3 DEPARTMENT OF BUDGET AND FISCAL SERVICES CITY AND COUNTY OF HONOLULU 530 SOUTH KING STREET. ROOM 203 - HONOLULU. HAWAII 96813 PHONE. (son) 768-3900 . FAX. {808) Tea-3179 . INTERNET. honolulu.gov KIRK CALDWELL MAYOR NELSON KOYANAGI JR DIREETOR MANUEL VALBUENA DEPUTY DIRECTOR June 7, 2019 The Honorable Tommy Waters Honolulu City Council 530 South King Street, Room 202 Honolulu, Hawaii 96813 Dear Councilmember Waters: Thank you for your letter dated June 3, 2019, to Wendy Imamura regarding concerns raised at the Hawaii Kai Neighborhood Board No. 1 meeting on May 28, 2019. Our responses to your questions are as follows: 1) On January 7, 2019, Addendum No. 2 was issued which among other changes, amended the mandatory minimum requirement for the RFB. a) Why did your of?ce amend the mandatory minimum requirements? Response: A potential bidder asked whether quali?cation requirements could be waived. After examination, the Department of Enterprise Services determined that quali?cation requirements could be lowered to induce better com petition. b) What factors are considered when determining whether to issue addendums to Response: Addenda are issued to correct errors in the solicitation, clarify or add speci?cations, enhance competition, give bidders more time to submit proposals, etc. 2) On January 16 and January 25, letters were sent by your of?ce to Aloha Riding Lessons LLC (ARL) asking for proof of Kim Hollandsworth?s income demonstrating that the minimum $100,000 requirement outlined in 1B of the mandatory requirements for the RFB were met. In the Civil Beat article A ?Vicious? Battle Over The Future Of Koko Crater Stables, it was reported that, ?The city required applicants to have been in business for at least a year and grossed at least $100,000 in a year. Aloha Riding Lessons had Of?cially opened in March 2018. It hadn?t grossed The Honorable Tommy Waters June 7, 2019 Page 2 3) 4) $100,000 yet, but it was on course to make more than that by the end of its ?rst year, she told city of?cials." a) Was ARL able to demonstrate that they met the minimum quali?cation in Response: Yes b) If not, what did the city take as acceptable proof to demonstrate that the minimum quali?cation was met? On March 5, your of?ce noti?ed Hollandsworth that she was not in good standing with the Hawaii Department of Taxation and had not provided any other proof of compliance and as such, failed to meet the compliance requirement in sections 13 of the General Instructions to Offerors. In the aforementioned Civil Beat article, Hollandsworth made the claim that ?On the morning of March 5, an of?cer in the city's purchasing division, John Francis Sapigao, called [her] and told her she needed to pay the general excise taxes she owed within 30 minutes or she would be disquali?ed." Beyond the written notice dated March 5, that was sent to Hollandworth and the phone call from Sapigao, what other notices (if any) were given to Hollandsworth prior to that date indicating that she was not in compliance with section 13 of the General Instructions to Offerors? Response: On March 5, 2019, the City began the award process for this solicitation. The highest bidder was not Hawaii Compliance Express (HCE) compliant. Mr. Sapigao made a courtesy call to Ms. Hollandsworth to notify her that we would be rejecting her offer because she was not HCE compliant. She asked for time to submit her payment to the Tax Department. Mr. Sapigao said if she submitted her HCE before he ?nalized the rejection letter, we would accept it. She asked how long it would take him to ?nalize the letter and he responded ?30 minutes.? She was not able to submit clearance on time. She later called the Purchasing Administrator asking for reconsideration. She admitted she knew HCE was a requirement for award. When asked why she did not clear this matter up when she knew she was the high bidder, she said she did not want to tie up funds unnecessarily. Section 13 of the General instructions to Offerors outlines that the City may reject an offer if the Offeror fails to provide proof of compliance within the time permitted by the City. a) What is the usual timeframe for a failure to provide proof of compliance within the time permitted by the City? The Honorable Tommy Waters June 7, 2019 Page 2 Response: The buyer determines whether additional time can be granted. Oftentimes we automatically move to the next bidder if there is no HCE and ?extra time? is not offered. b) What is the typical timeframe provided for an offeror to provide proof of compliance? Response: HCE must be in place prior to the award. 5) More recently and in response to the formal complaint issues by Hollandsworth, the City has decided to cancel the current solicitation for Koko Crater Stables. In the letter dated May 9, 2019, your of?ce notes that the cancellation includes faulty speci?cations and requirements including, but not limited to, not identifying structures and buildings in the list of City Property, and not stating a clear description of the City?s vision and objectives for the property. If possible, would your of?ce be able to provide the speci?c reasons for the cancellation of the current solicitation as well as Hollandsworth's formal complaint letter reference in the May 9 correspondence? Response: The reason for cancellation is as stated above. If you have any questions, please call me at 768-3901. Sincerely, 0G, elson H. Koyanagi, Jr. Director APPROVED: Roy Amemiya, Jr? Managing Director