The state agency that is supposed to help academic researchers secure grants from government institutions and private funding sources is under scrutiny by Hawaii lawmakers who say it’s being used to facilitate projects completely outside of its purview.

The Research Corporation of the University of Hawaii is attached to the UH for administrative purposes only and is exempt from a range of state regulations, including the procurement code and certain civil service laws. Lawmakers say those exemptions are what make the RCUH so attractive to other Hawaii agencies that have turned to it when they want to get a project off the ground without being bound to those regulations, which can consume time and limit spending. One former RCUH director in legislative testimony earlier this year referred to this practice as the “convenience standard.”

Recent scrutiny has centered on a project the RCUH took over in 2007: construction of the UH’s beleaguered West Oahu campus, which is now millions of dollars in debt. In an unprecedented arrangement, the RCUH has managed construction of the campus even though the $174 million project has nothing to do with research.

And lawmakers argue the agency has since managed other non-research contracts, too, including one for public relations services and one to help Gov. Neil Abercrombie implement his early learning office.

When state lawmakers established the RCUH nearly half a century ago, they envisioned a state agency that could efficiently handle lucrative and competitive research grants — most of them for the UH from the federal government and private sector — as if it were a business firm.

Today the RCUH, at least on paper, serves largely the same purpose that lawmakers had in mind in 1965: a project management organization that provides services such as accounting, human resources management and procurement for research and training grants at UH and throughout the state. The RCUH doesn’t receive any direct state funding and relies entirely on fees it receives from clients, about 85 percent of which come from the university. Total business amounted to nearly $485 million for the 2012 fiscal year.

High school students tour UH West Oahu campus 12.3.13

PF Bentley/Civil Beat

The public agency, which employs a core staff of about 40 people, manages thousands of projects ranging from time-sensitive research efforts to combat the invasive coqui frog population to the creation of a culinary apprenticeship program at Kapiolani Community College.

But critics, including Sens. Donna Mercado Kim and Kalani English and several prominent university professors, worry that the RCUH has undergone a “mission creep” since taking on the West Oahu campus, a construction management contract that’s earned the agency $141 million and counting over the years.

Even RCUH Executive Director Michael Hamnett acknowledges grave problems with UH West Oahu, telling Civil Beat that the RCUH was “pressured” by the university into accepting the project and that its burdensome contract paperwork, among a range of other hassles, have seriously bogged the agency down. The RCUH, he added, doesn’t have the in-house expertise to handle construction projects to begin with.

The RCUH’s ‘Mission Creep’

The Senate Higher Education and finance committees recently held an informational briefing at which they grilled RCUH officials and asked them to justify non-research projects such as UH West Oahu.

The briefing came just months after lawmakers passed a measure, Senate Bill 1388, that gave the Legislature a bigger say in the RCUH’s board of directors and removed the UH president as president of the corporation, among other provisions.

It also marked the roughly one-year anniversary since the scathing Senate Special Committee on Accountability hearings on the university’s Stevie Wonder concert fiasco, which also raised concerns about the university’s inappropriate use of the RCUH. The RCUH, as it turns out, managed a public relations contract with Hoakea Communications — a firm that was originally hired by the UH to provide the university president with strategic PR counsel on controversial projects such as the Kalaeloa biosafety lab but was also involved in efforts to smooth through the “Wonder Blunder” mess.

It appears that lawmakers still aren’t happy with the RCUH’s direction.

UH West Oahu campus 12.3.13

PF Bentley/Civil Beat

“Almost everything can fit into RCUH if you stretch it,” Kim said at the October briefing. “That’s been the problem: when convenient, (state) officials have gone to RCUH with a project, and RCUH has accepted it.”

Kim pointed to a recent project the agency managed on behalf of the governor’s office to help it figure out how to set up the Executive Office on Early Learning — a project one RCUH official explained was enough of a “public good” that it satisfied RCUH criteria.

“But isn’t that true for every project?” Kim asked. “Almost every project can have some element of research, and the fact that you have all these exemptions can make you very attractive for agencies to run to you … to get around the process.”

Hamnett, the RCUH director, responded that the research corporation isn’t in a position to vet whether agencies are using it appropriately.

“We’re obligated by law to provide research and training for the state of Hawaii,” he said, adding that the agency doesn’t look into whether a certain project was initially rejected by the Legislature. “We don’t go shopping for positions or people … They come to us.”

That, Hamnett later explained, is exactly what happened with UH West Oahu.

According to Hamnett, the UH asked the RCUH to take over construction of the West Oahu campus in 2007 after failing to secure a contract for the construction project. UH officials explain that the university was nearing a deadline to begin construction or risk forfeiting the land, so they decided that the RCUH “would be best able to move the project forward in a timely manner.”

The RCUH quickly realized it had become embroiled in “a nightmare” — in particular, “a tsunami” of change orders that were never approved by the RCUH and eventually put the project in severe debt, Hamnett said. A 2012 audit of the RCUH found that the agency failed to account for $14.7 million in payments for the West Oahu campus construction due to the undocumented change orders.

“We were playing catch up after the fact,” Hamnett said, noting that the RCUH will no longer have to work with the campus once it completes final paperwork and closes out the contracts.

Getting its ‘Mojo’ Back

Hamnett said the RCUH is in the process of refining its policies to emphasize that the agency will only take on construction projects if they support research and training. He stressed that some construction projects do have research or training elements, pointing to the university’s cancer center, whose construction was also handled by the RCUH.

Meanwhile, many UH professors are rallying behind the RCUH, arguing that its mistakes with UH West Oahu shouldn’t overshadow the role the agency plays in helping them engage in research critical to the community.

One of them is David Duffy, president of the UH faculty union and a botany professor who relies heavily on the RCUH for research.

UH West Oahu Campus 12.3.13

PF Bentley/Civil Beat

“They (the RCUH) do all these good things, and the trouble is more recently that they’ve been distracted from what they do well,” Duffy told Civil Beat, adding that the state’s procurement code often handicaps research grants that need to be acted upon in a timely manner. “We waste millions of dollars being accountable rather than spending the money.”

“It’s like putting alarms on your pencils,” he continued. “If they (the state) were running TSA we would all get cavity searches.”

But Danielle Conway, a law professor at the UH who also directs the Hawaii Procurement Institute, is critical of the RCUH, arguing that all state agencies should be subject to the state’s procurement code. In a recent conversation with Civil Beat, she said state agencies often assume that exemptions from the procurement code are necessary to accomplish certain time-sensitive projects when the law does in fact allow for flexibility and ensures contractors can address emergencies when they come up.

If as much time was put into understanding the procurement code “as there is trying to get exemptions (from the procurement code),” she said, “we’d have a cracker jack procurement system … They’ve gotten hooked on this idea of getting an exemption. There’s a culture of exemptions.”

But according to Duffy, the RCUH allows the university to act quickly on grants with a short lifespan, expediting equipment purchases and ensuring any research positions offer competitive pay. He noted that the agency has helped UH hire a researcher with unmatched expertise in Hawaii’s invasive fire ant population — a specialist whom university researchers probably couldn’t have taken on if they had gone through the state because of strict civil service and procurement regulations. Because he’s employed by the RCUH and not the state, the researcher, who is Australian, is able to earn a higher salary and work on a short-term contract.

“You can have something cheap, or you can have it fast, or you can have it good,” Duffy said. “RCUH has been able to do all three.”

The UH West Oahu nightmare has made the RCUH “gun-shy” and risk averse when it comes to research grants, Duffy says.

“We fail, and we hope we learn by failing forward,” he said at the recent briefing. “We want them (the RCUH) to get their mojo back … they’re a necessity, and we want them to be better.”

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