Officials building Honolulu’s $6 billion commuter rail line thought they got a good deal when a local contractor submitted a construction bid for three stations in west Oahu that came in lower than expected.

Then, after being awarded a $56 million Honolulu Authority for Rapid Transportation contract, Nan Inc. apparently had second thoughts about doing the work and has since tried to wriggle out of its obligations.

But HART wouldn’t let the company off the hook. A recent report says the agency threatened to withhold $2.5 million from a bond Nan posted to guarantee it would perform the work if awarded the contract.

Rail guideway columns along Farrington Highway as construction moves eastward.  21 july 2015. photograph Cory Lum/Civil Beat

Rail work continues along the Farrington Highway last month.

Cory Lum/Civil Beat

Nan has since signed the deal and is expected to perform the work as originally negotiated.

HART officials were unavailable Wednesday to comment on the contract dispute.

The agency also has yet to fulfill a public records request submitted by Civil Beat this week seeking documents related to Nan’s attempt to back out of its bid.

Nan asked to withdraw its bid due to an unspecified mistake in calculating its costs, according to a July report by a federal consultant hired to provide oversight of HART. Details of the error have not been explained.

Nan’s vice president, Ryan Nakaima, did not respond to Civil Beat’s request for comment.

The company won its contract to build the UH West Oahu, East Kapolei and Hoopili rail stations along the West Oahu Farrington Highway segment of the 20-mile rail system with a bid that came in $10.5 million below its nearest competitor, Watts Construction, which had estimated the cost of the job at $66.5 million.

HART had targeted bids for the three stations at $65 million to $80 million.

Coincidentally, in winning the contract, Nan beat out Hawaiian Dredging Construction Co.’s high bid of $73.4 million. The two companies battled it out in March for a contract to build three other stations – West Loch, Waipahu and Leeward Community College.

HDCC was the low bidder on that project with a price of $79 million and Nan came in second with an $85 million bid.

Nan delayed the contract for three months by protesting the award on the basis of what it claimed were seven technical defects in HDCC’s bid.

One of those alleged defects involved HDCC’s calculation of “compensable delay” costs – the amount a contractor would be reimbursed for every day construction was delayed by HART.

Nan claimed the $30,000-per-day cost included in HDCC’s bid was inflated, being more than double the $12,633 daily amount Nan had bid. Nan said documents submitted to justify its complaint contained confidential information and were kept secret from the public.

Doors  leading into second floor offices of Nan Inc. 11 aug 2015. photograph Cory Lum/CIvil Beat

When Nan Inc. sought to withdraw its low bid, HART threatened to withhold $2.5 million from a bond.

Cory Lum/Civil Beat

HART rejected the protest, but Nan appealed to the Hawaii Department of Commerce and Consumer Affairs, which upheld HART’s action following an administrative hearing.

Last year Nan submitted a low bid of $294 million for construction of nine stations, but those bids were cancelled when every bid came in at least $100 million over HART estimates.

Subsequently HART restructured construction into three-station packages in an attempt to lower costs. Requests for bids on the third package of stations — Pearl Highlands, Pearlridge and Aloha Stadium — are scheduled for early next year.

Construction of the west Oahu stations is the second contract Nan has received from HART. Last year Nan was awarded a $28.4 million contract to relocate utilities and perform other work along Kamehameha and Nimitz highways between Aloha Stadium and Middle Street.

Progress on that contract was delayed due to issues dealing with access to Navy property. The cost of additional work by Hawaiian Electric Co. is not included in the contract and will be separately reimbursed by HART.

In developments unrelated to rail work, Nan is currently embroiled in a bitter legal battle with its former partner and Liberty Mutual Insurance Co. over claims made against a performance bond by subcontractors who said they weren’t paid for work on military contracts.

A second, related lawsuit includes allegations that Nan attempted to deceive the federal government in an attempt to gain access to hundreds of millions of dollars in contracts meant to go to small, minority-owned companies.

About the Authors