What does a buck get you? A strange deal, ex-University of Hawaii regent says

THE SITE: University of Hawaii West Oahu Campus (UH photo)
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THE SITE: University of Hawaii West Oahu Campus (UH photo)

BY MALIA ZIMMERMAN – HONOLULU — One dollar.  That is the amount of compensation private contractor AC Kobayashi Inc. billed the University of Hawaii each month under a “Pre-Construction Services Agreement” to build the university’s new West Oahu campus.

That’s $1, plus as much as $60,000 for reimbursable expenses over 18 months ending Dec. 31, 2010.


The unconventional deal helped AC Kobayashi Inc. secure the coveted construction contract to build the entire $109-million West Oahu campus deemed by University of Hawaii President M.R.C. Greenwood as one of “the most important projects for higher education in the entire state of Hawaii.”

While $1 a month looks like a good deal for taxpayers, industry experts are skeptical because the campus construction has been subjected to 83 change orders that cost $19 million more than the project’s budget.

The university was forced to take out an $18 million loan to pay its bills and sell land to pay for cost overruns.

Ted Hong, a lawyer in private practice in Hilo and former university regent, said he’s never seen such a deal. He worked as the assistant corporation counsel forHawaii County for eight years, is familiar with university policy and procurement law.

“Having done procurement cases, I can tell you it is a violation of the procurement code to do something to try to get around the procurement code,” Hong said.
University of Hawaii Associate Vice President for Capital Improvements Brian K. Minaai, now on paid leave as the attorney general investigates allegations against him of favortism

The campus in Kapolei houses a library, classroom buildings, labs, a campus center, a roadway and parking lot, as well as earthwork and landscaping.

According to the university’s web site, the West Oahu campus houses a four-year institution with an enrollment of 1,662 undergraduate students. The entire University system statewide has an enrollment of more than 60,000 students.

Gene Awakuni, the university chancellor overseeing construction of the campus, retired last month amid criticism by some legislators and former regents who say the West Oahu construction project was poorly managed.

Greenwood in a statement thanked Awakuni and said she appreciated working with him.

Rockne Freitas, the vice president for student affairs and university and community relations for the University of Hawaii System, was reassigned as the chancellor for the West Oahu campus on May 1.

University of Hawaii Associate Vice President for Capital Improvements Brian K. Minaai, now on paid leave as the attorney general investigates allegations against him of favortism

Brian Minaai, who leads of the Office of Capital Improvements at the University of Hawaii, was one of five people who evaluated bids by AC Kobayashi and four other companies and helped select AC Kobayashi as the winning bidder.

The company has been awarded other lucrative contracts by Minaai during his tenure at the University of Hawaii, including  the $120 millionUniversity of Hawaii Cancer Center and the $28 million Hilo student dorm project. AC Kobayashi also completed the university’s Cloning Laboratory and the Center for Microbiological Oceanographic Research and Education.

THE LEADER: Rockne Freitas, new University of Hawaii West Oahu Campus chancellor

Minaai, employed as the associate vice president for capital improvements at the university since 2008, was put on administrative leave earlier this year after he was accused of awarding the university’s multimillion-dollar procurement contracts to the same group of contractors who are friends of his.

The attorney general, at the university’s request, is investigating the allegations of favoritism  after a prominent government contractor made the allegations of favoritism public at a Senate hearing.

While the university has been free to manage its building projects, the allegations and problems on several construction projects led the Legislature to revoke the university’s procurement autonomy during the 2013 legislative session, which ended in May.

Under new legislation pending the governor’s signature, the university’s procurement responsibilities will fall under the state Department of Accounting and General Services, the agency charged with overseeing the vast majority of the state’s procurement projects. Projects under way will remain under the university’s management.

Hong, who served as a regent from 2003 to 2004, has been critical of the Legislature’s probe before and during the 2013 session.  The Senate Special Committee on Accountability held three hearings in fall 2012 after the university disclosed it has lost $200,000 to scam artists posing as agents for singer Stevie Wonder.

The university’s athletic department wanted to hold a concert with Wonder to bail out the athletic department of its $11 million debt, but instead the money disappeared into the bank account of fake talent agency, EPIC Talent LLC of Miami, and Wonder’s real agents confirmed the university had been defrauded.

“As much as I disagree with a lot of the legislative intervention into the university’s autonomy this past session, these kinds of incidents really call into question whether the university can be autonomous or even semi autonomous,” Hong said.

According to a spokeswoman for the University, the West Oahu campus has been completed, however the contractor is finishing up “punchlist items” and the staff “is reviewing as-builts, closing permits, and more.”
Editor’s note: The reimbursable expense amount of $60,000 to AC Kobayashi was a total ceiling amount for the entire contract, not per month as originally stated in the article. 





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