Council Chair recommends for rail contract rebid

Ernie Martin
Ernie Martin

By Tim Sakahara - bio | email

HONOLULU (HawaiiNewsNow) - There are growing concerns over the company picked to build Honolulu's rail cars.

The New York Times, Bloomberg and The Wall Street Journal are a few of the media outlets running stories about Finmeccanica Group's substantial financial losses.  Finmeccanica is the parent company to Ansaldo Honolulu which was chosen to build Honolulu's rail cars.

Finmeccanica reported it would sell nearly $1.4 billion in assets, which happens to be the same amount as Honolulu's rail contract.  The company's stock has also lost half of its value this year. It's also partially owned by the Italian government which is also restructuring in a financial crisis.

"These are uncertain times and they call for extraordinary measures," said Giuseppe Orsi, Finmeccanica CEO, in a statement.

Add it up and the Italians are giving some in Hawaii heartburn.

"I think with this additional news it may be prudent for them to take a step back and do a more thorough review," said Ernie Martin, Honolulu City Council Chair.

Chair Martin is one that thinks starting the billion plus dollar contract over again could end up saving money.

"I think they should perhaps postpone and do a little bit more due diligence I would ask that of them," said Martin.

Losing bidder Sumitomo Corporation has repeatedly warned the city about Italy and Ansaldo's financial problems.

"The question remains why would the city continue down this path when it makes no economic sense to do so. There is no technical advantage in doing so. And of course the past history and so called inability for this company to meet its deadlines," said Gino Antoniello, Sumitomo Corporation Vice President.   "Currently, and we stand by this, we believe the city will pay $700 million more in operations and maintenance costs for the project with Ansaldo than if they went with Sumitomo."

The city has offered Ansaldo the contract and is verifying the company's guarantee it will finish the job.  Ansaldo's spokesperson Carolyn Tanaka says the company's bid is solid. They have answered all the city's questions and will any further questions as well.

As to a rebid the council has no power over the procurement process.  You'll recall voters approved the semi-autonomous board that is the Honolulu Authority for Rapid Transportation.

Time will tell if Ansaldo gives HART heartburn as well.

"You would think common sense would prevail so we'll see," said Martin.

"We are aware of and will continue to monitor Ansaldo's financial situation. We are confident that the contract includes the right safeguards through performance and payment bonds. Those bonds will guarantee the core systems work will be completed," said Toru Hamayasu, HART Interim Executive Director and CEO.

The HART board is expected to address the issues at a board meeting this Thursday.

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