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UPDATED 4/14/11 3:22 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.

Honolulu will have to spend $900 million more over the 30-year life of its rail project because it picked the wrong company to operate the system, a losing bidder argues.

The claim against Ansaldo Honolulu came in a protest filed Monday by Sumitomo Corporation of America.

Mayor Peter Carlisle presented the Ansaldo proposal as being a good deal, and cited savings on the initial construction phase as a critical signal for watchful federal officials who have yet to guarantee $1.55 billion in funding for the $5.5 billion project.

City rail planners also emphasize they did not select the company based on a “low-bid” model. The losing bidders — both of whom protested Monday — are bringing up some concerns too late, and knew the criteria for evaluating bids when they made their proposals, said Honolulu Transportation Services Director Wayne Yoshioka.

“All the evaluation criteria, that was revealed to everyone,” Yoshioka told Civil Beat on Monday. “They had an opportunity to make comments and ask for any changes at that time, and no one did. It’s a little late to be talking about this stuff.”

Yoshioka said he hadn’t seen the protests, and was speaking generally about what he had already heard from the companies. A spokeswoman for the mayor said the protests would be reviewed “according to procurement law,” but had no other comment.

In its protest, Sumitomo said the $574 million price Ansaldo Honolulu gives for the first phase of the contract is “illogical and lacks credibility.” Sumitomo, which wanted $689 million for the same phase, alleges the city considered the design and build phase of the core systems contract as “significantly more important” than the price given for operations and maintenance. Ansaldo’s bid of $1.1 billion covers design, build and operations and maintenance for the first five years after the 20-mile system is completed.

“This sort of financial manipulation is plainly improper,” the protest reads. “Ansaldo’s unreasonably low DB price should have been a red flag that resulted in a significantly lower score.”

Instead, Sumitomo claims that Ansaldo was able to swing hundreds of points in its favor by shifting cost from the design/build phase to the operations and maintenance phase because the city heavily favored a lower design/build cost.

“DB was allotted 350 potential points and O&M was allotted only fifty,” Kato and Fricke wrote. “By using imbalanced pricing, Ansaldo was able to manipulate the City’s scoring system and net hundreds of additional points. The swing in points was so large that SCOA believes Ansaldo would not have been awarded the contract but for this imbalance.”

Representatives with Ansaldo Honolulu have repeatedly declined Civil Beat’s requests for interviews, but submitted a statement earlier this month defending the company’s “solid track record of success, with a high degree of reliability.”

Sumitomo and the other losing bidder, Bombardier, which was disqualified just before the city made its selection, had already publicly raised similar concerns about the city’s procurement process for the core systems contract. An executive with Bombardier did not return a phone call requesting comment. Sumitomo, on the other hand, made its protest documents available through an attorney.

Sumitomo Lists ‘Fundamental Errors’

In its protest documents, Sumitomo cited “a number of fundamental errors” that led city officials to select Ansaldo Honolulu to design, build, operate and maintain the system. Specifically, Sumitomo complains that the city did not adequately consider problems with Ansaldo reported in other cities.

“If the evaluators had appropriately accounted for Ansaldo’s history, the results of the City’s decision would — and should — have been quite different,” wrote Russell Kato and Robert Fricke, the Honolulu attorneys representing Sumitomo.

As Civil Beat previously reported , several other cities have complained of delays or otherwise botched train orders.

But Sumitomo says the city should have at least docked Ansaldo for its track record, if not disqualified the company.

Sumitomo alleges the following, which it says alone “should have resulted in Ansaldo’s disqualification:”

In 2003, the Los Angeles County Metropolitan Transit Authority ordered 50 rail cars for delivery by June 2007. The cars were delivered three years late, 6,000 pounds overweight, and with numerous technical problems.

In 2001, Gotherburg, Sweden ordered 40 cars. The cars were delivered years late with serious problems.

In December 2000, Denmark’s national railway operator purchased 83 intercity trains from Ansaldo for delivery in 2003. Nine years later, only 15 had been delivered.

In 1995, Boston’s Massachusetts Bay Transit Authority ordered 100 cars for delivery between November 1998 and December 2000. The cars suffered from numerous problems, including derailment and delivery delays. Delivery of the last car was in 2007.

Sumitomo also challenged Ansaldo’s adherence to technical specifications, and called Ansaldo’s bid “riddled with errors,” including an alleged failure to hold a contractor’s license at the time it submitted its proposal.

The protest documents include dozens of articles detailing problems with Ansaldo in other cities, including accessibility issues, delays, parts shortages, cracked train cars, as well as a transcript from Sumitomo’s debrief with the city last week.

Council Members Plan Trip to Review Ansaldo

On the same day city officials received the protests, City Council Transportation Committee Chairman Breene Harimoto and Vice Chairman Ernie Martin finalized their plan to travel to cities where Ansaldo has worked — including San Francisco, Los Angeles and Copenhagen, Denmark — to ask questions about the company’s track record.

“We have several issues and concerns, so we finally decided that we need to do this,” Harimoto told Civil Beat. “We will go on an investigative trip. We were advised to see Copenhagen on the firm advice of the administration and the winning bidder because Honolulu’s transit system is being modeled after Copenhagen. We can see the system in operation and we can talk with the owner — not Ansaldo but the owner — about their experiences.”