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Old Hawaii airport contracts tie up more than $6 million in funds: Critics say appropriations could be used elsewhere, point to bad managementDec 06, 2009 (The Honolulu Advertiser - McClatchy-Tribune Information Services via COMTEX) -- The state's airports division has 54 contracts that are five years or more beyond their expiration date, including 13 contracts that have lapsed for at least 10 years. Overall, more than $6 million in unspent appropriations are tied up in those open contracts that date to as early as May 1998, according to the state Department of Transportation. State contracts typically lapse after five years. The release of the contract data follows a recent state Senate probe into a $1.5 million, June 2000 contract for a system to monitor taxi traffic at Honolulu International Airport. The state spent $1.3 million before initiating default proceedings against the contractor this year for failing to finish the system. The airport also paid the contractor -- Ted's Wiring -- a total of $21,000 in late 2004 and 2005 for work completed in 1986. The agency has since come under criticism for failing to properly manage its contracts. However, state transportation Director Brennon Morioka said most contracts linger because of lengthy environmental impact reviews or the need for other outside approvals. In some cases projects are delayed because of a change in state priorities, he said. Money tied up in old airport contracts does not affect the state's general fund, which has experienced shortfalls because of a slowing economy. That's because funding for the airport deals comes from the federal government and the airport special fund, which gets the bulk of its revenue from airport concessions. The airport special fund has about $400 million in unrestricted cash, according to the state. "The only thing that could really injure (the airport special fund) is the fact that visitor arrivals and (airplane) takeoffs and landings decrease because of the state of the economy," said Lowell Kalapa, director of the Tax Foundation of Hawaii. However, "Good management should dictate that they try and close these things out as soon as possible because if you have money out there dangling for 20 years, that doesn't make sense because that money can be deployed somewhere else," Kalapa said. The state did not specify how many of the 54 contracts have lingered beyond their original expiration dates. However, most are services contracts that don't expire until a project is completed, Morioka said. "The amount of approvals that we have to go through, it does stretch out the length of our projects and that has been a concern for a long time," he said. "As long as the project is ongoing, whether it's in design, or it's still in the planning phase (or) it's an environmental impact statement, then we keep working with that contractor or that consultant until the product is finished." State Sen. Donna Mercado Kim, chairwoman of the Senate Ways and Means Committee, said the large number of old contracts reflects a failure in management. That unnecessarily ties up state airport funds, which come from airport concessions and tenant rents, she said. "It is a lack of oversight. It's a lack of continuity. It's a lack of paying attention to the details and what's going on," said Kim, D-14th (Halawa, Moanalua, Kamehameha Heights). "I don't know how many businesses out there would run these open-ended contracts or would have these things sitting there. "Then they're charging all these taxes to businesses that pass it on to us the consumer." Overall, the 54 contracts five years or older are valued at nearly $18.6 million. Of that, $12.5 million was spent as of Oct. 9, leaving $6.1 million in remaining commitments . The oldest of the airport's open contracts are three May 1998 deals with Wilson Okamoto Corp. for $145,544 to work on an environmental impact plan at the Lihu'e Airport. The state still owes the contractor $26,340, according to state airport records. Morioka said the project is awaiting Federal Aviation Administration approval. Another 12 deals with SDV Telecommunications Inc. for airport telecommunications maintenance are tied up in legal issues, according to the airport officials. The largest outstanding contract is an April 2000, $2.2 million deal with Wilson Okamoto for improvements to the airport's Wiki-Wiki roadway system. The state still owes the contractor $1.75 million. Under state law, contract commitments expire five years after the fiscal year of the original commitment, unless the state comptroller grants an exemption . Morioka said that state law doesn't apply to most, if not all the aging airport contracts. "Often times when we comingle federal funds, which is typically what we do, federal regulations typically govern over state appropriations, or state laws, in terms of how funding and appropriations are handled," he said. Reach Sean Hao at [email protected]. To see more of The Honolulu Advertiser or to subscribe to the newspaper, go to http://www.honoluluadvertiser.com. Copyright (c) 2009, The Honolulu Advertiser Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |