Tough reforms needed at DAGS

It’s galling to hear about complex projects that veer off-track, at taxpayers’ expense. But the state’s handling of what should have been a straightforward electronics and security upgrade at Halawa Correctional Facility has been bungled so badly that it defies comprehension.

The state Department of Accounting and General Services (DAGS) appears to have dropped the reins on the project it was managing, badly, one that has sent the public the tab for millions more than it should have cost.

The work, to replace the facility’s locks and electronics, including the video surveillance systems, was pegged originally for completion some 15 months ago. Since then, it’s been a continually widening money pit.

The state Department of Public Safety, which runs the prison, is back before the state Legislature for another “emergency” budget request to cover the expense: Inmates transferred out of each module during prolonged construction and moved to Saguaro Correctional Center in Arizona.

Supplemental cash infusions were sought in 2015, 2017 and 2018. This year’s appropriation will cost $3.42 million, for a grand total of $11 million.

This is on top of the mounting construction expense, which started at $9.75 million but now has hit the $12.3 million mark.

The first of many questions yet to be answered, either by DAGS or state lawmakers: How has a festering problem such as this lingered for so long without action? This has been an issue since 2015, and only on the fourth request for funds has it been visibly flagged.

Clearly there has been a lack of oversight on this project from the top administration for years. Curt Otaguro recently was appointed the new state comptroller, a Cabinet-level post that also serves as DAGS director.

Otaguro most recently was executive vice president and division manager of First Hawaiian Bank’s digital banking division. Although his career focus has been on banking and customer service rather than construction, he should be expected to apply his managerial skills and private-sector common sense to state projects.

Otaguro’s first worry should be getting briefed on the problems to prepare for the hearing in the state Senate, which must confirm his appointment. Senators owe the taxpayers some probing questions on what’s gone wrong here.

Eric Nishimoto, DAGS acting construction management branch chief, said the problems started when the original security electronics subcontractor bowed out and had to be replaced.

Then a subcontractor’s electrical conduit installation fell short of state requirements; fixing it added a lot of delay. Ordinarily, the state can hit the general contractor — BCP Construction of Hawaii Inc. — to pay damages for delays. Nishimoto asserted that not enough money remains in the contract fund to cover the state’s losses. Regardless, the state needs to seek as much compensation from BCP as possible.

This failure also underscores why the state agency must monitor the work by all subcontractors aggressively enough to identify such missteps early, and correct them to contain costs.

When asked how DAGS policed this project, Nishimoto on Wednesday would say only that “we have enforced the terms of the contract.” If that’s so, the terms must be far from ironclad; benchmarks and a robust system for monitoring them should be in place.

Many other procurement fumbles have littered the state and city landscape for years. The contract battles of the rail project leap to mind, of course, but the roster includes the Kamamalu Building, shuttered for a dozen years, and the $128 million maintenance hangar at the Daniel K. Inouye International Airport, which also had been due for completion years earlier.

This time, unfortunately, delay means inmates’ upheaval and relocation costs for the state. Someone has to whip DAGS into shape. And the prison project presents the focal point for such an effort.