The city upheld Friday its decision to keep Italian-based rail car maker Ansaldo Honolulu as the main contractor to design, build, operate and maintain the rail cars for the $5.3 billion system.
Bombardier Transportation, which had submitted the lowest bid, said it is planning to file an appeal with the state Department of Commerce and Consumer Affairs.
"After a cursory review we completely and vehemently disagree with their statements" in the city’s written explanation, said Andrew Robbins, core systems project manager for the Canadian-based global company. "There seems to be interesting things they call facts in there that we’ve never seen before. We definitely plan to appeal."
An executive with the other losing bidder, Sumitomo Corp. of America, based in New York, did not return evening calls for comment.
The city said there were no procedural or legal violations in the procurement process. Ansaldo Honolulu could be paid $1.4 billion over the life of the contract, including $574 million to design and build 80 rail cars.
"The protests were thoroughly reviewed, each point was considered and on all counts the finding was that procurement law and procedures were followed throughout the evaluation and selection process," said Nelson Koyanagi, deputy director of the city Budget and Fiscal Services Department.
This does not mean that Ansaldo Honolulu can begin work on the rail cars.
If the losing bidders file an appeal, the procurement process would still be open, and work on the rail cars will still be postponed. Ansaldo’s proposal projected an April 2011 start date. The city announced in March its intent to award the contract to Ansaldo.
Bombardier’s main point of contention lies within their second, final offer, in which the company proposed to clarify language in the contract about liability limitations. The city argued that this was a "condition" in the company’s bid, which automatically disqualified it from the process.
The city argues that it made clear to Bombardier and others that it did not intend to change the language.
"However, despite having been advised by the city that there would be no change to the language on multiple occasions, Bombardier failed to file a protest on the content of the solicitation on a timely basis," said the city’s rejection letter to Bombardier, signed by Koyanagi and Rapid Transit Division chief Toru Hamayasu, who was one of six members of the contract evaluation committee.
At the forefront of Sumitomo’s protest is that the city didn’t consider Ansaldo’s past performance. Other cities have reported delays and other problems with Ansaldo as a contractor, including Los Angeles, where officials cite late deliveries and cars that didn’t meet specifications.
Sumitomo also accused Ansaldo of "imbalanced pricing," stating that Ansaldo’s design-build price was lowered because that aspect of the contract was graded at a higher value than others.
But the city argued that the entire proposal must be looked at, and Ansaldo’s pricing came out cheaper. Sumitomo’s proposal was for $1.45 billion.
A protesting company can request an administrative hearing with the state Department of Commerce and Consumer Affairs, which would be scheduled within 21 days unless the parties agree to waive that deadline.
"We look forward to a fair hearing," Robbins said.
The hearings officer must issue a decision within 45 days of the appeal.
After that decision the companies have 10 calendar days to appeal to Circuit Court.
Although work on the rail cars is stalled, the project is expected to get the full $55 million in federal funding that was appropriated for this fiscal year.
The funding will come from the Federal Transit Administration’s New Starts program, which funds transportation projects around the nation. New Starts funding was reduced to about $1.6 billion from $1.988 billion, but the Honolulu appropriation stayed in.
