Rail firm’s pilikia could cost city, Council chairman says

City Council Chairman Ernie Martin worries that Honolulu’s planned rapid transit system could see increased costs and delays because of problems with the company that won a $1.45 billion contract to design, build, operate and maintain the rail cars.

Last week’s announcement from the parent company of Ansaldo Honolulu that it faces "urgent restructuring" or might be sold because of financial and managerial problems prompted Martin to say Sunday, "Common sense would lead you to believe that the bid they submitted may be understated. … Time delays are always a concern. They’ve admitted that they’ve had difficulty adhering to those requirements.

"There’s always the potential for increases in costs," Martin told the Star-Advertiser. "It’s premature but the likelihood is there. … I hope the (city) administration and Honolulu Authority for Rapid Transportation are going to look into this matter with a fine-tooth comb and make the decision as to whether it’s in the best interest of the city to move forward with Ansaldo or to look at other alternatives."

HART’s board likely will take up the issue Thursday, but probably in executive session because Italian company Finmeccanica made its announcement in a London investors’ webcast on Thursday before HART could put the matter on its agenda, HART Chairwoman Carrie Okinaga said.

"I’ve reviewed the webcast, and the CEO’s comments raise more questions than answers at this point for me," Okinaga said.

Toru Hamayasu, HART’s interim executive director, emphasized Sunday that no contract has been signed with Ansaldo Honolulu and that any agreement likely would require a performance bond, possibly from a third party.

"The city has built-in protections," Hamayasu said. "But we haven’t executed a contract yet."

Don Horner, chairman of the HART board’s finance committee, said, "If and when we issue a contract, it would be based on a construction bond. Our finance committee will ensure we review very carefully the financial strength of the bond insurer."

Representatives for Ansaldo Honolulu could not be reached for comment Sunday.

Delays in awarding a contract to build cars for Hono­lulu’s rail system are already occurring.

A senior hearings officer for the state Department of Commerce and Consumer Affairs is scheduled to continue examining evidence today on an appeal by Sumi­tomo Corp. of America, one of two companies that lost their bids for Honolulu’s rail car contract.

A ruling is expected Aug. 15. If a decision goes against Sumitomo, the company could appeal for a hearing in Circuit Court.

Because of the DCCA process, Gino Antoniello, Sumitomo’s vice president of transportation systems and equipment, declined to speculate Sunday what his company would do if it loses on Aug. 15.

Bombardier Transportation (Holdings) USA, the other company that lost the Honolulu rail car contract, is watching both the DCCA developments and Ansaldo Honolulu’s future with great interest.

AnsaldoBreda and Ansaldo STS, companies under Finmeccanica, form Ansaldo Honolulu, and "they have struggled for many years," said Andrew Robbins, Bombardier Transportation’s vice president of business development. "That’s pretty well known."

Bombardier has yet to decide whether it will appeal its losing bid, which could further delay the signing of a contract.

"If we or Sumitomo ends up going to Circuit Court, that could take a lot longer," Robbins said.

The acknowledgement by Finmeccanica Chief Executive Officer Giuseppe Orsi that AnsaldoBreda has had difficulty producing cars for its customers — resulting in difficult customer relations — only fueled criticism over Honolulu’s plans to build its $5.3 billion, 20-mile rail project.

"In L.A. and Denmark, AnsaldoBreda is already behind six months to 12 months," said rail critic Panos Prevedouros, a University of Hawaii civil engineering professor. "We’re not even in line to be in their backlog yet. Now that they have real problems, we’re looking at significant additional delays. These cars are all custom designed. If Ansaldo folds or closes that division, we’re back at square one."

Prevedouros said it could take months before Finmeccanica decides what to do with the companies that make up Ansaldo Honolulu.

“By then,” he said, “we will have thrown more money at the problem to get out of it or to litigate it.”