UPDATED 11/17/11 2:27 p.m.

The financial questions about would-be rail contractor Ansaldo are serious enough that Honolulu will delay executing the $1.4 billion core systems contract and will conduct additional due diligence.

Honolulu Authority for Rapid Transportation Interim Executive Director Toru Hamayasu told the board of directors Thursday morning that reports in Bloomberg and the Wall Street Journal this week about Finmeccanica’s willingness to sell Ansaldo STS and the parent company’s own financial health “raised a new concern for Honolulu.”

“HART will conduct additional due diligence,” Hamayasu said. “If the results are favorable, we will execute the contract.”

A representative of Ansaldo declined to comment on the decision immediately after the meeting.

The additional due diligence will take place, at least in part, at a joint meeting of the Finance and Project Oversight Committees like the one hosted by Finance Chair Don Horner at First Hawaiian Bank in September. (For more on the results of that meeting, read: What We Learned From the Ansaldo Teleconference)

That meeting will take place next Friday, Horner said. That day is the city’s deadline to execute the contract. If the contract isn’t executed by that day, Ansaldo will be able to change its price, unless the parties agree on an extension. Hamayasu said he doesn’t think Ansaldo would raise its price because it too is anxious to finish a contract.

The delay comes after multiple members of the Honolulu City Council expressed misgivings, and after other bidders insisted Ansaldo can’t be relied upon.

Council Chair Ernie Martin and member Tulsi Gabbard earlier Thursday sent a letter to HART urging a delay.

Read Gabbard’s and Martin’s full letter here:

Tom Berg showed up in person to request a new or supplemental environmental impact statement that would allow Honolulu to consider alternate technologies like monorail and magnetic levitation.

Only Transportation Chair Breene Harimoto expressed a desire to proceed with Ansaldo Thursday. In testimony, he warned any delay at this stage would kill the Honolulu rail project for good, since federal funding is contingent on local support and progress.

Also sending a letter to HART this week was Gino Antoniello, vice president of Sumitomo, one of the two companies that lost the bid to Ansaldo.

“The time for questions has expired,” he told Civil Beat after learning of the decision. “What HART needs to do is require Finmeccanica and Ansaldo to provide a real financial guarantee.”

He said Ansaldo should be required to place whichever portion of the contract value is not covered by bond guarantees into an escrow account so “the city can sleep well” knowing the project won’t be derailed by the company’s financial struggles.

Hamayasu has repeatedly said that hundreds of millions of dollars in bond guarantees mean the city would be compensated in the event that Ansaldo fails. But that doesn’t assuage concerns of rail proponents who want to make sure the project is completed on time.

Horner said earlier Thursday HART has not reviewed the finances of all bidders — that was done before HART came into existence — but instead did homework to ensure that Ansaldo’s financial position has not changed dramatically since it was announced as the winning bidder earlier this year.

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