Procurement controversies -- Hawaii

The following controversy underlines the cost of improper procurement. If the procurement had been conducted with an eye to cost in the first instance, there would have been substantial savings to the government. Now it will cost the government more money to pay the damages done by the wrongful procurement.

It might be noted that the State of Hawaii, as is Guam, is an ABA Model Procurement Code jurisdiction. This does not mean that the local law is identical to the ABA Model. Neither is Guam's. There are occasional differences in particulars, often substantial difference, but the principals remain the same.

From The Maui News and its news services March 23, 2012

$1.2 million to end vote machine dispute

The Hawaii Attorney General's Office is requesting $1.2 million to settle a 2008 protest filed over a contract for electronic voting machines.

Hart InterCivic Inc. was awarded a $43.3 million contract for new electronic voting machines through the 2016 elections, with an option to extend to 2018. Another vendor submitted a competing bid of $18 million.

Attorney General David Louie's office says former Chief Election Officer Kevin Cronin violated state procurement code when he awarded a multi-term contract for voting equipment without conducting the required analysis of the proposals.

The contract in this case appears to be, effectively, a 10 year "multi-term" contract.

The ABA Model Code contemplates the use of multi-year contracts (§ 3-503). They are allowed only for supplies or services "for any period of time deemed to be in the best interests of the [state] ...."

But what is meant by "the best interests of the state"? The Code provides the answer: "A multi-year contract is authorized where ... such a contract will serve the best interests of the [state] by encouraging effective competition or otherwise promoting economies...." (§ 3-503(2)(b).)

It should be noted that this results from a settlement, not an administrative or judicial adjudication.

It is hard to justify accepting a $43 million award for such a long contract term over an $18 million alternative unless the lower offer is demonstrably nonresponsive to the real needs of the government. The fact that this was settled suggests the difficulty in proving absolutely the responsiveness of the lower bid in this case, but also stands as a testament to the "stink" test.

This case reminds me of a similar action I brought to Guam's Public Auditor a few of years ago. See the Decision in that matter here.