Editorial: State has key role in HART oversight
Someone has got to hold the line on costs for the city’s long-delayed, increasingly expensive rail project.
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Someone has got to hold the line on costs for the city’s long-delayed, increasingly expensive rail project. It now looks as if state Comptroller Curt Otaguro has been properly fulfilling that role, to the consternation of the project’s principal overseers.
What’s still unknown is how at least $11.2 million in claims for certain delays will be paid, ultimately, as it’s still unclear precisely how one discrepancy over a contract provision occurred, and which party will be left holding the bag.
But what is clearer is the takeaway message from all this: Going forward, the Honolulu Authority for Rapid Transportation and its contractors cannot count on the state rubberstamping invoices for costs found to be avoidable.
Otaguro and his agency, the state Department of Accounting and General Services, is involved in back-checking the rail bills because of a 2017 law, Act 1, which was passed to authorize additional tax funding for the $9.2 billion rail line.
In exchange for that authorization, the quasi-independent HART is now subject to greater state oversight to ensure that state tax revenues are tapped only for construction expenses, called “capital costs.” This review includes approval of invoices by the comptroller such as the delay billing.
And there are more delay claims anticipated. Most notably these include the $160 million settlement with contractor Ansaldo Honolulu JV, not to mention any future ones that could come up.
More currently, DAGS has declined to reimburse HART for $11.2 million that didn’t qualify as capital costs. In one incident, Otaguro found a delay claim was related to poor coordination between two contractors on the project, Nan Inc. and Kiewit Infrastructure West Co.
Nan Inc. was supposed to take over a job site, but Kiewit was still on property on the contractual start date, so job costs mounted until the issue was resolved. Otaguro found, rightly, that this was a contractual error that shouldn’t be used to tap state taxpayer funds.
Bill Brennan, a spokesman for HART, countered Otaguro’s assertion that “we, the state or the taxpayers, should not have to pay for an error of that nature.”
The controller “is not supposed to make it subjective or how he ‘feels’ about it,” Brennan said. “It’s a capital cost and needs to be paid. Period. Act 1 is pretty straightforward in that regard.”
Brennan also cited state Auditor Les Kondo’s finding in a March report that DAGS “construes its responsibilities under Act 1 to include verifying that the work reflected in the invoice was actually performed.”
“Act 1 clearly did not intend for DAGS to be involved in managing the rail project or to otherwise interfere with HART’s management of the rail project, which may be the unintended consequence of DAGS’ misplaced interpretation of its responsibilities under Act 1,” according to the March audit.
Lawmakers — specifically, House Finance Chairwoman Sylvia Luke — beg to differ. Luke said in a telephone interview that the act was intended as a means of constraining the rise in costs.
The discussion between HART and Otaguro has been a back-and-forth over several months, and if the comptroller was not convinced that this was legitimately a construction cost, Luke said she is inclined to agree.
What needs to happen now is for HART to make sure all present and future contractual language is clear and to improve avoidance of delays.
The authority has said it plans a “soft opening” of the segment from East Kapolei to Pearlridge for October 2020. That would boost public confidence in the realization of this project.
But so will tighter cost controls. And the state should play a crucial role in that.