Recorded interview sheds light on dozens of costly change orders for rail project

HONOLULU, Hawaii (HawaiiNewsNow) - An audiotaped interview of a top city purchasing official is raising new questions about more than $100 million in change orders paid for by the embattled rail project ― and city taxpayers.

Last June, investigators with the state Legislative Auditors Office interviewed Wendy Imamura, administrator for city’s purchasing division, who helped draft the initial request for proposals for the rail project.

She taped the interview and a copy of the audiotape was obtained by Hawaii News Now under a request under the state Open Records Law.

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The interview shows that the investigators ― retired Circuit Judge Randal Lee and Daniel Hanagami, the chief investigator for the Attorney General’s office ― questioned several types of rail expenditures, including:

• More than $13 million in change orders for the rail authority’s casting yard at Campbell Industrial Park;
• $9 million in change orders for commercial insurance coverage;
• And $78 million in delay claims stemming from a lawsuit over the project’s archaeological inventory survey.

The lawsuit by cultural practitioner Paulette Kaleikini resulted in an 18-month delay in the project, whose price tag has ballooned over the years from $5 billion to $9 billion.

In the audio tapes, Lee and Hanagami indicated that based on the project’s request for proposals and the rail authority’s contract with Kiewit ― the construction company for the rail project’s West Oahu guideway segment ― the contractor should have paid for some of those and other cost increases.

“It says the casting yard site would be the responsibility of the design-builder," Lee said, in the audio recording. “And then, it says, the design-builder shall be responsible for insurance.”

[Read more: 'Gross incompetence or worse’: Rail purchase of reinforced steel questioned]

Imamura partly agrees: “Just reading what you highlighted, it would appear it would be the contractor is responsible for the precast yard,” she said.

In the recording, she added, “If the (Owner Controlled Insurance Program) was not in place, at the time the contract was executed, the contractor would have been responsible for insurance.”

The Honolulu Authority for Rapid Transportation said in a statement that it only reimbursed Kiewit for a portion of the casting yard costs because the original site for the yard was rejected by the Federal Transit Administration. It said the change orders were carefully and publicly vetted.

“HART takes very seriously its contracting and change order process and has been diligent and transparent," HART said. “The decisions made were clearly appropriate and HART stands by them."

But change orders like these are still a big concern for lawmakers.

“HART and the city administration have previously blamed either the moving of the utility lines, litigation or delay for the rise in cost. But in these situations it show it was none of those things,” said state Rep. Sylvia Luke, chair of the House Finance Committee.

“If somehow federal funds are implicated, this could lead to additional federal investigation.”

That separate federal investigation of the rail project ― whose investigators now include Hanagami ― has subpoenaed thousands of rail contracts, change orders and other documents.

But the investigation for the Legislative Auditor’s Office was never completed. A month after investigators interviewed Imamura, they were abruptly terminated.

On Thursday, HNN will look at why their probe was stopped.

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