Man at center of university procurement scandal back on the job

BY MALIA ZIMMERMAN – HONOLULU —  The man at the center of a procurement scandal at the University of Hawaii has returned to work.

Brian Minaai, associate vice president for Capitol Improvements since 2008, has been on paid leave for nearly eight months as the state attorney general investigated allegations of favoritism in the procurement of construction projects.

The investigation is ongoing, but Hawaii Reporter has learned that, just five days before MRC Greenwood stepped down as university president Aug. 31, she authorized Minaai to return full-time.

Minaai is paid an annual salary of $213,768, more than $17,000 per month. While on paid leave Minaai made more than $140,000, plus benefits.

University spokeswoman Jodi Leong maintained Minaai’s work assignments and office location “ensure there is no real or perceived influence or interference with the attorney general’s ongoing investigation into the construction-related allegations made earlier this year.”

The attorney general is aware of Minaai’s return to work, Leong said, saying the university continues to cooperate fully with the investigation.

In February, Dennis Mitsunaga, owner of Mitsunaga & Associates and a prominent engineer and construction contractor, accused Minaai of using his position to marginalize his company’s bids in favor of competitors with ties to Minaai, ultimately increasing the cost of university projects.

Mitsunaga has worked on dozens of government projects in Hawaii, including a $28 million Hilo dorm that opened to students in August. The allegations came in a letter Feb. 14 letter to the Hawaii State Senate in support of pending legislation that would transfer procurement responsibilities from the university to the Department of Accounting and General Services, which manages most state construction projects. His project management team continues to express concern about the project, according to documents sent to the university and acquired by Hawaii Reporter.

Hawaii Reporter investigations show AC Kobayashi Inc. secured the coveted construction contract to build the entire $109-million West Oahu campus by bidding $1 per month for the job under a “Pre-Construction Services Agreement.”

Ted Hong, a lawyer in private practice in Hilo and a former university regent, said he’s never seen such a deal. He worked as the assistant corporation counsel for Hawaii County for eight years and is familiar with university policy and procurement law.

“Having done procurement cases, I can tell you it is a violation of the procurement code to do something to try to get around the procurement code,” Hong said.

While $1 a month looks like a good deal for taxpayers, industry experts are skeptical. The campus construction has been subjected to 83 change orders, $19 million over the project budget. The university took out an $18 million loan to pay its bills and sell land to pay for cost overruns.

Minaai was one of five people who evaluated bids by AC Kobayashi and four other companies, and he helped to select AC Kobayashi.

The company has been awarded other lucrative contracts during Minaai’s tenure at the University of Hawaii, including the $120 million University of Hawaii Cancer Center and the $28 million Hilo student dorm project.

Regarding the University of Hawaii Cancer Center project, Hawaii Reporter looked into the deal afforded to Honolulu-based Palekana, which obtained permits for the center before it opened in February.

Palekana was a subcontractor for Shimokawa Nakamura, the architect of the University of Hawaii’s Cancer Center, and was paid an estimated $500,000 for permitting work on the center and adjoining parking lot, including about $200,000 for a change order.

Industry experts, including Mitsunaga, questioned why the architect needed a subcontractor to obtain permits, and other experts questioned why the change order was so costly, or even necessary.

University spokeswoman Lynne Waters said the university had little information on the subcontractor’s role.

The problems at the Hilo dorm haven’t been settled. Mitsunaga & Associates on Aug. 27 sent a letter to the University of Hawaii at Hilo. The letter, from Gary Nakatsuka, Mitsunaga’s Hilo dorm project manager, said the windows approved for the project were not used. Nakatsuka said lower-grade commercial windows — which don’t meet the wind stress criteria — were installed, instead of the heavy-grade commercial windows approved by Mitsunaga. Nakatsuka said Mitsunaga refuses to accept liability for the windows.

According to the state Office of Budget and Finance, the state appropriated nearly $400 million between fiscal 2011 and fiscal 2015 for construction projects at the university’s 10 campuses, accommodating some 60,000 students.

While the university has been free to manage its building projects, the allegations and problems on several construction projects led the Legislature to revoke the university’s procurement autonomy during the 2013 legislative session, which ended in May.

Projects under way will remain under the university’s management, but the state Department of Accounting and General Services, the agency charged with overseeing the vast majority of the state’s procurement projects, will oversee new construction.

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