Broken trust between HART, Kiewit detailed

Acrimony between rail transit officials and the project’s major contractor, Kiewit Infrastructure West, could explain why Kiewit declined to submit a bid for rail work past Aloha Stadium.

The bad blood was described in a letter from a recently fired rail consultant.

In a lengthy Aug. 28 letter to rail board Chairwoman Colleen Hanabusa and other rail leaders, former project consultant Bart Desai said that Kiewit doesn’t fully trust the Honolulu Authority for Rapid Transportation to properly settle cost disputes.

There’s a “lack of open communication” — and plenty of acrimony, he wrote.

The Omaha, Neb.-based firm is building rail’s first 10 miles under construction contracts worth more than $1 billion, and it had the equipment in place to keep building. Kiewit has never fully explained why it declined to bid on the next major stretch of construction work: 5.2 miles of guideway and four stations around the airport.

When asked in July why Kiewit didn’t compete for that work, former HART Executive Director Dan Grabauskas offered a short answer: “I don’t know.”

But Desai wrote that at HART “there is an unwarranted sense that Kiewit … is the enemy, a crook and a cheater.”

Desai served nearly six months as a change and claims manager for the rail agency through its contractor PGH Wong Engineering Inc. until he was terminated last month.

“It is no surprise to me that Kiewit did not bid on the recent HART projects,” he said.

At issue are about $65 million in unresolved change orders with Kiewit for the first half of rail’s elevated steel-and-concrete guideway.

The rail agency has already approved some $265 million in change orders to Kiewit and joint firm Kiewit/Kobayashi for the first 10 miles of guideway and the operations center in Pearl City, according to HART’s monthly reports. Construction delays contributed to much of that cost.

Last month HART Westside Construction Manager Kai Nani Kraut told the board “there’s going to be a battle” ahead with Kiewit over the unresolved changes and who’s responsible for those costs.

“There’s going to be a lot of back-and-forth discussion, a lot of going through historical documents to see how well the design had proceeded at that time,” Kraut said Aug. 8.

Kiewit maintains that the delays associated with west-side construction are all HART’s responsibility, “but we don’t feel that way,” Kraut added.

As an example of acrimony, Desai cited a June 7 email from HART Deputy Director for Design and Construction Chris Takashige to other agency officials.

In that message, Takashige advised his colleagues that Kiewit had told him it was preparing for litigation due to “recent ‘threatening’ situations we’ve either said or written to them in the field.”

“We need to stay professional as it’ll keep things better postured even if we move into the courts,” Takashige wrote to several rail colleagues in the email, which was later provided in its entirety by HART to the Honolulu Star-Advertiser.

On Friday, Takashige said any action interpreted by Kiewit as “threatening” was a misunderstanding.

“Our field personnel sometimes gets into contentious situations on change orders. That’s so common. I have this tendency for putting out directives to staff” to help coach them on how to handle those situations, he said.

Takashige further said he misspoke in the email and that Kiewit was preparing for court action over change-order disputes — not over any threatening actions by HART.

Desai, whose resume lists more than 30 years in the transportation industry as a civil engineer, said he was let go because he clashed with HART management over its handling of Kiewit.

He said in making critical comments against HART, he didn’t have an axe to grind or was seeking any financial compensation. Instead, he said, he chose to write openly to Hanabusa and rail leaders once he returned home to Southern California out of concern for Oahu’s transit project.

HART, meanwhile, said Desai was fired because it found “deficiencies in (Desai’s) work end-product that needed curing.” The agency did not specify further.

Asked whether Desai’s account of the HART-Kiewit situation was accurate, a Kiewit spokeswoman would only say that the firm “is committed to working with HART to complete the first 10 miles of guideway for the Honolulu rail transit project.”

Takashige described HART’s current relationship with Kiewit as “mediocre.”

“It’s not a terrible relationship … but it isn’t hunky-dory,” he said Friday. However, Takashige added that he believed that’s a “normal” relationship for a public agency to have with a contractor on a job that’s so big.

Desai’s letter further claims that HART unnecessarily delayed approving some change orders for Kiewit and that he had been told to create multiple change orders so that they would total less than $1 million, which is the threshold for HART board review. Takashige denied both claims, adding that Desai either “misinterpreted” or “misheard” his instructions on change orders.

Splitting them into smaller changes, or “parceling,” isn’t allowed under state and federal procurement laws.

Takashige did agree with at least one point in Desai’s letter: Kiewit has helped to prevent the rail project from falling further behind schedule “numerous times” by continuing to work despite not having a formal change order in hand.

Kiewit’s contracts on rail date back to 2009 to erect the first 10 miles of elevated guideway and, though its joint venture, build the Pearl City operations center. However, Kiewit declined to compete for the next major stretch of construction work: 5.2 miles of guideway and four stations around the airport.

Kiewit officials said they had decided to focus on their commitments to the West Oahu/Farrington and Kamehameha Guideway projects and other project pursuits in Hawaii.

HART awarded the airport-leg contract to joint firm Shimmick/Traylor/Granite, which submitted an $875 million proposal for the work.

In recent meetings HART board members have questioned the agency’s staff over whether the contract was issued too early. Their questions followed a July 21 letter from the Federal Transit Administration that cautioned the city against taking any actions that might “foreclose viable options” for the cash-strapped rail project in the future.

HART staff told the board that they spoke to the FTA after they got the letter and addressed the federal agency’s concerns about the timing of that contract. The FTA, meanwhile, says its letter “was not referring to a specific procurement.”