Ansaldo’s past performance problems were not considered in the city’s assessment of the company’s billion-dollar rail bid, it was revealed Thursday.
The six people charged with evaluating the proposals to design, build, operate and maintain the rail line didn’t even pick up the phone to learn more about those issues.
“It was not as positive as some of the other major suppliers, but certainly they had a record of performance in the industry,” said Simon Zweighaft, one of those evaluators and a managing partner of InfraConsult, the company the city hired to manage the rail project. “There were stories that they had had some performance problems on some projects.”
Zweighaft’s statement — and the acknowledgment that he and fellow judges didn’t dig any deeper and didn’t take Ansaldo’s “negative issues” into account when grading bids — came during Day 2 of the evidentiary portion of losing rail bidder Sumitomo’s contract appeal Thursday.
Sumitomo is protesting to the state Honolulu’s decision to award the contract to Ansaldo, claiming that it was wrongly awarded to the Italian company.
Sumitomo pressed Zweighaft on what it argues is an unrealistic design-build price from Ansaldo. Sumitomo’s attorney repeatedly played up the importance of determining which company would win “perhaps the biggest procurement the state of Hawaii will ever see.”
Asked if, given the size of the contract, it would be fair to expect that he “would at least pick up the phone and call the current owners for these projects listed in the dispute area as part of your due diligence,” Zweighaft said simply, “No.”
Later asked why he didn’t weigh Ansaldo’s past performance as part of the price realism criteria in the scoring, he said, “Because it wasn’t a factor in those evaluation criteria.”
Attorneys for both Ansaldo and the City and County of Honolulu reserved their questions for Zweighaft until next week. For one day, Sumitomo’s argument went largely unchallenged.
The questions about price realism and reasonableness centered on Ansaldo’s low design-build number of $574 million. Bob Fricke, Sumitomo’s attorney, made a mantra of the “29 percent” gap between that figure and the estimate originally provided by the city’s engineering firm, Parsons Brinckerhoff.
Essentially, Sumitomo is arguing that Ansaldo’s price is incredibly cheap — as in not credible. On Wednesday, it argued that Ansaldo wasn’t cheaper, and would cost the city $700 million more than Sumitomo over the life of the rail cars.
Fricke asked Kerry Stevenson, a Parsons Brinckerhoff executive who was the primary drafter of the city’s Request For Proposals, why the RFP asked only for bidders’ prices and not for their costs. In other words, why the city didn’t ask the companies to disclose how much profit they’d be gleaning at various stages of the project to ensure taxpayers aren’t getting “gouged.”
Stevenson said the RFP called for either cost or price, not both, because it was a fixed lump-sum contract. He said the city doesn’t give bidders instructions on when to take their profits, or how much to take.
And while the 29 percent gap did cause some concerns, Stevenson said, when Parsons Brinckerhoff compared the line-by-line price estimates, it determined that none were so far out of whack as to be reason for alarm.
There wasn’t a significant variation that would make the company dig any further, he said.
Zweighaft said he and other bid judges found a reasonable explanation for Ansaldo’s low design-build price: Ansaldo already had vehicles in production similar to what Honolulu was requesting and the other two suppliers did not, and would need to start from scratch.
Both the city and Ansaldo also reserved their questions for Stevenson. Those parties will begin to call witnesses when the hearing continues Monday.