IN REPLY REFER TO:

CMS-BSDBB271-00004

April 14, 2015

BOARD OF DIRECTORS
Ivan M. Lui-Kwan, Esq.
CHAIR

EMAIL & CERTIFIED MAIL

Mr. Fooney Freestone, President
Nan Inc.
636 Laumaka Street
Honolulu, Hawaii 96819
Dear Mr. Freestone:
Subject:

Donald G. Horner
VICE CHAIR
George I. Atta
Robert Bunda
Michael D. Formby
Ford N. Fuchigami
William Buzz Hong
Keslie W.K. Hui
Damien T.K. Kim
Carrie K.S. Okinaga, Esq.

Honolulu Rail Transit Project - Farrington Highway Station Group Construction Contract
March 9, 2015 Protest of Nan Inc.

The Honolulu Rapid Transit Authority (HART) acknowledges receipt of, and responds to, Nan Inc.s
letter dated and received on March 9, 2015 RE: Notice of Protest (Protest), relating to HARTs
Request for Bids, RFB-HRT-798316, Farrington Highway Station Group Construction Contract
(Project). Nan Inc. (Nan) argues that [p]ursuant to Section 203D-701 [sic] of the Hawaii
Revised Statutes, HDCCs failures renders its bid non-responsive and requires HART to disqualify
HDCC from further consideration for award.1
Please be advised that HART has not issued a notice of award for this the Project. Accordingly, HART
considers the Protest premature and, therefore, untimely. As such, Nan lacks standing to protest
because it is not an aggrieved person under HRS 103D-701, which provides that a protest
shall be submitted in writing within five working days after the aggrieved person knows or should
have known of the facts giving rise thereto. An aggrieved person is one who suffered an injury-infact as a result of the agencys decision. HART has not made a decision regarding the contract
award for the Project, thus Nan has not suffered an injury-in-fact and is not an aggrieved party.
Consequently, Nan lacks standing to protest at this time. This notwithstanding, and without waiving
the above, HART provides its response to each of the allegations raised in the Protest, as follows:
Protest Item 1
Nan alleges that Hawaiian Dredging Construction Company (HDCC) did not properly list two
subcontractors, Structurflex LLC (Structurflex) and Swanson Steel Erectors, Inc. (Swanson) as
having the proper licenses to perform the work related to the Tensioned Fabric Structures.

HART assumes Nan is referring to Hawaii Revised Statutes (HRS) 103D-701. HRS does not contain a
Chapter 203D.
1

Mr. Freestone
Page 2 of 7
April 14, 2015
The nature of work for the Tensioned Fabric Structures under Section 13 31 23 of the
Technical Specifications of the Project requires a bidder to erect a tensioned fabric canopy
roof system which includes two distinct types of work: (1) erecting the steel support
structures which are referenced in sections 05 12 00 and 05 12 13 and (2) installing the
fabric membrane to the steel support structures. A C-48 structural steel specialty license is
required to perform the work identified in Sections 05 12 00 and 05 12 13, including the
erection of the steel support structures for the installation of the entire tensioned fabric
structures. However, no specialty license is required for installation of the fabric membrane
to the steel support structures.
In its bid, HDCC listed Swanson, who possesses a C-48 structural steel specialty license, to
perform the C-48 work necessary in Sections 05 12 00 and 05 12 13, including the tension
fabric structures steel support systems, structural steel, and metal railings.2 Therefore,
HDCC met the bid requirements for listing a C-48 structural steel specialty licensed
subcontractor and for the subcontractor listing requirement for work relating to erecting the
steel support structures.
With regard to the installation of the fabric membrane, a specialty license is not required
and HART informed all potential bidders of this. On February 12, 2015, HART issued
Addendum No. 3 for this solicitation, and Question and Response #52 states:
Questions #52
Spec 133123 Special Provisions (SP-8.2). Special Provision Section SP-8.2 does not
include a specialty license classification for the Tensioned Fabric Contractor. Does
the required classification fall under one of the specialty contractor classification
listed or is there a different specialty license or licenses needed to perform this
scope of work which includes per spec section 133123 both PTFE membrane &
cable installation and structural steel fabrication/erection (i.e. C-48)?
Response #52
There is no specialty license(s) required for the Tensioned Fabric Contractor.
(Bold in original.)
Also, on February 18, 2015, HART issued Addendum No. 4 which provided further clarification on
this issue. Question and Response #18 states:
Questions #18
In Addendum #2 addressed specialty contractor licensing. This has created
confusion regarding the appropriate licensing for the installation of the tensile
2

In addition to holding a C-48, HDCC identified Swanson as a C-68 contractor in relation to working on
the Tensioned Fabric Structures, but that is an obvious typographic error as Swanson only holds a C-48
structural steel specialty license, is identified as a C-48 contractor in relation to the Structural Steel and
Metal Railings work to be performed, and HART has determined that a C-48 structural steel specialty
license is required to perform the work in those three areas. See HAR Section 3-122-31. Furthermore,
listing of the specialty license classification numbers is not a statutory listing requirement under HRS
103D-302(b). See Note 5, infra.

Mr. Freestone
Page 3 of 7
April 14, 2015
membrane systems. Please clarify what license or licenses are acceptable for the
installation of the tensile membrane systems. Will the Awnings C-44b, still be
acceptable for the installation of the systems? If this is being replaced with Sheet
Metal C-44, it would not be practical to consider that a sheet metal contractor would
have the experience in installing a highly specialized tensile membrane system.
Awning license or similar is most appropriate.
Response #18
There is no specialty license(s) required for the Tensioned Fabric Contractor. Please
refer to Addendum 3, Response 52.
(Bold in original.)
As a specialty license is not required for installation of the fabric membrane to the steel support
structures, HDCC was not required to identify a specialty licensed subcontractor for this work.
Therefore, HDCC satisfied its responsive requirements for the work related to the Tensioned Fabric
Structures.
Alternatively, Nan asserts in its Protest that a B license is required to perform the
Tensioned Fabric Structures work (Section 13 31 23 of the Technical Specifications). As the
addenda were part of the solicitation, Nan was required to protest this issue prior to the
receipt of offers, March 3, 2015, pursuant to Hawaii Revised Statutes (HRS) 103D-701
and Hawaii Administrative Rules (HAR) 3-126-3; however, Nan did not protest this issue
prior to the date set for the receipt of offers. See Ludwig Construction, Inc. v. County of
Hawaii, Department of Public Works, PCX-2009-6 (December 21, 2009).
In addition, HART welcomed potential bidders who believed that specialty licenses were
required for certain work but not identified as such in the solicitation to inform HART. The
Instructions to Bidders (ITB) of the RFB, Section 6.3, Paragraph 2 provides:
Furthermore, HART has examined the scope of work and determined that the
specialty licenses, listed in the Special Provisions, are required for this Contract.
Bidders shall provide the names of the entities that hold the specialty licenses and
will be providing such services under the resulting Contract. If a bidder believes that
other or additional specialty licenses are required or any of the listed specialty
licenses is not required, it must provide its comments to HART by the Deadline for
Clarification Requests stated in the Solicitation Timetable above. The required
specialty licenses are a specifications requirement and, as such, any dispute as to
the required specialty licenses shall be made in a timely manner.
(Emphasis added.)
The deadline for clarification requests was February 12, 2015. See Addenda Nos. 2 and 6.
Nan did not inform HART that additional license or specialty licenses were required for the
Tensioned Fabric Structures work by this deadline. Therefore, Nans protest that the
Tensioned Fabric Structures work required a B license is untimely.

Mr. Freestone
Page 4 of 7
April 14, 2015
Notwithstanding this, HART notes that HDCC holds both an A and a B licenses. As the
installation of the tension fabric membrane work does not require a specialty license, HDCC
can self-perform this work. Nans assertion that Swanson, in conjunction with HDCC, does
not have the expertise to install the tension fabric membrane is not a responsiveness issue.
HDCC listed all required specialty licenses and subcontractors for the work in Section 13 31
23. It is the responsibility of each bidder to comply with the requirements of the Contract;
compliance with the Contract is not a matter of responsiveness, but contract administration.
(Nan included Nans subcontractor bids with its Protest. Subcontractor bids were not a part
of the required submittals for HARTs Request for Bids, RFB-HRT-798316 (RFB). To the
extent that subcontractor bids were not required as a part of the RFB submittals and the
issue is responsiveness, Nans subcontractor bids are not relevant and will not be
considered a part of the Protest. Furthermore, the subcontractor bids referenced in Nans
Protest are Nans subcontractor bids and not necessarily HDCCs.)
Finally, HART notes that HDCC listed Structurflexs nature of work as Structural Steel
Tensioned Fabric and identified a C-48 structural steel specialty license. Structurflex is not
currently registered with the Professional Vocational License (PVL) Division of the
Department of Commerce and Consumer Affairs as a C-48 structural steel license holder.3
As such, its listing will not be accepted as a C-48 structural steel specialty licensed
subcontractor. However, disqualification of Structurflex does not render HDCCs bid
nonresponsive. As HDCCs bid proposal included a valid C-48 structural steel specialty
licensed subcontractor, HDCCs bid proposal is responsive. Therefore, HDCC properly listed
its subcontractor for the Tensioned Fabric Structures work. As such, HART intends to waive
the listing of Structurflex as a minor informality4.
Protest Item 2: Nan asserts that because HDCC listed multiple subcontractors for
Tensioned Fabric Structures, that HDCCs bid is inadequate and ambiguous, and that
HDCC is bid shopping.
As stated above, Swansons scope of work includes the structural steel work of the
Tensioned Fabric Structures, which includes the work identified in Sections 5 12 00 and 5
12 13. As discussed previously, because Structurflexs listing as a C-48 specialty contractor
was a minor informality and it cannot perform the structural steel work, it will not be
considered a C-48 subcontractor. Thus, bid shopping is not an issue. (Although Structurflex
cannot perform the structural steel work, it could supply the fabric membrane to be affixed
to the structural steel installed by Swanson; however, since suppliers are not required to be
listed under the subcontractor listing requirement under HRS 103D-302(b), Structurflex
was not required to be listed.) In Kiewit Pacific Co. v. Dept. of Land and Natural Resources,
PCH-2008-20 (February 20, 2009), the hearings officer held, Intervenors listing of two
subcontractors to perform masonry work, without more, is ambiguous and, as such, gives
rise to an opportunity to bid shop. (Emphasis added.) Here, however, the potential for bid
3

HART notes that as of March 16, 2015, Structurflex holds a C-44b (Awnings & Patio Cover) specialty
license.
4
A minor informality is a mistake that does not affect price, quantity, quality, delivery, or contractual
conditions which may be waived or corrected. See HAR 3-122-31(c)(1)(B).

Mr. Freestone
Page 5 of 7
April 14, 2015
shopping between Swanson and Structurflex is not a concern, because HDCC lists different
scopes of work for each subcontractor and only Swanson holds a C-48 structural steel
specialty license.5 Consequently, the opportunity to bid shop between the two
subcontractors is not possible. HART rejects Nans assertion that HDCCs bid is inadequate
and ambiguous and that HDCC engaged in bid shopping between Swanson and Structurflex.
HART would like to note that review of Nans bid proposal shows that Nan also named two C48s: Swanson Steel and Steeltech. In Nans case, both Swanson Steel and Steeltech are C48 license holders.
Protest Item 3: Nan asserts that HDCCs bid item for compensable delay cost is materially
unbalanced.
HART disagrees with Nans assertion. In the Protest, Nan provides a lengthy argument as to
how HDCC should have calculated its daily compensable rate; however, the calculations are
the provenance of each bidder, who presumably considered the risk that the bidder wanted
to add into its daily compensable rate. This is a determination each bidder must make on
its own. As such, the daily compensable rates provided by each of the five (5) bidders were
widely varied and did not follow the methodology posited by Nan.
The daily compensable rates provided by each are as follows:
HDCC

Nan

Watts

Daily
$30,000
$12,633
$85,000
Compensable
Rate
Allowance for
Compensable
$900,000
$378,990
$2,550,000
Delay (30
days)
Total Bid
$78,999,000 $85,074,478 $88,803,553
Amount
Percentage
of
Compensable
Delay
1.13%
0.45%
2.9%
Allowance to
Total
Contract
Amount

Hansel
Phelps LLC

Ralph S.
Inouye

$19,122.30

$40,000

$573,670

$1,200,000

88,016,525 $117,515,520

0.65%

1.02%

HART notes that the only requirements for bidders are to identify the name of each person or firm to be
engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the
nature and scope of work to be performed by each. See HRS 103D-302(b). The Specialty License
information is not a statutory requirement and not mandatory.

Mr. Freestone
Page 6 of 7
April 14, 2015

Also, the quoted compensable delay rate is applicable only if there is a delay caused solely
by HARTs actions or omissions. HART is not able to predict the number of days for which
the contractor might be entitled to its quoted daily compensable delay rate. The quoted
daily compensable rate, however, is an agreed upon rate for future compensable delays.
The contractors bid item for Allowance for Compensable Project Delay directly affects the
contractors total bid. Logically, this creates an incentive for bidders to quote the lowest
possible rate in order to lower its bid price and increase the likelihood of being the lowest
bidder. Nans argument that HDCCs higher daily compensable rate actually lowered HDCCs
bid price is not correct. If HDCC used a higher compensable delay rate it would have
increased HDCCs bid price. Based on its analysis, HART determined that HDCCs bid is fair
and reasonable and that the bid complied in all material respects to the instructions and
criteria in the Request for Sealed Bids.
Protest Item 4: Nan asserts that HDCC did not list a joint contractor/subcontractor for C-02
Mechanical Insulation, nor for C-04 Boiler, Hot-Water Heating, and Steam Fitting as required
by the RFB.
HRS 103D-302(b) provides that Construction bids that do not comply with this
[subcontractor listing] requirement may be accepted if acceptance is in the best interest of
the State and the value of the work to be performed by the joint contractor or subcontractor
is equal to or less than one per cent of the total bid amount. The C-02 Mechanical
Insulation work is estimated at $30,000 and the C-04 Boiler, Hot-Water Heating, and Steam
Fitting work is estimated at $36,000. One percent of the total bid amount is $789,000.
Accordingly, both C-02 and C-04 work are clearly below one percent. HART determined that
it is in its best interest to accept HDCCs bid without the listing of the C-02 and C-04
subcontractors and intends to waive the failure to list those subcontractors.
Protest Item 5: Nan argues that HDCC incorrectly listed Pacific Commercial Services, LLC as
a C-19 Asbestos specialty licensed subcontractor, rather than a C-17 Excavating, Grading
and Trenching specialty licensed subcontractor.
In the RFB Technical Specifications, there is no asbestos work and therefore a C-19
specialty licensed subcontractor is not needed. However, there is work for an Excavating,
Grading, and Trenching contractor to excavate, transport and dispose of contaminated soil
material. Pacific Commercial Services, LLC holds a C-17 specialty license. Under HAR 3122-31(c)(1)(B), If the mistake is a minor informality which shall not affect price, quantity,
quality, delivery, or contractual conditions, the procurement officer may waive the
informalities. Examples of mistakes include: (i) Typographical errors; (ii) Transposition
errors. Here, the error is clearly a minor informality. The Professional and Vocational
Licensing Division shows that Pacific Commercial Services holds a C-17 specialty license,
not a C-19 specialty license. Furthermore, there is no asbestos work under this Contract. As
such, HART finds the mistake to be a minor informality which does not affect price, quantity,
quality, delivery or contractual conditions which may be correctable. See Okada Trucking
Co., Ltd. v. Board of Water Supply, 101 Hawaii 68, 79-80,62 P. 3d 631, 642-43 (Hawaii App.
2002).