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Rail pact faces challenge

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    Mayor Peter Carlisle announced earlier this month the awarding of contracts for construction of the city's rail transit system. Representatives of the construction industry and unions appeared with him at the news conference.

One of the three bidders to provide rail cars for Honolulu’s transit system plans a formal protest of the contract award, which the city publicized would cost $574 million but has since acknowledged might amount up to $1.4 billion over the life of the contract.

The winning bid from Ansaldo Honolulu that the city announced last week was about $574 million for the "core systems"contract, which the city said was the cheapest price proposed from three bidding companies. The core systems contract includes designing, building, operating and maintaining the system.

Mayor Peter Carlisle’s news conference announcing the award pointed only to the $574 million figure, which covers only the designing and building portion of the contract. Toru Hamayasu, head of the city Rapid Transit Division, said at the time that operations and maintenance costs were not included in their $574 million figure but did not spell out the full costs of the contract. When asked what those costs were, he said he could not remember but pointed reporters to the redacted proposal.


» Design and build:$574 million
» Interim operations and maintenance:$167 million*
» First five years:$339 million
» Optional five years:$317 million
» Estimated total:$1.4 billion**

» Design and build:$688.8 million
» Interim operations and maintenance:$286 million*
» First five years:$228 million
» Optional five years:$248 million
» Estimated total:$1.45 billion**
* In year-of-expenditure dollars
** Estimated because the operations and maintenance costs are not in year-of-expenditure dollars and does not take inflation into account

The city did not highlight operations and maintenance figures because those costs are not included in the $5.5 billion capital costs of the project, said city Rapid Transit Division spokeswoman Jeannie Mariani-Belding. Operations and maintenance costs are not included in the project’s overall price tag, and are still subject to inflation.

Sumitomo Corp. of America led a consortium that was among the three bidders, and the other bidder was Bombadier Transportation, based in Canada.

Sumitomo officials say the operation and maintenance costs they proposed are lower than Ansaldo Honolulu’s. But Sumitomo’s overall costs were still higher than Ansaldo’s.

"We urge the city to bring in a third party of technical experts to independently review the financial proposals," said Gino Antoniello, vice president of transportation systems and equipment unit for Sumitomo Corp. of America, who was in Hawaii last week.

"We believe a thorough financial evaluation of all the documents will clearly show that the contract should have been awarded to the Sumitomo team," he said.

Antoniello said the company is asking to meet with city officials to discuss their reasons for giving the contract to another company. Ansaldo Honolulu officials declined comment yesterday because the procurement process is still continuing and a contract has not yet been signed.

ACCORDING TO PROPOSALS reviewed by the Star-Advertiser last week, Ansaldo Honolulu’s cost for interim operations and maintenance is $167 million. That is payment to run the train on constructed portions of the 20-mile route through 2019.

The first five years of full operation and maintenance, after the route is completed, will be $339 million. So the total contract will cost at least $1 billion.

The contract also includes the option to extend for another five years, which would cost another $317.6 million. That means the design, build, operations and maintenance contract for the rail transit may cost up to $1.4 billion.

According to Sumitomo’s proposal, the interim period would cost $286 million, while the first five years would cost about $228.1 million. The optional five-year extension would cost about $248.1 million.

Sumitomo’s final price of about $1.45 billion is still more expensive than Ansaldo Honolulu’s price. Sumitomo’s design and build price was at $688.8 million.

City Budget and Fiscal Services Director Mike Hansen said the city has not yet received an official protest from Ansaldo and that protests for large contracts are common.

"The city followed all procurement procedures as required by law, and the contract was awarded accordingly," he said.

Bombardier Transportation’s design and building costs were about $697.3 million. According to its January proposal, Bombardier’s interim costs would have been $86.6 million. The first five years would be $176.2 million, while the extended optional period would have been $203.4 million. The company’s final proposal in February did not outline operations and maintenance costs.

Bombardier officials are expected to meet with the city today for a debriefing on the procurement process, said Maryanne Roberts, Bombardier U.S. transportation spokesman.

"We’ll hear (today) what they felt about it,"Roberts said. "It’s hard for me to say anything because it’s still in open procurement. A contract has not been signed yet."

Antoniello said most of the evaluation for the contract was based on categories like past experience, performance and management team, and he said his company came out on top for many of those factors.

"The evaluations don’t make any sense at all," he said.

When announcing the contract award last week, Carlisle said the award came about $218 million under what the city expected to spend. He said the procurement process occurred "at a time when obviously labor was less expensive than was as anticipated, as well as materials because of the downturn in the construction industry."

"There’s a lot of people who have excess supplies accumulating," Carlisle said. "That was a specific strategy that was employed by the Rapid Transit Division."

SUMITOMO ISN’T THE only group with pending action against the project. Rail opponents announced yesterday that they plan to file a federal lawsuit against the city and the Federal Transit Administration.

Rail opponent Cliff Slater, along with former Gov. Ben Cayetano, have retained San Francisco-based attorney Nicholas Yost to file the lawsuit. Yost said he expects to file within a month.

"Opponents of the rail project have been very public for some time about their intentions to bring legal action," Carlisle said. "The city has no further comment about (yesterday’s) announcement since no lawsuit has been filed."

Yost said the lawsuit will hinge on several environmental aspects. It will allege that the FTA’s final environmental impact statement did not adequately study all alternatives. Yost led the drafting of the National Environmental Policy Act during the 1960s.

"The obligation is placed by law on the federal agencies," Yost said.

Yost said the suit will seek to force the FTAto conduct a supplemental environmental impact statement on alternatives to mass transit.

"Once that is done, the decision-making process has to start again," Yost said.

Yost argued that the EIS "failed adequately to study multiple reasonable alternatives (including omitting entirely the Managed Lane Alternative)." The managed-lane alternative is discussed in the second chapter of the final environmental impact statement.

Yost will also cite federal law that mandates transportation projects to avoid historic sites if there are feasible alternatives. In a 2009 letter to the U.S. Department of Transportation, the Oahu Island Burial Council also pointed to the same law, asking for archaeological inventory surveys of the entire route before it was planned.

The National Environmental Policy Act also does not allow projects to be studied in segments. Yost argues that the planned extensions of the 20-mile route also should have been part of the environmental statement.

The lawsuit will also allege that the "purpose and need" for alternatives was manipulated to rule out other alternatives. The EIS states "purpose and need"is "to provide high-capacity rapid transit."

"That automatically just excludes, takes off the table, what are otherwise reasonable alternatives," Yost said.

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