Rail subcontractors revealed: Lots of local companies, but how much overlap?

We’re learning more about who’s getting paid to do what for Honolulu’s multibillion-dollar rail project.

For the first time in the project’s history, there’s a public list of subcontractors hired, what they’re being paid, and what they’re doing.

While there has long been easy access to see details and payments to main contractors, very little has been known about all the folks they’re giving work to.

One of Dan Grabauskas’ last tasks prior to resigning as Honolulu Authority for Rapid Transportation CEO was to sign and submit the first subcontractor report since the Honolulu City Council passed a law requiring one after each fiscal year.

“Prior to us imposing this requirement on HART, even by their own admission, they had no idea how many subcontractors were in existence on the project, or even the true cost of the subcontractors themselves,” Honolulu City Council chairman Ernie Martin told Always Investigating.

Here’s what the report shows: About 50 general and prime contractors farmed out work and paid hundreds of subcontractor invoices the span of the one year examined.

Out of about $500 million paid involving costs incurred over the last fiscal year or so, the subs got more than $235 million.

“Now we can do that in-depth analysis to ensure the work that is being subcontracted out is reasonable and we’re getting the best value for what is being expended,” Martin said.

Subcontracting is standard operating procedure in construction. The prime or general contractor coordinates the job and provides much of the direct labor. The subs come in as specialists and additional hands on deck.

But the council still plans to dig into the details of why there’s so much subcontracting on rail — things like designers hiring designers, engineers hiring engineers, builders hiring builders.

“There is some duplication of services,” Martin said, “and that’s a question we’re going to have to follow up with HART. Hopefully they’ll impose that on the general contractors, prime contractors, and get that information.”

It’s information Martin says HART couldn’t tell the city auditor when the auditor was digging for details. (View the audit in its entirety here.)

“Our city auditor is doing a follow-up audit,” Martin said, “so we will also share this information with our audit staff as well, and I’m sure that’s one of the prime questions they will be asking.”

So what happens next? Are there near-term policies that might need to change as a result of seeing the list?

“I think one of the things that we would like to see is more detailed information on the subcontracting work itself,” Martin said. “Are we seeing change orders even at the subcontracting level, is that something we need to be paying attention to?”

Mike Formby, the city’s transportation director and HART board member, just took over as interim HART executive director after the departure of Grabauskas and until a replacement is hired.

He told Always Investigating in a statement: “The contractor and subcontractor report certainly provides an additional layer of transparency and will help HART maintain confidence in the rail project.”

The sub list may help bolster rail’s job count statistics, hovering under a quarterly 1,500 the last time HART publicly announced them. That’s thousands fewer than projected when the project started.

Always Investigating asked Martin, when you see this depth of subcontractors, to some degree, does it speak to maybe there are more jobs out there than we thought before?

“One thing we did notice was there are a lot of local subcontractors, so that particular number perhaps was under-reported. Maybe there are more local jobs being created,” Martin said.

“It’s especially encouraging to find such a large number of local companies, both big and small, receiving work as subcontractors, because we’re building this important project. Local surveyors, demolition and hauling companies, engineers, arborists, cleaning services, landscapers and many others are all working on different portions of the project,” Formby said. “Local jobs for local people. That’s certainly a trend we would want to see continue as we build out the next sections of the project, providing a boost to local companies and the local economy.”

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