DBEDT, HHFDC navigate a smooth transition following SMS collapse

by Stan Fichtman, PoliticsHawaii, Oct 17, 2024 

The State Department of Business, Economic Development and Tourism (DBEDT) and the Hawai‘i Housing Finance & Development Corporation (HHFDC) have recently confirmed that the state contracts previously held by SMS Research & Marketing Services, which recently shut down operations, have been transferred to other entities.

Upon breaking the news that SMS Research had shut down operations in late September and early October, Politics Hawai‘i has been reaching out to various offices that may have been affected by the sudden closure.

According to two offices at DBEDT, one from its Research and Economic Analysis Division (READ)and the other from HHFDC’s Housing Information Officer, they informed Politics Hawai‘i that late last month, and earlier this month those contracts were formally transferred to two other companies.

For a contract that was to survey statewide domestic in-flight visitors’ characteristics, for years 2023-2024, initially awarded to SMS in December 2022, that contract was formally transferred to Omnitrack Group, Inc. on October 1, 2024.

Around the same time, another contract to perform the 2023 Hawai‘i Housing Planning Study, also awarded initially to SMS, was transferred to Ward Research on October 11th. For both contracts, SMS Research informed both DBEDT’s READ and HHFDC offices that they were unable to complete the work as contracted at or around the end of September.

In one response from DBEDT READ, they were informed that SMS intended to file for bankruptcy. Another response noted that SMS had informed HHFDC that “due to a lack of liquidity, the company would be unable to complete the study.”

Both DBEDT and HHFDC went on to say in their statements that both SMS and the successor company worked together to effectuate an orderly transfer of interest in the contracts. For the in-flight characteristics survey, DBEDT had discussions with who could be considered the lead firms in research in Hawai‘i – Omnitrack Group, Ward Research, and Anthology Research.

The following are the full statements by each of the offices responding to the Politics Hawai‘i inquiry.

Statement from HHFDC’s Housing Information Officer on the Hawai‘i Housing Planning Study contract

Aloha Stan,

Here is a statement from HHFDC that should answer the questions you posed.

Leading a consortium of eight participating state and county housing agencies, HHFDC contracted with SMS to prepare the 2023 Hawaii Housing Planning Study (HHPS) at a total cost of up to $730,037.56.

At an in-person meeting with HHFDC on September 27, 2024, the owner of SMS explained that due to a lack of liquidity, the company would be unable to complete the study, and that they had had discussions with Ward Research to complete the work. After subsequent meetings with Ward Research, HHFDC was satisfied with the firm’s qualifications and capacity to complete the study on time. With HHFDC’s consent, SMS assigned its interest in the contract for the study to Ward Research on October 11, 2024.

The HHPS is expected to be completed before the start of the 2025 legislative session, as planned. HHFDC’s portion of the balance of the contract value is $12,900.01 and will be paid to Ward Research upon the successful completion of the HHPS. No additional monies are expected to be needed to pay for this study.

Statement from DBEDT’s Research and Economic Analysis Division

Aloha Stan,

Here is the response from DBEDT’s Research and Economic Analysis Division:

DBEDT Research and Economic Analysis Division (READ) issued RFP-23-04-READ Sealed Offers For Statewide Domestic In-Flight Visitors Basic Characteristics Survey For Calendar Years 2023 – 2024 on November 2, 2022 and the contract was awarded to SMS Research & Marketing Services, Inc. on December 14, 2022 for $841,304.00 as contract number CON 70857. This research project is fielded on a daily basis, with monthly and annual deliverables. The data collected though this project are part of the tourism data DBEDT releases monthly and in DBEDT’s Annual Visitor Research Report. READ paid SMS’s invoices on a timely basis. 

SMS notified READ on Friday, September 27, 2024 via phone call regarding SMS’s situation, inability to complete the scanning and processing of September 2024 survey forms, and intent to file bankruptcy. READ had discussions with several market research firms regarding this project including Omnitrak Group, Inc., Ward Research, and Anthology Research. SMS reached an agreement with Omnitrak on September 30, 2024 and the contract CON 70857 was assigned to Omnitrak on October 1, 2024.

SMS and Omnitrak worked together to ensure all data files and survey forms were transferred to Omnitrak. There was no loss in data or intellectual property to the State. Omnitrak was able to complete the scanning and processing of September survey forms on time.

In our ongoing investigation into this story, Politics Hawai‘i has officially contacted Mr. Timothy Carson, Chief Executive Officer of SMS Hawai‘i. Despite being unable to locate a phone number or email for Mr. Carson, Politics Hawai‘i took a traditional approach and sent a formal letter to him on October 16th, requesting a comment on the situation of SMS. Politics Hawai‘i is eager to present Mr. Carson’s perspective on the sudden closure of the renowned research firm.

And Politics Hawai’i with Stan Fichtman thanks DBEDT and HHFDC for their response to inquiries on the situation.

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