Is the fifth time the charm? That is the question that the board of directors of the Natural Energy Laboratory of Hawai`i Authority should be asking of NELHA administrator Ron Baird when it comes to efforts to repair seawater pipelines more than two years after they were apparently damaged in the October 15, 2006, earthquakes off the Kona coast of the Big Island.
A related question might be how much of the delay resulted from Baird’s apparent efforts to see the repair contract directed to a California company that didn’t even have a Hawai`i license until after it got the nod for the work the first time around.
It took nearly a full year – until October 10, 2007 – for Baird to put out the first request for proposals, soliciting bids from companies interested in repairing the 18-inch and 40-inch deep seawater pipelines that serve aquaculture businesses and seawater bottling companies on the 870 acres of state land managed by NELHA. Within five weeks of the RFP being published, however, it had to be cancelled by NELHA’s parent agency, the Department of Business, Economic Development, and Tourism, owing to an error in the general conditions attached to it.
December 21, 2007, a second RFP was issued, calling for much the same work as the first. In April 2008, a California company called Harbor Offshore was awarded the contract, with a bid of $245,732. Sea Engineering, a Hawai`i based company whose proposal was second-ranked, challenged the bid results. DBEDT denied the challenge. Sea Engineering then appealed to the state Office of Administrative Hearings, housed within the Department of Commerce and Consumer Affairs. Although the company’s specific complaints were not upheld by the hearing officer, other problems were identified in the bidding process, including the fact that at the time of the bid opening, Harbor Offshore did not have the required Hawai`i contractor license. As a result, in the hearing officer’s report, dated June 27, Baird was instructed to re-evaluate the bids “to determine whether the offerors were properly licensed at the time they submitted their proposals.”
But Baird did not do this. Instead, on July 24, he instructed DBEDT to cancel the RFP. Baird explained that he had found another defect in the bidding process that disqualified all bidders: under one of the conditions, they were supposed to have given DBEDT formal notice of their intention to bid within 10 days of the bid opening, he said. But, he added, “no one submitted a written notice of intention to bid. Accordingly, all bidders are disqualified.”
Instead of going through a third RFP process, Baird appears to have decided that time was of the essence and in early September sought to have the State Procurement Office exempt him from the need to comply with competitive bidding procedures. Baird sought approval to grant a no-bid contract – now worth $295,200, nearly $50,000 more than the original bid amount – to Harbor Offshore.
Chief Procurement Officer Aaron Fujioka wasn’t buying it: on September 16, he disapproved the exemption request. In explaining his decision, Fujioka recapped the problems associated with the second RFP, then said, “NELHA should have immediately re-issued the RFP. A procurement exemption would not be fair as it would eliminate open competition for all potential offerors.”
Three days later, on September 18, Baird made his fourth attempt to get approval for the pipeline repair work. This time, it took the form of an “emergency procurement request.” Again, Baird identified Harbor Offshore as the preferred contractor, noting that it “was the highest ranking offeror” under the earlier request for proposals and that it “is able to make an expedient repair.”
At the same time, according to an email exchange between the NELHA contracts officer and workers in DBEDT’s procurement office, Baird wanted to see work continued on a third RFP, in the event that the emergency request were denied. It was just as well: for whatever reason, the State Procurement Office has no record of receiving the emergency request, according to a worker there.
With his efforts to expedite the award of a contract to Harbor Offshore having failed, Baird decided to move forward with the third RFP, notice of which was posted on DBEDT’s website October 6. The deadline for submitting proposals was set for November 5.
A Long and Winding Road
Whatever the problems with the RFP process have been, Baird has not discussed them in any detail at the meetings of the NELHA board in the two years since the earthquake. On October 24, just nine days after the earthquake, Baird informed the NELHA board that, “other than a few tiles in Building D, ceiling tiles coming loose, the only sustained damage that we believe that we have may be down at the Keahole Point pump station.”
In fact, NELHA’s own daily logs showed a potential problem with the 18-inch deep seawater pipeline within a week of the earthquake. Before the quake, flows had averaged about 1600 gallons per minute, but by October 21, the average was closer to 1000 gpm. Initially, NELHA staff attributed the problem to a faulty flow meter and installed a new meter, but the diminished flows remained.
In December and January, however, a series of dives revealed a crack in the 18-inch pipeline near an elbow joint close to shore, where the pipeline enters the larger shoreline conduit. Following heavy winter swells, the crack opened wider, eventually resulting in a complete rupture. Jack’s Diving Locker was hired on an emergency basis to salvage a 40-foot length of the damaged pipe and bring it to shore for refurbishment. The 18-inch line has been out of commission ever since.
Then, in late January, one of the aquaculture tenants noticed that water temperatures were increasing. A dive in early February found a large crack in the 40-inch deep seawater pipeline, which had to be quickly patched.
Over the next year and a half, as the bidding process dragged on, the 18- and 40-inch pipelines continued to be buffeted. Late last August, the temporary patch on the 40-inch pipeline gave way, and once more, Jack’s Diving Locker was hired to make the repairs needed to bring it back in service.
The rupture in the 40-inch line seems to be what prompted Baird to ask for an exemption from procurement processes in early September. “Currently only the 40” [pipeline] is in working condition,” Baird told the State Procurement Office. “However, the recent failure of the temporary patch and the enlarged crack in the pipeline elbow is of grave concern… Because of the worsening situation of the 40” pipeline, it is no longer practicable or advantageous to re-issue a RFP.”
Apparently, Baird thought approval was a foregone conclusion. Even as he was awaiting a decision from Fujioka on the request, NELHA staff were in close contact with Jeff Terai, owner of Harbor Offshore (as well as a luxury house near the Mauna Kea Beach resort). The hold-down chains on the 40-inch pipe were in precarious condition near the break, NELHA’s Jan War wrote Terai in a September 11 email. “If we go with your idea” on how to make the repairs, War said, “then the chains should not be in play… I would be interested from your standpoint as to how this approach might change the cost of your proposal.”
Patrick Ross of Sea Engineering, who protested the award of the job to Harbor Offshore, was not happy when he learned of the exemption request. “Morally it’s not right. The whole thing just doesn’t make any sense,” he told Environment Hawai`i.
A spokesperson for Sea Engineering said the company would certainly be bidding on the job now that the new RFP was out. “You betcha!” she said.
Ongoing Problems
The earthquake repairs are only the first step in overhauling the 18-inch and 40-inch deep seawater pipelines at NELHA. Dives made by a submersible in 2008 disclosed serious problems with the anchors on both lines. In the estimation of Makai Ocean Engineering, which made the survey, the 18-inch line might have another five years of useful life, while the 40-inch pipe might last another decade. “On the other hand, with no repairs in place, the pipe could also catastrophically fail anytime after” an especially weak tether line fails. Both lines were installed in 1987.
The large 55-inch deep seawater pipeline, installed in 2001, was found to be in “excellent condition,” Makai Ocean Engineering wrote in its report. “The original design life … was 20 years. There is no reason to believe it will not easily surpass this 20 year life and reach 30 or more years of operational life.” The 55-inch, which delivers water to the more mauka tenants at NELHA (including the water bottlers), could serve as a back-up supply for the makai aquaculture operations in the event the 40-inch line fails.
Baird mentioned the problems to the NELHA board in a meeting last spring. “The 40-inch pipeline anchors are loose,” he said, adding that “the best estimate we have is that this is going to cost a few million dollars.”
The 2008 Legislature included money for the repairs in NELHA’s capital improvement project budget. Baird has said that the earthquake damage must be fixed before any contracts can be awarded for the deeper work on the pipeline anchors.
Environment Hawai`i attempted to reach Baird for comment, but he was out of town and unavailable by press time.
— Patricia Tummons
Volume 19, Number 5 November 2008
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