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The state Department of Commerce and Consumer Affairs has dismissed an appeal by Sumitomo Corp. of America that challenged the validity of the state’s selection of rival Ansaldo Honolulu for a $1.45 billion contract to design, build, operate and maintain the city’s rail transit project.
The ruling by DCCA senior hearings officer David Karlen was handed down Saturday and posted on the DCCA website a day later.
"Ansaldo Honolulu is extremely pleased that the state’s independent hearings officer concluded that the city correctly followed the procurement law and properly selected Ansaldo’s offer to design and operate Honolulu’s rail system as presenting the best value to Honolulu," the company said in a statement Sunday. "The selection of Ansaldo Honolulu has been reaffirmed now by both the city and state, and while we elected not to argue our case in the media, we are encouraged that an objective and impartial hearing process has found that our offer was sound and balanced."
Key to Sumitomo’s argument for appeal was its contention that the city should have considered Ansaldo’s past performance in its evaluation of "price realism and reasonableness" — a claim that Karlen dismissed for lack of jurisdiction. Past performance was not an evaluation criterion for scoring either price realism or price reasonableness under the city’s official request for proposals, or RFP.
"While Sumitomo claims that it is desirable, or even standard in the industry, to consider past performance as part of a price realism or price reasonableness analysis, such a consideration was not contained in the terms of the RFP," Karlen wrote. "Sumitomo is therefore challenging the terms of the RFP as not being prudent or sufficient, and such challenge was required to be made no later than the submission of Sumitomo’s last proposal."
Karlen cited the same basis for his dismissal of Sumitomo’s challenge to the life cycle cost analysis required by the RFP. Expert witness William Rennicke argued in favor of a 30-year period of evaluation versus the 18 years specified in the RFP.
During last week’s testimony, Rennicke claimed that a 30-year life cycle cost analysis would have found that Ansaldo’s costs over the life of the vehicles would add more than $700 million.
