Clifton M. Hasegawa

President and CEO Clifton M. Hasegawa & Associates, LLC

Chairman, President and CEO Kaimanu Maritime Corporation

1044 Kilani Avenue 12 Wahiawa, Hawaii 96786-2243

Telephone: (808) 498-8408

Email: clifhasegawa@gmail.com

Via United States Postal Service – Express Mail

June 19, 2015

The Honorable Barack Obama President of the United States of America

The White House 1600 Pennsylvania Avenue NW Washington, DC 20500

Re: Senator Daniel K. Inouye - The Rail Transit Department of Transportation Inspector General Complaint Audit and Investigation of the Honolulu Authority for Rapid Transit (HART) Transit from Kapolei to Ala Moana Center and The University of Hawaii

Dear President Obama:

Your intervention to complete Senator Dan Inouye's Rail Transit is requested.

Senator Inouye began the Rail Transit project with Mayor Mufi Hanneman and shepherded the project with Mayor Peter Carlisle and Mayor Kirk Caldwell.

Senator Inouye's leadership, wisdom, guidance and direction provided the cohesiveness to keep the transit organization and project focused and moving forward.

The Rail Transit is the largest construction project in the State of Hawaii.

Department of Transportation Inspector General Calvin L. Scovel III is in receipt of my Hot Line Complaint regarding the operation of the Rail Transit Program. My objective is to have a complete audit and thorough investigation of Honolulu Authority for Rapid Transit, to implement best management and financial procedures, and to establish oversight program to complete the Rail Transit.

Senator Inouye stated on more than one occasion that the disbursement of $1.5 billion from the Federal Transit Authority (FTA) was the last. Senator Inouye languished over the delays in the project, the unaccounted and lavish expenditure of tax dollars, gaps in the procurement practices and procedures, and the consistent and constant requests from Honolulu Authority for Rapid Transit for additional funding. Shuttering access to Federal funding was Senator Inouye's message to Honolulu Authority for Rapid Transit, “No grant and aide from Washington until and unless financial transparency, accountability and responsibility are restored and established, the Honolulu Authority for Rapid Transit budget is streamlined, all known and reasonably foreseeable cost contingencies are accounted and included in the budget, all financial information is accurate and current, and all revenue, expenses and expenditures are auditable without self-guided restrictions.”

Immediate action by Inspector General Scovel and his investigative and audit teams is imperative. The situation is Code Red. The Rail Transit is in crisis and immediate jeopardy.

Upon completion of action by the Department of Transportation Inspector General and the Federal Transit Authority, I respectfully recommend a collaborative and mutual financial plan between Department of Transportation, Federal Transit Authority and the Honolulu Authority for Rapid Transit be developed and implemented for a cost sharing to complete the Rail Transit.

The current end point for the Rail Transit from Kapolei is Ala Moana Center. The University of Hawaii was the intended destination.

Respectfully, I recommend the Department of Transportation, Federal Transit Authority and the Honolulu Authority for Rapid Transit develop, establish and implement operational plans and procedures to complete the Rail Transit to the University of Hawaii.

Thank you very much

Aloha

Respectfully,

--- Signed---

Clifton M. Hasegawa

Copies provided to:

Governor David Ige

State of Hawaii

Lieutenant Governor Shan Tsutsui State of Hawaii

Members of the Hawaii State Senate

Members of the Hawaii State House of Representatives

Mayor Kirk Caldwell City & County of Honolulu

Members of the Honolulu City Council

Congresswoman Colleen Hanabusa

Honolulu Authority for Rapid Transit

Daniel Grabauskas

Executive Director & CEO

Honolulu Authority for Rapid Transit

Scott Ishikawa

Media Relations – Construction Honolulu Authority for Rapid Transit

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Clifton M. Hasegawa

President and CEO

Clifton M. Hasegawa & Associates, LLC

1044 Kilani Avenue 12, Wahiawa, Hawaii 96786-2243

Direct: 808.498.8408 ♦ Email: clifhasegawa@gmail.com

LinkedIn: https://www.linkedin.com/in/cliftonhasegawa

June 6, 2015 VIA EMAIL - hotline@oig.dot.gov The Honorable Calvin L. Scovel III Inspector General U.S. Department of Transportation 1200 New Jersey Ave. S.E. - 7th Floor Washington, DC 20590 RE: Request for Investigation Dear Mr. Scovel: This Complaint and request that the Office of the Inspector General (OIG) initiate an investigation into the Honolulu Authority for Rapid Transportation (HART) on the bases of fraud, waste and abuse in the expenditure of Federal funds violations of contracting and government procurement laws, and violations of laws and regulations on Standards of Conduct. This matter has been brought to the attention of government officials at the United States Department of Transportation; the Federal Highway Administration (FHWA); the Federal Transit Authority (FTA); David Y. Ige, Governor, State of Hawaii; Shan S. Tsutsui, Lieutenant Governor, State of Hawaii; the Hawaii State Legislature; the State of Hawaii Department of Transportation; Kirk Caldwell, Mayor City & County of Honolulu; the Council Members, City & County of Honolulu; Daniel Grabauskas, Executive Director & CEO, Honolulu Authority for Rapid Transportation and the Board of Directors, Honolulu Authority for Rapid Transportation. Financial mismanagement; instances of fraud, waste and abuse; violations of contracting and procurement laws, and standards of conduct laws and regulations continue.

Please refer to the attached Exhibit Request for Government Records – Ethics Violations to the City & County of Honolulu, Honolulu Authority of Rapid Transit (HART) June 4, 2015 and the following Slide Share presentations: 1. Request for Government Records – Ethics Violations – City & County of Honolulu, Honolulu Authority of Rapid Transit (HART) June 4, 2015. 2. http://www.slideshare.net/cliftonmhasegawa/the-rail-quality-assurance-safety-primary-and-priority 3. http://www.slideshare.net/cliftonmhasegawa/honolulu-authoirty-for-rapid-transit-unsafe-at-any-speed-part-ii 4. http://www.slideshare.net/cliftonmhasegawa/hart-hawaii-state-legislature-city-and-county-of-honolulu-hawaii-public-utilities-commission-may-5-2015 5. http://www.slideshare.net/cliftonmhasegawa/yesterday-47881430 6. http://www.slideshare.net/cliftonmhasegawa/honolulu-authoirty-for-rapid-transit-hart-a-template-for-doom-and-destruction The Federal dollars committed and to be released are significant. PROJECT REVENUE STATUS (As of May 1, 2015)

Projections to Date Collected/ Committed to Date % of projections

REVENUE SOURCE: (in millions) (in millions)

Project Beginning Cash Balance (December 2009) $ 298 $ 298 100% General Excise Tax (GET) Surcharge

$ 3,291 $ 1,091 33%

Federal New Starts Funds

$ 1,550 $ 806 52%

Other Federal Transportation Funds

$ 214 $ 4 2%

Source: Honolulu Authority for Rapid Transit (HART) Date Accessed June 6, 2015 http://www.honolulutransit.org/media/344687/201506-rail-update-hart-facts.pdf

Prevention and detection of fraud, waste, abuse of Federal funds are priority programs of the United States Department of Transportation. Prevention and Detection of Fraud in Transportation Programs

The prevention and detection of fraud is an objective we share throughout

all levels of government. In 1960, the predecessor of this subcommittee,

led by Congressman Blatnik, investigated the Federal-aid Program and

found it was fraught with waste, fraud, and corruption. They concluded

that essential controls were lacking at both the state and Federal levels.

Controls to prevent the types of problems that were occurring then were

put in place; our work does not suggest abuse on a scale such as was

experienced in the 1950s and 1960s. However, in the past 3 years, we have

seen increases in our fraud case work and judicial actions involving

highways and transit, including several of the biggest cases in the history

of the highway program.

At present, we have 113 pending investigations of contract and grant

fraud involving highway and transit projects in 37 states.

The types of fraud we are commonly seeing today include activities like

bid rigging, bribery and kickbacks, false claims, and product substitution.

The states are the first line of defense in preventing such fraud, and we

have been working closely with a number of state Inspectors General and

state auditors on our fraud investigations.

Source: Statement of Kenneth M. Mead, Inspector General, U.S.

Department of Transportation. Before the Subcommittee on Highways

and Transit House Committee on Transportation and Infrastructure

United States House of Representatives. May 1, 2002.

https://www.oig.dot.gov/sites/default/files/cc2002155.pdf

Audit Announcement — Audit of FTA’s Oversight of At-Risk Grantees

Federal Transit Administration. From: Thomas E. Yatsco, Assistant

Inspector General for Surface Transportation. To: Federal Transit

Administrator. August 12, 2014

The Federal Transit Administration (FTA) administers multiple grant

programs to more than 1,200 State and local grantees, providing more

than $10.6 billion of Federal assistance in 2014 to help plan, build, and

operate transit systems nationwide.

In the past 4 years, FTA’s financial management reviews of transit

agencies’ internal controls have identified 36 at-risk grantees with

significant deficiencies such as unallowable costs, inadequate competition

for major procurements, and an inability to reconcile actual costs with

allowable budget categories. The deficiencies required FTA to place

additional oversight controls on the disbursement of Federal funding to

these transit agencies, including restricting agencies’ ability to draw down

Federal funds and requiring them to take corrective actions before

restrictions are lifted.

We are initiating an audit of FTA’s oversight of at-risk transit agencies.

The objective of this audit is to assess whether FTA has effective oversight

procedures to ensure that at-risk transit agencies take corrective actions to

address internal control weaknesses identified in financial management

reviews.

Source: U.S. Department of Memorandum. Transportation Office of the

Secretary of Transportation Office of Inspector General.

https://www.oig.dot.gov/sites/default/files/FTA%20At%20Risk%20Gran

tees%20Announcement%20Letter%5EAugust%2012%2C%202014.pdf

The Honolulu Authority for Rapid Transportation (HART) has not

heretofore been identified as an at-risk transit program. HART is an at-risk

transit program. The Exhibit and Slide Share presentations provide clear and

convincing clear demonstrative factual evidence. of the as it should be. The

extent to which HART is an at-risk transit program has been minimized and

shrouded by less than fully transparent audits and reports. Primary is

expressed by the City Auditor, City & County of Honolulu, “HART has met

minimum requirements as required by the FTA and its various contracts. But

HART needs to go beyond meeting minimum requirements. Honolulu’s

taxpayers need assurance that their tax dollars are used prudently and

efficiently.”

Less than charitable but more direct and insightful are the words of

HART’s Independent Auditor, “[T]he financial statements present only the

Honolulu Authority for Rapid Transportation and do not purport to, and do not,

present fairly the financial position of the City and County of Honolulu as of

June 30, 2014 … we performed tests of its compliance with certain provisions of

laws, regulations, contracts, and grant agreements, noncompliance with which

could have a direct and material effect on the determination of financial

statement amounts. However, providing an opinion on compliance with those

provisions was not an objective of our audit, and accordingly, we do not express

such an opinion.”

Denial of the truth by government officials and plain and unequivocal

representation of the facts by Auditors have perpetuated fraud, waste and abuse

of federal and state funds.

Deficiencies in internal controls, financial oversight and full and

complete compliance with all applicable laws and regulations are revealed in

the audit reports of the Honolulu Authority for Rapid Transportation by the City

Auditor for the City & County of Honolulu and the audit report by

Independent Auditor for the Honolulu Authority for Rapid Transportation.

Specifically,

Audit of the Honolulu Authority for Rapid Transportation (HART).

The City Auditor, City & County of Honolulu

This audit was performed in response to City Council Resolution 12-149,

which requested an audit of the Honolulu Authority for Rapid

Transportation (HART) contracts and spending for public relations and

public involvement services. The resolution requested that the audit

determine what specific public involvement service(s) each employee,

consultant and subconsultant provided, and an opinion on whether the

service(s) and the amount paid (individually and collectively) were

objective, required by federal law, and justified. This audit was included

in the Office of the City Auditor’s Work Plan for FY 2012-13. The audit

was performed in accordance with generally accepted government

auditing standards between August 2012 and November 2012, and again

between April 2013 and November 2013.

HART needs to ensure that invoices are properly monitored and

approved; invoices have adequate support and documentation as

recommended in a prior audit; verify work performed by consultants and

sub-consultants; and develop a basis to evaluate consultant performance

and work products for efficiency and accountability.

Proper internal controls allow an entity to have reasonable assurance that

program objectives related to economy, effectiveness and efficiency of

operations, reliability of financial reporting, and compliance with

applicable laws and regulations are achieved. We found that HART’s

contract management system does not contain accurate data and is not an

effective oversight tool.

According to our review, the CMS system does not appear to be an

effective tool for managing HART’s contracts and associated costs. We

question HART’s ability to properly monitor its contracts and associated

costs if their main management system has incomplete data.

HART has met minimum requirements as required by the FTA and its

various contracts. But HART needs to go beyond meeting minimum

requirements. Honolulu’s taxpayers need assurance that their tax dollars

are used prudently and efficiently. Our audit report recommendations

will continue HART’s best efforts to be more efficient and accountable as

the project moves forward.

HART disagreed with our audit findings and recommendations. Based on

our audit work and supporting work papers we stand by our audit

results, audit conclusions, and audit recommendations. We believe HART

should be less reliant on consultants as the project progresses and should

be able to produce documents and data requested without the

intervention of the consultants.

[Emphasis Supplied]

Source: The City Auditor, City & County of Honolulu, State of Hawaii.

Report No. 13-03 http://www.honolulu.gov/rep/site/oca/oca_docs/audit_of_HART_public_involvement_programs_final_repor

t.pdf

Independent Auditor’s Report

To the Board of Directors

Honolulu Authority for Rapid Transportation

City and County of Honolulu

Report on the Financial Statements

We have audited the accompanying financial statements of the Honolulu

Authority for Rapid Transportation (HART), a component unit of the City

and County of Honolulu, as of and for the year ended June 30, 2014, and

the related notes to the financial statements, which collectively comprise

HART’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of

these financial statements in accordance with accounting principles

generally accepted in the United States of America; this includes the

design, implementation, and maintenance of internal control relevant to

the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements

based on our audit. We conducted our audit in accordance with auditing

standards generally accepted in the United States of America and the

standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the United

States.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and disclosures in the financial statements. The procedures

selected depend on the auditor’s judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due

to fraud or error. In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control. Accordingly,

we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in

all material respects, the financial position of the Honolulu Authority for

Rapid Transportation, as of June 30, 2014, and the changes in its financial

position and its cash flows for the year then ended in accordance with

accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 1, the financial statements present only the

Honolulu Authority for Rapid Transportation and do not purport to,

and do not, present fairly the financial position of the City and County

of Honolulu as of June 30, 2014, and the changes in its financial position

or, where applicable, its cash flows for the year then ended in accordance

with accounting principles generally accepted in the United States of

America. Our opinion is not modified with respect to this matter.

Other Matters

2013 Financial Statements

The financial statements of HART, as of and for the year ended June 30,

2013, were audited by other auditors whose report dated on November 15,

2013 expressed an unmodified opinion on those statements.

Required Supplementary Information

Accounting principles generally accepted in the United States of America

require that the management’s discussion and analysis and the schedule

of funding progress for the Hawaii Employer-Union Health Benefits Trust

Fund on pages 7 through 12 and page 34, respectively, be presented to

supplement the basic financial statements. Such information, although not

a part of the basic financial statements, is required by the Governmental

Accounting Standards Board who considers it to be an essential part of

financial reporting for placing the basic financial statements in an

appropriate operational, economic, or historical context.

We have applied certain limited procedures to the required

supplementary information in accordance with auditing standards

generally accepted in the United States of America, which consisted of

inquiries of management about the methods of preparing the information

and comparing the information for consistency with management’s

responses to our inquiries, the basic financial statements, and other

knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the

information because the limited procedures do not provide us with

sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued

our report dated December 18, 2014 on our consideration of the HART’s

internal control over financial reporting and on our tests of its compliance

with certain provisions of laws, regulations, contracts, and grant

agreements and other matters.

The purpose of that report is to describe the scope of our testing of

internal control over financial reporting and compliance and the results of

that testing, and not to provide an opinion on internal control over

financial reporting or on compliance. That report is an integral part of an

audit performed in accordance with Government Auditing Standards in

considering HART’s internal control over financial reporting and

compliance.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we

considered HART's internal control over financial reporting (internal

control) to determine the audit procedures that are appropriate in the

circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the

effectiveness of HART’s internal control. Accordingly, we do not express

an opinion on the effectiveness of HART’s internal control.

A deficiency in internal control exists when the design or operation of a

control does not allow management or employees, in the normal course of

performing their assigned functions, to prevent, or detect and correct,

misstatements on a timely basis.

A material weakness is a deficiency, or a combination of deficiencies, in

internal control, such that there is a reasonable possibility that a material

misstatement of the entity’s financial statements will not be prevented, or

detected and corrected on a timely basis. A significant deficiency is a

deficiency, or a combination of deficiencies, in internal control that is less

severe than a material weakness, yet important enough to merit attention

by those charged with governance.

Our consideration of internal control was for the limited purpose

described in the first paragraph of this section and was not designed to

identify all deficiencies in internal control that might be material

weaknesses or significant deficiencies. Given these limitations, during our

audit we did not identify any deficiencies in internal control that we

consider to be material weaknesses. However, material weaknesses may

exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether HART's

financial statements are free from material misstatement, we performed

tests of its compliance with certain provisions of laws,

regulations, contracts, and grant agreements, noncompliance

with which could have a direct and material effect on the

determination of financial statement amounts. However,

providing an opinion on compliance with those provisions

was not an objective of our audit, and accordingly, we do not

express such an opinion. The results of our tests disclosed no

instances of noncompliance or other matters that are required to be

reported under Government Auditing Standards.

[Emphasis Supplied]

Source: Honolulu Authority for Rapid Transit (HART)

http://www.honolulutransit.org/media/308474/20140630-and-2013-hart-

financial-statements-and-independent-auditors-report-final.pdf

House Bill 134-House Draft 1-Senate Draft 2-Confrence Committee Draft 1

was transmitted to Governor David Ige for signature on May 6, 2015. The

measure will extend the General Excise Tax (GET) Surcharge for the Honolulu

Authority for Rapid Transit, require the Board of Directors of the Honolulu

Authority for Rapid Transportation to conduct audits, submit annual reports to

the Governor and the State Legislature, and conduct public hearings and take

testimony on the audits and reports.

The measure adds an extra $1.8 billion in revenue for the rail project

which is already nearly $1 billion over-budget. Optimistically, the law is

intended minimize the red ink, realistically, based on the long-standing track

record of State and City & County officials inability to reign in HART the

implication is the creation of another spending frenzy for HART with no clearly

detailed incentives to change by establishing and implementing stricter

management and financial practices and procedures.

Failings in HART’s self-guided contracting and procurement procedures

cited in Exhibit 2 – Yesteryear and the focus of Request for Government Records

and Ethics Complaint, Exhibit 1, HART’s apparent violations of Federal and State

Procurement Laws and directives issued by the Federal Transit Authority (FTA)

perpetuate a toxic environment conducive to fraud and further unrestrained

mismanagement of Federal and State funds. The situation is Code Red. The

gravity is severe as the continued forward progress of the HART transit project is

in immediate jeopardy.

Your immediate intervention is requested.

Thank you very much.

Respectfully

Clifton M. Hasegawa

Copies provided to:

Mayor Kirk Caldwell

Council Chair Ernest Y Martin

Council Member Kymberly Marcos Pine

Council Member Carol Fukunaga

Council Member Ann Kobayashi

Council Member Ikaika Anderson

Councilmember Joey Manahan

Council Member Trevor Ozawa

Council Member Brandon Elefante

Council Member Ron Menor

Donna Y.L. Leong, Corporation Counsel, City & County of Honolulu

Honolulu Authority for Rapid Transit (HART)

Mr. Daniel Grabauskas Executive Director and CEO

Board of Directors

Congresswoman Colleen Hanabusa

Mr. Ivan Lui-Kwan

Mr. Don Horner

Mr. George I. Atta

Mr. Robert Bunda

Mr. Michael Formby

Mr. Ford Fuchigami

Mr. William Hong

Mr. Keslie Hui

Mr. Damien Kim

State of Hawaii

Senate President Ronald Kouchi Members of the Hawaii State Senate House Speaker Joseph Souki Members of the Hawaii House of Representatives Mr. Les Kondo, Executive Director, Hawaii State Ethics Commission NOTE: Exhibits have been omitted for this Slide Share presentation

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Clifton M. Hasegawa President and CEO

Clifton M. Hasegawa & Associates, LLC 1044 Kilani Avenue 12

Wahiawa, Hawaii 96786-2243 Direct: 808.498.8408

Email: clifhasegawa@gmail.com LinkedIn: https://www.linkedin.com/in/cliftonhasegawa

June 22, 2015 Ellen Richardson Administrative Assistant to Ann CalvaresiBarr, Deputy Inspector General U.S. Department of Transportation 1200 New Jersey Avenue S.E. – 7th Floor Washington, DC 20590 RE: Hot Line Complaint and Request for Investigation, June 6, 2015 City and County of Honolulu Recipient ID: 1703 Honolulu Authority for Rapid Transit (HART) US Department of Transportation, FTA Region IX Dear Ms. Richardson, Deputy Inspector General Ann CalvaresiBarr during her tenure with the US General Accountability Office as Director of Acquisition and Sourcing Management provided testimony before the United States Senate, Committee on Homeland Security and Governmental Affairs, Ad Hoc Subcommittee on State, Local, and Private Sector Preparedness and Integration, Federal Efforts Are Helping to Address Some Challenges Faced by State and Local Fusion Centers, GAO-08-695T, April 17, 2008. The major theme of Deputy Inspector General CalvaresBarr’s testimony is the proper provisioning to systematically collect current and accurate data and information, thorough analysis of the data and information, identification of strengths and weaknesses, and positive action to correct weaknesses in incumbent and mandated for State and local entities. These issues are presented in my Complaint and are exponentially compounded by the lack of oversight and the reluctance of the Honolulu Authority for Rapid Transit (HART) and the City & County of Honolulu to implement recommended corrective measures.

The $78.9 Million award by HART to Hawaiian Dredging Construction Company, Inc. (HDCC) on June 10, 2015 for the Farrington Highway Station Group - West Loch, Waipahu Transit Center and Leeward Community College rail transit stations. This procurement was protested by Nan, Inc. and discussed in my Complaint. HART made the award after receipt of the decision May 28, 2015 from Senior Hearing Officer David H. Karlen. Hearing Officer Karlen granted HART’s and HDCC’s Motion to Dismiss/Summary Judgment, denied Nan’s Motion as Moot, denied Nan’s claim and request for Administrative Hearing as lacking jurisdiction. The Hearing Officer’s decision included discussion of unbalanced bids. The Hearing Officer determined HDCC’s bid was not mathematical unbalanced and on that basis determined inquiry and a determination as to whether HDCC’s bid was materially unbalanced was not necessary or required. Please refer to http://cca.hawaii.gov/oah/files/2015/05/PDH-

2015-004-Nani-Inc.-v.-Hawaii-Authority-for-Rapid-Transportation.pdf The forgoing inquiry as to whether HDCC’s bid was unbalanced taken by the Hearing Officer is a misinterpretation of guidance provided by the US Department of Transportation and compromises the integrity of the procurement. Specifically,

“In our review of bid information involving substantial differences between the low bid unit prices, we are required to consider first, whether there is an error in the estimated quantity and if there is no error, whether the bid is mathematically or materially unbalanced. A mathematically unbalanced bid is one containing a bid item(s) which do not reflect reasonable actual costs and a reasonable proportionate share of the bidder's profit and overhead. A materially unbalanced bid is one for which there is reasonable doubt that award to the bidder submitting the mathematically unbalanced bid will result in the lowest cost the Government. Identify any of these items considered to have the potential to significantly overrun or underrun. Indicate whether the unbalanced item is considered to be mathematically or materially unbalanced.

[C]onsiderable judgment is required in reaching a decision on whether a bid is mathematically or materially unbalanced.” [Emphasis Supplied] “Bid Analysis and Unbalanced Bids” FWHA Memo http://www.fhwa.dot.gov/programadmin/contracts/880516.pdf http://www.fhwa.dot.gov/construction/cqit/award.cfm

The independent review as to whether Hawaiian Dredging Construction Company’s bid is unbalanced, mathematical and/or materially, by the Office of the Inspector General and the Federal Transit Authority (FTA) is requested to restore transparency, responsibility and accountability to Honolulu Authority for Rapid Transit (HART), the City & County of Honolulu, their leadership and managers. Thank you very much. Respectfully, --- Signed --- Clifton M. Hasegawa

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Caldwell Returns Budget Bills Unsigned in Protest of HART Oversight

June 23, 2014· By Sophie Cocke Honolulu Civil Beat

Honolulu Mayor Kirk Caldwell will allow the city’s 2015 fiscal year budget to take effect in July without his signature, a symbolic gesture meant to underscore his position that the City Council doesn’t have authority over the budget of the quasi-city agency overseeing the $5.2 billion Honolulu rail project.

Caldwell returned six bills unsigned to the City Council on Monday, three of which relate to the budget for the Honolulu Authority for Rapid

Transportation. Three others are the city’s legislative, operating and capital budgets.

Caldwell said during a press conference earlier this month that he was leaning toward signing the city’s operating and capital budgets this year, which he rejected last year, while making clear that he would likely not sign the separate HART budget bills.

“I believe under the charter amendment setting up HART, HART was designated the entity to build rail and it was to take the politics out of the system,” he said.

Honolulu Mayor Kirk Caldwell speaking to the press on June 4, 2014

However, he decided not to sign the city’s legislative, operating and capital budget bills as well because of clauses included in the measures related to HART, according to a press release issued by the mayor’s office on Monday.

The clauses relate to the City Council’s authority over HART’s budget.

The move by Caldwell signifies a long-standing disagreement between the mayor’s office and City Council over whether the council has authority over HART’s budget. Former Mayor Peter Carlisle also declined to sign bills related to the HART budget.

Council Chair Ann Kobayashi said that the City Council has always gone over the HART budget since the agency was established.

HART “always submits their budget, they come to our hearings, they don’t have a problem with it,” Kobayashi told Civil Beat.

“They have been transparent with us when asked questions or when asked for more information, they give it to us.”

She said it was odd [ ? ] for the mayor to take the position that the City

Council doesn’t have authority over HART’s budget when HART is asking the City Council to float bonds as bridge financing for the rail project.

“If they [sic]1 mayor thinks we don’t have any authority, does that mean that

he thinks we shouldn’t issue city bonds?” she said.

[Emphasis and Clarification Supplied]

Source: Honolulu Civil Beat http://www.civilbeat.com/2014/06/caldwell-returns-budget-bills-unsigned-in-protest-of-hart-oversight/

1 Sic /sik/ in square brackets is an editing term used with quotations or excerpts. It means

“that’s really how it appears in the original.”