per contract agreement the surety company is 100% bound by statute regulations contract language including the case of default and we're confident the matter will be resolved get this the project is a 5% complete which is approximately 760 thousand dollars the work performed on the project included mobilization set up protection of the staging area while the improvement project is necessary the structure is inspected at least every other year and is safe. Well I don't accept that as being fact because if you can't control the dollars and the flow dollars how can you deal with something you don't know the real structure and when you see the structure how horrendous it is you don't know. A footnote we tried to reach out to Senator Miley Schumer-Bakur who was in that area and we didn't get a response back but as early as July recently as July 27th or 17th she was writing and talking about the progress of the bridge in its place when in fact there's a default notice in March did she know that did she not know that if she didn't know it why not if she did know it why didn't she disclose it to the public. So there's a lot of questionable behavior as it relates to occurring as it relates to the use of public money the guarding of public money and the protection and the proper spending we need these jobs done in a timely fashion we need vetting better vetting of the contractors and when you can't detect if a person is overextending themselves when you default on a city project at Camel Industrial Park at nine million dollars another three here and a three there and a two here the city should be concerned and there should be an emergency action or something to call into play. Now this $760,000 I'm informed was paid to the contract PSI if you go there and see for the setup the work that was complete as I said there's two trailers there's a black cloth to control the dust there's gravel that was brought in by truck there's runoff the black better management sausages that you place around property the perimeter and that was it that person then can claim that is five percent. Now I didn't mention that this was a non a Native American corporation not a Native American minority corporation who won an award something's wrong here I'm all for getting the job done and giving fairness to competition but if you demonstrate that you can't do the job and we're talking millions and millions of dollars at stake here and the interest of the public and exposing the public to safety concerns and danger I don't think that we should tolerate that at any cost a minority business and this person also won an award for being the minority business I'm not speaking ill of the minority business program because it's trying to right some of the wrongs but don't right the wrong to a point where it's off kilter where we are exposed to loss of revenues loss of monies and dangerous conditions on the roadways it's just not logical. So talking about using local businesses and local resources these two trailers now I make a phone call to the company that rented or delivered the trailers to PSI and I inquired as to who owned the trailers they said they did and they expressed concern that they had not been paid so that's a pretty good deal if you ask me you go in and you do 5% of the work and that 5% I don't know if it constitutes 5% but we'll accept what the state say and then in turn accept that but when vendors are harmed or cause to lose money or cause to have to fight for the money they're rightfully owed from these contractors then something is wrong we need to review the procurement process we need to step up and have better monitoring and management and oversight maybe they do maybe they dropped the ball on this one that's the big question why was the ball dropped on this one if there is anybody willing to play ball that's the problem we are pretty much exposed to loss of revenues again exposed to danger delay in services delivered and in turn higher cost at the tax box when it comes when you open your mailbox it just does not seem that the taxes are going down and this might be yet another example of the waste fraud and abuse that we also are so concerned about our fear that is prevalent and prominent in our culture here in Honolulu we should think rethink this the mayor the city council need to revisit this this is a biggie to default in such a fashion with so many contracts it's not to be taken lightly and it does not speak well for the procurement process or the monitoring or the oversight or the management on the part of the administration so on the big island I told you they too lost a bit of money or time in the area so here's a press release from Mayor Harry Kim and the headlines contractor for aeration sludge removal at Keala Kehe transfer state of defaults the contract in charge of the project to provide aeration pump upgrades and sludge removal at the Keala Kehe wastewater treatment plant has defaulted and dredging of the facility sludge puns has come to a temporary hall according to the Department of Environmental Management I'm not going to read the whole thing but again this is suggesting that our procurement system or the people that is managing it are handing out or doling out our monies does not have our best interest at hand it's not monitoring it's not policing it and we need to do better I'm not preaching I'm attempting to teach we can do better we know we can the monitor is in place we're paying people to do it so how is it that again one person can have five contracts and more to default and just in the city and the state and by the way the bridge is still sitting there traffic is transferring over and that is it so again I want to thank you for tuning in to eyes on Hawaii on the think-tank Hawaii it's always a pleasure bringing you something of this sort to nature and and enlightening you as well as myself as to the loss and the cost and what can we do better so let's ask our mayor our governor our city council our state representatives to do better let's come up with stricter laws and monitoring and avoid the waste and fight the waste that we witness here and the fraud I believe it's fraudulent that we would be led on to believe that things are happening when they're not happening so that's about it and thank you my executive director Jay Fidel technical support from Robert McClain and Ray Sangolan and Nick Sexton this is eyes on Hawaii thank you I'm your host Carol Cox see you in two weeks Aloha