Answers due for cost overruns in county contracts
By NANCY COOK LAUER
Several county department heads and purchasing agents have some ’splaining to do to the County Council next week.
The council’s Finance Committee agenda shows change orders were authorized for five contracts during the first two weeks of January alone, extending completion dates and increasing contract amounts to the tune of $829,322. Over the period of the contracts, change orders have increased one contract amount more than eight-fold, another more than five-fold and several contracts have added significantly to the original bid price.
Changes to original contracts have become more transparent to the County Council and the public because of a 2011 ordinance sponsored by former Council Chairman Dominic Yagong that requires regular reports to the council.
Yagong sponsored the bill after an audit of county contracting procedures showed the county paid 116 percent more for professional services in the 2006-07 fiscal year than those services were originally contracted to cost. Construction contracts that year ended up costing about 33 percent more than the original contracted amount. The industry standard for change orders increasing project costs is about 6 to 10 percent.
Dora Beck, acting director of the Department of Environmental Management, said she’s been asked to attend the council meeting to talk about two DEM projects on the list. She said Councilwoman Brenda Ford, who represents South Kona and Ka‘u, asked that she attend. Ford did not return a telephone message Thursday.
A purchase agreement with Business Services Hawaii for collection of recycling material from transfer stations and landfills was originally secured for $484,030 in 2007, but has been extended eight times, increasing the original contract by 972.5 percent to $4.7 million, according to information provided by the Finance Department. It has been most recently extended for an additional 180 days at $533,000.
Another DEM contract, also with Business Services Hawaii, stems from a 2007 contract for $390,460 for the landfill diversion incentive program. Seven change orders have ballooned that price 608.5 percent to $2.4 million, with the most recent change order adding $200,000 and 180 days to the contract.
Beck said the department has been swamped with work and had been unable to get all the bids out on time. There are currently 20 ongoing contracts in the department, and it has been trying to grapple with several large multiyear programs such as organics composting.
The department has also had unplanned projects come up, such as drafting and promoting rules for the plastic bag ban passed by the council that went into effect this year, she said.
“I chose to prioritize them,” Beck said. “My plan has always been to get off these extensions.”
A $241,000 contract the Finance Department inked with Accuity LLC in 2010 has increased 245.6 percent to $592,000 with the latest $5,000 change order to conduct an audit of the Kulaimano Elderly Housing Fund.
Rounding out the list is a 116 percent increase in a 2011 contract various agencies signed for $300,483 with Pacific Wireless Communications LLC, adding Makalei Fire Station to the list and bringing the total cost to $348,617 and a 114.8 percent increase in a 2011 contract the Office of Aging signed with Hawaii County Economic Opportunity Council for $167,427 for nutrition transportation, bringing the contract price to $192,132.
Alan Parker, Office of Aging executive, said HCEOC had been undercharging for the service, and increases in the cost of the program were further exacerbated when the state was late with payments. He said the office is currently putting together a new request for proposals.
“We’ve been paying a really low rate for years and years,” Parker said.
Nonprofits have been making up the difference with grants from other sources, but first the shrinking economy, and now cuts because of sequestration in Washington are putting the pinch on nonprofits, Parker said.
“We have to deal a lot with this with nonprofits. And we’re going to have to deal with it more as time goes on,” Parker said. “I think this is just the tip of the iceberg.”
The Finance Committee meets at 1 p.m. Tuesday in Hilo with videoconferencing from the West Hawaii Civic Center, the Hawaiian Ocean View Estates Community Center and the Waimea and Pahoa council offices.
Email Nancy Cook Lauer at email@example.com.
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