As the Navy continues to wrestle with the consequences of the contamination of its water system from its underground Red Hill Bulk Fuel Storage Facility, the complexity of its fueling operations comes under increasing scrutiny — particularly when it comes to maintenance work at the aging fuel farm.
Day-to-day operations at Red Hill are carried out by a mixture of both uniformed and civilian defense personnel along with private contractors that together manage, operate and maintain a 20-tank fuel farm that can hold up to 250 million gallons of petroleum.
Operations have been scrutinized intensely by government regulators and local activists since at least 27,000 gallons of fuel spilled from Red Hill’s Tank 5 in 2014. At the time of the incident, the Navy said error on the part of a contractor caused the spill.
The current crisis stems from the contamination of the Navy’s water system, which serves 93,000 people. The fuel, the Navy says, may have originated from a Red Hill spill in May, after which jet fuel ultimately made its way to a pipeline that ruptured Nov. 20.
The history of leaks from Red Hill has stoked fears that it threatens the freshwater aquifer that lies just beneath the tanks and that the facility ultimately is a threat to Oahu’s water supply.
Over the years top Navy officials have argued that removing the fuel from Red Hill — and potentially building a new facility to store it — would be too expensive. A 2018 analysis commissioned by the Navy found that building a new facility with the same storage capacity as Red Hill would cost $4 billion to $10 billion and could take until 2051 to complete.
The facility was built underground during World War II to protect it from enemy air attacks, but its unique architecture has left those who work there today with unique challenges maintaining and operating it.
The aging facility as it exists needs constant upgrades and repairs that more often than not involve contractors in some capacity.
Several agencies are involved in military fueling operations, including the Defense Logistics Agency, an organization charged with overseeing military supply missions and supporting the services’ acquisition of weapons, fuel, spare parts and other materials. The Navy owns the Red Hill facility, but the DLA owns the fuel inside and is responsible for coordinating its distribution to troops using it.
The military considers the Pacific its top-priority theater of operations, and Oahu is its headquarters for those operations.
Navy officials have publicly argued Red Hill is vital to supporting U.S. operations in the region. But privately, some say the underground facility, with its aging equipment and history of problems, has become a burdensome, outdated and increasingly expensive liability.
A former senior DLA employee who spoke on the condition of anonymity due to the sensitivity of work he did in the Pacific, said there has been an internal debate within the military over the Red Hill facility’s strategic value — one that has only gotten more intense as the World War II-era fuel farm ages and requires more upgrades and constant repairs.
“It’s a money pit,” said the former DLA employee. “DLA does not want to be in that hill. It’s costing them a fortune.”
When it comes to Red Hill, Navy officials often allude to the work of contractors but rarely name specific companies.
The state Department of Business, Economic Development and Tourism, however, has maintained a database of defense spending in the islands from 2017-2021 through its Hawaii Defense Economy Project, which offers a glimpse into Oahu fueling operations.
Defense spending plays a critical role in the state’s economy, making up at least 7.7% of Hawaii’s gross domestic product, the second- highest share of any U.S. state. The Hawaii Chamber of Commerce has for years pushed back on proposals to move fuel from Red Hill.
“The Department of Defense has the largest budget of any agency in the federal government, and so it’s really a very lucrative place for companies to target to be able to get revenue, and particularly as the budgets have continued to only go up, it’s a very stable source of revenue for many companies,” said Mandy Smithberger, director of the Project on Government Oversight’s Center for Defense Information.
Gov. David Ige has ordered the Navy to de-fuel the tanks and suspend operations at the facility, which the Navy is fighting.
A March 2014 Pentagon budget request for $50 million in improvements to the facility’s fire suppression system noted that analysts had concluded “the existing underground fueling facility at Red Hill has inadequate fire protection infrastructure and communication system” and that “fueling operations in the underground complex create high potential for fire incident.” The funding request also noted concerns that the “ventilation within the tunnel as well as the remote location and inadequate fire protection infrastructure external to the tunnel make this a high risk operation.”
During a Dec. 20 hearing in which the Navy and state officials argued over the facility’s future, Capt. James Meyer of Naval Facilities and Engineering Command Hawaii said that he and others have a “working theory” that fuel from a May spill descended into a lower tunnel and ended up being pumped into a pipeline that’s part of the facility’s fire suppression system. Months later, on Nov. 20, that pipeline ruptured and spilled thousands of gallons of fuel and water that Navy officials now think flowed into a drain used to release rainfall infiltration back into the environment. Their investigation continues.
When asked about specific contracts listed in the Hawaii Defense Economy Project database, Navy officials did offer some insights into the money spent on the facility and the contractors working there.
The contractor that has made the most working on the Navy’s fuel systems in Hawaii, according to state data, is APTIM Federal Services LLC out of Baton Rouge, La. APTIM received at least $106.5 million in contracts from the Navy for various maintenance, repair and alteration work on fuel facilities and pipelines in Hawaii between 2017 and 2021, according to data from the Hawaii Defense Economy Project.
Navy officials told the Honolulu Star-Advertiser that APTIM’s contracts involving Red Hill included “various work” on Tanks 1, 4, 13, 14, 17 and 18 along with a contract for Tank 5 marked “closed.” It also made $802,474 in 2017 on another contract for “pipeline inspection and coating repair” marked as closed, and has contracts for work on several above-ground tanks.
Data from the Hawaii Defense Economy Project also shows the Navy paying the company $69.2 million between 2017 and 2021 for “oil and gas pipeline and related structures construction.”
When asked how far the company’s contracts in Hawaii go back before 2017, Navy spokespeople stopped answering questions about Navy contracts altogether and said any further questions regarding Navy contracts would have to be obtained through formal Freedom of Information Act requests. APTIM also did not respond to requests for comment.
In terms of other contractors, Navy officials said Allied Pacific Builders Inc. of Kapolei received $2.9 million in 2021 for a contract to replace a secondary containment liner; Kailua-based Concept 2 Completion LLC was paid $1.3 million in 2019 and 2020 for work on an elevator modernization project; and Wahiawa-based Hawk-Niking LLC received $804,900 in 2020 and 2021 for work on Red Hill’s ventilation system.
Colorado-based Hensel Phelps Construction Co. received $10.8 million in 2017-2020 for several fuel system maintenance contracts. Navy officials said those included upgrades to Red Hill’s fire suppression and ventilation system subcontracted to Insight Pacific LLC; replacing the electrical system at Red Hill Pump Station S-307, which was subcontracted to Triton Marine Construction Corp.; and repairs to the fueling station at Hotel Pier in Pearl Harbor, which was subcontracted to Weston Solutions Inc.
Subsidiaries of the Hawaiian Native Corp. also made at least $24.7 million on contracts to maintain Navy fuel systems around Oahu. The HNC is a Hawaii registered non-profit, but it’s for profit Dawson companies work extensively on fueling operations at Pearl Harbor and Marine Corps Base Hawaii though not at the Red Hill facility itself.
Hawaii state data shows that Dawson Federal Inc. received $1.7 million for repairs and alterations to Navy fuel facilities in 2017-2019 and Dawson Enterprises LLC received $4.1 million for repairs and alteration to Navy fuel facilities in Hawaii in 2020 and 2021.
Dawson-Pond JV LLC, a Texas-based joint venture listed on Dawson’s website, also received $6.9 million for work on fuel facilities in 2018-2021, which Navy officials said included work at the Fuel Oil Reclamation Facility at Joint Base Pearl Harbor- Hickam, where fuel and water removed by Navy salvage divers working in the Red Hill well were taken. It also received $12 million from the Navy for “oil and gas pipeline and related structures construction.”
Dawson Enterprises also received $130,700 in 2019 and 2020 for water quality support contracts labeled “temporary help services” in the Hawaii Defense Economy database.
Neither HNC nor Dawson companies, which listed the same spokesperson, responded to requests for additional details and comments.
The former Defense Logistics Agency employee said Texas-based Willbros Group had the contract to work on Tank 5 during the 2014 spill but had since lost its major Red Hill contracts, with APTIM taking over.
According to data from GovTribe.com, APTIM was established in 2002 as CB&I Federal Services LLC and in its first decade was a relatively small player in terms of federal contracting, making a peak $14.6 million in 2008 and less than $2 million in 2013. But in December 2013 the company hired Rear Adm. David Boone, who had retired earlier that year as the Navy’s director for shore operations — a role in which his duties included overseeing fueling facilities — as the company’s new president.
In 2014 the company raked in $153 million in federal contracts.
In 2018 the Project on Government Oversight added APTIM and Boone to its Pentagon Revolving Door Database, which tracks senior officials leaving government to take jobs at companies whose work they once oversaw or regulated, and at the time noted that APTIM received $370.2 million in contracts from the Navy alone.
POGO’s Smithberger said private companies often approach government officials in hopes of putting them on their payroll after they leave the government.
“There is certainly a perception, and I think in many cases the reality, that by recruiting former senior government officials that they have the influence and relationships that will help give companies a competitive edge to be able to win more government contracts,” Smithberger said.
Boone left APTIM in 2018. Data from GovTribe.com shows that as of December the company has netted $2.7 billion in federal contracts since its modest early days.
The Star-Advertiser received no response from APTIM to its request for comment, which was made via email as indicated as the method for media inquiries on its website. Boone also could not be reached for comment.
On Dec. 16 the Navy announced that water samples it collected showed that contamination in its water system was below the state’s “environmental action limit.” In a news release announcing the results, the Navy said it uses a contractor to collect daily water samples and that these samples are sent to the mainland for testing of petroleum products by “third-party certified laboratories.”
Navy officials did not respond to questions about what company collected the samples or what labs tested them.
“Sharing that information across the government and with the public is part of the safeguards that you need to have in place to ensure that we only do business with responsible companies,” said Smithberger.
Data from the Hawaii Defense Economy Project indicates that in addition to the contracts for maintaining fueling facilities and equipment on Oahu, APTIM also received $3.7 million in Navy contracts since 2017 for “environmental services,” including water quality support and lab testing. In 2021 it received $73,900 for “toxic and hazardous substance analysis.”
Correction: A previous version of this story incorrectly said that the Hawaiian Native Corporation and its Dawson subsidiaries received tax incentives as a Native Hawaiian owned entity. Though many organizations do, HNC has never applied for any tax incentives and pays full taxes on its for-profit Dawson subsidiaries. This story has also been updated to clarify that Dawson companies, while working extensively on Navy and Marine Corps fueling facilities around Oahu, do not have contracts at the Red Hill facility itself.
