Legislative panel
questions awarding
of Felix contracts

It says the DOE went to great
lengths to circumvent procedures

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By Lisa Asato
lasato@starbulletin.com

A legislative investigative committee has questioned the awarding of contracts to two nonprofit groups to provide services to the state under the Felix consent decree.

Rep. Scott Saiki, co-chairman of the joint House-Senate committee, said testimony by one of the group's financial officers was "verification of our suspicions that the Department (of Education) went through great lengths to circumvent normal procedures to award contracts."

Last August, Pacific Resources for Education and Learning, or PREL, received a $2.3 million contract from the state Department of Education and awarded a $600,000 subcontract to Na Laukoa to provide mental health services.

At a previous investigative hearing, it was reported that schools Superintendent Paul LeMahieu, a former voting member of PREL's board of directors, who has since stepped down, had personal ties to Na Laukoa.

"The whole master contract was conditioned on nonprofit entity Na Laukoa be given the subcontract that was the whole gist of this whole $2.3 million," said Saiki (D, McCully-Moiliili-Pawaa).

Karen Ehrhorn, PREL's chief financial officer, told lawmakers yesterday that the agreement bound it to subcontract to Na Laukoa, a Big Island group with little experience.

"Yes, we took the contract with the understanding that Na Laukoa would be the subcontractor in the project," she said.

Regarding PREL's concerns about Na Laukoa's inexperience, Ehrhorn said, "Definitely there was probably some concern." Later she added, "But questions were asked and concerns were answered."

"The way I read it, (Na Laukoa) never administered a large contract."

Na Laukoa could not be reached for comment.

The joint committee is holding an investigation into the costs associated with the Felix consent decree, a federal mandate that requires the state to improve services to special-needs students.

Sen. Colleen Hanabusa, committee co-chairwoman, said the contract was meant to help all schools achieve compliance through technical assistance coordinators targeted especially at the 18 most troubled sites. The coordinators were individuals subcontracted by PREL separate from the Na Laukoa subcontract.

The main contract, she said, was crucial for the state to achieve compliance, which "shows the federal court that we're doing the right thing."

She called it "very unusual that something as critical as that" would be treated haphazardly by the state Education Department, which has the main responsibility of bringing the schools into compliance.

They were "contracting with people (Na Laukoa) that their own department people said had no experience in the area and couldn't do it, and secondly had this the other entity (PREL) that's never done Felix before," said Hanabusa (D, Waianae-Maili-Makaha).

Ehrhorn, who was joined by PREL attorney Gary Slovin, said she was not aware of concerns of education officials that Na Laukoa was unqualified to provide services. She said she heard about those concerns later when a Department of Education employee filed a lawsuit alleging mismanagement in the awarding of the contract.

Committee members and their attorney, James Kawashima, questioned Ehrhorn on concerns of having to train Na Laukoa to do the job it was paid to do.

It is common for PREL to train subcontractors so they can do the job once PREL leaves, Ehrhorn said, adding it was a requirement of LeMahieu's that PREL mentor native Hawaiian organizations to "build the capacity of the Big Island."