A bill that would strip the University of Hawaii of procurement responsibilities for new construction was passed by the Senate Ways and Means Committee on Monday, signaling continuing legislative concern over the way the school has handled millions of dollars in projects.
Under the amended version of House Bill 114 advanced by the Senate panel, the Department of Accounting and General Services would take over procurement functions, including the awarding of contracts, for new construction at UH, while the state procurement office would assume oversight responsibility.
The legislation also gives broad authority to the DAGS comptroller for determining whether that agency or UH would maintain jurisdiction over repair and maintenance work and over any projects considered continuing or ongoing. Construction contracts in place before the bill were to take effect would stay with UH.
Allegations of UH mismanagement and favoritism involving the awarding of construction and consulting projects has fueled legislative efforts this session to change the school’s procurement system.
The controversy intensified after Dennis Mitsunaga, a politically prominent engineer whose firm does business with UH, submitted written testimony in February alleging that a top UH executive, Brian Minaai, wasted potentially tens of millions of taxpayer dollars through blatant mismanagement and by steering contracts to friends.
"The procurement process at the university is fraught with so many problems," Sen. Sam Slom, one of 12 members of the Senate money panel who voted Monday for the bill, said in an interview. No one on the committee voted against it.
In the wake of Mitsunaga’s allegations, the university said the attorney general’s office would conduct an investigation. Minaai, UH’s associate vice president for capital improvements, has been placed on leave while the investigation is conducted, legislators said.
UH has not commented on Minaai’s status. An email sent to his UH address Monday generated an automated response saying he was unavailable and that his emails would be forwarded to and handled by UH staff.
Throughout the session, UH has opposed legislation that would remove procurement functions and oversight from the school.
Howard Todo, UH vice president for budget and finance, said in written testimony that taking away responsibilities for construction, including related consulting services, would mean the university no longer would have the ability to ensure the timely procuring of contracts.
UH is concerned that such a change will adversely affect more than $600 million in major projects under way or in the pipeline and have a severe impact on the university offices that handle construction, repair and maintenance on 10 campuses, Todo said Thursday in testimony to the Ways and Means Committee.
The amended measure passed by Ways and Means differs substantially from the House bill, which would have transferred only oversight responsibility — deciding compliance issues involving the state procurement code — over construction projects. Under the House bill, the university would have retained non-oversight functions, including the ability to award contracts and determine funding priorities.
UH has oversight responsibility for all its procurement contracts, a self-policing system that some legislators consider a conflict of interest.
If the full Senate passes its version of HB 114, the two chambers would have to resolve their differences and pass an agreed-upon measure before the proposal can be sent to Gov. Neil Abercrombie for consideration.
Sen. Donovan Dela Cruz, whose Economic Development, Government Operations and Housing Committee played a key role in reviewing the bill, said he envisions the proposed changes being temporary and a way to address some $460 million in backlogged repairs UH has acknowledged and other procurement-related problems.
"This cannot be a long-term fix," Dela Cruz said.
The idea, he added, would be for DAGS to build the capacity to handle UH projects and eventually transfer that capacity, including staff, back to UH, along the lines of what happened when the Department of Education took over procurement duties and staff from DAGS years ago.
Dean Seki, comptroller at DAGS, said in written testimony to the Ways and Means Committee that his agency would need about $2.7 million a year in additional positions to handle UH construction projects for new buildings. The positions would be new and would not involve transfers from UH because DAGS would need the university staff to handle coordination for new projects, Seki said.
He did not address staff needs related to repair work.
The procurement issue was one of several that legislators raised this session in the wake of last year’s Stevie Wonder concert debacle. Senate accountability hearings identified oversight and transparency problems at UH.
