Losing bidders might delay rail project
Contract award protests will result in uncertain delays for the city’s rail transit system, officials acknowledge.
Until the protests are resolved, the city cannot take action on the solicitation or award of the contract to design and build the rail cars. And state law does not provide a deadline by which a protest must be resolved.
The two losing bidders in the contract, Bombardier Transportation and Sumitomo Corp. of America, have filed protests with the city alleging that winning bidder Ansaldo Honolulu doesn’t deserve the contract.
The city picked Ansaldo Honolulu, a subsidiary of Italian conglomerate Finmeccanica, to design, build, operate and maintain the rail cars. The value of the contract is $1.4 billion, including $574 million as part of the project’s $5.5 billion capital costs.
City officials declined to comment on specific assertions made by the two companies because the matter is in adjudication.
If the protests are not resolved by mutual agreement, the city’s chief procurement officer, Budget and Fiscal Services Director Mike Hansen, could make a decision that awarding a contract without delay is “necessary to protect the substantial interests of the city,” said city spokeswoman Louise Kim McCoy.
But even if that decision is made, the companies could appeal with the state Department of Commerce and Consumer Affairs for an administrative hearing, which would be held within 21 days.
Then the DCCA hearings officer must issue a decision within 45 days of the appeal. After that process a company would still have 10 days to file an appeal with Circuit Court, McCoy said. If that fails, a bidder can take it to appellate court.
The protests filed April 11 reflected public statements made by Bombardier and Sumitomo executives over the past few weeks.
Bombardier is protesting its disqualification from the process after it submitted its final offer in late February.
City procurement officials have said Bombardier’s proposal had a “condition” that automatically disqualified the company from bidding. Andy Robbins, Bombardier’s vice president, said it had to do with clarifying liability language in the city’s request for proposals, and that the company made the issue known as early as last June.
Bombardier also alleges that Ansaldo’s first proposal did not comply with the requirements of the Buy America Act, which requires federally funded projects to purchase U.S.-made products. Bombardier questions why Ansaldo’s second proposal became compliant with the federal mandate.
“It is unknown to what extent Ansaldo may have been informed in discussions that its initial proposal had to be changed in order to be responsive,” Bombardier’s protest states.
The request for proposals says the city should have informed Bombardier officials of “weaknesses, significant weaknesses, and/or deficiencies in their proposals,” the protest states.
Based on scores from the first proposal, Bombardier was the highest ranked. The company boasts the cheapest contract value, at $1.2 billion. Sumitomo’s value was $1.45 billion.
At the forefront of Sumitomo’s argument is Ansaldo’s past performance, which has been reported as spotty in other locations, including Los Angeles, where transit officials cited late deliveries and cars that didn’t meet specifications.
Sumitomo also accused Ansaldo of “imbalanced pricing,” stating that its design-build cost of $574 million was used to “improperly manipulate the city’s scoring system.” The design-and-construction portion of the contract was valued seven times higher in the procurement process scoring system than the operations and maintenance portion, the most costly portion of the contract.
Sumitomo also alleged in its protest that Ansaldo’s proposal was nonresponsive because its specifications didn’t conform to the city’s guidelines, and that it has an “unrealistic project schedule.”
Sumitomo also alleges that Ansaldo failed to comply with state contractor license law, stating that Ansaldo did not obtain its general engineering contractor license until after submitting its proposal.
Sumitomo cites Hawaii law that states that no company can act as a general engineering contractor without a license. State law defines a contractor as anyone who “offers to undertake” a project.
Mayor Peter Carlisle has said the procurement process followed state law.
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