A whistleblower lawsuit filed in California sheds more light on a key issue federal investigators are already probing related to Honolulu rail: the questionable handling of the project’s change orders.
Jeff Werner, a former change control claims manager with the engineering firm Stantec, is suing that company, a rail contractor, for wrongful termination. Werner alleges that Stantec fired him in October 2017 after he discovered that “mandatory change order procedures were not being followed” on the Oahu rail project.
The longtime construction-management professional worked on rail from August 2016 to June 2017. While Werner’s suit is aimed at Stantec it alleges that the Honolulu Authority for Rapid Transportation “did not obtain or require accurate cost justifications for change orders,” violating Federal Transit Administration requirements.
During his time working on rail, Werner found that HART, which oversees the project, had “deliberately” stalled progress on more than 100 change orders, worth more than $5 million in total, the complaint states.
“HART deliberately and intentionally delayed change order processing and payments to contractors for years due to project funding issues, after changed work was completed, without accurate cost justifications, resulting in substantial additional costs due to overpayments and litigation,” it adds.
Werner, who filed the complaint in California Superior Court in October, declined to comment Thursday. However, the issues raised in his suit echo some of the key demands in the first of three federal grand jury subpoenas to recently land at HART.
That initial, sweeping order, requires the rail agency to provide the U.S. District court with “all documents concerning change orders for the project, including change orders, cost analyses, request for bids, correspondence, negotiations and change orders signed with contractors.”
The subpoena further requires “documents provided to HART’s board of directors or the Honolulu City Council concerning proposed change orders, their associated cost, and the identity of contractors.”
In January, the city auditor also flagged HART’s handling of change orders.
The rail agency, according to the auditor, failed to properly manage dozens of change orders that eventually amounted to nearly half a billion dollars between 2008 and 2016.
Werner, meanwhile, worked on rail for Stantec starting in late 2016 and into 2017, a period when HART’s interim executive director Krishniah Murthy was overseeing procedural reforms at the agency that aimed to better manage the project, including its change orders.
Before he was hired as interim director, Murthy served as a technical advisor for Stantec on its Honolulu rail work.
Stantec, an international firm, has a $55 million engineering and inspection contract to handle construction claims and other tasks along rail’s east side, from Aloha Stadium to Ala Moana Center.
The joint venture Shimmick Traylor Granite has an $874 million contract to build the stations and elevated concrete pathway from Aloha Stadium to Middle Street. HART’s most recent report show that contract’s only change order so far to be a $6.3 million credit back to the project — not a cost increase.
That report further shows that Stantec has incurred nearly $25 million on its contract so far.
Werner states in his complaint that Stantec sent him back to work in Orange County, California, in June 2017 after he warned his boss that he would have to report HART’s change order violations to Stantec’s human resources department if they weren’t corrected.
Werner eventually did report the problem to human resources while he continued to assist on Honolulu rail from California, the complaint states. The issue finally came to a head in September 2017, when, according to the complaint, Werner flagged an “unauthorized” change order submitted by a HART project director.
Werner was pulled from the project the same day and fired the following month, according to the complaint.
Werner further alleges that he witnessed — and reported to his superiors — bullying and abusive behavior by that same HART project director against several administrative staff members — including when those subordinates tried to expedite change orders. The suit goes so far as to describe it as “workplace violence.”
HART officials did not immediately comment on Werner’s suit against Stantec late Thursday. In its court response, Stantec, through its attorneys, call Werner’s allegations that he was wrongfully terminated and retaliated against unfounded.
Werner isn’t the first change order and claims manager to turn whistleblower on the Honolulu rail project.
Around the same time Werner joined the project, one of his recently departed predecessors, Bart Desai, chronicled similar dysfunction surrounding HART in an Aug. 28, 2016 letter to the HART board.
Desai, who handled claims on the westside for another rail contractor, PGH Wong, also shared emails that detailed the acrimony between HART and guideway-builder Kiewit Infrastructure West. The situation had reached the point that Kiewit was considering legal action because of “recent ‘threatening’ situations (HART employees) either said or written to them in the field.”
“We need to stay professional as it’ll keep things better postured even if we move into the courts,” HART’s then deputy director for design and construction, Chris Takashige, wrote to several rail colleagues in the email.
Desai’s 2016 letter to the board was also sent to the FTA Inspector General.
Read Werner’s lawsuit here:
Read Desai’s 2016 letter to HART here:
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