The Legislature wanted greater oversight of the Honolulu rail project, and part of that impulse led to the assignment of the state auditor to do a series of reviews.
Few expected that among the conclusions would be this: The Honolulu Authority for Rapid Transportation does not itself have enough oversight over the top executives because many are contracted consultants, not employees.
While it’s not a mystery why HART has recruited experts for construction of the 20-mile elevated rail project, it’s plain that the agency does not have sufficient controls in place. Such controls are needed to serve the interests of taxpayers, not of the consultants’ parent company.
Those are among the key findings of the latest report from the state Office of the Auditor, second in a series mandated by the state Legislature during the 2017 special session.
The HART chief executive officer’s response indicates it is now making some moves in the right direction, but they should have been taken well before this crucial, late stage of construction.
The state’s connection to this city public works project — and the reason why the state auditor is reviewing the work of the quasi-independent HART — is that lawmakers held the special session to authorize more funding for rail. What they approved, after a contentious debate, was an extension of Oahu’s general excise tax surcharge and the addition of a share of the state’s transient accommodations tax.
The rail project’s cost has ballooned, nearly doubling from $5.12 billion. The current estimate stands at nearly $8.3 billion, with more cost increases expected to boost the total to more than $9.2 billion by the time financing costs are tallied.
It’s becoming more evident how this could happen, now that the public sees the uneven communication between HART staff and its governing board — as well as the loose rein on the performance of the contract-consultant hires.
At issue in this report, signed by state Auditor Les Kondo, are primarily the cost and oversight of the 18 contract employees from the firm HDR Engineering Inc. They fill many high-level positions including project director, director of design and risk manager, at $9.6 million a year.
Some of the identified management flaws concern the decision-making responsibilities of HART’s staff and board. A City Charter amendment in 2016 gave the board more oversight, but the relationship is still “in flux,” according to the audit.
It questioned the fact that the decision to pursue public-private partnership as a mode for completing construction was left to the discretion of CEO Andrew Robbins, for example. Also, some key information about “contingency” funding budgeted for contracts was not disclosed to the board. In his response, Robbins said that the contingency on individual contracts is kept confidential to maintain leverage for when renegotiations with contractors become necessary.
But the auditor rightly countered that transparency with the governing board is sacrificed, and that the board “does not know whether the actual construction costs exceeded the amount that HART had budgeted for that work.”
Kondo and his team recommended that HART develop more rigorous policies for performance evaluations of third-party consultants, and action plans to correct deficiencies. The embedded HDR staffers also, as recommended, must work with management on specific performance metrics.
HART has initiated a new formal procedure for review and approval of staff performance reports, according to the official response, and “will require that the supervising personnel of all seconded consultant staff review and approve the performance report.”
Without a doubt, legislators will be checking, as they should, for a progress report this session, and marked improvements. When it comes to $3 billion-plus in cost overruns, there’s no such thing as enough oversight — and the rail project is a long way from hitting that mark.