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Sumitomo protest

Sumitomo protest

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Published by Craig Gima

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Published by: Craig Gima on Apr 18, 2011
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GOODSILL
ANDERSON
QUINN
&
STIFEL
A
LIMITED
LIABILITY
LAW
PARTNERSHIP
LLP
ALII
PLACE,
SUITE
1800
1099
ALAKEA
STREET
HONOLULU,
HAWAII
96813
MAIL
ADDRESS:
P.O.
BOX
3196
HONOLULU,
HAWAII
96801
TELEPHONE
(808)
547-5600
FAX
(808)
547-5880
info@goodsill.com
www.goodsill.com
DAVID
J.
REBER
JOHN
R.
LACY
THOMAS
W.
WILLIAMS.
JR.
LANI
L.
EWART
RANDALL
K.
STEVERSON
GARY
M.
SLOVIN
LISA
WOODS
MUNGER
BRUCE
L.
LAMON
PETER
T.
KASHIWA
RUSSELL
S.
KATOVINCENT
A.
PIEKARSKI
MICHAEL
J.
O'MALLEy
LEIGHTON
J.H.S.
YUEN
CORLIS
J.
CHANG
BARBARA
A,
PETRUSPATRICIA
NAPIER
MIKI
OKUMURA
AUDREY
E.J.
NGALAN
S.
FUJIMOTO
WALTER
C.
DAVISON
RAYMOND
K.
OKADA
GAIL
O.
AYABE
DALE
E.
ZANE
LINDALEE
K.
FARM
CAROL
A.
EBLEN
JUDY
LEE
LENNES
OMURO
PETER
Y.
KIKUTA
THOMAS
BENEDICT
EDMUND
K.
SAFFERY
LISA
A.
BAIL
CAROLYN
K.
WONG
JOACHIM
COX
SCOTI"
O.
MORITA
SEAN
K.
CLARKROBERT
FRICKE
REGAN
IWAO
DAWN
T.
SUGIHARA
H.
GREGORY
NASKYANNE
T.
HORIUCHIMIHOKO
E.
ITO
JENNIFER
M,
YOUNG
KIMBERLY
J.
KOIDE
SHANNON
H.
SAGUM
ROSEMPdKIE
S.
J•
SAM
BRIAN
D.
ANCHETA
WILLIAM
K.
TANAKA
]ESSICA
M.
MICKELSEN
CLAIRE
E.
GOLDBERG
REBECCA
L.
DAYHUFF
GO
R.
KOBAYASHI
KARYN
R.
OKADA
AUDREY
M.
YAP
ABIGAIL
M.
HOLDEN
DARSIE
J.
T,
ING-DODSON
KIMBERLY
VOSSMAN
CHRISTINA
ZAHARA
NOHCOUNSEL:
JACQUELINE
L.S.
EARLE
LISA
T.
BEDELL
ROBERTJ.
HACKMAN
MARTIN
S.
LOUI
OF
COUNSEL:MARTIN
ANDERSON
CONRAD
WEISER
RONALD
LUM
MARSHALL
M.
GOODSILL
(I916-2004)
WILLIAM
F,
QUINN
(I919.2006)
RICHARD
E.
STIFEL
(1920-1993)
April
11,2011
DELIVERED
BY
HAND
EMAIL
transitmailbox@honolulu.gov
Mr.
Michael
R.
Hansen
Chief
Procurement
OfficerDirector
of
Budget
&
Fiscal
Services
City
and
County
of
Honolulu
530
South
King
Street
Honolulu,
Hawaii
96813
Re:
Sumitomo
Corporation
of
America's
Protest
of
REP-DTS-198413,
Core
Systems
Design-Build-Operate-Maintain
Contract
for
the
Honolulu
High
Capacity
Transit
Corridor
Project
Dear
Mr.
Hansen:
Sumitomo
Corporation
of
America
("SCOA"),
with
an
address
at
Seven
Waterfront
Plaza,
500
Ala
Moana
Boulevard,
Suite
400/424,
Honolulu,
HI
96813,
hereby
protests
the
award
ofthe
contract
for
the
project
referenced
above
(the
"Project")
to
Ansaldo
Honolulu
JV
("Ansaldo").
This
protest
is
made
pursuant
to
Hawaii
Revised
Statutes
("HRS")
§§
103D-303
and
103D-701,
Hawaii
Administrative
Rules
("HAR")
§§
3-122-60,
3-122-97(b),
and
3-126-4,
the
terms
and
conditions
of
the
Request
for
Proposal
referenced
above
(the
"RFP")
and
other
applicable
statutes
and
rules.
This
protest
is
timely.
The
City
and
County
of
Honolulu
(the
"City")
announced
the
award
to
Ansaldo
on
March
21,2011.
Later
that
same
day,
SCOA
requested
a
debriefing
pursuant
to
HRS
§
103D-303.
The
City
responded
to
SCOA's
request
for
a
debriefing
on
March
28,
2011,
and
a
debriefing
was
held
on
April
4,
2011.
While
the
City
has
not
yet
provided
SCOA
with
all
of
the
documents
and
information
it
is
entitled
to
receive
(among
other
things,
SCOA
is
still
waiting
to
receive
unredacted
versions
of
key
documents
that
were
relied
upon
in
the
evaluation
process),
SCOA's
ongoing
review
of
the
 
Mr.
Michael
R.
Hansen
April
11,
2011
Page
2
GOODSILL
ANDERSON
QUINN
&
STIFEL
A
LIMITED
LIABILITY
LAW
PARTNERSHIP
LLP
evaluation
process
has
already
revealed
a
number
of
fundamental
errors
that
require
the
City's
award
of
the
Project
to
Ansaldo
to
be
rescinded
and
the
contract
to
be
awarded
to
SCOA.
I.
PRELIMINARY
STATEMENT
It
is
fair
to
saythat
no
large
construction
project
is
free
of
problems,
and
no
contractor
is
without
flaws.
A
review
of
Ansaldo's
recent
history,
however,
demonstrates
a
disturbing
pattern
of
repeated,
seriousfailures failures
of
a
degree
and
severity
that
are
significantly
greater
than
industry
norms
and
far
below
the
expectations
of the
Project.
SCOA,
which
serves
as
the
prime
contractor
withoverall
project
responsibility,
has
an
impeccable
track
record
and
a
history
of
satisfied
customers.
And
while
SCOA
(like
every
major
contractor)
has
from
time
to
time had
to
contend
with
unexpected
delays
in
production
and
construction,
SCOA's
relatively
minor
problems
pale
in
contrast
with those
of
Ansaldo
and
its
partners.
By
way
of
example:
In
2003,
the
Los
Angeles
CountyMetropolitan
Transit
Authority
ordered
50
rail
cars
for
delivery
by
June
2007.
The
cars
were
delivered
three
years
late,
6,000
poundsoverweight,
and
with
numerous
technical
problems.
Ansaldo
paid
millions
ofdollars
in
liquidated
damages
and
was
also
required
to
pay
an
additional
$15
million
dollars
to
settle
the
dispute.
In
1995,
the
Massachusetts
Bay
Transit
Authority
in
Boston
ordered
100
cars
for
delivery
between
November
1998
and
December
2000.
The
cars
sufferedfrom
numerous
problems
including
frequent
derailment
that
took
nearly
a
decade
to
resolve.
Delivery
of
the
last
car
did
not
take
place
until
early
2007.
In
December
2000,
Denmark's
national
railway
operator
purchased
83
inter-city
trainsets
from
Ansaldo
for
delivery
in
2003.
Nine
years
later,
only
15
trainsets
had
been
delivered
and
Ansaldo
was
required
to
pay
over
$400
million
to
settle
the
dispute.
The
city
of
Gothenburg,
Sweden
ordered
40
cars
in
2001.
In
a
by-now
familiar
story,
the
cars
were
delivered
years
late
and
were
reported
to
have
serious
problems.
SCOA
respectfully
submits
that
if
the
evaluators
had
appropriately
accounted
for
Ansaldo's
history,
the
results
of
the
City's
decision
would
and
should
havebeen
quite
different.
The
City
would
not
have
found
Ansaldo
to
be
qualified,
and
even
if
for
the
sake
of
argument,
Ansaldo
had
been
deemed
qualified,
its
proposal
would
not
have
been
found
to
be
the
best
value
to
the
City.
First,
as
a
matter
of
law,
this
history
alone
should
have
resulted
in
Ansaldo's
disqualification.
The
law
requires
that
an
offeror
who
"is
or
recently
has
been
seriously
deficient
in
contract
performance"
must
be
"presumed
to
be
nonresponsible."
There
should
be
little
doubt
 
Mr.
Michael
R.
Hansen
April
11,
2011
Page
3
GOODSILL
ANDERSON
QUINN
&
STIFEL
A
LIMITED LIABILITY
LAW
PARTNERSHIP
LLP
that
Ansaldo's
history
of
poor
performance
places
it
squarely
within
this
description
of
"nonresponsible."
Second,
even
if
Ansaldo
were
not
outright
disqualified
as
a
resultof
this
history
of
non-performance,
the
individual
scores
simply
do
not
reasonably
reflect
Ansaldo's
troubled
past.
As
just
one
among
many
examples
detailed
below,
the
scoring
in
the
category
of
"Price
Realism"
did
not
reflect
these
well
known
facts.
A
thoughtful
appraisal
of
Ansaldo's
recent
contract
history
especially
as
compared
with
SCOA's
would
suggest
that
Ansaldo
will
have
significant,
severe
disruptions,
delays
and
problems
during
all
phases
of
the
project.
There
can
be
no
question
that
the
greater
the
number
and
severity
of
disruptions, delays
and
problems,
the
more
likely
costs
will
end
up
being
higher
than
anticipated.
Yet
Ansaldo
was
inexplicably
scored
higher
than
SCOA
in
the
category
of
price
realism.
Had
these
price
realism
scores
alone
more
accurately
reflected
reality,
SCOA
would
have
been
awarded
the
Project.
Third,
whether
going
by
Ansaldo's
own
proposal
or
by
common
sense
expectations
given
Ansaldo's
operating
history,
the
evidence
shows
that
once
operational,
the
Ansaldo
system
will
be
materially
more
expensive
to
operate
and
maintain
than
SCOA's.
Any
purported
savings
to
the
City
in
the
initial
design-build
("DB")
component
of
the
project
will be
exceeded,
over
the
life
of
the
Project,
by
the
very
high
costs
to
operate
and
maintain
the
Ansaldo
system.
In
fact,
for
the
first
five-year
period
once
the
system
commences
operation,
Ansaldo's
operations
and
maintenance
("O&M")
price
is
forty-eight
percent
(48%)
more
expensive
than
that
proposed
by
SCOA
(assuming
a
reasonable
four
percent
(4%)
inflation
rate).
For
the
second
five-year
period,
Ansaldo's
O&M
price
is
twenty-nine
percent
(29%)
higher
than
that
proposed
by
SCOA.
Indeed,
over
the
thirty-year
life
of the
project
called
for
by
the
City,
the
savings
provided
by
Sumitomo's
O&M
price
to
the
taxpayers
as
compared
with
Ansaldo's
proposed
O&M
price
in
the
year
of
expenditure
is
almost
$900
million.
Fourth,
even
if
there
were
not
a
higher-than-usual
risk
that
Ansaldowould
go
over
budget
and
take
longer
than
proposed,
Ansaldo's
technical
specifications
fail
to
meet
numerous
City
requirements
and
should
have
been
rejected
by
the
City
as
non-responsive.
For
instance,
Ansaldo's
proposed
train
control
system
falls
short
of
the
specifications.
The
failure
of
Ansaldo
to
offer
a
compliant
vehicle
and
system
should
have
resulted
inits
proposal
being
rejected.
At
a
minimum,
the
non-compliance
certainly
should have resulted
in
less
favorable
scoring
of
Ansaldo's
proposal's
technical
merits.
Fifth,
Ansaldo's
price
for
the
DB
portion
of
its
proposal
is
illogical
and lacks
credibility.
Both
SCOA
and
Bombardier
independently
submitted
proposed
DB
prices
of
approximately
$700,000,000.
Ansaldo's
DB
price
was
$573,782,793
an
incredible
$125
million
less.
There
are
only
two
possible
explanations
for this
difference.
First,
that
Ansaldo
improperly
shifted
a
substantial
portion
in
DB
costs
to
the
O&M
portion
ofthe
Contract
in
order
to
exploit
the
fact
that the
DB
portion
was
given
seven
times
more
weight
than
O&M.
This
sort
of
financial
manipulation
is
plainly
improper.
Or
that
Ansaldo
is
selling
the
City
the
same
sort
of
problem-
plagued
product
it
sold
to
Los
Angeles,
Boston,
and
Denmark.
Either
way,
Ansaldo's

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