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HORIUCHI COUNSEL:
JOHN R. LACY GAIL O. AYABE MIHOKO E. ITO
THOMAS W. WILLIAMS. JR. DALE E. ZANE JENNIFER M, YOUNG
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HONOLULU, HAWAII 96813 PETER T. KASHIWA THOMAS BENEDICT ]ESSICA M. MICKELSEN OF COUNSEL:
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BARBARA A, PETRUS
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AUDREY M. YAP
ABIGAIL M. HOLDEN MARSHALL M. GOODSILL
PATRICIA NAPIER ROBERT FRICKE DARSIE J. T, ING-DODSON (I916-2004)
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ALAN S. FUJIMOTO
info@goodsill.com www.goodsill.com WALTER C. DAVISON
H. GREGORY NASKY RICHARD E. STIFEL
(1920-1993)
April 11,2011
DELIVERED BY HAND
EMAIL transitmailbox@honolulu.gov
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award of the Project to Ansaldo to be rescinded and the contract to be awarded to SCOA.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 say that 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, serious failures 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 with overall 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 County Metropolitan Transit Authority ordered 50 rail
cars for delivery by June 2007. The cars were delivered three years late, 6,000
pounds overweight, and with technical problems. Ansaldo paid
numerous
millions of dollars 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 100cars for
delivery between November 1998 and December 2000. The cars suffered from
numerous problems including frequent derailment that took nearly a decade to
resolve. Delivery of the last car did not take place until early 2007.
that Ansaldo's history of poor performance places it squarely within this description of
"nonresponsible."
Second, even if Ansaldo were outright disqualified as a result of this history of
not
non-performance, the individualscores 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, if there were not a higher-than-usual risk that Ansaldo would go over
even
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 in its 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 portion of its proposal is illogical and lacks credibility.
DB
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 of the 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
GOODSILL ANDERSON QUINN & ST[FEL
k LIMITED LIABILITY LAW PARTNERSHIP LLP
Mr. Michael R. Hansen
April 11, 2011
Page 4
unreasonably low DB price should have been a red flag that resulted in a significantly lower
score.
Finally, Ansaldo submitted a proposal that was riddled with other errors. It
impermissibly submitted an alternate offer. It did not possess a contractor' s license at the time it
submitted its proposal. It did not properly register as a partnership. And so on. Moreover, the
City's evaluation did not, in several important respects, comport with the procurement code and
the terms of the RFP. For instance, the City admittedly never performed a mandatory Cost
and/or Price Evaluation.
For these and all of the reasons detailed below, Ansaldo's proposal was misleading to the
City and the Evaluation Committee, and does not offer the best value to the City. Accordingly,
SCOA respectfully requests that the City rescind the award to Ansaldo and award the Project to
SCOA.
II. BACKGROUND
The Honolulu High Capacity Transit Corridor Project ("HHCTCP") will provide high-
capacity transit service between Kapolei and, eventually, the University of Hawaii at Manoa.
The Core Systems are the equipment and related infrastructure and systems for the HHCTCP,
including train vehicles, train control, traction power, communications, signals, and fare
collection sub-systems.
The Core the heart of the HHCTCP, and as such, the success (short-term
Systems are as
well as long-term) of the HHCTCP will depend in large part upon the Core Systems. This is
especially so since the Core Systems will be designed, constructed and administered under a
Design-Build-Operate-Maintain ("DBOM") contract.
The City issued the RFP to retain a qualified Core Systems Contractor ("CSC") offering
the best value. SCOA took seriously its task of developing a proposal that would represent the
best value to the City. SCOA regularly brings together integrated teams of members with
specialized capabilities, skills and knowledge in complex transit projects. SCOA's assemblage
for Honolulu, under SCOA's proven leadership as a prime contractor, is just such a superior
team.
For two years, SCOA and the members of its team diligently worked on the Project and
devoted considerable time, energy and other resources to the preparation of its proposal. SCOA
submitted a responsive and compliant proposal to the City. Over and beyond responsiveness and
compliance, SCOA's proposal was prepared in the spirit of enhancing the value of the Project in
the best interests of the City. SCOA's proposal incorporates several concepts that provide
This RFP officially commenced on April 19, 2009 when the City issued Part 1 of the RFP ("RFP
Part 1").
GOODSILL ANDERSON QUINN 6< STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 5
considerable value to the HHCTCP and demonstrates SCOA's approach and capability to
undertake the Project, among them:
A proven track record of delivering and maintaining DBOM projects in North
America;
Thirty years of customer satisfaction on all SCOA-led projects;
Providing proven, safe and reliable transit systems;
Operating and maintaining multiple automated systems with one of the highest
industry availabilities often exceeding ninety-nine and one-half percent
(99.5%);
Experienced O&M company with proven management and technical expertise;
Creating long-term local career opportunities; and
Managing local work with trusted local partners and creating jobs.
III. THE CITY'S EVALUATION OF ANSALDO'S PROPOSAL WAS FLAWED.
Part 1 under Instructions to Offerors ("ITO") § 9.17). Indeed, the Federal Transit Authority
("FTA") has made clear:
A prospective bidder or offeror that is or recently has been
seriously deficient in contract performance is presumed to be
nonresponsible, unless the recipient determines that the
circumstances were properly beyond the bidder or offeror's
control, or unless the bidder or offeror has taken appropriate
corrective action. Past failure to apply sufficient tenacity,
perseverance, and effort to perform acceptably is strong evidence
of nonresponsibility. Failure to meet the quality requirements of a
contract is a significant factor to consider in determining
satisfactory performance. FTA expects the recipient to consider
the number of the bidder or offeror's contracts involved and the
extent of deficient performance in each contract when making this
determination.
Ex. 1 (FTA Circular 4220.1) (incorporated by reference under RFP Part 1, ITO § 9.17).
Ansaldo has had numerous problems with its recent contracts that should have precluded
it from qualifying as a responsible bidder. Of particular note is the fact that Ansaldo has been
penalized in several jurisdictions for its delays. In Los Angeles, for instance, AnsaldoBreda
S.p.A. 2 did not contest the imposition of nearly $15 million in liquidated damages in connection
with a contract to supply fifty rail cars that was "approximately three years behind schedule."
See Ex. 2 (Memo. to Board of Dir., Jan. 28, 2009); Ex. 3 (Operations Committee's
Recommendations, Jan. 21, 2010) ("AnsaldoBreda S.p.A. confirmed that they would not protest
or dispute the liquidated damages in the amount of $14,677,487 incurred by Metro under the
contract."). See also Ex. 4 (Operation Committee's Recommendations, Jul. 15, 2010). In
addition, Ansaldo paid another $15 million to settle claims related to weight and compatibility
problems with the cars. See id. "Further discussions resulted in AnsaldoBreda offering a sum of
$15,000,000 to not do any modification to the cars to correct the overweight condition and the
trainline compatibility discrepancies."). Similarly, in connection with a contract with Denmark's
national railway operator, Danske Statsbaner, AnsaldoBreda S.p.A. was required to pay 250
million Danish krone (approximately $48 million using current conversion rates) in
compensation for late deliveries in 2005. Four years later, when AnsaldoBreda S.p.A. still could
not deliver the trains on time, it was required to pay an additional two billion Danish krone
(approximately $385 million). See Exs. 5-7 (Denmark news articles).
Ansaldo is a recently formed joint venture of sister companies AnsaldoBreda S.p.A. and Ansaldo
STS S.p.A. Under Ansaldo's proposal, AnsaldoBreda S.p.A. "will design and manufacture the
passenger vehicles for the project." See Ansaldo's first Best and Final Offer ("BAFO 1"), Executive
Summary at 6. All of the problems described arise out of delivery of trains to be manufactured by
AnsaldoBreda S.DA.
GOODSILL ANDERSON QU•rN &. STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 7
These are just two of the many recent disputes between Ansaldo and its customers. As
summarized in Appendix A, rail authorities in Boston, Massachusetts, Buffalo, New York, and
Gothenburg, Sweden have all had significant problems with Ansaldo and the related entities on
its team. See Exs. 8-16. Moreover, Ansaldo's own exhibits reveal that Ansaldo STS S.p.A. is
currently involved in pending litigation with four rail authorities in Italy. See Ex. 17 (Exhibit 10
to RFP Part 1). 3
Not only are Ansaldo's contract disputes widely reported in the press and a matter of common
knowledge, an inquiry by the City to the appropriate authorities would have revealed that the issues
that gave rise to the disputes were not routine contract renegotiations.
See Ex. 18 at 49-50 (Transcript of Debriefing held on April 4, 2011 ("Debriefing Tr.")).
It is unclear whether the Evaluation Committee's failure to disqualify Ansaldo was a result of the
Evaluation Committee's failure to properly consider past performance or a result of Ansaldo's
failure to disclose its past performance issues. The City has not yet provided SCOA with unredacted
copies of the documents that would have contained Ansaldo's disclosures, namely Exhibits 7 and 10
to Ansaldo's response to RFP Part 1. IfAnsaldo failed to disclose these issues, then its proposal
should also be disqualified for the separate and independent reason that its proposal was
nonresponsive. See HAR § 3-122-97(b)(2)(B).
GOODSILL ANDERSON QUINN & STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 8
In its press conference on March 21, 2011, the City stated that DB costs under the Ansaldo proposal
would be 27% less than the City's project estimate, which would put the City's estimate at
approximately $780 million.
See Appendix B, Ansaldo's second best and final offer ("BAFO 2") scoring sheet compilation
prepared by SCOA.
GOODSILL ANDERSON QUINN & STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 9
Prior to submittal of their proposals, offerors are allowed to propose and the City has the authority to
approve or disapprove Alternate Technical Concepts ("ATCs"). RFP Part 2, ITO § 2.8.1 provides,
"A Priority-Listed Offeror may elect to submit Alternate Technical Concepts that do not comply
with the Project requirements but that are still consistent with the Project goals and may be
advantageous to the City
GOODSILL ANDERSON QUINN & STIFEL
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Mr. Michael R. Hansen
April 11, 2011
Page 10
More details regarding the noncompliance of Ansaldo's train control system are set forth in
Appendix D.
GOODSILL ANDERSON QUINN & STIFEL
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Mr. Michael R. Hansen
April 11, 2011
Page 11
The RFP requires compliance with the industry standard IEEE 1474.1 for CBTC
systems. See RFP Part 2, TP-8, § 1.03. Among other requirements, IEEE 1474.1
states that a compliant system must provide the following characteristics: (1)
determination of train location, to a high degree of precision, independent of track
circuits; and (2) a geographically continuous train-to-wayside and wayside-to-
train data communications network to permit the transfer of significantly more
control and status information than is possible with conventional systems. The
train control system proposed by Ansaldo does not provide the above
characteristics, and is therefore non-compliant with the technical requirements.
Several other required functions and subsystems of the train control system are
missing from Ansaldo's proposed solution. For instance, information to
demonstrate compliance with requirements for Broken Rail Detection, Disaster
Warning System (Earthquake, High Wind and Encroachment Detector), and
Protection at the MSF Secondary Road Access are not included in Ansaldo's
proposal. See RFP Part 2, TP-8, §§ 34 44 00, 2.03(B), 34 44 00, 2.03(C).
The fact of Ansaldo's non-compliance as to the train control system is not in dispute. The
Proposal Evaluation and Scoring sheets of one of the City's evaluators state with respect to
Ansaldo's proposal, "They are proposing a track circuit system as opposed to CBTC." Simon
Zweighaft, BAFO 2 Proposal Evaluation and Scoring sheet regarding Ansaldo (Mar, 10, 2011).
And the City's Technical Review Committee ("TRC") stated in its consensus review of
Ansaldo's Train Control proposal, "Not 'CBTC' system due to absence of high resolution train
position identification." Consensus Worksheet, Technical Solutions, Train Control (June 18,
2010) (emphasis added). Moreover, Ansaldo itself acknowledges in its Executive Summary:
AHJV is therefore in a position to offer the City (at its discretion
and at the same price) the alternative solution of a fully compliant
CBTC solution. This issue can be further discussed during
subsequent discussion meetings with the City.
Executive Summary at 5. Ansaldo's statement can be interpreted in two ways, each of which is
non-compliant. If, as discussed in Section IV.C below, Ansaldo's offer ofa CBTC system in the
alternative (the details of which axe not specified) is an alternate proposal, then it is
impermissible and grounds for immediate rejection. See HAR § 3-122-4.
On the other hand, if Ansaldo's CBTC solution is not an alternate proposal but by some
stretch of the imagination is meant merely to juxtapose and describe its non-CBTC proposal, the
statement underscores that Ansaldo's primary proposal is not for a CBTC system and thus is not
compliant with the RFP. If that is the case, the statement is an admission by Ansaldo that the
train control system upon which its proposal is based is not a "fully compliant CBTC solution,"
and the proposal should be deemed nonresponsive and rejected. See HAR § 3-122-97(b)(2)(B).
GOODSlLL ANDERSON QUNN & STIFEL
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April 11, 2011
Page 12
This is just one example of a material component of Ansaldo's Core Systems that is not
compliant with the City's specifications. Any one of these items is sufficient basis for rejection
of Ansaldo's proposal. Collectively, the evidence is clear and unmistakable, and it compels the
rejection of Ansaldo's proposal.
B. Ansaldo submitted a non-compliant and unrealistic project schedule.
Ansaldo did not integrate its vehicle production and delivery schedule into its overall
schedule, as required by the City, and also did not provide the vehicle schedule in the
required Primavera electronic format. See Addendum No. 41, ITO § 4.7.1 (A)(1).
Therefore, the linkage between vehicle manufacturing/delivery schedule and
construction/testing cannot be confirmed to be compliant. See Ansaldo's BAFO 2
Proposal § 4.2.2.5.
In Ansaldo's proposed schedule, Notice to Proceed #2 to start to procure,
baselifle
fabricate, and furnish ("NTP#2") is shown as February 20, 2013. However, in
Ansaldo's passenger vehicle schedule, vehicle manufacturing work is started in
November 2012, prior to NTP#2, which is in violation of the City's requirements. If
the start of vehicle manufacturing is adjusted to comply with the contractual
requirements of NTP#2, it is clear that Ansaldo will no longer be able to deliver the
vehicles on time. See Ansaldo's BAFO 2 Proposal § 4.2.2.5.
included construction and installation. The proposed schedule demonstrates that Ansaldo is not
qualified to deliver this project on time, nor does it have a realistic strategy to meet the contract
requirements. These problems warrant rejection of Ansaldo's proposal. At the very least,
however, the proposal should have been scored significantly lower in light of these problems.
C. Ansaldo impermissibly submitted an alternate offer.
Under Hawaii's contractor license law, HRS Chapter 444, each offeror was required to
hold the requisite contractor license prior to submitting its proposal. Ansaldo did not obtain its
"A" general engineering contractor license until after submitting its proposals in response to
RFP Part 1 and RFP Part 2.
While ITO § 6.9 of RFP Part 1 and ITO § 3.1 of RFP Part 2 (and the Calls for BAFO 1
and BAFO 2) state that an "A" general engineering contractor's license is required at the time of
the award, 1° the offerors must nevertheless comply with Hawaii law. An offeror must be
licensed to offer to undertake or hold itself out as being able to undertake the contracting work.
The law clearly states that:
No person within the purview of this chapter shall act, or assume
to act, or advertise, as a general engineering contractor.., without
a license previously obtained under and in compliance with this
chapter and the rules and regulations of the contractors license
board.
HRS § 444-9. HRS § 444-1 defines "Contractor" as "any person who by oneself or through
others offers to undertake, or holds oneself out as being able to undertake, or does undertake
to... construct, alter, repair, add to, subtract from, improve, move, wreck, or demolish" various
types of structures, improvements, and infrastructure. (Emphasis added.)
Engineering, Inc. v. Dept. of Business Economic Development and Tourism,
In Sea
PCH-2008-8 (June 27, 2008), an RFP issued by the State of Hawaii Department of Business
Economic Development and Tourism ("DBEDT") required offerors to be licensed contractors
and stated that an offeror could be disqualified and its proposal rejected if it was not licensed. At
a pre-proposal conference, DBEDT stated orally that the contractor license need not be
demonstrated until contract execution. The Administrative Hearings Officer held that oral
statements cannot change the requirements of an RFP and therefore the contractor license was
required at the time the proposal was submitted. The Administrative Hearings Officer also
stated:
Whether Respondent can waive the requirement that offerors
possess the required contractor's license at the time a proposal is
submitted is not an issue before the Hearings Officer, but the
Hearings Officer would note that HRS Chapter 444, which governs
Id. at 5, n.1.
In addition to the straightforward language in HRS § 444-9, which requires a license
when making the offer, HRS Chapter 444 demonstrates a strong public policy in favor of the
license requirement, even where harsh results might occur. See Butler v. Obayashi, 71 Haw.
175, 177, 78 P.2d 1324, 1325 (1990) ("HRS Chapter 444, providing for the licensing of
contractors, expresses a very strong public policy that contractors in this state should apply for,
and receive licenses, and the provisions of HRS § 444-22, which are sweeping in their terms, are
obviously intended to produce harsh results in furtherance of that policy.").
Proposalsin response to RFP Part 1 were due June 5, 2009, and proposals in response to
RFP Part 2 were due June 7, 2010. Ansaldo did not receive a contractor license until
October 15, 2010. In fact, in its proposal in response to RFP Part 2, and specifically in response
to ITO § 4.3.1 (H), where Ansaldo was required to provide licensing information, Ansaldo
responded with an affidavit stating that Ansaldo was "in the process of... obtaining all
applicable licenses and permits, including but not limited to an "A" general engineering
contractor license." Ex. 19 (emphasis added).
proposals in response to RFP Part 1 and RFP Part 2, when it admittedly did not
In its
have the requisite contractor license, Ansaldo was offering to undertake, and holding itself out as
being able to undertake the work for which an "A" general engineering contractor license was
required. Because Ansaldo's proposals were contrary to Hawaii law, they should have been
found unacceptable and Ansaldo should not have been deemed a priority-listed offeror. Further,
as only priority-listed offerors can submit best and final offers (HAR § 3-122-54), neither of
Ansaldo's BAFOs should have been accepted.
Ansaldo delayed for over a year before registering with the DCCA, in violation of HRS §
425-1. Even Ansaldo's constituent partners, Ansaldo STS S.p.A. and AnsaldoBreda S.p.A., both
corporations formed under the laws of Italy, did not register to do business in Hawaii until July
1, 2010, after the due date for the RFP Part 2 proposal. During that delay, which was a critical
time during the preparation of proposals by the offerors and amendments and refinements to the
RFPs by the City, information regarding Ansaldo and its partners that is required of any entity
doing more than casual business in the state of Hawaii, was not available to the general public
and to City and State regulators, such as the taxing authorities and persons charged with
enforcing labor laws.ll
Based on the foregoing, Ansaldo was not in compliance with Hawaii law and should have
been disqualified.
VI. SCORING BY THE EVALUATION COMMITTEE WAS FUNDAMENTALLY
FLAWED.
Ansaldo's failure to timely register as a general partnership in Hawaii at the time it submitted its
proposal would have also prevented it from qualifying for a contractor license.
HAR § 16-77-10(b)(3).
GOODSILL ANDERSON QUINN &. STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 17
In Ansaldo's case, the City seems to have given a favorable price realism score due to the
artificially low start up price, as well as a more even spread of the cost of Ansaldo's DB portion
arising from the proposed just-in-time delivery of vehicles. While this may look attractive to the
City from a cash flow curve perspective, it is not a realistic or practical approach to performing
this Project. As discussed earlier, Ansaldo has a very weak track record of delivering vehicles on
time and of meeting quality and performance requirements. Delivering vehicles just-in-time as
shown in Ansaldo's schedule only further increases the risk of delays and cost increases to the
project and should have resulted in a negative impact on Ansaldo's price realism score.
In contrast, SCOA was severely penalized in this category because it proposed delivering
vehicles to the site early, an approach that allows for early and extensive testing to ensure that
the vehicles will meet all performance and safety requirements prior to commencing passenger
service. This is in the best interest of the City to ensure on time, on budget completion. It was
thus erroneous and arbitrary to penalize SCOA as to price realism in this category.
The scoresby the Evaluation Committee on realism and reasonableness appear to have
been driven solely by numerical prices rather than true realism and reasonableness. In
performing its scoring, the committee took liberties that were overly broad, subjective, and
non-uniform across the committee, contrary to the policy behind the government procurement
GOODSILL ANDERSON QUNN & STIFEL
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Mr. Michael R. Hansen
April 11,2011
Page 18
process. 12 The result is a scoring method that allows the scorers to over-emphasize and give
extra credit to the lowest price while ignoring (i) the technical merits of an offer that might have
a higher but more well-reasoned price, (ii) the risks of performance that accompany a lowball
price, and (iii) imbalanced pricing. The result is scores that are unreasonably and unfairly
skewed in favor of the lower numerical price, with little or no accountability for the risks hidden
behind the low price. Several factors should have caused lower price realism scores for Ansaldo:
14 See J. V. Penauille/BMAR & Assocs., LLC, B-311200, 2008 CPD ¶ 118 (Comp. Gen. May 12, 2008)
("Although not required, an agency may also provide for a price realism analysis in a solicitation for
award of a fixed-price contract for the purpose of assessing an offeror's understanding of the
requirements and the risk inherent in an offeror's proposal. In this regard, the risk of poor
performance when a contractor is forced to provide services at little or no profit is a legitimate
concern in evaluating proposals." (internal citations omitted) (emphasis added).
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MR. FRIEDMANN (SCOA): Do you know over what how many years
MR. ZWEIGHAFT (City): I don't remember.
Ex. 18 at 39-40 (Debriefing Tr.).
The City did not perform the life cycle analysis correctly on any of the proposals. The
result of this error is that Ansaldo somehow received nearly double the points of SCOA. This
was clearly erroneous and clearly material. Ansaldo would not have been awarded the contract
without the differential in points awarded to it.
The City's apparent response is that the City was not able to properly perform a life cycle
analysis due to an error in SCOA's submission regarding energy consumption. 16 Although
admittedly there is a typographical error in SCOA's submission, this error was a plain, obvious
and correctable mistake that was not only acknowledged, but unilaterally revised by the City. 17
16 The discussion at the debriefing was:
MR. FRIEDMANN (SCOA): I guess my question is there seem to be comments going to
the life cycle costs that weren't just looking at the period that's being covered but potentially
the whole life of the system, and that's what we are trying to understand, when you
determined that this was not a defined term or anything as far as we understand the proposal,
I just want to understand if when you looked at the reasonableness of the life cycle costs,
whether you were looking at just that initial period or the true the actual life as defined in
the system of the thirty years, approximately? Because there were comments in there about
the long term costs of the system, but we don't know what you were considering to be the
long term costs, the long tenn.
MR. ZWEIGHAFT (City): The only thing I remember about it was that there was an
expressed problem with evaluating, as I think I commented here, there was an expressed
problem with evaluating the Sumitomo price because of the difficulty of having a good
handle on the traction power costs.
Ex. 18 at 40 (Debriefing Tr.).
17 Contrast this unfavorable treatment of SCOA with the treatment by the City of an error in Ansaldo's
drawing showing floor height, where the City found that the error was "obvious" and made the
assumption that Ansaldo's floor height was in compliance with ADA requirements. See Appendix C
(discussing questionable ADA compliance).
GOODSILL ANDERSON QUINN & STIFEL
A LIMITED LIABILITY LAW PARTNERSHIP LLP
Mr. Michael R. Hansen
April 11,2011
Page 23
See BAFO 2, Consensus Scoring Sheet Price Realism (Mar. 6, 2011). Moreover, the placeholder
number that the City stated would be used for SCOA in the Life Cycle Cost calculation would
make no material difference in annual life cycle costs between Ansaldo's and Sumitomo's
proposals. Energy power consumption is not the real issue in life cycle cost evaluations. It is
insignificant in comparison to all other costs and pales in relation to the $900 million differential
between Ansaldo's and Sumitomo's total life cycle costs.
Furthermore, as it had done numerous times over the previous year, the City could have
asked SCOA to clarify its calculations. The City has stated that it avoided asking SCOA for
clarification apparently for fear of being accused of engaging in "technical leveling." See Ex. 18
at 48 (Debriefing Tr.). Technical leveling, however, should be less of a concern than achieving a
better understanding of an offeror's proposal. Indeed, the City's statement reflects a
misunderstanding of "technical leveling" and the law. First, technical leveling occurs where a
contracting agency helps an offeror by pointing out general weaknesses in an offeror's proposal
and coaching the offeror on how to revise its proposal; technical leveling does not occur where a
contracting agency contacts an offeror to resolve an obvious error. See generally Mantech
Telcoms. & Info. Sys. Corp. v. United States, 49 Fed. C1.57, 76 (Fed. C1. 2001). Second, the
modem trend is to allow agencies to "resolv[e] a given proposal's weakness or deficiency by
means of multiple rounds of discussions with the offerors, provided the discussions are not
conducted in a fashion that favors one offeror over another." Id at 77 (discussing revised federal
roles). This approach, which the City used for other questions it had about SCOA's proposal,
"maximize[s] the government's ability to obtain the best value, based on the requirements and
evaluation factors set forth in the solicitation." Id 18
As demonstrated above, the price realism scoring engaged in by the City was erroneous,
arbitrary, capricious, and contrary to law. 19
18 As to those aspects of SCOA's proposal scored low relative to the remainder of SCOA's proposal, it
appears that the reviewers' comments related to the quality of the description in the proposal, rather
than the substance of the proposal. In this situation as well as the energy consumption calculations,
if the City were to have sought clarification from SCOA as it had in the past, the City would have
been better able to understand SCOA's proposal and obtain the best value.
19 SCOA also finds puzzling the manner in which its score decreased on certain items between its
RFP 2 proposal and BAFO 2. There are several line items where SCOA's score was decreased by
members of the TRC or the Evaluation Committee, where the only changes were made to comply
with changes requested by the City. In at least two instances, the only change was at the express
request of the City to limit the amount of information for which SCOA claimed confidentiality.
Yet, SCOA inexplicably lost points as a result! See Consensus Worksheet, Technical Solutions, Risk
Management, § 6.1.2.2 and Consensus Worksheet, Technical Solutions, O&M Information, §
6.1.2.3, Capital Asset Replacement Program, Subsection 5.6.2.8.
GOODSILL ANDERSON QUINN & STIFEL
A LIMITED LIABILITY LAW PAR•ERSHIP LLP
Mr. Michael R. Hansen
April 11,2011
Page 24
MR. FRIEDMANN (SCOA): Yes, we understand that it is a HAR 3-122-123 which describes
this cost price analysis that is to be done on, I believe, this selected proposer or the preferred
proposer to determine if their pricing is in fact realistic in lines with the engineer's estimate or
other metrics. Was that type of analysis performed to validate the pricing of the proposers?
MR. ZWEIGHAFT (City): I am not sure how to answer that question. The answer is did we
have the engineer's estimate, and did we compare that to the pricing, the answer is yes. This
this COPA process that you described, you know, I'm not sure what it is, so
VII. SCOA RESERVES THE RIGHT TO RAISE OTHER GROUNDS FOR THIS
PROTEST.
SCOA is filing this protest without the benefit of all information to which it is entitled
from the City. In addition, issues might emerge if the City continues to award the contract to
Ansaldo and Ansaldo fails to meet the post-award conditions. Accordingly, SCOA reserves its
right to supplement this protest and does not waive its rights to protest either Ansaldo's or the
City's failure to meet any other condition to the contract• The reasons that SCOA believes
additional relevant information will likely emerge include, but are not limited to, the following:
of the rolling stock to be fumished by Ansaldo satisfy the requirements of the Buy
America Act and performance and payment bonds in the amount of the contract price).
Information requested from City. SCOA has not been provided with the documents
and information it is entitled to receive from the City. On March 21,2011, SCOA made
a written request to the Chief Procurement Officer of the City for copies of documents
and other information in its files in connection with the Project. On March 28, 2011,
SCOA made a supplemental written request to the Chief Procurement Officer for
unredacted documents and documents not previously made available to SCOA. Also on
March 28, 2011, SCOA made a written request to the Director of Transportation Services
for copies of certain documents and other information in its files in connection with this
Project. On the evening of April 1,2011 the Friday evening before the Monday
debriefing the City provided SCOA with some documents, but many key documents
were either redacted or not available at all. On April 4, 2011, the Chief Procurement
Officer wrote to SCOA stating that while some of the documents requested by SCOA
were in the City's April 1,2011 production, others were still in the custody of the Rapid
Transit Department or were being withheld. SCOA responded the next day, explaining
the bases for its requests and making clear that the City's failure to produce these
documents was significantly prejudicing SCOA's efforts. To date, the City has failed to
produce any of the additional documents. As a result, this protest is based on the limited
information available to SCOA at this time. 23
Accordingly, SCOA reserves the right to supplement or revise this protest based upon
documents and information subsequently received and reviewed. See also HAR § 3-126-6(a)
("Any additional information requested by any of the parties should be submitted within the time
periods established by the requesting party in order to expedite consideration of the protest
unless justification is provided for a delay ").
VIII. CONCLUSION
Based on the foregoing, the City should uphold SCOA's protest. In the context of this
protest, it is not necessary to discuss SCOA's scores, because the violations and deficiencies in
Ansaldo's proposal described herein provide ample grounds to disqualify Ansaldo and reject its
proposal. However, at the debriefing session with SCOA on April 4, 2011, the City recited its
principal reasons for rejecting SCOA's proposal. So that the record is clear, SCOA submits that
the concerns identified by the City are relatively minor. Except for the price realism score, the
concerns identified with respect to SCOA are also concerns identified by the TRC or the
Evaluation Committee with respect to Ansaldo's proposal. On a majority of those categories,
SCOA was rated superior to Ansaldo.
In upholding SCOA's protest, the only appropriate remedy is to award the contract to
SCOA. No other remedy is appropriate, inasmuch as the contents of all offerors' proposals are
now available to the public, including SCOA's competitors. Once proposals have been made
public, revised proposals and best and final offers are not authorized under HRS § 103D-303, in
order to maintain the integrity of procurement system and ensure that offerors are provided fair
and equitable treatment. Dick Pacific Construction Co. v. Dept. of Trans., PCH 2005-5
(Sept. 23, 2005); see Wheelabrator Clean Water Systems, Inc. v. City & County of Honolulu,
PCH-94-1 (Nov. 4, 1994). A new RFP process would effectively violate the public policy
behind the procurement process to promote competition and fairness by preventing offerors
from gaining knowledge of their competitors' offers. See HRS § 103D-303. A new RFP would
prejudice SCOA by allowing competitors to tailor their offers based on SCOA's proposal, not to
mention the prejudice to the public interest. The purpose of the Procurement Code is to
"(1) provide for fair and equitable treatment of all persons dealing with the government
procurement system, (2) foster broad-based competition among vendors while ensuring
accountability, fiscal responsibility, and efficiency in the procurement process, and (3) increase
public confidence in the integrity of the system." Carl Corp. v. State of Hawaii, 93 Haw.155,
166, 997 P.2d 567, 578 (2000) (citing Carl Corp. v. State of Hawaii, 85 Haw. 431,456, 946 P.2d
1, 26 (1997)). The best way to meet these goals for this project is to award the project to SCOA.
In the alternative, the City should promptly move to reevaluate price realism and cause a
COPA to be performed by a qualified, independent, third party. The results of a price realism
reevaluation and a COPA may obviate the need for the City to respond to all of the other issues
raised in this protest.
GOODSm•. ANDERSON QUNN & STIF•I.
A LIMITED LIABILITY LAW PARTNERSHIP LLP
Mr. Michael R. Hansen
April 11, 2011
Page 28
SCOA respectfully requests that the City respond to this protest promptly.
Respectfully submitted,
GOODSILL ANDERSON QUINN & STIFEL
PARTNERSHIP LLP
Russell S. Kato'
Robert K. Fricke
Appendices; Exhibits
CC: Wendy K. Imamura
Gino Antoniello, Sumitomo Corporation of America
Shinji Kobayashi, Sumitomo Corporation of America
Amy R. Kondo, Esq.