The politically prominent owner of an engineering company that does work for the University of Hawaii has accused a top UH executive of wasting potentially millions of dollars in state money through what the engineer called blatant mismanagement of construction projects, including steering contracts to firms operated by friends.
Dennis Mitsunaga, who owns Mitsunaga and Associates, said the actions of UH’s associate vice president for capital improvements, Brian Minaai, on a Hilo dormitory project Mitsunaga is involved with would have been criminal had the university not had a temporary exemption from the state’s procurement code. That two-year exemption expired last year.
Mitsunaga, a major Democratic political donor and supporter of Gov. Neil Abercrombie, made the startling accusations in written testimony submitted Thursday to a Senate committee considering a bill about UH construction projects.
The measure, Senate Bill 1383, would shift procurement oversight of construction contracts from UH and return it to the state Procurement Office, which handles that responsibility for most other state agencies.
The bill passed the Senate Higher Education Committee on Thursday but was killed later that day by the Senate Economic Development Committee. UH opposed the bill while the Abercrombie administration supported it.
In his written testimony in support of the bill, Mitsunaga said Minaai’s process for selecting consultants for nonbid projects is highly suspect and, with the exception of Mitsunaga’s firm, said Minaai picks only friends from a pool of hundreds of qualified Honolulu architects and engineers.
Mitsunaga said working with Minaai on the Hilo dorm has been a nightmare for his staff. He accused Minaai of ordering the replacement of two project consultants and hiring of a third one after the selection process had been completed, adding to the cost.
Minaai directed Mitsunaga’s firm to hire the third company, Palekana Permitting and Planning, to do permit processing, even though that work usually is part of the engineer or architect’s basic service and normally doesn’t involve a separate charge. Palekana’s fee for this service is $23,000.
THE ALLEGATIONS
Prominent engineer Dennis Mitsunaga, in testimony to the Legislature, has accused a top University of Hawaii official of:
>> Steering contracts to friends.
>> Making project changes that waste state money.
>> Running an inefficient office.
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"In the process of giving us a difficult time, Brian gave away millions of dollars on this project alone and should be investigated for BLATANT MISMANAGEMENT," Mitsunaga wrote in his testimony to the Senate Committee on Higher Education.
Asked about Mitsunaga’s testimony, UH spokeswoman Lynne Waters said in a written statement that the university leadership was aware of the serious nature of some of the Mitsunaga allegations.
"Please note these accusations have not been proven," Waters wrote. "Nevertheless, a thorough investigation of the allegations will be conducted."
Minaai did not respond to a Star-Advertiser request, made through Waters, for comment.
Mitsunaga’s written testimony — he didn’t appear at Thursday’s hearing to answer questions — is significant because he publicly questioned a UH process that many contractors privately complain is unfair but are unwilling to openly criticize, fearing retaliation because they still bid for or work on university projects.
Mitsunaga’s firm has done multiple UH projects, including the Les Murakami Stadium, and still is involved with the Hilo housing complex, now under construction. He could not be reached Monday for comment.
"These are the kinds of things you hear about but never see in writing, especially by someone so prominent and involved in the industry," said Senate President Donna Mercado Kim, who supports bringing UH procurement oversight responsibility back to DAGS.
In his six pages of written testimony, Mitsunaga said Minaai essentially controls the selection of no-bid contractors because two of his assistants sit on the three-person selection committee. Mitsunaga said the selected consultants are small firms that are not the best qualified for the work.
He noted that Minaai selected Bryce Uyehara’s small architectural firm to design major renovations at International Gateway House, a Manoa dorm complex, even though Uyehara submitted a flawed design for the UH softball stadium in the late 1990s. Before it even opened, the field had to be raised because spectators sitting in the bleachers could not see home plate.
Published reports at the time indicated that Uyehara had to pay more than $300,000 to correct the problem, with the state kicking in a similar amount to fix other issues. Uyehara could not be reached Monday for comment.
On the Hilo dorm project, Mitsunaga said Minaai replaced another Mitsunaga firm, Mitsunaga Construction Inc., with Albert C. Kobayashi Inc., as the so-called design-assist partner, and also named Kobayashi as the contractor. Mitsunaga and Associates continued as the lead designer.
When the Legislature decided last year not to extend UH’s exemption from the state procurement code, the decision was made as UH fended off charges within the construction industry that work was unfairly being steered to Kobayashi.
During the design phase of the Hilo project, Minaai directed Mitsunaga and Associates to draw up whatever the contractor wanted and was told to not question the costs, resulting in no independent check on Kobayashi’s price, according to Mitsunaga. One offshoot: a wooden framing system dictated by the contractor that will require heavy maintenance because of Hilo’s rainy weather, he added.
A Kobayashi representative could not be reached for comment Monday.
The Hilo project has become "never ending" because Kobayashi constantly is making changes to increase its profit margin, Mitsunaga wrote.
When Minaai gave the general construction contract to Kobayashi, that company subcontracted what is normally considered the general contractor’s work to Isemoto Construction, the largest contractor in Hilo, according to Mitsunaga. By not awarding the contract directly to Isemoto, the state probably has to pay an extra $3 million to $4 million, he estimated.
Louis Kiang, formerly with a company that settled a breach-of-contract lawsuit against UH tied to its soon-to-open cancer center, said Mitsunaga’s testimony is consistent with experiences he had with Minaai.
Kiang said he believes Minaai is trying to subvert procurement rules to benefit friends and patrons. "It’s deliberate," Kiang said. "These things go beyond incompetence."
CORRECTION: Senate Bill 1383 would shift procurement oversight of construction contracts from the University of Hawaii and return it to the state Procurement Office. An earlier version of this story and the story on page A1 of today’s paper said it would shift responsibility to the Department of Accounting and General Services.
Dennis Mitsunaga’s testimony to the Senate Committee on Higher Education on Thursday, Feb. 14, 2013 in supp… by
