The city administration's comments about the Communications Pacific petition for a ruling on whether the city is misapplying procurement law demand a response.
As the CommPac petition states, CommPac seeks a ruling on the proper interpretation and application of the Hawaii Procurement Code. The specific question raised concerns the code provision that sets out the rules for awarding professional services contracts (HRS § 103D-304).
CommPac is asking for a ruling because the City interprets this provision to allow a back-room award of contract work to subcontractors who were never evaluated by a selection committee and never participated in the competition for the contract work.
The city says the state Procurement Policy Board is precluded from considering CommPac’s petition because it has no authority to rule on "disputes." As it does with other Procurement Code provisions, the city is simply misstating the law.
The relevant provision of the Hawaii Procurement Code states:
. . . [T]he policy board shall have the authority and responsibility to adopt rules . . . governing . . . the procurement . . . of any and all goods, services, and construction. . . The policy board shall consider and decide matters of policy within the scope of this chapter including those referred to it by a chief procurement officer. The policy board shall have the power to audit and monitor the implementation of its rules and the requirements of this chapter, but shall not exercise authority over the award or administration of any particular contract, or over any dispute, claim, or litigation pertaining thereto.
HRS § 103D-202, Authority and duties of the policy board; emphasis added.
The city characterized CommPac’s petition as a "dispute" in its latest news release. By calling the petition a "dispute," the city hopes to convince someone that the Board’s statutory authority prevents a Board ruling on the CommPac petition. However, the city either does not know what a "dispute" is or is purposely trying to deceive the public.
A "dispute" in public contract law is a controversy between the government and a contractor arising from a specific contract between the parties. The mandatory "Disputes" clause to be inserted in all Hawaii government contracts is published at Hawaii Administrative Rules (HAR) § 3-126-31. Anyone interested in reading what a contract "dispute" really is (and what procedures apply to "disputes") can access HAR § 3-126-31 at the following State Procurement Office Web site:
http://www.hawaii.gov/spo/SPO/Code/AdminRules/SPO/Code/AdminRules/126s.pdf
As the city knows, CommPac does not have a contract with the city that can give rise to a contract "dispute." The city is also well aware that CommPac has not asserted a "claim" against the city arising from any contract. Nor has CommPac initiated any litigation related to any contract. Consequently, CommPac’s petition raises none of the limitations on the Policy Board’s authority (i.e. "dispute, claim, or litigation" pertaining to a specific contract).
Instead, CommPac’s petition specifically asks the Board to exercise its duty and authority to "consider and decide matters of policy within the scope of [the Hawaii Procurement Code]" as provided in HRS § 103D-202. CommPac’s questions about the interpretation of the statute’s section governing award of professional services contracts clearly fall within the Board’s authority.
As a further note, Hawaii state law specifically permits interested persons to ask for declaratory rulings from any state agency concerning laws and rules the agency administers. HRS § 91-8. Because the Policy Board is an attached agency of the Department of Accounting and General Services, the administrative rule that allows CommPac’s petition is HAR § 3-1-6.
Consequently, the city’s comments about the Board’s authority to address the questions raised in CommPac’s petition are deceptively off-the-mark.
Finally, the city expresses its view that Board action on CommPac’s petition will open the gates to "petty" complaints from subcontractors. We at CommPac doubt that there is any risk of the Board accepting "petty" complaints from anyone.
The real question presented is whether CommPac’s request for a ruling is "petty." CommPac does not consider non-competitive, back-room awards of government work and money to be "petty." The closed-door, secretive handling of the Ewa Villages contracts led to disaster for the City. The loss of taxpayers’ dollars from the mishandling of contracts in that case was certainly not "petty." The city’s misapplication of procurement laws is further shown by the city’s recent award of a beach boy concession contract to a "nonresponsible" company controlled by persons who pled guilty to felony charges involving the handling of funds.
CommPac’s petition is intended to ensure the Hawaii Procurement Code rules are followed and corruption from sloppy procurement practices is prevented. If the city thinks these issues are "petty," we can only say that we think the city is wrong.
So far, the city has not been able to provide any legal justification for its practice of pushing contract work to subcontractors it likes over those the Prime contractors nominated. If it has a legal basis for what it is doing, the city should provide it to the Board, the public, and the federal government for those contracts involving federal funding.
To date, the city’s pronouncements have been "smoke and mirror" complaints about CommPac’s petition and claims that CommPac’s questioning of the city’s procurement practices is just to "make the city look bad." If the city is worried about looking bad, it should stop complaining. The city should give all of us a good, solid legal explanation for city officials pushing contract work to favored subcontractors without competition. If the city does not have a legal basis for what it is doing, the city should stop the practice and start following the law.
To see the supplement to the petition in an Adobe Acrobat pdf version, click here: Supplement to Petition
Kitty Lagareta is the Chairman and Chief Executive Officer of Communications Pacific.
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