Honolulu, Losing Rail Bidder Lawyering Up
UPDATED 4/14/11 3:11 p.m.
Correction: An earlier version of this story inaccurately referred to the Ansaldo Honolulu proposal as worth $1.2 billion. The contract would guarantee Ansaldo $1.1 billion.
Monday’s meeting between about 10 city officials and 15 representatives of Sumitomo Corporation of America wasn’t exactly friendly, the Manhattan-based company’s vice president told Civil Beat.
“They lawyered up and we lawyered up,” Gino Antoniello said. “In the end, we really didn’t learn anything today that was going to keep us from protesting.”
The meeting was a debrief for Sumitomo to ask questions of Honolulu officials about why the city picked another company — Ansaldo Honolulu — as the winning bidder on a rail contract worth $1.1 billion.
Antoniello says when his company files its protest — which is due to the city by Monday, April 11 — a flood of new allegations against the city will come with it. Antoniello is reluctant to discuss those claims outside of formal legal proceedings.
“The way I can answer that is that everything that has been in the media or has been discussed today in the debrief is only the tip of the iceberg,” Antoniello said. “In other words, our protest will go beyond this illogical outcome.”
Sumitomo and another company, Bombardier, have both decried the city’s selection. They say the city failed to follow a “best value” process, and opted for a company that only appeared to have the lowest cost because its initial design/build phase was more than $100 million cheaper than proposals by the other two companies.
The city emphasized Ansaldo’s design/build figure — $574 million — when discussing the value it would get from entering into an agreement with the Italian firm.
Both Sumitomo and Bombardier have challenged that appearance of lower cost, and a Civil Beat investigation found Ansaldo makes up for that $100 million in the later operations and maintenance phases.
“One of the questions I asked was, ‘When did you notice the imbalance between the design/build and the operations and maintenance prices,” Antoniello said. “The answer was, ‘We didn’t see it.’ My next question was, ‘Did you look for it?’ The answer was, ‘No.'”
Antoniello rejects the city’s claim that Sumitomo’s protest is fueled by sour grapes over losing a lucrative long-term contract.
“Sumitomo does not protest jobs,” Antoniello said. “Sumitomo has not engaged in any negative position with any of its clients, ever, that I’m aware of, and I’ve been here 23 years. Win or lose, this is the most unusual culmination to a process. It’s unbelievable. We have lost projects over the years where the city or purchasing agent provides us a debrief, and there were clear reasons for the outcome. So we educate ourselves and we move on. ‘Hopefully we can do better on our next project,’ that’s the mindset. This is not the case in this instance.”
Anotoniello says he believes the city rushed the bid selection at the end, because it wanted an announcement to coincide with a visit to Honolulu by federal transportation leaders.
“The timing of that, why they didn’t take more time became even more clear,” Antoniello said. “They should’ve taken more time, but there seemed to be an outside pressure to get this thing out.”
Honolulu Mayor Peter Carlisle announced two contract awards, including the Ansaldo selection on Monday, March 21. He and other city officials attended a welcome reception for U.S. Transportation Secretary Ray LaHood and Federal Transit Administration Administrator Peter Rogoff the next night.
“In the end, there was a cordial handshake with everyone in the room, and nobody said anything beyond that,” Antoniello said. “I think it was pretty clear by the line of some of our questions that there should be no doubt: We’re not going away. I think they understand that.”
Bombardier scheduled a debrief with the city for Tuesday, and has not said whether it will launch a formal protest.
