WAILUKU - For now it looks like F&H Construction has won the contract to build the new Kihei Police Station, according to county Department of Finance Director Danny Agsalog.
F&H appeared to have submitted the low bid to construct the two-story, 47,000-square-foot station along Piilani Highway for $27.7 million, or more than $7.7 million under budget.
But F&H was not the apparent winner at first.
On Thursday, Mayor Alan Arakawa's administration opened the police station's 10 bids and originally selected Unlimited Construction Services of Hawaii. However, a couple days later, the Lihue, Kauai-based business informed Agsalog's office that it would need to drop out because of an apparent internal error that would add $1.4 million to its bid, Agsalog said.
In a letter, the company told county officials it had inadvertently left out three material and manpower items. In particular, company officials forgot to budget for some large concrete slabs, Agsalog said.
But now, contractor Albert C. Kobayashi Inc. of Waipahu, Oahu, which finished third in bidding, has filed a formal protest of awarding the job to F&H, Agsalog said.
"But I'm keeping my fingers crossed the taxpayers will be happy we were able to get it done for a lot lower than we originally budgeted," he said.
Kobayashi Inc.'s formal protest alleges F&H is using an electrical contractor not licensed with the state Department of Commerce & Consumer Affairs.
"And F&H said they also have a letter verifying their contractor is licensed; and if it's true, we will probably allow them to be the contractor," Agsalog said.
F&H's Hawaii Division Corporate Manager Dan Blackburn said the protester confused subcontractor's name, Electric Construction Co., with another nonlicensed company.
"With this tough economy, I think maybe he was trying to throw a pebble in a pond and make a ripple," Blackburn said.
Kobayashi had a bid of nearly $30 million, which is more than $2 million higher than F&H's bid.
Agsalog said he and his staff will investigate any protests that come in by the Wednesday deadline and most likely will reach a final decision on the contractor on Oct. 7. Only a complicated protest could hold up the process a bit longer, he said.
"With a contract of this magnitude, we need to do our due diligence with every protest and do it fairly," Agsalog said.
F&H's bid is approximately $660,000 more than Unlimited Construction's first bid of $27 million, Agsalog said, but he noted the top three really were all "in striking distance."
F&H has a resume that includes work on large-scale projects, such as resorts, convention centers and apartment/condominium complexes, according to its website. On Maui, F&H built Maui Electric Co.'s Maalaea power plant, much of King Kekaulike High School and now the new University of Hawaii Maui College's science building.
The highest bid, Agsalog said, came in at $33 million from an unnamed firm.
The project's request for proposals went out July 31 with a Sept. 8 deadline. County officials met with the contracting firms to give them all the details and got them all together again to open the bids.
Last month, Council Member Riki Hokama expressed concerns about the sudden speed of a project that's been years in the making. He unsuccessfully lobbied to give the contractors six more weeks to prepare bids.
The situation illustrates how competitive construction companies have become in their search for steady work in this poor economy, said Agsalog, who indicated he wouldn't be surprised if more protests were filed.
Agsalog joked that the owners probably had their employees up all night looking for errors in the top bids.
"We're very fortunate considering the economy," Blackburn said. "We're also really excited and attribute this win to the hard work of our staff who pushed to bring these jobs in."
Police Chief Gary Yabuta said the county wants construction to begin in early 2012.
"We are planning to start working on it very quickly," Arakawa said.
The mayor also said he is trying to decide with lawmakers if it would be best for the county to reject the federal low-interest loan it has for $17 million at 4 percent interest.
"With all the red tape they (the U.S. Department of Agriculture) require, we think it would probably be best to just go with floating a bond for the entire project," Arakawa said Saturday.
He said he is having the Finance Department and Corporation Counsel examine the loan specifics and determine if they would need to put the project back out again for new bidders if they change the financing structure, something he is loathe to do.
"Our bond rating is so good, we're just more inclined to go with more bonding and have full control," Arakawa said.
The federal loan would demand reporting that would eat up a lot of staff time, Arakawa said.
"But we're not going to destroy the path we're on or create a time delay," he said.
The station will be located on 10 acres near the intersection of Piilani Highway and Kanani Road.
Construction is expected to create 200 jobs for 16 months, Blackburn said.
* Chris Hamilton can be reached at chamilton@mauinews.com.
