Local businesses seek
tough military market

Housing privatization project
will rebuild or renovate 7,700 units

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By Lyn Danninger
ldanninger@starbulletin.com

The Army's plan to replace and privatize its housing on Oahu is drawing questions from local contractors who wonder whether they will have a chance to obtain some of the lucrative business generated by the project.

It's unlikely one company could manage the huge project, which includes obtaining private sector financing and building or renovating 7,700 Army housing units on Oahu as well as managing the housing.

Officials from the Army's Residential Communities Initiative told those who attended a forum on the program yesterday at the Hilton Hawaiian Village that partnering has been the case in other similar projects.

"Most are joint ventures," said James Rich, director of contracting for the initiative.

Representatives from local companies, however, are concerned that experienced mainland developers will bid on the Oahu project after having done such projects before. These companies have their own teams in place and will leave little room for local subcontractors, they fear.

"They could take away jobs from hundreds of small businesses," contractors' representative George Toyama told officials.

RCI officials acknowledged that similar concerns have been raised by local contractors at other proposed military housing projects. But they stressed that the Army will encourage whoever wins the bid to work with as many local businesses as possible.

"Our track record to date has been good utilizing small business," said Don Spigelmyer, RCI program director.

At similar projects, the master developer has conducted forums for local companies interested in obtaining work.

"However the private sector puts this together, we ask for small business fairs and forums from the winner to maximize exposure," said Rich.

The Residential Communities Initiative already underway at bases in several mainland states began formally in 1996 after the military decided it wanted to get out of the housing construction business.

The Army estimates 70 percent of its houses nationwide need either renovation or replacement. Work on Oahu is expected to start in 2004 with the contract to be awarded around May or June of 2003, Rich said.

Audrey Hidano, of local construction firm Hidano Construction, said complaints from local contractors have been raised before about the difficulty in becoming part of a large military-sponsored project.

"Small contractors feel they cannot compete. Some of the concerns are connected to the paperwork involved, which can be difficult until you get into the system or process and feel comfortable," she said.

Others are also nervous about becoming subcontractors, she said.

"If you are a small shop, you may not want to deal with it," she said.

Still, Hidano is hopeful more local companies will try to obtain some of the business. "Some companies are now more venturesome so I hope there is real work to do," she said.