HONOLULU -- The city has awarded a lucrative contract for a new high-tech bus fare system to a local construction company with no experience in the bus business, KITV 4 News investigative reporter
Keoki Kerr learned.
The company is already under investigation by both prosecutors and the Campaign Spending Commission for its donations to Mayor Jeremy Harris and his top lieutenant.
The city already cut bus service in June and plans to cut more bus service this month because of budget cuts. Now, it's spending $2 million on a high-tech project that's already six months behind schedule.
Commuters in some mainland cities are already using smart cards. They're shaped like credit cards and can be purchased at transit stations and retail shops. Electronic readers deduct the value for each bus or train trip and riders can re-charge them by purchasing more value.
It's cutting-edge technology also being used in the fast-food industry.
When the city of Honolulu awarded its contract for smart cards on city buses, it rejected the bid of an internationally-known company that specializes in the technology. Instead, the city hired Royal Contracting.
Royal Contracting is well-known for building projects like Central Oahu Regional Park as well as numerous road, landscaping and other parks projects for the city. It has no experience in the high-tech bus fare business.
"True, but they partnered with people that do have vast experience in doing it," said Paul Steffens of the Transportation Department.
The company is relying on two subcontractors to manage, design and install the smart card technology.
Steffens said the contract was awarded, "based on cost, ability to meet the schedule, a viable approach to installing the equipment, meeting deadlines."
Royal Contracting, with its offices in Mapunapuna, is under investigation by the Campaign Spending Commission for allegedly funneling at least $10,000 in company money to family members to make illegal donations to Harris' campaign.
"I'm really surprised that the city would be giving the contract to one, a company that has absolutely no experience in this area. And secondly, a company that's under some cloud in terms of the investigation that we're carrying on," Campaign Spending Commission Director Bob Watada said.
The company also faces a criminal probe by the prosecutor's office because it delivered historic curbstones from a city construction project to the home of city Managing Director Ben Lee.
Royal's vice president is Leonard Leong, who chairs the Honolulu Police Commission.
"And we picked the lowest responsive bidder period. End of story. There's nothing hidden. There's nothing deceitful. There's no misuse of money," city Transportation Department Director Cheryl Soon said.
The city fast-tracked the contracting process for bus smart cards, putting it out to bid in December of last year. The city's original timetable called for the new system to start operating in July of this year. However, once the company won the contract, the city delayed the start date by at least six months, not until January or February of 2004.
The city said the delay came because Royal's bank at first refused to provide them a performance bond, because of Royal's inexperience in bus software.
"My understanding is their bonding company finally said, 'Oh, we'll give you the bond,'" Steffens said.
The city awarded a $2.2 million bus smart card contract to Royal in the late spring, which was about half the cost of the only other bidder, Cubic Transportation Systems of California.
The city spent another $236,000 hiring a consultant to design the specifications and help evaluate the proposals. The city does not have an estimate of how much operation and maintenance will cost taxpayers, but the city may have to hire two or three new employees.
KITV 4 News left a message for Leong at Royal Contracting Tuesday, but did not hear back from him.
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KITV 4 News Investigates: City Smart Card Contract
