This is the August 31, 2011 letter sent to the The Honolulu Authority for Rapid Transportation Board of Directors re: Bombardier’s disqualification to fulfill a $1.4 billion contract for rail cars on the city’s proposed $5.3 billion rail line. The letter is from Andrew S. Robbins, P.E., Vice President, Business Development Bombardier Transportation:

I am taking what some may view as an unusual step by communicating directly with you despite an active appeal with the Circuit Court and a Protest to the Federal Transit Administration. Given the importance of your mission as Board members on a project that will change the face of Honolulu for 100 years or more, it is imperative that you be presented with facts and information that I believe have not been made available to you to-date.

Bombardier also believes strongly in the Honolulu High-Capacity Transit Corridor rail project and has no objective to block it in any way. Our actions should prove this having been an Offeror in 1991, having kept an active interest ever since, having fully re-engaged with the City more than 6 years ago, having encouraged City officials to become educated and understand global best practices and having offered cost-saving and passenger enhancements to City staff and consultants as they made their way through a long, complicated and arduous procurement process.

Bombardier qualified for the Priority Offeror List and was invited to submit a proposal for this project. We responded to the RFP and 47 addenda and cooperated through numerous changes in plan and due dates. We submitted not one, but three proposals having committed experienced staff time, resources, subcontractor and supplier resources to this multi-million dollar effort to offer the City and its taxpayers the best possible proposal for the heart of the system – the Core Systems, as well as for long-term and ongoing Operations & Maintenance. I believe City and HART staff would acknowledge that our efforts were serious, meaningful and valuable.

DISQUALIFICATION OF BOMBARDIER’S PROPOSAL

We are aware that some would characterize our actions of appealing our disqualification as “sour grapes” or the actions of “sore losers.” In fact, we did not “lose” this award. Our proposal was disqualified and not even considered. When we examined the public file documents shortly after Mayor Carlisle made the award announcement on March 21, 2011, we were shocked to discover that the disqualification of our proposal swept away what would have been the winning bid. Although the City did not finish the scoring of our proposal, according to the City’s own evaluation of pricing in its life cycle cost analysis, and the scoring it did do on the technical & management aspects of the proposal, Bombardier had the lowest total price and highest score. It took the media to expose this truth despite a misleading City press release and improper redacting of documents. A summary of the pricing and the scoring is attached for your convenience. Also attached is the City’s own “Life Cycle Cost”, or more appropriately, “Net Present Value” analysis of all three bids, which clearly shows that Bombardier offered the lowest total price proposal and best value by a significant margin.

What is even more shocking is the City’s handling of our disqualification. Bombardier included one sentence in all three of its proposals attempting to clarify a poorly drafted provision in the RFP. The provision involved the City adding language to create an overall cap on liability but then leaving in language that circumvented the cap rendering it meaningless. While the City pointed out other areas of our proposal that could be strengthened over this time period, the City never specifically indicated to Bombardier through all this time that the objectionable sentence would be viewed as creating a conditional proposal and would be used, just days prior to awarding the Contract, as a reason to completely disqualify Bombardier and in the process, to sweep aside the lowest total price and highest scoring technical and management proposal.

APPEALS WITH THE CITY AND DCCA

Bombardier protested this improper disqualification to the Chief Procurement Officer of the City. We subsequently received a denial of our Protest, in reality by the same team that disqualified our proposal in the first place, leaving us no choice but to appeal to the State Department of Commerce and Consumer Affairs (DCCA).

Unfortunately, at DCCA, the Hearings Officer granted the City its summary motion to dismiss and we never were afforded the opportunity for a fair hearing where we could present evidence and testimony of the actions of the City that would have shown that the City acted improperly and contrary to the Hawaii Procurement code. In addition, the Hearings Officer relied on a clever twisting of the facts by the City’s outside counsel when he conceived a theory that Bombardier “conditioned” its proposal to gain a price advantage on its competition. There was zero actual evidence presented to the Hearings Officer to justify such a theory. In fact, Bombardier‘s price would not have changed one bit at that time or now. The proof that Bombardier did not play this game is sitting in an Escrow bid file that is still in escrow today at a local Title company and can be accessed to prove that the Hearings Officer got this wrong.

APPEAL TO FTA AND CIRCUIT COURT

It is for these reasons that we were compelled to file further appeals with the FTA and in Circuit Court. Bombardier has an obligation to its shareholders, its suppliers and subcontractors and especially to its employees to see this through. The utmost concern for HART Board members is the interests of the taxpayers. It defies logic that the City would, at the 11th hour, simply sweep aside the lowest price and highest scored proposal based on one sentence of many tens of thousands, that it felt was objectionable.

In fact, the Hawaii Procurement code was written with this logic in mind. The code is not intended for the City to cry “gotcha.” It is written to create a situation where the City becomes an agent to seek the best value on behalf of the taxpayers. In fact in HAR 3-122-97, it states:

A proposal shall be rejected for reasons including but not limited to:

(B) The proposal, after any opportunity has passed for modification or clarification, fails to meet the announced requirements of the agency in some material respect…(emphasis added.)

If the City truly believed that Bombardier’s sentence created a conditional proposal, and despite whether the City believes it warned Bombardier or not about submitting such a proposal, the Procurement Code clearly establishes a road to seeking the best value for taxpayers. As had been done on other bids in numerous jurisdictions including those involving Federal Government funds, all the City had to do was to provide an opportunity for Bombardier to address this issue and even withdraw the sentence.

Yet, instead, the City has pursued a course of action of defending its position and award, which has led to a wide range of taxpayers questioning the wisdom of its actions and created a lack of

trust in the City’s stewardship of this large and complex Project. The City’s defense of appeals from both Bombardier and Sumitomo has a common theme, namely:

1)    All protests are untimely, as they should have been made prior to submission of Offers.

2)    While the RFP may be poorly drafted and constructed in several instances, it stands.

While these have so far proven to be successful defenses for the City, with all due respect, I must suggest that the HART Board of Directors have a more compelling interest and that is to get this procurement right for the future of Honolulu and to ensure that the best value has truly been obtained for the City.

THERE IS TIME TO GET THE CORE SYSTEMS RIGHT

Fortunately, there is time for the HART Board of Directors to take charge and get this right. The HART Interim Executive Director made a presentation to you at a recent Board meeting indicating that the bulk of the anticipated $1.55B federal funding, via the Federal Full Funding Grant Agreement (FFGA), is now not expected until October 2012. Additionally, the City Council has stated its preference not to release significant funding from the excise tax account or permit the floating of City bonds to advance funds to the project until the FFGA is secured. For these reasons, significant construction cannot begin at this time and a reasonable delay in executing the Core Systems contract will neither affect the Project schedule nor delay jobs, and especially construction jobs, from being created.

Bombardier continues to believe that the best and most efficient course of action is to reverse the improper disqualification of Bombardier’s proposal and permit the evaluation of all three Offerors to pick up where it left off, including full consideration of Bombardier’s proposal. We believe the results will be compelling and will provide confidence to taxpayers that HART truly has acted fully to ensure that the best value was obtained. Such a course of action can be accomplished very swiftly as most of the work has already been completed.

Should the course of action above not be possible, there is another avenue that is viable. HART can call for new bids from all three Offerors, which can be accomplished, in a reasonable period of time, likely not to exceed two months. Such an action has been taken in other jurisdictions when a situation arises that potentially taints the procurement process.

We are aware that Sumitomo has suggested to you that, should the AnsaldoHonolulu proposal ultimately be rejected, Sumitomo ought to be awarded the contract. You should be aware, however that this would create a situation where HART selects the most expensive proposal of the three submitted to the City, as the City’s NPV analysis attached to this letter clearly shows. With Bombardier’s proposal reinserted into the evaluation, awarding to Sumitomo would also mean that the City would have selected the lowest scoring and highest priced proposal of the three Priority Listed offerors.

OTHER FEATURES OF THE BOMBARDIER PROPOSAL

The Bombardier proposal also contained many important elements that were passed over in the course of this controversy and to which, as HART Board members, you have not been informed of. For example, Bombardier was the only Offeror to include local assembly in Honolulu of a majority of the fleet of rail cars, thereby not only creating local jobs, but also careers for people who would then migrate into the operations & maintenance of the system. Bombardier was again the only Offeror to propose 3-car trains thereby providing a higher level of comfort with 50% more seating per train than any other Offeror. Bombardier created training and internship arrangements with both the University of Hawaii-Manoa and Leeward Community College. In fact we already employ UH graduates on the mainland and have sponsored seven summer interns to-date.

Bombardier also included both noise & vibration and corrosion control experts on our team to address very significant concerns in Honolulu and, perhaps most importantly, we included the Vancouver SkyTrain Operating Company on our team to ensure that Honolulu’s system would be operated correctly right from start. No other proposal included these important features.

Unfortunately, all of these elements were simply passed over due to the City’s actions in disqualifying Bombardier’s proposal without specific discussions as required under the Hawaii Procurement code and because Bombardier took that action of pointing out an ambiguity in the RFP as, in fact, was its obligation to do under the RFP requirements.

I highly suggest that you review all three proposals available to you so that you can decide for yourself about the quality of all three proposals.

CONCLUSION

In summary, Bombardier wishes to make the following points to the HART Board of Directors:

  • Bombardier hereby extends the validity of its proposal through October 31, 2011. Bombardier will not change the price in this proposal.
  • Bombardier is a financially strong, serious, and highly respected global leader in the supply of rail transit and aerospace products and solutions, and at no time did Bombardier “play games” to gain an unfair advantage in Honolulu.
  • Bombardier hereby waives the “condition” in its proposal relating to liability exclusions that the City believes is contained therein and Bombardier confirms that it meets all of the requirements of the RFP. The Hawaii Procurement code clearly permits the withdrawal of any such “conditions” prior to the City being compelled to disqualify a proposal.
  • Bombardier delivered the lowest total price to the City in its BAFO #2 proposal and received the highest technical and management scores of all three proposals from the City evaluators.
  • The HART Board of Directors has a compelling interest in not just defending past City actions but in being stewards in seeking the best value and most compelling solution for taxpayers and the future of Honolulu.
  • With a delay in Federal funding until October 2012, there is time to get the critical Core Systems Contract right. This should be of utmost interest and concern.
  • The City will be engaging a Core Systems Contractor for at least an 18-year period and therefore it is critical that a financially strong and capable Offeror be chosen who has delivered the most compelling and cost-effective proposal.

We truly hope that this letter helps Board members understand the reasons why Bombardier’s proposal should be fully considered. The Honolulu Rail project is too important to the future of the City not to be done right. The HART Board of Directors has the chance now to make this right, restore public trust in the process and act in the interests of the taxpayers. We look forward to a solution that will benefit all of the citizens of Hawaii and that will ensure a successful and affordable project for generations to come.

Sincerely,

 

Andrew S. Robbins, P.E. (Hawaii License # PE-8125)

Vice President, Business Development

Bombardier Transportation

(Hawaii Contractor’s License # CT-30643)

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