New Twist in Case Against Ansaldo — Lack of License
A new front has been opened in the fight to keep Honolulu from awarding a $1.4 billion rail contract.
Ansaldo wasn’t licensed as a contractor in Hawaii when it first bid on the opportunity to design, build, operate and maintain the city’s rail system — an apparent violation of state law.
Two firms that would have worked with Sumitomo, a losing bidder, have filed complaints against Ansaldo with the Hawaii Department of Commerce and Consumer Affairs.
If the Italian firm is found to be in violation of state law, it could have to pay as much as $560 million — yes, you read that right, million — as a penalty. Even worse, the company’s license could be revoked.
A spokeswoman for Ansaldo declined to comment for this story.
“I didn’t write the laws. If all the contractors here have been held to this law, why now should there be an exception?” William Spiegelberg, Sumitomo’s contractor and one of the the complainants against Ansaldo, told Civil Beat last week. “What good are our laws if there are all these exceptions?”
Read Spiegelberg’s complaint against Ansaldo:
Ron Yee of Wasa Electric, another subcontractor with Sumitomo, filed a complaint last week and then appeared before the Contractors Licensing Board on Thursday.
“They said my complaint has merit,” he told Civil Beat Monday. He complained that rather than holding a license at the time it made its offer, as required by law, Ansaldo instead filed an affidavit that it was in the process of obtaining its license.
“That’s not the way it works,” Yee said.
The issue was raised by Sumitomo in its appeal to the state last month. (Sumitomo’s appeal was rejected, but another losing bidder is challenging the contract in court and Sumitomo is still weighing its options.) On July 20, Sumitomo attorney Robert Fricke told Senior Hearings Officer David Karlen: “When a statute is clear, as it is in this case, there is no discretion to deviate from its requirements.”
“(The city) can’t simply stick their head in the sand because they want more offerers,” he said.
Fricke was referencing Chapter 444 of the Hawaii Revised Statutes. defines a “contractor” as “any person who by oneself or through others offers to undertake, or holds oneself out as being able to undertake, or does undertake,” any construction or demolition work. says, “No person within the purview of this chapter shall act, or assume to act, or advertise” as a contractor without first obtaining a license.
Karlen declined to weigh in on the question, when he Sumitomo’s appeal, saying it was outside his purview. He said any decision on consequences for a violation of contractor licensing rules fall to the Contractors Licensing Board.
A woman who identified herself as “Dawn W.,” a “verifier” in the state Regulated Industries Complaints Office, told Civil Beat Monday that the Ansaldo Honolulu Joint Venture was issued its contractor license — No. 31120 — on Oct. 15, 2010. That was months after Ansaldo first made a bid to produce everything from the cars to the track, from traction power to communications systems.
The city and Ansaldo have pointed out that final offers weren’t due until early 2011, after the company had secured its license. But Sumitomo and its subcontractors have argued that’s not good enough.
says the first violation shall result in a penalty of $2,500 or 40 percent of the value of the contract, whichever is greater. In this case, the percentage is greater — much greater. Forty percent of $1,397,387,093 is $559 million.
also gives the Contractor Licensing Board the power to revoke or suspend the license of anybody in violation of the law.
It may seem that Ansaldo obviously violated the law, but it’s not necessarily so. There are a number of exemptions to the law. In particular, states that the chapter doesn’t apply to “Any public works project that requires additional qualifications beyond those established by the licensing law and which is deemed necessary and in the public interest by the contracting agency.”
In other words, the city could conceivably establish its own strict standard that trumps the licensing1 law. Whether the core systems contract qualifies is a matter for the state to determine — and Ansaldo’s relationship with Honolulu hangs in the balance.
