The lucrative contract to market Hawaii’s visitor industry in the United States remains shrouded in uncertainty as the Hawaii Tourism Authority sorts out whether its controversial procurement process will end in a historic change.
HTA awarded its largest piece of business, the U.S. brand management and global support services contract, on June 2 to the Council for Native Hawaiian Advancement. The new contract, worth more than $34 million in the first two years, was expected to start June 30 and is slated to end Dec. 31, 2024. The contract comes with an option to extend for an additional two years.
If the award stands, it will be the first time that a Native Hawaiian group has been in charge of marketing for the state’s largest source of visitors. It also would be a rare example of an Indigenous nonprofit at the top spot of a state tourism agency.
But the deal is far from done.
Executives from the Hawaii Visitors and Convention Bureau, the losing bidder and current contract holder, met with HTA officials Tuesday for a formal debriefing, and they have until next Tuesday to challenge CNHA’s award.
It’s unclear whether HVCB, the only entity ever to hold HTA’s U.S. marketing contract, will appeal.
HVCB President and CEO John Monahan declined to comment because he is still under a nondisclosure agreement, a condition of HTA’s procurement process.
HTA officials, meanwhile, say they plan to scale up the organization so it can temporarily run the U.S. marketing operation if HVCB’s current contract extension, which expires June 29, runs out before a new U.S. contract is finalized.
HTA President and CEO John De Fries said in a statement that the agency would “fill the gap in brand management and visitor education for the U.S. market in-house, using existing funding.”
“Contingency planning is occurring at this time, which may include temporary reassignment of staff, emergency temporary hires, emergency procurement, and convening members of the HTA Board in an advisory capacity,” he said.
Even if HVCB decides not to appeal and CNHA takes over on June 30, the plan calls for a 90-day transition, according to public documents from the request for proposal process obtained by the Honolulu Star-Advertiser.
If HVCB challenges CNHA, it will open the door to even more questions about an already complicated procurement process.
Based in Kapolei, CNHA describes itself as a nonprofit with a mission to enhance the cultural, economic, political and community development of Native Hawaiians. The group says its services include financial counseling and providing grants and loans targeting underserved communities in Hawaii.
CNHA originally lost the first version of the RFP by five points to HVCB, according to public records released by HTA on Monday to the Star-Advertiser.
HVCB’s score was 581.3 points, while CNHA’s was 576 points. Wondros/IQ360, headed by Patrick McGovern and Lori Teranishi, was the third finalist with a score of 543.3.
Protest letter
On Dec. 10, HTA awarded HVCB a four-year contract to market the U.S. that was worth $22.5 million the first year and came with an option to extend a year. Seven days later CNHA sent state Department of Business, Economic Development and Tourism Director Mike McCartney a 14-page protest, after which he rescinded HVCB’s offer.
CNHA said in its protest letter, “Given the importance of this industry to the culture, natural resources, and economic development of this place we have called home for nearly 2,000 years, we feel compelled to protest this decision and strongly urge HTA leadership to find that the best value to the state of Hawaii, and her people have not been met through this decision.”
McCartney declined to comment due to procurement rules.
CNHA’s protest letter alleged that committee member Karen Hughes gave it a low outlier score, which it said skewed the results by nullifying the scores of five committee members. It stated that HTA’s procurement officer during a Dec. 13 briefing had acknowledged that outlier scores affected the decision.
CNHA also argued that Hughes had a conflict of interest as a former HVCB executive.
CNHA said when it brought up the question of bias for Hughes during a debriefing, the HTA procurement officer indicated that Hughes, who had worked for HVCB six years ago, was outside a five-year prior-employment window that was used as the threshold to determine conflict.
Hughes, a past HTA vice president of marketing and product development, declined to comment. She was the only committee member with an extensive history in Hawaii’s hotel industry.
Other committee members for the first RFP included Laci Goshi, who was serving at the time as HTA brand manager for the U.S. market; HTA Chief Brand Officer Kalani Ka‘ana‘ana; HTA board Chair George Kam; HTA board member David Arakawa; HTA brand manager Maka Casson-Fisher; and Mahina Paishon-Duarte, a social entrepreneur with two Hawaii-based businesses and co-founder of Waiwai Collective.
Second round
Changes to the scope of work in the second version of the request for proposals, which HTA re-solicited in April, added a requirement for a global support services management plan. The second RFP’s scoring model was changed to minimize marketing. Language was added to allow the new contractor to start without a permanent team in place.
The selection committee’s makeup changed during the second version of the RFP, as did the scores and applicants.
Arakawa, Kam, Ka‘ana‘ana and Paishon-Duarte returned to serve on the second RFP evaluation committee. However, Hughes, Goshi and Casson-Fisher were replaced by state harbors Administrator Davis Yogi, Kualoa Ranch President and owner John Morgan, and Nalani Brun, director of Kauai County’s Office of Economic Development.
The second RFP committee, which did not include any hoteliers, picked CNHA over HVCB by a 103.9-point margin. The score for CNHA in the second round was 724 and for HVCB was 620.08.
For the second RFP, only HVCB and CNHA applied.
CNHA asked Wondros, the third finalist from the first RFP, to become a major marketing subcontractor. Leslie Dance, a former HTA vice president of marketing and product development, is on Wondros’ team.
CNHA dropped other well-known Hawaii visitor industry names as part of its first and second RFP applications. However, Star-Advertiser research has confirmed that at least two of CNHA’s proposed team members — Jerry Gibson, of the Hawaii Hotel Alliance and BRE Hotels and Resorts, and Tom Kiely, former XTERRA CEO/co-founder — had not committed to the organization.
CNHA CEO Kuhio Lewis declined to address the discrepancies due to a nondisclosure agreement tied to the HTA procurement.
CNHA named Gibson as part of the transition team for its second RFP, which also included Lewis; interim Executive Director Amy Kalili; Doug Chang, general manager of the The Ritz Carlton Residences, Waikiki Beach; Ann Botticelli, former Hawaiian Airlines executive; Micah Kane, president and CEO of Hawaii Community Foundation; Rebecca Soon, owner of Solutions Pacific and Ward Research; Frank Haas, industry and marketing consultant; Roy Tokujo, Ulalena and Ko ‘Olina Marketing, former HVCB president; Kuha‘o Zane, president of the Edith Kanaka‘ole Foundation; Aaron Sala, president of Gravitas Pasifika and a cultural practitioner; and an unspecified HTA representative. Ku‘uipo Kumukahi, director of culture at the Hyatt Regency Waikiki, was named a potential transition team member.
Gibson’s name was important to the selection committee, as indicated by a clarifying question, where evaluators sought to ascertain his participation.
The committee asked CNHA, “Mr. Jerry Gibson was listed as a potential executive on your transition team. Have you received a commitment that he will be part of the transitional team if awarded this contract?”
CNHA told evaluators that all members listed on the transition team were confirmed.
CHNA told the committee, “We indicated (proposed) next to Mr. Gibson because we understand that he currently serves on the board of the incumbent and surely he will be supporting that application. However, he did confirm that if CNHA were to be awarded, he would be willing to serve on the Transition Team, and he indicated that he would do all he could to support a smooth transition,”
Gibson, who serves as president of the Hawaii Hotel Alliance, told the Star-Advertiser on Tuesday that he met with CNHA’s Lewis on May 14 but did not make a commitment to the nonprofit.
“I was never asked to be involved with the bid from CNHA, and I have no idea how I ended up in the bid documents for CNHA,” Gibson said. “I was never asked to be on the transition team by Kuhio Lewis. We had a conversation, and he asked, ‘If CNHA wins the bid, would you be able to support us?’”
Kiely said he was misidentified as part of CNHA’s first RFP proposal’s transition team.
“I got a call from somebody last fall that said, ‘Hey, if somebody wants to talk about tourism, are you open to do that?’” he said. “It was never mentioned that it was a proposal (involving) HTA, none of that. When I saw my name was part of a proposal, I was upset about it.”
Kiely said the discrepancies in CNHA’s proposals must be evaluated.
“Someone needs to go back to HTA and say, ‘What are you doing?’” he said. “‘You gave it to HVCB the first time, and you pulled it back and gave it to these other guys the second time, and some of their people aren’t even involved. It casts a pall on the whole thing.”
Kiely said such an important state contract should check every box perfectly.
“If one box isn’t checked perfectly, then you stop and start again,” he said. “This is not a little $10,000 sponsorship of a kite-flying tournament somewhere. This is the big deal.”
