Honolulu Mayor Rick Blangiardi announced Tuesday at a hastily called press conference that he is appointing former U.S. Rep. Colleen Hanabusa to the board that oversees Honolulu’s troubled rail project.
The announcement came amidst growing calls for answers about a consulting contract, potentially worth almost $1 million over six years, which Hanabusa had landed with the Honolulu Authority for Rapid Transportation.
The mayor’s move effectively quashes questions about the contract while allowing Hanabusa to play a role in overseeing construction of the rail line, an enormous public works project which is expected to cost some $12.4 billion, most of it paid for by Honolulu taxpayers.
Hanabusa said Tuesday she will not pursue the consulting gig after all and will instead serve on the HART board as an unpaid volunteer.
A prominent Honolulu labor lawyer and politician, Hanabusa ran for mayor against Blangiardi last year but endorsed him after losing in the primary election. She formerly served as chair of the HART board, as a U.S. Congresswoman and as the Hawaii Senate president.
Blangiardi said Hanabusa will fill an upcoming vacancy left by outgoing board member Glenn Nohara, whose term ends June 30. The fact that Blangiardi is able to fill a seat that is not yet vacant or in holdover status is highly unusual for the HART board, which has struggled in recent years to find replacements for sitting members.
The mayor denied the move was intended to allow the former congresswoman to save face while removing herself from the contract.
“There’s nothing face-saving here,” Blangiardi said.
He also denied being concerned about the appearance of the lucrative rail contract going to Hanabusa, given that she had endorsed him during last year’s election, was the only bidder on the contract and her former chief of staff, Mike Formby, is now serving in an equivalent role in his administration as managing director.
“I had nothing to do with that contract,” Blangiardi said. “I found out about it after it was done.”
At the same time, he said Hanabusa is uniquely qualified to serve on the rail project and that he was glad to know she would be involved when he heard about the consulting gig.
For her part, Hanabusa said she considered not applying for the consulting job. She anticipated there would be questions about favoritism if she got the contract, she said.
Likewise, she anticipated people would ask if giving up the consulting contract was a face-saving step. But she said she thought she was in a position to serve the public.
“I don’t want to be the distraction,” she said. “I want to see this project completed.”
Procurement experts have raised red flags about the contract announced April 27. The contract, worth up to $924,000 over six years, was for Hanabusa to be hired as a consultant to help the agency lobby local, state and federal officials so that the city could secure the billions of dollars needed to complete construction on the project.
She was the only bidder and the solicitation appears to have been written to mirror the congresswoman’s resume, raising the question of whether the procurement process was concocted in such a way to ensure that Hanabusa and only Hanabusa could win the bid.
“It smells funny,” said Jessica Tillipman, an associate dean of government procurement law studies at George Washington University in Washington, D.C. “There may not be anything illegal here, but at the same time it’s definitely worth investigating to see if there was anything improper.”
Civil Beat had pressed Blangiardi for an interview about Hanabusa’s contract and the concerns experts were raising earlier this week. He did not respond to that request but called the press conference on short notice Tuesday.
Hanabusa similarly did not respond to Civil Beat’s request for an interview before the press conference.
Tillipman said the way the request for proposals was written certainly raises some questions about why HART included the narrow specifications that it did. Even more worrisome, she said, is the fact that Hanabusa, a well-connected former chairperson of the oversight board, was the only person to submit a proposal and win the contract.
“If it appears that the requirements were designed to have specifically one person in mind then there are concerns.” — Jessica Tillipman, George Washington University
Rigged specifications and the exclusion of qualified bidders are among the most common procurement fraud schemes, according to the International Anti-Corruption Resource Center. Narrow requirements that allow only a favored contractor to qualify, unduly burdensome pre-qualification criteria and the presence of only a single bidder are all signs that something might be amiss.
In general, Tillipman said government officials want to encourage competition so that they can get the best deal possible for taxpayers.
While there are occasions where limiting the scope of qualifications for bidders can make sense to meet certain policy objectives — such as buying American or targeting small businesses — it can also be seen as a red flag that the process was manipulated to favor a preferred contractor.
“If it appears that the requirements were designed to have specifically one person in mind then there are concerns,” Tillipman said. “This would be problematic if they were just looking for a way to filter money to somebody.”
Hawaii law has its own rules for “ethical public procurement” that states, among other things, that government employees act only in the public’s interest and not those of prospective bidders.
The procurement code additionally says that government agencies should “encourage economic competition by ensuring that all persons are afforded an equal opportunity to compete in a fair and open environment” and that officials remain impartial while at the same time identifying and eliminating any conflicts of interest or appearances of “unethical behavior.”
Anyone caught intentionally violating the law could be removed from office, fined or found guilty of a misdemeanor.
Hanabusa has close ties to Honolulu’s rail project and HART in particular.
She was nominated to the board of directors in 2015 by then-Mayor Kirk Caldwell and was instrumental in ousting former HART CEO and Executive Director Dan Grabauskas as well as securing more money from the state legislature to help cover a growing shortfall.
During her short time with HART she was named chairwoman of the board.
Hanabusa resigned in 2016 when she decided to return to Congress to fill a seat left vacant by U.S. Rep. Mark Takai, who had died in office.
Hanabusa’s political connections run deeper still. In 2020, after an unsuccessful run for Honolulu mayor, she endorsed her primary opponent Rick Blangiardi, who ultimately beat out Keith Amemiya in the November general election.
Blangiardi hired Hanabusa’s former chief of staff Mike Formby to be his managing director. Formby and Hanabusa had also served together on the HART board. In her bid proposal to HART, Hanabusa listed Formby as one of two references.
The other was Jennifer Sabas, the executive director of the pro-rail business group, Move Oahu Forward, and the former longtime chief of staff for U.S. Sen. Dan Inouye, who is credited with securing the initial bout of federal money to make the project happen.
Jill Tokuda is a former state senator who was chair of the Ways and Means Committee until 2017 when she was removed from that position by her colleagues after pushing back against a financial bailout for rail.
Tokuda said she was initially taken aback by Hanabusa’s contract, not because of how it was procured, but by the cost. The contract initially called for Hanabusa to be paid $216,000 over 18 months, but officials say that amount could have increased over subsequent years to total nearly $1 million.
“When you aggregate the dollars it’s quite a bit of money for an organization that is extremely cash strapped and really needs to be judicious with how it spends its money,” Tokuda said. “I’m surprised for an agency that’s been under such scrutiny for its contracting, its spending and its financial position that it would let out a contract like this.”
Tokuda made clear that she believes Hanabusa is more than capable of doing the work, but she also said she was concerned about how HART wrote its solicitation. The minimum qualifications for bidders are so specific, Tokuda said, that she couldn’t think of a single other person in the state of Hawaii who could qualify.
“It’s not clear to me why these specific qualifications would be needed for the position,” Tokuda said. “The burden in this situation falls on HART to explain what their intention was for this position and why these (minimum qualifications) were required. They put out this bid and it really falls on them to be clear on what is the intention and purpose of this position.”
HART Executive Director Lori Kahikina declined to be interviewed for this article.
Hanabusa’s contract isn’t the only one HART awarded last month as it attempts to fill its funding gap. The agency also approved a $337,500 contract with Williams & Jensen PLLC for federal lobbying services.
HART and the City and County of Honolulu have a long standing relationship with the firm, which beat out three other firms for the contract, including Dentons and Strategies 360, which employ some of the top lobbyists in Hawaii.
Eric Beste is a former federal prosecutor who specialized in white collar crime and was part of the team of U.S. attorneys that investigated retired Honolulu police chief Louis Kealoha and his wife Katherine, a former city prosecutor, for corruption and abuse of power.
“You want to cast a wide net and see what you get, that’s just good contracting policy.” — Eric Beste, former federal prosecutor
Beste now works in private practice in San Diego, California, where he is involved in complex business litigation, criminal defense and other cases involving procurement and government contracting.
When considering a government contract and whether it was let properly, he said, it’s important to analyze an agency’s past practices when it comes to writing bid specifications. It’s also important to review any interpersonal relationships between the bidder and the entity paying for the work to ensure those connections are not the sole reason for the contract.
“The facts as presented certainly raise questions about the process that led to this RFP,” Beste said. “It does seem odd that in the great state of Hawaii, with so many talented and experienced people, that you would end up with only one person meeting these qualifications.”
Setting the possibility of impropriety aside, Beste said questions should still be asked about the contracting process and why it appeared to limit the number of people who could apply.
“You want to cast a wide net and see what you get, that’s just good contracting policy,” Beste said. “This is a once-in-a-lifetime project for the state of Hawaii and Honolulu so I think you’d want to get it right.”
Joey Manahan, a spokesman for HART, said it will be up to the board to decide what to do next with the contract and whether it will be put back out for bid. He described the contract as “a board initiative.”
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