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One contract, many questions


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LAST UPDATED: 02:23 p.m. HST, Aug 05, 2011



Competition is often invaluable in judging performance in public contracts, and comparison by companies performing in nearby areas is useful — but those will disappear if the city awards a sole islandwide contract for handling police-initiated vehicle tows. Among the likely bidders is Stoneridge Recoveries, which is targeted in a fraud investigation for its handling of tows in Oahu's busiest and most lucrative zones. The city should reconsider its decision to hire just one tow company for all of Oahu over the multiple vendors it currently uses.

Five venders now handle towing of vehicles from accidents scenes, parking violations, stolen-vehicle recoveries and other tows spread among 13 zones. The busiest have been zones stretching from downtown to Makapuu, Stoneridge's territory.

The area had been handled by Oahu Auto, which charged higher fees for difficult tows in fewer than a fourth of its accident tows, according to its owner. In contrast, Stoneridge charged the higher fees in all but one of its 500 accident tows from 2009 to early last year and reviewed by the National Insurance Crime Bureau, according to people with the overcharging investigation.

The administration of former Mayor Mufi Hannemann recognized the problem and won a seven-year court battle to allow rebidding of the Stoneridge contract. Now, Mayor Peter Carlisle has chosen instead to consolidate all 13 zones in the entire island. The city expects the new approach will result in more consistent service to motorists throughout the island, but the question is whether it will be consistently good or bad.

"It can be a good approach — assuming you get the right lead contractor," Stoneridge attorney Mark Kawata told the Star-Advertiser's Rob Perez. He said Stoneridge probably will submit a proposal by the July 27 deadline.

The Carlisle administration's plan is to measure numerous factors regarding the companies' operational plans. Since no company has the wherewithal to handle towing throughout Oahu, companies are likely to submit combined contracts, with primary and subcontractors, to pay the city a premium of $62,000 a month for five years, $14,000 more per month than what the city now receives island-wide.

The apparent boost to city coffers, though, masks a host of unresolved issues, such as a too-high premium that might necessitate raising regulated tow charges; diminished direct accountability to towed motorists and taxpayers; and questions of tighter oversight. If an impetus for bundling the various zones into one is to provide the city more specifics on customer service issues, surely standardizing the contract terms for a handful of vendors could achieve that goal.

Awards for previous bids have been based on which contractor would pay the highest premium to the city for exclusive rights to a particular zone. The present bids set the minimum amount but the question is whether the $62,000 monthly premium will be an invitation to gouge motorists caught parking in the wrong place. The question to be asked: Compared with what?






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