Honolulu rail contractor Ansaldo wants compensation for construction delay

The contractor installing the driverless operating system for Honolulu’s 20-mile rail project has filed a “mega-substantial” claim with the Honolulu Authority for Rapid Transportation seeking compensation for construction delays on the project.

The claim by Ansaldo Honolulu Joint Venture was filed about 18 months ago, but the contractor might now have extra leverage to get HART to finally resolve the dispute. The rail authority needs Ansaldo’s cooperation to move forward with a public-private partnership to complete the last five miles of the rail project through the city center, HART officials said.

HART Executive Director Andrew Robbins declined to say how much money Ansaldo is seeking because a settlement in the dispute is still being negotiated, but HART board member Ember Shinn described it as a “mega-substantial” amount.

Robbins said money to resolve the claim was included in the rail project’s latest $9 billion budget, but he declined to say how much money was set aside because that would tip the city’s hand during negotiations with the company.

Ansaldo signed a $1.4 billion contract with the city in 2011 that included $574 million for the design and construction of the train control systems and also for delivery of 80 train vehicles. Ansaldo also is to be paid $830 million for operating and maintaining the rail system over 14 years.

That was the largest single contract in city history at the time, and Robbins said Ansaldo’s contract was based on a city construction schedule that called for the entire rail line to be completed by 2019. However, lawsuits and other problems caused years of delays, and the project is now scheduled to be completed at the end of 2025.

Ansaldo is claiming damages because of the delays, but the claim is mostly based on the $574 million design and construction portion of the contract, Robbins said. HART is arguing Ansaldo could have or should have taken mitigating steps to reduce the costs associated with the delays, but Robbins declined to be more specific about those negotiations.

“On the main line, at least, there’s an issue of delay, and whether that delay is something that Ansaldo could not avoid,” Robbins said.

The Ansaldo claim came up Thursday at a special meeting of the HART board to discuss a proposal to use a public-private partnership — also known as a P3 — to design and build the city center rail guideway and stations as well as the Pearl Highlands transit center, and to operate and maintain the system.

City officials have now been discussing and studying the possibility of a public-private partnership for almost a year, and Robbins said HART is almost ready to begin the procurement process for a P3 agreement if the HART board votes to proceed.

Wes Frysztacki, director of the city Department of Transportation Services and a member of the HART board, traveled to Pittsburgh with other HART officials to meet with Ansaldo executives, and said “they were really clear on the P3. They said there’s two conditions. One, we have to settle their claims.”

Ansaldo also was concerned about the scope of any P3 agreement, and how a new P3 contract covering operations and maintenance of rail would fit with Ansaldo’s existing contract with the city to have Ansaldo operate and maintain the rail project in the years ahead. The company wants “to be kept whole,” Frysztacki said.

Robbins had a somewhat different interpretation of Ansaldo’s reaction, saying company representatives “completely embraced” the plan for P3. Ansaldo executives indicated “that launching the P3 and themselves getting involved in P3 would be the perfect opportunity to reset our relationship,” he said.

He acknowledged Ansaldo raised the issue of the “rather large claim” stemming from delays in the project, “and they felt like we should engage with them and make every effort to resolve these outstanding claims.” Robbins said it should be possible to settle the Ansaldo claim by the end of the year.

Honolulu Mayor Kirk Caldwell told the HART board Thursday that his administration fully supports a public-private partnership to complete rail, and the board is scheduled to further consider the P3 plan at its regular meeting Sept. 27.