As state lawmakers continue to weigh a rail tax extension, the House Transportation Committee is considering whether to request a state audit of the project — but rail officials might not be able to provide all the details committee members want to see.
House Concurrent Resolution 181 would ask the state auditor "at a minimum" to examine the Honolulu Authority for Rapid Transportation’s operations, management and policies — as well as factors contributing to the budget gap of nearly $1 billion now confronting the largest public works project in Hawaii’s history.
Transportation members will discuss the resolution, which was introduced by the committee’s chairman, Rep. Henry Aquino (D, Waipahu), during a 10:30 a.m. hearing Wednesday at the Capitol.
The resolution would also have state auditors probe costs "associated with the rail transit project contracts, including payments to contractors, subcontractors and consultants, and what the expenditures are being used for."
However, while they keep records on rail’s prime contractors, HART officials say that by law they’re not obligated to keep track of all subcontractor expenses. To date, they’ve provided only a partial accounting of subcontractor costs, which they maintain is largely based on their prime contractors’ voluntary reporting of that information.
"We’ll make the best efforts to comply with, fully cooperate with the auditor," HART Executive Director Dan Grabauskas said Tuesday. He said that the semiautonomous government agency would not be able to provide a full breakdown of the subcontractor cost details.
"We don’t have that authority," Grabauskas said. "I can’t do what I’m not legally able to do."
HART has provided some rail project subcontractor expense details in recent years, and it does track subcontractors that qualify under a government "Disadvantaged Business Enterprise" program, but it has never presented a full picture of subcontractor activity — and Grabauskas said that’s because there isn’t one. Most recently, in January, the agency gave the Honolulu City Council’s Budget Committee a list of prime contractors and subcontractors as well as the contract values where they were available.
The list included 191 subcontractors through Jan. 16, but only 107 of those had dollar values attached to their contracts, totaling nearly $78 million.
The rail project has awarded 49 prime contracts as of December, according to a city tally, and HART has reported spending $1.3 billion overall on the project as of January. Prime contractors hire the project’s myriad subcontractors.
Grabauskas asserted Tuesday that the absence of any comprehensive subcontractor tracking is "absolutely within the norm" for building public transportation projects such as Honolulu’s rail system. HART’s main concern is that "whoever is doing the work" — the prime contractor — "makes sure that they deliver a quality product on the schedule that we’ve defined and the price that we’ve agreed on," he added.
In his written testimony for HCR 181, Grabauskas further noted that the project is subject to several other audits. That includes one conducted by an independent firm, most recently KMH LLP, which had "no findings" for fiscal year 2013-2014.
The proposed House resolution isn’t the only document in which state lawmakers have called for a comprehensive audit of HART as they consider approving a rail tax extension. There’s also language in the Senate tax extension measure, Senate Bill 19, that calls for a state audit of the project. Aquino said the House resolution could be vital if the audit language in the Senate bill is removed.
In written testimony submitted in February for SB 19, state Budget and Finance Director Wesley Machida called for "a detailed accounting of all expenditures and revenues for the rail project" from January 2007 to December 2014. Machida said those details plus several others were needed before lawmakers could make an informed decision.
In later testimony, after HART provided the Budget and Finance Department with more details, Machida said the information that HART gave would be "particularly helpful" for lawmakers making a decision on the tax extension.
It remains to be seen what the House Transportation Committee members have to say on the matter.
"It does bring up concerns" that there’s only a partial accounting of subcontractor expenses, Aquino said Tuesday. He added that the purpose of an audit would be for state finance officials to determine just how significant that partial picture is.
