Cost overruns go before finance committee
By NANCY COOK LAUER
A parade of county department heads made its way through council chambers Tuesday, as the County Council Finance Committee heard explanations for hundreds of thousands of dollars in contract changes.
Council members seemed satisfied with the specific explanations and unanimously filed the various reports with little comment.
Change orders and supplemental contracts were authorized for five pacts during the first two weeks of January alone, extending completion dates and increasing costs to the tune of $829,322. From Dec. 16 to Dec. 31, five change orders totaled $535,296.
Over the period of the arrangements, change orders have increased one contract amount more than eight-fold, another more than five-fold and several have added significantly to the original bid price.
Finance Director Nancy Crawford noted some of the supplemental agreements are simply extensions of contracts that had options for renewals.
“If we’re satisfied with the service, it doesn’t make sense to change it year after year,” Crawford said.
That was the case with several Department of Environmental Management contracts.
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. 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.
Sometimes change orders are required because of hidden damage, as in the case of a $305,834 addition to a $1.1 contract to renovate the Waiakea Recreation Center in Hilo. There, termites had riddled the beams holding up the roof.
“As our guys were up on the roof, we began to see beams start to bend and fold,” said Parks and Recreation Director Clayton Honma.
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.
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.
Email Nancy Cook Lauer at firstname.lastname@example.org.
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