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Saturday, February 09, 2019
Lyon Bribe: DHHL Releases Suspect Contract Docs
By Andrew Walden @ 9:14 PM :: 1719 Views :: Kauai County, DHHL, Ethics

by Andrew Walden

Responding to a UIPA request from Hawai’i Free Press and inquiries from other media outlets, the Department of Hawaiian Homelands (DHHL) is releasing 211 pages of documentation related to its now-infamous 2010 contract with Lyon Associates.

The $2.5M contract awarded October 28, 2010, for “Design and Assessment of five DHHL owned reservoirs in Anahola and Kekaha” appears to match the timeframe and amount in Lyon Associates owner Jim Lyon’s January 22 guilty plea in Honolulu federal court. 

A DHHL statement dated February 8, 2019 came along with the contract documents:

The Department of Hawaiian Home Lands has not received a target letter or subpoena from federal investigators in the matter of Lyon & Associates. Although the Department was not solicited, it has made its contract file available to authorities for their review.

In an initial review of the contract in question, the DHHL has found the State's procurement policies were followed. This process included separate review and selection committees.

However, in an abundance of caution, the DHHL has asked the State Procurement Office and the State Attorney General to review the contract file and the Department's procurement policies and procedures, to ensure they are consistent with State law.

According to Lyon’s guilty plea, the bribery scheme aimed at an unnamed “State Agency” involved $240,000 in bribes paid out annually from March 31, 2011 through December 12, 2016, to “Co-Conspirator 3 … an employee of ‘State Agency’ from at least approximately 2008 until at least approximately 2012.”  These sums were them passed on to “certain State Agency officials who would have influenced the award….”  Other corrupt payments went to a “relative of Co-Conspirator 3, purportedly for consulting services….”

The State Professional Services Awards database (search “Lyon Associates”) shows Lyon as primary or sub contactor on dozens of State contacts between 2009-2015.  Each of these contracts could be a target for investigators.  On the DHHL Anahola and Kekaha contract, the database (scroll right) lists six DHHL employees who may have played a role in awarding the contract—as well as a seventh, Land Agent Kaipo Duncan, listed as agency “contact.” (pg 4)

The same seven names show up in the documentation provided by DHHL:

Review Committee members: (pg 4)

  • Stewart Matsunaga 
  • Janueri Wong
  • Robert Ing

The DHHL docs include three Review Committee scoring sheets (pgs 7-15) showing Lyon in the 90th percentile beating well-known engineering contractors such as SSFM, PB Americas, Mitsunaga and Assoc, RM Towill and others on “experience” and “capacity”.  The review process approved 57 contractors. (pgs 27-30)  Of these, according to the State Professional Services database, three submitted bids:

  • Lyon Associates
  • Hawaii Engineering Group, Inc
  • Engineering Concepts, Inc

In an October 18, 2010 memo approved by DHHL Chairman Kaulana Park, DHHL Land Agent Kaipo Duncan names the Selection Committee Members: (pg 5-6)

  • Cliff Laboy
  • Jeff Fujimoto
  • Sam Moku

Reached by Hawai’i Free Press, Sam Moku did not answer questions about whether he has been contacted by investigators, but did provide a statement:

”I had absolutely no awareness of - or involvement with - any improper or illegal activities when I served on the selection committee. I am stunned and saddened to hear this reprehensible activity took place, and hope they bring the individuals to swift justice.”

Kaipo Duncan and Jeff Fujimoto did not respond to a request for comment.  An attempt to reach Cliff Laboy was unsuccessful.

The DHHL documents also include a January 18, 2012 letter from the late Frank Lyon to Kaipo Duncan detailing what Lyon called, “proprietary information pertaining to our calculations.”  Lyon provided the information asking, “that this material remain confidential as we do not want our pricing data to be shared with competitors.”  (pg 182-183)

Interestingly, Lyon’s response details, “a lump sum amount of $250,000…identified for a possible subcontract titled Geotechnical/Valley Well Drilling and Cooper labs.  There is no subcontract for this value and this value was an estimated reserve….  The total amount, $250,000 is still available for future use..  Lyon Associates deem this portion of the site work 0% complete.”  (pg 185)

According to the indictment and plea, Lyon’s ‘State Agency’ bribes total $240,000.

Lyon’s response is included in an exchange of letters which came after Lyon on March 29, 2011 wrote DHHL asking to renegotiate the contract due to seemingly contradictory clauses. (pgs 180-185)

Lyon’s preferred clause would compensate Lyon for a $2.5M flat fee based on “a percentage complete.”  DHHL declined to renegotiate, denying there was a contradiction between “percentage complete” and another clause calling for contractor to be paid on a “time and material fee basis” – a wording which might justify not paying Lyon the full $2.5M if some aspects of the bid did not need to be performed. (pg 180)

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