Clifton M. Hasegawa
President and CEO
Clifton M. Hasegawa & Associates, LLC
Chairman, President and CEO
Kaimanu Maritime C...
Senator Inouye began the Rail Transit project with Mayor Mufi Hanneman and
shepherded the project with Mayor Peter Carlisl...
Upon completion of action by the Department of Transportation Inspector
General and the Federal Transit Authority, I respe...
Members of the Hawaii State Senate
Members of the Hawaii State House of Representatives
Mayor Kirk Caldwell
City & County ...
This page intentionally left blank
Clifton M. Hasegawa
President and CEO
Clifton M. Hasegawa & Associates, LLC
1044 Kilani Avenue 12, Wahiawa, Hawaii 96786-2...
Please refer to the attached Exhibit Request for Government Records –
Ethics Violations to the City & County of Honolulu, ...
Source: Honolulu Authority for Rapid Transit (HART) Date Accessed June 6,
2015 http://www.honolulutransit.org/media/344687...
The Federal Transit Administration (FTA) administers multiple grant
programs to more than 1,200 State and local grantees, ...
Less than charitable but more direct and insightful are the words of
HART’s Independent Auditor, “[T]he financial statemen...
HART needs to ensure that invoices are properly monitored and
approved; invoices have adequate support and documentation a...
Independent Auditor’s Report
To the Board of Directors
Honolulu Authority for Rapid Transportation
City and County of Hono...
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statem...
Other Matters
2013 Financial Statements
The financial statements of HART, as of and for the year ended June 30,
2013, were...
The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compli...
Compliance and Other Matters
As part of obtaining reasonable assurance about whether HART's
financial statements are free ...
Failings in HART’s self-guided contracting and procurement procedures
cited in Exhibit 2 – Yesteryear and the focus of Req...
Donna Y.L. Leong, Corporation Counsel, City & County of Honolulu
Honolulu Authority for Rapid Transit (HART)
Mr. Daniel Gr...
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Clifton M. Hasegawa
President and CEO
Clifton M. Hasegawa & Associates, LLC
1044 Kilani Avenue 12
Wahiawa, Hawaii 96786-22...
The $78.9 Million award by HART to Hawaiian Dredging Construction
Company, Inc. (HDCC) on June 10, 2015 for the Farrington...
[C]onsiderable judgment is required in reaching a
decision on whether a bid is mathematically or
materially unbalanced.”
[...
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Caldwell Returns Budget Bills Unsigned in Protest of HART
Oversight
June 23, 2014· By Sophie Cocke Honolulu Civil Beat
Hon...
However, he decided not to sign the city’s legislative, operating and capital
budget bills as well because of clauses incl...
of 25

President Barack Obama - Honolulu Authoirty for Rapid Transit (HART) - SOS - Code RED - Immediate Jeopardy

To speak practically and as a citizen, unlike those who call themselves no-government men, I ask for, not at once no government, but at once a better government. Let every man make known what kind of government would command his respect, that will be one step toward obtainint it. --- Henry David Thoreau "Civil Disobedience"
Published on: Mar 4, 2016
Published in: Leadership & Management      
Source: www.slideshare.net


Transcripts - President Barack Obama - Honolulu Authoirty for Rapid Transit (HART) - SOS - Code RED - Immediate Jeopardy

  • 1. Clifton M. Hasegawa President and CEO Clifton M. Hasegawa & Associates, LLC Chairman, President and CEO Kaimanu Maritime Corporation 1044 Kilani Avenue 12 Wahiawa, Hawaii 96786-2243 Telephone: (808) 498-8408 Email: clifhasegawa@gmail.com Via United States Postal Service – Express Mail June 19, 2015 The Honorable Barack Obama President of the United States of America The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Re: Senator Daniel K. Inouye - The Rail Transit Department of Transportation Inspector General Complaint Audit and Investigation of the Honolulu Authority for Rapid Transit (HART) Transit from Kapolei to Ala Moana Center and The University of Hawaii Dear President Obama: Your intervention to complete Senator Dan Inouye's Rail Transit is requested.
  • 2. Senator Inouye began the Rail Transit project with Mayor Mufi Hanneman and shepherded the project with Mayor Peter Carlisle and Mayor Kirk Caldwell. Senator Inouye's leadership, wisdom, guidance and direction provided the cohesiveness to keep the transit organization and project focused and moving forward. The Rail Transit is the largest construction project in the State of Hawaii. Department of Transportation Inspector General Calvin L. Scovel III is in receipt of my Hot Line Complaint regarding the operation of the Rail Transit Program. My objective is to have a complete audit and thorough investigation of Honolulu Authority for Rapid Transit, to implement best management and financial procedures, and to establish oversight program to complete the Rail Transit. Senator Inouye stated on more than one occasion that the disbursement of $1.5 billion from the Federal Transit Authority (FTA) was the last. Senator Inouye languished over the delays in the project, the unaccounted and lavish expenditure of tax dollars, gaps in the procurement practices and procedures, and the consistent and constant requests from Honolulu Authority for Rapid Transit for additional funding. Shuttering access to Federal funding was Senator Inouye's message to Honolulu Authority for Rapid Transit, “No grant and aide from Washington until and unless financial transparency, accountability and responsibility are restored and established, the Honolulu Authority for Rapid Transit budget is streamlined, all known and reasonably foreseeable cost contingencies are accounted and included in the budget, all financial information is accurate and current, and all revenue, expenses and expenditures are auditable without self-guided restrictions.” Immediate action by Inspector General Scovel and his investigative and audit teams is imperative. The situation is Code Red. The Rail Transit is in crisis and immediate jeopardy.
  • 3. Upon completion of action by the Department of Transportation Inspector General and the Federal Transit Authority, I respectfully recommend a collaborative and mutual financial plan between Department of Transportation, Federal Transit Authority and the Honolulu Authority for Rapid Transit be developed and implemented for a cost sharing to complete the Rail Transit. The current end point for the Rail Transit from Kapolei is Ala Moana Center. The University of Hawaii was the intended destination. Respectfully, I recommend the Department of Transportation, Federal Transit Authority and the Honolulu Authority for Rapid Transit develop, establish and implement operational plans and procedures to complete the Rail Transit to the University of Hawaii. Thank you very much Aloha Respectfully, --- Signed--- Clifton M. Hasegawa Copies provided to: Governor David Ige State of Hawaii Lieutenant Governor Shan Tsutsui State of Hawaii
  • 4. Members of the Hawaii State Senate Members of the Hawaii State House of Representatives Mayor Kirk Caldwell City & County of Honolulu Members of the Honolulu City Council Congresswoman Colleen Hanabusa Honolulu Authority for Rapid Transit Daniel Grabauskas Executive Director & CEO Honolulu Authority for Rapid Transit Scott Ishikawa Media Relations – Construction Honolulu Authority for Rapid Transit
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  • 6. Clifton M. Hasegawa President and CEO Clifton M. Hasegawa & Associates, LLC 1044 Kilani Avenue 12, Wahiawa, Hawaii 96786-2243 Direct: 808.498.8408 ♦ Email: clifhasegawa@gmail.com LinkedIn: https://www.linkedin.com/in/cliftonhasegawa June 6, 2015 VIA EMAIL - hotline@oig.dot.gov The Honorable Calvin L. Scovel III Inspector General U.S. Department of Transportation 1200 New Jersey Ave. S.E. - 7th Floor Washington, DC 20590 RE: Request for Investigation Dear Mr. Scovel: This Complaint and request that the Office of the Inspector General (OIG) initiate an investigation into the Honolulu Authority for Rapid Transportation (HART) on the bases of fraud, waste and abuse in the expenditure of Federal funds violations of contracting and government procurement laws, and violations of laws and regulations on Standards of Conduct. This matter has been brought to the attention of government officials at the United States Department of Transportation; the Federal Highway Administration (FHWA); the Federal Transit Authority (FTA); David Y. Ige, Governor, State of Hawaii; Shan S. Tsutsui, Lieutenant Governor, State of Hawaii; the Hawaii State Legislature; the State of Hawaii Department of Transportation; Kirk Caldwell, Mayor City & County of Honolulu; the Council Members, City & County of Honolulu; Daniel Grabauskas, Executive Director & CEO, Honolulu Authority for Rapid Transportation and the Board of Directors, Honolulu Authority for Rapid Transportation. Financial mismanagement; instances of fraud, waste and abuse; violations of contracting and procurement laws, and standards of conduct laws and regulations continue.
  • 7. Please refer to the attached Exhibit Request for Government Records – Ethics Violations to the City & County of Honolulu, Honolulu Authority of Rapid Transit (HART) June 4, 2015 and the following Slide Share presentations: 1. Request for Government Records – Ethics Violations – City & County of Honolulu, Honolulu Authority of Rapid Transit (HART) June 4, 2015. 2. http://www.slideshare.net/cliftonmhasegawa/the-rail-quality- assurance-safety-primary-and-priority 3. http://www.slideshare.net/cliftonmhasegawa/honolulu-authoirty- for-rapid-transit-unsafe-at-any-speed-part-ii 4. http://www.slideshare.net/cliftonmhasegawa/hart-hawaii-state- legislature-city-and-county-of-honolulu-hawaii-public-utilities-commission-may- 5-2015 5. http://www.slideshare.net/cliftonmhasegawa/yesterday-47881430 6. http://www.slideshare.net/cliftonmhasegawa/honolulu-authoirty- for-rapid-transit-hart-a-template-for-doom-and-destruction The Federal dollars committed and to be released are significant. PROJECT REVENUE STATUS (As of May 1, 2015) Projections to Date Collected/ Committed to Date % of projections REVENUE SOURCE: (in millions) (in millions) Project Beginning Cash Balance (December 2009) $ 298 $ 298 100% General Excise Tax (GET) Surcharge $ 3,291 $ 1,091 33% Federal New Starts Funds $ 1,550 $ 806 52% Other Federal Transportation Funds $ 214 $ 4 2%
  • 8. Source: Honolulu Authority for Rapid Transit (HART) Date Accessed June 6, 2015 http://www.honolulutransit.org/media/344687/201506-rail-update-hart-facts.pdf Prevention and detection of fraud, waste, abuse of Federal funds are priority programs of the United States Department of Transportation. Prevention and Detection of Fraud in Transportation Programs The prevention and detection of fraud is an objective we share throughout all levels of government. In 1960, the predecessor of this subcommittee, led by Congressman Blatnik, investigated the Federal-aid Program and found it was fraught with waste, fraud, and corruption. They concluded that essential controls were lacking at both the state and Federal levels. Controls to prevent the types of problems that were occurring then were put in place; our work does not suggest abuse on a scale such as was experienced in the 1950s and 1960s. However, in the past 3 years, we have seen increases in our fraud case work and judicial actions involving highways and transit, including several of the biggest cases in the history of the highway program. At present, we have 113 pending investigations of contract and grant fraud involving highway and transit projects in 37 states. The types of fraud we are commonly seeing today include activities like bid rigging, bribery and kickbacks, false claims, and product substitution. The states are the first line of defense in preventing such fraud, and we have been working closely with a number of state Inspectors General and state auditors on our fraud investigations. Source: Statement of Kenneth M. Mead, Inspector General, U.S. Department of Transportation. Before the Subcommittee on Highways and Transit House Committee on Transportation and Infrastructure United States House of Representatives. May 1, 2002. https://www.oig.dot.gov/sites/default/files/cc2002155.pdf Audit Announcement — Audit of FTA’s Oversight of At-Risk Grantees Federal Transit Administration. From: Thomas E. Yatsco, Assistant Inspector General for Surface Transportation. To: Federal Transit Administrator. August 12, 2014
  • 9. The Federal Transit Administration (FTA) administers multiple grant programs to more than 1,200 State and local grantees, providing more than $10.6 billion of Federal assistance in 2014 to help plan, build, and operate transit systems nationwide. In the past 4 years, FTA’s financial management reviews of transit agencies’ internal controls have identified 36 at-risk grantees with significant deficiencies such as unallowable costs, inadequate competition for major procurements, and an inability to reconcile actual costs with allowable budget categories. The deficiencies required FTA to place additional oversight controls on the disbursement of Federal funding to these transit agencies, including restricting agencies’ ability to draw down Federal funds and requiring them to take corrective actions before restrictions are lifted. We are initiating an audit of FTA’s oversight of at-risk transit agencies. The objective of this audit is to assess whether FTA has effective oversight procedures to ensure that at-risk transit agencies take corrective actions to address internal control weaknesses identified in financial management reviews. Source: U.S. Department of Memorandum. Transportation Office of the Secretary of Transportation Office of Inspector General. https://www.oig.dot.gov/sites/default/files/FTA%20At%20Risk%20Gran tees%20Announcement%20Letter%5EAugust%2012%2C%202014.pdf The Honolulu Authority for Rapid Transportation (HART) has not heretofore been identified as an at-risk transit program. HART is an at-risk transit program. The Exhibit and Slide Share presentations provide clear and convincing clear demonstrative factual evidence. of the as it should be. The extent to which HART is an at-risk transit program has been minimized and shrouded by less than fully transparent audits and reports. Primary is expressed by the City Auditor, City & County of Honolulu, “HART has met minimum requirements as required by the FTA and its various contracts. But HART needs to go beyond meeting minimum requirements. Honolulu’s taxpayers need assurance that their tax dollars are used prudently and efficiently.”
  • 10. Less than charitable but more direct and insightful are the words of HART’s Independent Auditor, “[T]he financial statements present only the Honolulu Authority for Rapid Transportation and do not purport to, and do not, present fairly the financial position of the City and County of Honolulu as of June 30, 2014 … we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.” Denial of the truth by government officials and plain and unequivocal representation of the facts by Auditors have perpetuated fraud, waste and abuse of federal and state funds. Deficiencies in internal controls, financial oversight and full and complete compliance with all applicable laws and regulations are revealed in the audit reports of the Honolulu Authority for Rapid Transportation by the City Auditor for the City & County of Honolulu and the audit report by Independent Auditor for the Honolulu Authority for Rapid Transportation. Specifically, Audit of the Honolulu Authority for Rapid Transportation (HART). The City Auditor, City & County of Honolulu This audit was performed in response to City Council Resolution 12-149, which requested an audit of the Honolulu Authority for Rapid Transportation (HART) contracts and spending for public relations and public involvement services. The resolution requested that the audit determine what specific public involvement service(s) each employee, consultant and subconsultant provided, and an opinion on whether the service(s) and the amount paid (individually and collectively) were objective, required by federal law, and justified. This audit was included in the Office of the City Auditor’s Work Plan for FY 2012-13. The audit was performed in accordance with generally accepted government auditing standards between August 2012 and November 2012, and again between April 2013 and November 2013.
  • 11. HART needs to ensure that invoices are properly monitored and approved; invoices have adequate support and documentation as recommended in a prior audit; verify work performed by consultants and sub-consultants; and develop a basis to evaluate consultant performance and work products for efficiency and accountability. Proper internal controls allow an entity to have reasonable assurance that program objectives related to economy, effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations are achieved. We found that HART’s contract management system does not contain accurate data and is not an effective oversight tool. According to our review, the CMS system does not appear to be an effective tool for managing HART’s contracts and associated costs. We question HART’s ability to properly monitor its contracts and associated costs if their main management system has incomplete data. HART has met minimum requirements as required by the FTA and its various contracts. But HART needs to go beyond meeting minimum requirements. Honolulu’s taxpayers need assurance that their tax dollars are used prudently and efficiently. Our audit report recommendations will continue HART’s best efforts to be more efficient and accountable as the project moves forward. HART disagreed with our audit findings and recommendations. Based on our audit work and supporting work papers we stand by our audit results, audit conclusions, and audit recommendations. We believe HART should be less reliant on consultants as the project progresses and should be able to produce documents and data requested without the intervention of the consultants. [Emphasis Supplied] Source: The City Auditor, City & County of Honolulu, State of Hawaii. Report No. 13-03 http://www.honolulu.gov/rep/site/oca/oca_docs/audit_of_HART_public_involvement_programs_final_repor t.pdf
  • 12. Independent Auditor’s Report To the Board of Directors Honolulu Authority for Rapid Transportation City and County of Honolulu Report on the Financial Statements We have audited the accompanying financial statements of the Honolulu Authority for Rapid Transportation (HART), a component unit of the City and County of Honolulu, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise HART’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
  • 13. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Honolulu Authority for Rapid Transportation, as of June 30, 2014, and the changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements present only the Honolulu Authority for Rapid Transportation and do not purport to, and do not, present fairly the financial position of the City and County of Honolulu as of June 30, 2014, and the changes in its financial position or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
  • 14. Other Matters 2013 Financial Statements The financial statements of HART, as of and for the year ended June 30, 2013, were audited by other auditors whose report dated on November 15, 2013 expressed an unmodified opinion on those statements. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the schedule of funding progress for the Hawaii Employer-Union Health Benefits Trust Fund on pages 7 through 12 and page 34, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2014 on our consideration of the HART’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
  • 15. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering HART’s internal control over financial reporting and compliance. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered HART's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of HART’s internal control. Accordingly, we do not express an opinion on the effectiveness of HART’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
  • 16. Compliance and Other Matters As part of obtaining reasonable assurance about whether HART's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. [Emphasis Supplied] Source: Honolulu Authority for Rapid Transit (HART) http://www.honolulutransit.org/media/308474/20140630-and-2013-hart- financial-statements-and-independent-auditors-report-final.pdf House Bill 134-House Draft 1-Senate Draft 2-Confrence Committee Draft 1 was transmitted to Governor David Ige for signature on May 6, 2015. The measure will extend the General Excise Tax (GET) Surcharge for the Honolulu Authority for Rapid Transit, require the Board of Directors of the Honolulu Authority for Rapid Transportation to conduct audits, submit annual reports to the Governor and the State Legislature, and conduct public hearings and take testimony on the audits and reports. The measure adds an extra $1.8 billion in revenue for the rail project which is already nearly $1 billion over-budget. Optimistically, the law is intended minimize the red ink, realistically, based on the long-standing track record of State and City & County officials inability to reign in HART the implication is the creation of another spending frenzy for HART with no clearly detailed incentives to change by establishing and implementing stricter management and financial practices and procedures.
  • 17. Failings in HART’s self-guided contracting and procurement procedures cited in Exhibit 2 – Yesteryear and the focus of Request for Government Records and Ethics Complaint, Exhibit 1, HART’s apparent violations of Federal and State Procurement Laws and directives issued by the Federal Transit Authority (FTA) perpetuate a toxic environment conducive to fraud and further unrestrained mismanagement of Federal and State funds. The situation is Code Red. The gravity is severe as the continued forward progress of the HART transit project is in immediate jeopardy. Your immediate intervention is requested. Thank you very much. Respectfully Clifton M. Hasegawa Copies provided to: Mayor Kirk Caldwell Council Chair Ernest Y Martin Council Member Kymberly Marcos Pine Council Member Carol Fukunaga Council Member Ann Kobayashi Council Member Ikaika Anderson Councilmember Joey Manahan Council Member Trevor Ozawa Council Member Brandon Elefante Council Member Ron Menor
  • 18. Donna Y.L. Leong, Corporation Counsel, City & County of Honolulu Honolulu Authority for Rapid Transit (HART) Mr. Daniel Grabauskas Executive Director and CEO Board of Directors Congresswoman Colleen Hanabusa Mr. Ivan Lui-Kwan Mr. Don Horner Mr. George I. Atta Mr. Robert Bunda Mr. Michael Formby Mr. Ford Fuchigami Mr. William Hong Mr. Keslie Hui Mr. Damien Kim State of Hawaii Senate President Ronald Kouchi Members of the Hawaii State Senate House Speaker Joseph Souki Members of the Hawaii House of Representatives Mr. Les Kondo, Executive Director, Hawaii State Ethics Commission NOTE: Exhibits have been omitted for this Slide Share presentation
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  • 20. Clifton M. Hasegawa President and CEO Clifton M. Hasegawa & Associates, LLC 1044 Kilani Avenue 12 Wahiawa, Hawaii 96786-2243 Direct: 808.498.8408 Email: clifhasegawa@gmail.com LinkedIn: https://www.linkedin.com/in/cliftonhasegawa June 22, 2015 Ellen Richardson Administrative Assistant to Ann CalvaresiBarr, Deputy Inspector General U.S. Department of Transportation 1200 New Jersey Avenue S.E. – 7th Floor Washington, DC 20590 RE: Hot Line Complaint and Request for Investigation, June 6, 2015 City and County of Honolulu Recipient ID: 1703 Honolulu Authority for Rapid Transit (HART) US Department of Transportation, FTA Region IX Dear Ms. Richardson, Deputy Inspector General Ann CalvaresiBarr during her tenure with the US General Accountability Office as Director of Acquisition and Sourcing Management provided testimony before the United States Senate, Committee on Homeland Security and Governmental Affairs, Ad Hoc Subcommittee on State, Local, and Private Sector Preparedness and Integration, Federal Efforts Are Helping to Address Some Challenges Faced by State and Local Fusion Centers, GAO-08-695T, April 17, 2008. The major theme of Deputy Inspector General CalvaresBarr’s testimony is the proper provisioning to systematically collect current and accurate data and information, thorough analysis of the data and information, identification of strengths and weaknesses, and positive action to correct weaknesses in incumbent and mandated for State and local entities. These issues are presented in my Complaint and are exponentially compounded by the lack of oversight and the reluctance of the Honolulu Authority for Rapid Transit (HART) and the City & County of Honolulu to implement recommended corrective measures.
  • 21. The $78.9 Million award by HART to Hawaiian Dredging Construction Company, Inc. (HDCC) on June 10, 2015 for the Farrington Highway Station Group - West Loch, Waipahu Transit Center and Leeward Community College rail transit stations. This procurement was protested by Nan, Inc. and discussed in my Complaint. HART made the award after receipt of the decision May 28, 2015 from Senior Hearing Officer David H. Karlen. Hearing Officer Karlen granted HART’s and HDCC’s Motion to Dismiss/Summary Judgment, denied Nan’s Motion as Moot, denied Nan’s claim and request for Administrative Hearing as lacking jurisdiction. The Hearing Officer’s decision included discussion of unbalanced bids. The Hearing Officer determined HDCC’s bid was not mathematical unbalanced and on that basis determined inquiry and a determination as to whether HDCC’s bid was materially unbalanced was not necessary or required. Please refer to http://cca.hawaii.gov/oah/files/2015/05/PDH- 2015-004-Nani-Inc.-v.-Hawaii-Authority-for-Rapid-Transportation.pdf The forgoing inquiry as to whether HDCC’s bid was unbalanced taken by the Hearing Officer is a misinterpretation of guidance provided by the US Department of Transportation and compromises the integrity of the procurement. Specifically, “In our review of bid information involving substantial differences between the low bid unit prices, we are required to consider first, whether there is an error in the estimated quantity and if there is no error, whether the bid is mathematically or materially unbalanced. A mathematically unbalanced bid is one containing a bid item(s) which do not reflect reasonable actual costs and a reasonable proportionate share of the bidder's profit and overhead. A materially unbalanced bid is one for which there is reasonable doubt that award to the bidder submitting the mathematically unbalanced bid will result in the lowest cost the Government. Identify any of these items considered to have the potential to significantly overrun or underrun. Indicate whether the unbalanced item is considered to be mathematically or materially unbalanced.
  • 22. [C]onsiderable judgment is required in reaching a decision on whether a bid is mathematically or materially unbalanced.” [Emphasis Supplied] “Bid Analysis and Unbalanced Bids” FWHA Memo http://www.fhwa.dot.gov/programadmin/contracts/880516.pdf http://www.fhwa.dot.gov/construction/cqit/award.cfm The independent review as to whether Hawaiian Dredging Construction Company’s bid is unbalanced, mathematical and/or materially, by the Office of the Inspector General and the Federal Transit Authority (FTA) is requested to restore transparency, responsibility and accountability to Honolulu Authority for Rapid Transit (HART), the City & County of Honolulu, their leadership and managers. Thank you very much. Respectfully, --- Signed --- Clifton M. Hasegawa
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  • 24. Caldwell Returns Budget Bills Unsigned in Protest of HART Oversight June 23, 2014· By Sophie Cocke Honolulu Civil Beat Honolulu Mayor Kirk Caldwell will allow the city’s 2015 fiscal year budget to take effect in July without his signature, a symbolic gesture meant to underscore his position that the City Council doesn’t have authority over the budget of the quasi-city agency overseeing the $5.2 billion Honolulu rail project. Caldwell returned six bills unsigned to the City Council on Monday, three of which relate to the budget for the Honolulu Authority for Rapid Transportation. Three others are the city’s legislative, operating and capital budgets. Caldwell said during a press conference earlier this month that he was leaning toward signing the city’s operating and capital budgets this year, which he rejected last year, while making clear that he would likely not sign the separate HART budget bills. “I believe under the charter amendment setting up HART, HART was designated the entity to build rail and it was to take the politics out of the system,” he said. Honolulu Mayor Kirk Caldwell speaking to the press on June 4, 2014
  • 25. However, he decided not to sign the city’s legislative, operating and capital budget bills as well because of clauses included in the measures related to HART, according to a press release issued by the mayor’s office on Monday. The clauses relate to the City Council’s authority over HART’s budget. The move by Caldwell signifies a long-standing disagreement between the mayor’s office and City Council over whether the council has authority over HART’s budget. Former Mayor Peter Carlisle also declined to sign bills related to the HART budget. Council Chair Ann Kobayashi said that the City Council has always gone over the HART budget since the agency was established. HART “always submits their budget, they come to our hearings, they don’t have a problem with it,” Kobayashi told Civil Beat. “They have been transparent with us when asked questions or when asked for more information, they give it to us.” She said it was odd [ ? ] for the mayor to take the position that the City Council doesn’t have authority over HART’s budget when HART is asking the City Council to float bonds as bridge financing for the rail project. “If they [sic]1 mayor thinks we don’t have any authority, does that mean that he thinks we shouldn’t issue city bonds?” she said. [Emphasis and Clarification Supplied] Source: Honolulu Civil Beat http://www.civilbeat.com/2014/06/caldwell- returns-budget-bills-unsigned-in-protest-of-hart-oversight/ 1 Sic /sik/ in square brackets is an editing term used with quotations or excerpts. It means “that’s really how it appears in the original.”

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