Thursday, December 5, 2002

City & County of Honolulu

City OKs
$1.2 million for
engineering firm

Approval was given a day
before the firm was to face a
grand jury on nonbid contracts

By Rick Daysog

City officials approved $1.2 million in additional payments to a local engineering firm the day before the company's officers were to appear before an Oahu grand jury investigating the award of nonbid city contracts to political contributors to Mayor Jeremy Harris' campaign.

The city Department of Budget & Fiscal Services amended SSFM International Inc.'s consultant contract for the Central Oahu Regional Park project on Nov. 26, increasing the contract's size to $3.7 million.

The amendment is the fourth issued by the city to SSFM for its construction management work on the 269-acre project, which has been criticized for cost overruns and shoddy work.

It was approved one day before an Oahu grand jury was scheduled to meet to consider an indictment against SSFM Chief Executive Officer Michael Matsumoto, but the hearing was canceled to work out a plea agreement.

SSFM -- which initially was hired by the city in 1999 for $932,000 to manage the construction of the Central Oahu park -- is linked to more than $100,000 in alleged illegal campaign contributions to Harris' campaign.

The firm is the target of civil and criminal investigations by the city prosecutor's office, a federal grand jury and the state Campaign Spending Commission.

Bob Watada, executive director of the Campaign Spending Commission, said the issuance of the $1.2 million contract amendment leaves a bad impression since SSFM officials were potential targets of the grand jury investigation.

"The timing is very suspect," said Watada, whose office has been investigating SSFM for more than a year.

City spokeswoman Carol Costa said the timing was coincidental. She said the city received a request for the amendment three or four months ago but did not finalize it until last month.

"We're embarrassed because it should have been signed months ago," Costa said.

City Managing Director Ben Lee said the amendment does not represent new costs. He said the city is within budget for SSFM's work. Typically, construction management services account for about 5 percent of a project's overall costs, he said. The $1.2 million amendment is only 5.4 percent of the $22 million second phase of the project.

City officials have said political contributions play no role in the awarding of contracts. They say Harris is the first mayor in the state to implement a system that eliminated political influence in the contracting process.

"There's no story here," said Lee.

An attorney for SSFM could not be reached.

The $45 million Central Oahu Regional Park is the largest city park, which will exceed the combined sizes of Ala Moana and Kapiolani parks when completed. The 100-acre, $23 million first phase of the park, which opened in July 2001, includes several major-league- and little-league-size baseball fields and five multipurpose fields for soccer, football and other sports. The second phase, which has not been completed, will include a 20-court tennis complex and a 20-lane archery range.

City records show that the latest amendment to SSFM went to cover the cost of managing construction in the Central Oahu project's second phase.

In an Aug. 29 memo to acting city Budget Director Chris Diebling, Rae Loui, director of the city Department of Construction & Design, said construction management services for the project's second phase should have been included in the language of the original contract award but were dropped due to "inadvertent errors and miscommunications."

According to Loui, SSFM did the construction management work on the project's second phase even though the work was not listed in the language of its contract with the city.

"I do believe that due to a series of inadvertent errors and differing opinions on how this work should have been contracted are the major reason why there is no executed contractual agreement for the Phase 2 (construction management) as the work effort nears completion," Loui wrote. "It was always the intent of the department to award the total scope of services to SSFM."

The city's handling of the Central Oahu Regional Park has been the subject of criticism during the past year. In August the City Council accused the Harris administration of stonewalling its efforts to obtain cost information, and has threatened to subpoena city officials.

That came after Kelly Saunders, a project manager with the Department of Design & Construction, raised allegations of fraud and waste.

Besides SSFM, the city issued several amendments to the Central Oahu park contracts with landscape architects Walters, Kimura, Motoda Inc. and general contractor Dick Pacific Construction Co.

Walters Kimura saw its initial $512,000 design contract soar to $1.95 million due to three amendments, while payments to Dick Pacific increased by more than $3 million to $20.1 million as a result of 20 change orders.

City & County of Honolulu

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