Editor’s Note: This is an installment in our occasional series, It’s Your Money, that looks more closely at public expenses that taxpayers may not realize they’re being asked to pay.

Feeling it got cheated out of a lucrative government contract with Hawaii, four years ago Election Systems & Software challenged the state’s decision to award a contract for e-voting machines to another company.

Nebraska-based Election Systems & Software had bid less than half the amount of the winning bidder for a multi-year deal to supply electronic voting equipment starting with the 2008 elections. The contract was instead awarded to Austin-based Hart InterCivic, a company Hawaii previously leased voting equipment from for the 2006 elections.

Election Systems & Software disputed the 2008 contract, alleging the state’s Office of Elections “engaged in bad faith actions against it on multiple occasions since 2004.” The company also claimed the state failed to perform a cost and price analysis to confirm the reasonableness of Hart Intercivic’s offer — a requirement laid out in the state’s procurement code.

The court found Kevin Cronin, the state’s former chief elections officer, at fault for violating procurement laws when he awarded the contract to Hart InterCivic, according to the Attorney General’s office.

Now, Hawaii taxpayers are on the hook for a $1.2 million settlement.

Gov. Neil Abercrombie this week signed off on legislation authorizing the payout for Election Systems & Software, along with other settlements totaling $5.8 million in state funds.

$53 Million vs. $18 Million

Before taking the state to court, Election Systems & Software had protested the contract through the state’s Department of Commerce and Consumer Affairs.

Hart’s bid was $52.8 million for the six election years between 2008 and 2018 — or about $8.8 million for each election. Election Systems & Software had offered $18.1 for the same period — or about $3 million per election year.

Records from the 2008 DCCA hearings say the Office of Elections “had a legal duty to perform an analysis of (Hart’s) offered price to determine whether the price was reasonable; and the undisputed evidence established that no such analysis was performed prior to the awarding of the contract.”

The parties had agreed in May 2008 to terminate Hart’s contract that had been awarded that January. The hearings officer required a cost and/or price analysis be done by May 14.

Hearings records show Cronin took it upon himself to conduct the analysis, and then signed a contract with Hart on May 14 — the same day he issued a cost/price analysis.

Cronin — “although he had no accounting background and had never performed a cost and/or price analysis” — prepared one, the records said. He “did not retain anyone qualified to perform or assist him in performing the analysis,” and concluded Hart’s proposal was “reasonable” under the RFP and procurement code.

Election Systems & Software again appealed the decision.

Analysis ‘Fundamentally Flawed’

DCCA Administrative Hearings Officer Craig Uyehara in August 2008 concluded:

“…that the (cost and price analysis) and the evaluation of the proposals by the Office of Elections were so fundamentally flawed such that the results are invalid and the required determination can no longer be made. Accordingly, the hearings officer concludes that petitioner (Election Systems & Software) is entitled to recover its bid preparation costs.”

Uyehara also ruled that Hart’s contract would be modified to only apply to the 2008 elections and would expire Dec. 31, 2008 with no option to extend.

The Office of Elections appealed to Circuit Court. The case finally came to an end in February, resulting in the $1.2 million settlement for Election Systems & Software.

Cronin, meanwhile, resigned at the end of 2009 after a turbulent two years on the job. He had come under fire for failing to register as a Hawaii voter until six months after his hiring, despite a state law listing that as a job requirement. He previously had been former assistant general counsel to the Wisconsin Public Service Commission.

Cronin also was criticized for mismanaging the agency’s finances.

Hart InterCivic again bid for a contract with the state in 2010 for the 2010, 2012 and 2014 elections, and was awarded an $11.5 million contract. Election Systems & Software had also bid for the contract, but was disqualified.

It’s unclear whether the Office of Elections has taken steps or put in place a process to make sure procurement rules are followed. A spokesman for the office wouldn’t comment and instead referred all questions to the AG’s office.

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