UH-Hilo pharmacy plans stall as bids come in over budget

A long-awaited building to house the College of Pharmacy at the University of Hawaii at Hilo is again facing possible delays as construction bids have come in over the $30 million budgeted for the project.

Five bids — two from local companies and three from mainland-based firms licensed to do business in Hawaii — were received for the project, which calls for a 45,000-square-foot facility with classrooms, teaching and research laboratories, and offices. The lowest bid is $2.57 million over budget.

The university is “exploring” its options within procurement laws to either dedicate more money to the project or reduce the scope of the work, UH Vice President Jan Gouveia told a Board of Regents committee Thursday. Rebidding the project is seen as a last resort.

“We are over the appropriated amount,” said Gouveia, who oversees capital improvement projects as UH’s vice president for administration. Speaking to members of the board’s Planning and Facilities Committee, she said, “It’s the nature of this industry right now. It’s a hot market. We did try to construct a lowest base-bid design in hopes that we wouldn’t find ourselves in this position. We are just shy of it by $2.5 million.”

Whatever the solution, the university is under a time constraint: The legislative appropriation for the funds will lapse June 30. In the meantime the pharmacy program continues to operate out of five sites, including temporary facilities near the proposed site and off-campus buildings.

“We are very optimistic that we will be able to issue an award and get this contract going before funds lapse,” Gouveia said.

The pharmacy college — which launched in 2007 and awarded its first degrees in 2011 — offers professional degrees including a Doctor of Pharmacy, doctorate in pharmaceutical sciences and Master of Science in clinical psychopharmacology. The Doctor of Pharmacy program has 321 students and typically graduates about 90 students a year.

Some regents wanted a direct answer as to whether the project — renamed the Daniel K. Inouye College of Pharmacy in 2013 — will be completed with the allotted funds.

“Is this going to get built or not?” regent Jeffrey Portnoy asked pointedly.

UH President David Lassner said his administration was providing the most current information that it could.

“You’re asking for a firm decision when we’re still working the problem,” Lassner said. “If we rebid there is no guarantee what the outcome of the new bids will be. … If we can find additional money that can legally be committed to the project, that’s something that we’re searching for. And I think another option is to reduce scope, if possible, from the current bid, which is a challenge under the procurement code. So there are a lot of moving parts.”

Gouveia said the hang-up illustrates the problems with using the traditional low-bid method for projects, which are funded in phases as they move from planning to design and construction.

“This is one of the risks associated with going with design-bid-build. Design-bid-build contemplates the university completing a full set of plans and specifications, and we go out to bid and we have to take lowest bidder,” she said. “And if our plans are flawed or don’t meet complete user requirements, we are stuck with change orders with the lowest bidder.”

Since joining UH in mid-2014, Gouveia has been working to revamp how the university handles its capital projects. She wants UH to take advantage of the so-called design-build method, through which design and construction services are handled by a single entity for a set price upfront.

“Design-build, on the other hand,” she said, “starts mitigating that risk because you have the contractor also responsible for the design, and in the end it’s a performance-based contract where we ask for deliverables at a fixed price.”

Getting the funds for the project proved controversial at the Legislature. During the 2013 legislative session, lawmakers in the House withheld funding for the building, telling UH to instead focus resources on its growing repair and maintenance backlog. Lawmakers denied the request even though UH warned that the college’s accreditation was at risk because it lacked proper facilities.

The regents later that year imposed a moratorium on new construction projects but exempted the pharmacy school and several other projects in the pipeline at the time. In 2014 lawmakers approved a combination of state-backed bonds and revenue bonds, which are being repaid using tuition revenue from the pharmacy program. Securing the funds was largely credited to the late Hilo Sen. Gil Kahele, who was a staunch supporter of the program.

PROJECT BIDDERS

Bid amounts received by the University of Hawaii to build the Daniel K. Inouye College of Pharmacy at UH Hilo for $30 million:

>> F&H Construction: $35,539,000. Incorporated in California, offices in Northern California and Kahului.

>> Isemoto Contracting Co.: $32,607,900. Based in Hilo.

>> Jacobsen Construction Co. Inc.: $35,443,199. Incorporated in Utah, offices in Salt Lake City and Honolulu.

>> Nan Inc.: $34,729,096. Based in Honolulu.

>> Okland Construction Co. Inc.: $32,576,352. Incorporated in Utah, offices in Salt Lake City and Tempe, Ariz.