House Standing Committee on Health

Good morning and thank you and welcome to this informational briefing of the House Committee on Health. On behalf of myself, Greg Takayama, and my Vice Chair, Sue Lee Loy, welcome, members of the audience as well as people who are watching on YouTube.

Now, as mentioned in the notice, the purpose of this informational briefing is to gain an understanding of the construction defects and resulting operational problems at the newly opened $160 million Hawaii State Hospital, Hale Ho'ola building. And so at this point, I'll turn it over to the Deputy Attorney General, JT Kim, for a brief statement.

Thank you.

By the way, I'd like to welcome Representative Scot Matayoshi, who happens to represent the district in which Hawaii State Hospital is located.

Thank you, chair.

Good morning, Chair Takayama and the members of the committee. My name is Jin Tae Kim, or JT for short. I'm a Deputy Attorney General. Today's presentation details the construction and the design defects and the ongoing problem related to the Hawaii State Hospital.

The Department of Attorney General is conducting an inquiry into the matter and is working with the Department of Accounting and General Services and the Department of Health on all matters related to the remediation, including working with the Hensel Phelps Construction Company on resolving the ongoing concerns.

Because this is an ongoing inquiry, and to preserve the right of the State of Hawaii, the Department of Attorney General will not be making any statement on any legal matters, including speculation on any legal course of action.

We have also advised the Department of Accounting and General Services and the Department of Health to do the same to limit their statement to factual matters only, thus helping to ensure the State of Hawaii to preserve their inquiry of--I'm sorry--to preserve our integrity of our inquiry in the future. Thank you.

Okay, thank you very much. As I understand it, though, you will be available to help answer questions that may not directly impact or influence the pending litigation?

Yes. Yes, chair. I'll be just right here, and if anybody has any questions, I am more than happy to answer to my best of my ability, any questions or inquiries that you guys may have in this information.

Okay, thank you very much. At this point, let me turn it over to the State Department of Health as well as Department of Accounting and General Services.

Good morning. Good morning, chair and members. My name is Marian--my name is Marian Tsuji, and I am the Deputy Director for Behavioral Health Administration at the Department of Health, and we have Mark Linscott here, who is the Administrator for the Hawaii State Hospital.

Next to him is Gordon Wood, who is the Division Administrator for Public Works over at DAGS. What we'd like to do is just go through a brief PowerPoint slides to kind of acquaint all of you to some of the issues that we've been dealing with and then we're available for questions.

Aloha, chair and vice chair. Mark Linscott, Hospital Administrator. As the chair talked about, Hale Ho'ola, which is designed for acute and the highest level of care in the state for our forensic patient population, and as he said, there were 144 beds in this facility. This is the place where people live 24 by 7.

We also have staff and psychiatrists there that are working in this building. Construction was accepted in 2021, and as we were moving to plan the opening, there were latent defects that were identified in that process along with some warranty information. So next slide. So I do want to--and basically--next slide. Sorry.

So the occupancy occurred in April of 2022. We identified and worked on correction of those ongoing issues, so we're always doing that, and if you see the dates in the pictures in the presentation, you'll see them from 2022, 2023, 2024, and 2025. So this is an ongoing challenge for the hospital.

Major design and construction defects included anti-ligature risk and corrections. We also had roofing and building--the build elopement leaks. They had--or elope--envelope, sorry--drainage, and also the flooring problems in the patient showers. Water intrusion continues throughout the building and causes additional damage. Our HVAC system performance is an issue and the use of incompatible materials.

What does that mean? So we all know--and you live in Kaneohe--the rain goes from the mountain to the sea. So we have materials like were used in the gym that actually ended up oxidizing and corroding and created falling pieces. So there's materials and that's just one example, but they're throughout the building where we have some challenges that we have to continually clean up. Next slide. Yeah, do you want to--?

Sure, yeah. Let me head into this area here. As Mark says, we've been doing quite a lot of investigations over the years. These photographs here show a section of roof that was essentially removed so that we could try to determine where the water was coming in.

That section has since been repaired, replaced, and I should note that the water intrusion continues. So we weren't able to identify it just with that. Okay, next slide, please. Here we see a number of sample areas where we can see leaks on the interior of the building.

Some of these are from the roof and some are from plumbing. And it's difficult to see, but some of the arrows point to areas where you can see actual evidence of the moisture and mold starting to grow. Next slide, please.

Can we--just a moment? So operationally, what does this mean? So if you look on that slide to the left, that is a treatment mall area where we have patient, classroom, therapeutic behavior that we're not able to use. A lot of the things with the day areas, we have to move patients around to mitigate that, and specifically with patient showers and that kind of thing, it creates an operational challenge for us to manage every day.

Right. Okay, next slide. This is--the upper two photographs there are of roof conditions, and you can see that we have two roof drains there, the sort of black constructions that are very close to one another. One of them is supposed to be the standard roof drain and the other is supposed to be an overflow roof drain.

Typically, we see those drains separated by six to eight feet. And somehow, the way that this building was constructed, they were very close and ended up not actually working in the way that they were supposed to work, and the contractor had to come in and do some after-the-fact modifications that, frankly, we find to be inadequate.

Down below, you can see where--and it's difficult to see, but if you look at the lower left drawing, you see a doorway there and then a sort of a black spot up above that, and that is actually the termination of a roof drain.

So water comes down from the roof and then pours out of this drain area essentially above that doorway, and so we do have water that is coming down into the interior areas or--actually these are exterior areas, but undercover from the roof. Let's see. Next slide, please. And this is the gymnasium.

There's a small gym as part of the facility, and instead of having it enclosed with windows, it's enclosed with louvers to allow free air circulation, and then there is a security screening on the inside of those louvers and that security screening has been secured with aluminum framing, sheet aluminum frames.

And over time and over a very short time, that aluminum has corroded to the point that it has expanded and started to fall under the floor of the gymnasium as little daggers. So we had to close down the gymnasium, clean that all up, and try to work with Hensel Phelps on a long-term solution for this.

We are continuing to work with Hensel Phelps on that long-term solution to today. Let's see. Clogged drains. Yes, clogged drains. This is good. If you look at the extreme right photograph, you can see that someone is holding a piece of plumbing that seems to be completely full of some material, and that material is grout.

Somehow, a contractor thought that it was reasonable to just pour grout into the drains, and, you know, they don't work very well after that. And so--but this is something that we couldn't figure out until we started to dig into the building, and that's--Mark has used the term, latent defect, and those are defects that you can't find until you start to tear things apart.

Next, please. Okay. Oh, yeah--this is more drainage problems, and you can see--on the left photograph, you can see where there's been water intrusion all around that drain that's coming through the ceiling then going into a wall.

You can also see the center photograph is of a shower and you can see the damage to the shower just with the discoloration. Even at this distance, you can tell that. And then we have--let's see, I think that's damage to a ceiling up there also from water intrusion, and this is happening throughout the building.

Next, more leaks and mold. With the intrusion of water into the building, of course you're going to have mold, and indeed we do, and even with the best efforts of the maintenance crew, the mold is in the building, and as you have seen from the recent news articles and so forth, there have been a grievance filed about that condition and we are just as concerned as the unions are for the health and safety of the employees and the occupants of the building.

So presumably that mold is in between--not just on the surface, but it's all in between the walls or--?

It's a--there is a great probability that it has been infused into the wall materials as well, and what we're doing at this point is we're cleaning the surfaces that we can reach. Part of the reason for the request for funding is so that we can do a deeper cleaning.

Sorry, chair. Can we ask questions as they go or do you want us to wait for the end?

I think if they're relevant to the photos, what are they showing, what does that mean, yeah, sure. I think so. But for the bigger questions, maybe hold off to the end, but if they relate to the photo, sure.

I'm kind of curious about the mold. Does this have to do with the HVAC not operating properly, that it's not sucking enough moisture out of the air?

Yeah, we have--it is--like many things in life, the problem doesn't have just one cause, okay, and so the water intrusion through roof leaks and plumbing leaks and exterior wall leaks, that's one contributor, but also the HVAC system isn't capable of removing enough moisture, and one of the things that we're looking at is putting in reheat units that will then remove the moisture and then we recool the drier air.

But so are the mold issues related to--are they centralized around the leaks or are they kind of everywhere?

They are pretty much throughout, yes.

Okay, so that does sound more like an HVAC system, and I know you mentioned earlier that the HVAC was defective, which I assume is a material defect still covered under warranty or maybe--sorry, chair. I don't want to get too off.

Okay, and let me just give a quick answer. We have two kinds of warranties in play here. One is the contractor's warranty--that's typically for two years--and then we have manufacturer's warranties that run longer. Okay. And so, yes, it's probably out of the contractor's warranty, depending on how you read...extensions to the warranty, if you will.

Yeah, let's get into the warranty questions maybe later on. Thank you.

Yeah, thanks.

Please proceed.

Thank you. Let's see. Next slide, please. Okay, let's see. The picture on the left there, it's a little difficult because we're looking through a window to an enclosed exterior area and so there's some reflections and so forth, but this is essentially the same roof drain as we saw five slides ago up above the doorway there. This one is a little more dramatic because you can see some vertical streaking there, and that is water actively flowing out of that roof drain. Okay. Certainly--

Wait, so it's the same exact roof drain or it's the same--

It is the same exact roof drain.

Is there only one that does that or are there multiple that do that?

There are multiple, yes. Right. Yeah. This just happens to be the same one. Okay. And then with the ceiling tiles there, you can see evidence of moisture in the ceiling tiles there as well, and that, that happens all over. Okay, next slide, please. Okay, here we see some of what's happening with the HVAC system.

We, we have a damper there that--and this is a three or four-year-old damper that is basically corroded beyond operation--and, and so that, that needs to be replaced. You can also see with the ceiling vent there, the moisture that has occurred around that ceiling vent and the corrosion of the vent itself. Let's see. Next slide, please? Oh, there we go. Mahalo.

Thank you. Do you want to--is there more to your presentation or do you want to open up to questions?

We're available for questions.

Okay. Well, let us proceed with questions then, starting with Health Committee, members.

You need to catch me up. I haven't been following this that closely. So what--this is a relatively new building, which we were so proud of when it was first built and that it was design build, is that right?

That is correct, yes.

And it came in in time, maybe even under budget?

It came in in time. It came in on budget. There were some change orders, but a very small amount, frankly.

So to, to what extent is, are these problems our problem versus the developer, builder's problem?

Okay. We believe that the, the problems belong to the design builder. And that's, that's our position.

But you're coming to us for money.

Yes, and that's because we need to address these things, these problems immediately, okay, and we actually have two requests before the Legislature. One is for an emergency appropriation. That's to take care of things as quickly as we can.

That's for $8 million or so?

That's correct, yes. And then we have another request out there for about 28.8 million for longer term repairs, realizing that that money won't be available until after July. And so what we need to do--

I'm sorry--if I could interrupt? So you're saying the building cost $160 million to complete, and the total cost of fixing the deficiencies in the building will be almost $40 million?

That's the neighborhood of our current estimates, yes. Yeah. But I will, I will say, you have to remember that we are continuing to investigate--

So it might be more.

And with latent defects, we may find even more.

Okay, thank you. I'm sorry.

No, no, no. Thank you. Thank you, chair.

I have a number of questions. Thank you for being here. I'm just really curious. With the design build project, who covered the inspection process as the building was being constructed?

Okay. One of the advertised beauties of design build is that the owner has 1.0 of responsibility to point to, and that is the design builder. They're responsible for both the design and construction. Okay. So internally, the design builder has its own inspection crew going around to make sure that the construction is in line with their design.

Independent of that, we also had inspectors on site to oversee that inspection function. Okay.

So in the inspection area, there's a number of disciplines. Right. Plumbing, engineering, the HVAC system. How many disciplines were contained within this inspection process?

Okay. Typically an inspector will cover multiple disciplines. Okay. And so I think we had two or three inspectors on our side overseeing the design builders inspections. And I. I can't answer to how many inspectors the design builder had aboard.

And through the design build process, they hire their own third party inspector or is that contained within the design build contract?

It's typically contained within the design build contract. Right.

I have a few others, but I would love to hear from the representative of the district who's probably been tracking this for a bit.

This is the Health Committee, so I want to defer to share, obviously.

Repuls, did you have any questions?

Yes.

Okay.

Nothing about the.

Okay, well, go ahead.

Thanks. Chair, you mentioned that on the roof, the drainages were not compatible or not normal. They were normally six to eight feet apart.

Correct.

But in the design build, it would have shown that these drainages were too close together.

Well, let me respond to that because this is something that is. It is something that we did address. Okay. In the original design that the design builder provided us, it did show the drains.

With a more conventional design, as the construction progressed, the design builder had a second tier design builder to do the mechanical work and plumbing work. And that design builder unilaterally changed the design to move the drains closer together.

And when our inspectors brought that to the attention of the design builder, the design builder's response was, apparently it's within our purview to make changes to our design.

Did that result in a change order to the concrete based on the design edit?

No.

Did it make it less expensive?

It may have, but I don't have any information to back up that assertion.

You mentioned the gym and the gym screens.

Yes.

And again, design build, at what point was it discussed that the material wouldn't kind of meet the expectation of the use of the facility? I'm trying to connect there.

Well, it was when Daggs was alerted by the hospital staff that these little shards of metal were falling down. That's when we went into an in depth investigation of what was going on there.

And we realized that again the design builder's original design drawing showed one detail for that that would show water drain to the exterior and so forth and a different design detail that was actually constructed.

So back to the question of design bill and the inspection. If there's an internal second tier design edit that's available through this design design construction, what are you guys inspecting to? I, I guess there's a set of plans that were approved.

Right.

And then an edit. And so as an inspector and the inspectors of the various disciplines, at what point are they seeing the disconnect between the actual plans that were approved?

Yeah, and I think what you're trying to address is stop me if I'm going too far but is an inherent weakness in the design build method of procurement.

I'm sorry to interrupt, Representative.

That's something that our team, the DAX office is trying to address when we are trying to look at the overall design and how we or what happened because this is, it goes to, like I said in my introduction goes to the legal matter in terms of trying to find fault, who's to be blamed and who's to be taking responsibility of such construction or design defect.

But the key, we're here to provide you with information as much as possible without going into much. We're not trying to hide anything. Representative. We definitely do want to provide you with every detail and every information.

However, as we learn more and more about the building, there are more and more questions that we need to, to have it answered. That's why we're. But that does, but it also we're currently working with the design, the construction company Hansel Phelps.

So we are in a way working together to see if we can resolve this without litigation or any kind of legal action. And if we were to get into it, then they become defensive unfortunately and then it might become a more longer process and we cannot.

The amount that we're appropriation that we're requesting is not to determine how to deal with the litigation part, but for the safety and the welfare of the staff and the patients that's there. And as you know, and many of you guys may be aware of any kind of legal action will take some time.

But we cannot wait for the help. We cannot wait to defer any well being or health issues of the staff or the patients we have over. Over 300 patients at the Hawaii State Hospital and we're concerned for each and well being of every one of them. Thank you. And so therefore we're just asking if.

I. I'm sorry, I just wanted to finish. Have you finish your thought?

Because you were going to say that you're going to describe the inherent deficiency in the design build concept and I'm interested, intrigued by that point because this isn't the first and it won't be the last state project that's probably built with design build concept in use. So please finish your thought.

Well, actually that statement that there is an inherent defect in the design build procurement method is pretty much my thought.

I will follow that up though, however, to say that we also realize that this is probably not the last design build pro project that we will undertake and we are looking at how we can improve that procurement process to bring in more accountability on the part of the design builder.

Because the issue is that with design build, while we have just a single point of responsibility, it also means that the state gives up a certain amount of control over the project as well.

Thank you. I'm sorry to interrupt. I have two more questions.

I just want to confirm this is 144 bed hospital. Correct. How many are operational or available for use?

Right now we're using all 44 plus some wave beds. So we have current census about 730, 374 patients throughout the facility.

So throughout the campus.

And then we were slated for, you know, 144 patient beds in Halehoa. Right. So that's where that six units are housed vertically for four stories.

And then just to confirm, these defects were first noticed from the day you guys opened or prior?

Prior. So the project was. The project was accepted. And as the hospital staff walked through we started to identify very obvious things like we have anti ligature doorknobs. Well, there's a hallway and three of the seven doors have anti ligature door knobs and the other doors have regular doorknobs.

So just to describe anti ligature doors, that's fixtures that avoid patients being able to hang themselves.

Correct? Correct. We also started to, we were testing the plumbing and so we turned all the showers on and found all the water going out into the hallway. And that was because instead of the drain sloping downwards, they were like a mountain. And so that had to be corrected also before we could move.

Patients in other areas had, for example the doorways, they had those arms that helped the doors close. Big ligature risk. And those were things that were not supposed to be in an acute psychiatric hospital.

I'm going to yield for now. Thanks.

Rep Marten

Yeah, I'm just curious about the relationship with Hansel Phelps for these during this repair process. So will they be doing the repairs or will you contract out to someone else?

And if you contract out to someone else, would they possibly reimburse the state for that work or would they possibly then say, well, you know, that now somebody else has messed with it so it's not our responsibility anymore.

So I'm just wondering how this, this relationship works as we try to go through the repairs without court prescribed rules.

If I may address that. We're still working on negotiation with Tansel Phelps. We can't give you a permanent answer that we can. That really answers your questions. We're looking at all remedies in terms of resolving the hospitals defects right now. That's our main goal.

And in the background we're working with the construction company and the third party to resolve any problems. As to your answer to your question, we can't give you a firm definitive method of how we're going to resolve payment issues.

So I agree that it's super important to resolve the safety issues for the employees and the patients. But that's $40 million. That's not going to our other programs, not going to our schools, not going to health care. So if it wasn't our fault. We. Would want it reimbursed. Right.

So that we can use it for other important state projects. So I just want to make sure that we're not giving them the Hansel Phelps a free ride.

We are looking into all remedies in terms of resolving that matter. Thank you.

If there are no other questions from Health Committee Members. Rep. Marsh.

Stop me if they're going to make an admission, please. I want to follow up with Rep. Martin's question. I'm a little how do you preserve evidence if you're allowing someone other than the original contractor to make these repairs?

Because if the repair is made badly, then there's no distinction of was that repair made badly because it was too difficult or did the person did the other contractor you're hiring screw it up? Not only that, but you're kind of if you're making the repairs, it's necessarily destructive.

So you're going to be destroying evidence that could be used later. I understand. I'm assuming there's no court, is there any court filing right now?

There's no litigation or court filing right now.

Okay. So if there's no pending litigation, I don't understand how this works. I mean, how are you. Are you. Are you folks trying to preserve all the evidence you can? But if you're truly trying to fix it as you go, which I.

Which I'm not disagreeing with, by the way, I mean, I do want these patients taken care of. I don't want anyone hanging themselves. You know, I don't want the hallways flooding. But how do you make these corrections if Hensel Phelps is not making them? Or is Hensel Phelps making them?

Hensel Phelps is making some of the corrections.

Are other contractors being brought in to make some of these corrections?

Chances are we will bring in other contractors to make some of the corrections.

Okay. How are you going to preserve the evidence for litigation later, though, if it comes to that?

Right.

There will be photographs, as you can see. There will be. Receipts. There will be designs that we'll be looking at. And so there are methods of preservation that you are worried about in terms of resolving your inquiry. So we do have.

We are going through the list of all the defects and working with Hassell and Phelps to resolve them if possible or otherwise. We're dedicated to listing, preserving extensive list of all the defects that we have through pictures, invoices, through testimony. So there are ways of preserving the defect before we resolve it and going back to.

And asking for any kind of resolution that we can get from the designer or from anywhere possible. And that's what we can do at this point. I understand. Without going through more in detail or going through any kind of litigation.

Yeah. And I don't want to push you for this too much, but if Hensel Phelps is not the one making these changes, I feel like later on, if we do litigate, it would be very easy for them to say, no, it wasn't us.

It was this fix that this other contractor did wrongly that's causing part of this problem. I don't understand why we're not using just Hensel Phelps to fix their own issues if it was them. I mean, we use design build because it was 1.0 of contact.

I have my own problems with design build, but it seems like we're going the opposite direction now. I'm not too sure why. Why not hold them responsible for fixing their own mistake?

I think right now we have been using debt, Hensel Phelps and their subs as much as possible, but there's a point at which you fix it and the problem comes back, and you fix it, and the problem comes back, back, and then you fix it again, and the problem is still there.

But if that. If that's the case we should be litigating right now, right?

I mean, so, you know, I think.

That that option is always there. That is our. That option to litigate, to take legal action is always there. But that would cost the state money and efforts. And I understand that, the frustration you have in terms of the difficulties of how did this occur and things like that.

But we cannot go into detail right now, and I do apologize.

I totally understand, and I'm not. Again, I'm not blaming you. I understand their restrictions. But to say that it would cost the state more to litigate right now, when you're coming to us for $40 million, it just. That feels odd, right? I mean, and especially 40 million that we may or may not get back.

I mean, if this is the case, and I think a couple of other representatives here have asked, if we're giving this money to you folks to fix these mistakes, and we're not guaranteed to get them back, why aren't we just litigating it right now and trying to see how much we can get back?

The litigation can go on parallel tracks with fixing the repair, as you know. So why. What are we waiting for? If you're already coming to us for millions of dollars, I mean, 25% of the overall projected project costs, what are we waiting for? The longer. You're right.

Litigation does take a long time, but it's going to take even longer if we start a year from now, I think. And it's going to take even longer because we didn't start two years ago.

That decision, unfortunately, I am not privy to that is overall decision by the Attorney General as to how to proceed. I can't give you the answer right now because there are other background events happening or things happening that I am aware of, but not aware of. So I'm only here to present to you.

They're only here to present to you the facts of the case, facts of the State of the Hospital. But unfortunately, I cannot get into when or how or where we're going, going to litigation.

And I do apologize for not being able to answer that question. But that's not the decision.

It's not their decision, and I am not privy to that.

Okay. And if I could, could I continue? This is literally my backyard, which is why I'm a little more pissed about this. Kaneohe is a very wet place. Anyone will tell you that it sounds like these materials are not spec'd properly at all for Kaneohe conditions, including the. I mean, just everything. I mean, corrosion.

Honestly, I don't even Wanna talk about Kaneohe in Hawaii? Things corrode a lot quicker. Who was speccing this stuff? I mean, it seems like we have materials that were used that were completely improper.

And if it is a design build format, which, again, it's faster, but it has its flaws, why weren't our guys checking that when we checked the material specs? I mean, don't let them make a dimension here. But I don't understand who dropped the ball here.

If it was them or us or both of us, or if this could have been caught during the design build format. And if it's a flaw of the design build format, maybe we shouldn't be using design build.

We're looking into that as well as to who should be taking responsibility. However, at this juncture, we cannot say one way or another whose fault it is because this would be considered a mission or could be considered blaming. So we. Unfortunately, that we cannot answer.

So you touched on something else I want to cover because you keep saying that, and again, I. I've been where you are, so I don't want to fault you on this, but you keep saying you don't want to blame Ansel Phelps for this, but I think we kind of are already.

I mean, the cat's a bit out of the bag there, and you're already in negotiations. And, you know, it's public knowledge for them to fix these errors, these known construction defects. And whether it's their fault or not is kind of neither here nor there.

But if we're already at that stage, I feel like we can start placing some of the blame. Right. I feel like we're really tiptoeing around. I'm not sure what they have over us. And maybe you can't tell us that's making us step so carefully.

But I don't know why the state isn't going kind of full force at these guys, because they've really. I mean, they're costing us $40 million. Why aren't we more publicly or going after them in, say, a lawsuit?

I'm not sure what the advantage is at this point, years down the line, when you're coming to us for 40 million to be tiptoeing like this.

Unfortunately, I don't have a. I'm not privy to that question, to the answer to that question. And we are hoping to resolve this matter in a more smoother way. And if. And like I said, all possible remedy is available to us, and we don't want to close indoors.

So I understand your frustration, and I understand that, you know, the default or the design default is with. We can blame anybody or any person, but at this juncture, we're still in the investigation phase, so we cannot give you a finite answer to your question.

That's all right. For the materials. Are the materials failing or were they badly specked? I mean, is this a material default where we can go after the material manufacturers, or is this something that was just spec'd poorly and therefore it's failing? Do you guys know.

I think it's a variety of different causes. The gymnasium, shards of metal that was simply dissimilar metals. There needed to be some isolation.

Okay, so that was a design fault. It sounds like you did some kind of. What's it called, an anode? I mean, you're talking about.

Or a rubber isolator or something of that nature, right? Yeah. Right.

So, I mean, let's just take that then. I mean, who's. Well, okay. I wish you guys would just see them. Is the other side preserving its records? Have you sent them a notice? Yes. Okay. All right. I'm very frustrated with this because I had for years been telling my.

We've gotten complaints about State Hospital for a long time. Obviously. I mean, there are. Besides some of the escapes and things that we fixed with the fence, it's an eyesore a bit. And I kept telling people in my district, don't worry about it. It's going to be doing so much good. This project is on time, on budget.

This is a great state project. This is going to be the model of all state projects going forward. And then now we're here, years later after that, and it's still. I think. I think I'm just extra frustrated just because of what I've been dealing with in my district. So sorry, if that's coming out. That's. That's my fault.

So sorry. Last question. Chair. How much of this 40 million are we expecting to get back? Please tell me it's 50.

There's no way to tell what the future will result in if we cannot guarantee, and we don't have a estimate as to the exact amount that we could recuperate or we could get back.

Well, but see, that's the problem that I'm dealing with here, because without litigation, I mean, if litigation was pending, there'd be one thing. If you folks are talking with Hensel Phelps, why isn't there an agreement in place? Why are we shelling out money if there's no agreement in place for them to pay us back for certain things?

I feel like there should be at least be an enumerated list of criteria under which certain repairs would fall and Hensel Phelps would reimburse the state. If we're fronting $40 million with no agreement for payback, why are we doing it? I mean, Hensel Phelps is a big company. They should be fronting this money.

Why are we doing it? That makes no sense to me. Unless there was a prior. Unless they are, for some reason capital strapped. They need us to front the money, and there's an agreement in place to pay us back for certain items that they probably admit are their fault.

But why are we fronting $40 million if there's no agreement? And will there be no agreement? I mean, is that the plan to just not have any agreement?

I'm not privy to that answer.

Okay, answer to that question.

So the inner working between the relationship between the DAC's office and Hansel is ongoing. And what we're doing, we're doing our best to make sure that all of the defects are preserved in terms of evidence and also trying to get them to resolve the problem.

But as of now, I can't tell you the details of the agreement or any kind of agreement, if there is one. And if we do have one, then it's difficult for us to tell you at this juncture. Like I said, the reason for the appropriation of this money is for the welfare of the staff and the employees.

And that's what we're trying to do.

And a lot of those employees live in my district and have been complaining about this. So I'm sympathetic. I guess I just don't. I guess I just don't get it. Without getting into details, has Hensel Phelps admitted that any of this was their fault, like any pieces of it? Because I feel like that that's gotta be the.

If they're not admitting to anything and they're saying, you know, go ahead and sue us, we should, we should sue them. But if they are admitting to certain things that they'll pay for, then that should be in the 40 million per agreement, right?

I mean, they are making some changes. They are making. They are fixing some defects in the. At their cost. So they're not trying to avoid their responsibility. So since they're not trying to avoid responsibility, we're trying to work with them as much as possible.

And to be clear, they're fixing it at their own cost. That's not in the 40 million that we're paying for?

That's correct.

Okay, so what's the 40 million for?

The 8 million? A little over 8 million is for the emergency appropriation is to fix what's cost, whatever health issue we have right now to resolve that. And there's I believe 20 something $1.0 million in a bond for a long term resolution of the Hawaii State Hospitals.

So that's beyond regular maintenance costs. This is to fix ongoing structural or construction defect issues going.

I've been to the hospital many times to inspect and to work there because I represent the Hawaii State Hospital personally as a Deputy Attorney General, not. Sorry, not personally as a Deputy Attorney General. And it's a large facility. It is. And it houses over 144 people.

And it's meant to not only provide housing but recreation, food, training programs, because all of these people, most of these people are dead and committed to the judicial system. So we do have an obligation as they come in. So it's not just we can just take them away and then fix everything and then put them back.

Like if we put them on a hotel or anything like that, we still need to continue to house them for the safety and the welfare of not just them, but for the public as well.

So we're doing our best to look into the structure and as we use the structure more and more, we are finding certain things happening.

But we're trying to get the money back. Right. Are we getting some of the. If we get it back, you're going to, you're going to put it back in the General Fund? Is that the plan?

If we are able to recoup any monetary funds from any third party or any person that's related to the construction, I'm sure we will be returning the money back to the general.

Okay. I'm just trying to distinguish if this is a loan or a grant, basically, but thank you. Thank you, Chair.

Well, if I can ask a couple questions. Now, the 28 million eventual cost, doesn't that basically call for a new roof? Totally. Yes, it does. I'll go back a couple years to between the time the contractor finished building and the time we accepted it. Who accepted the building, by the way? Was it Department of Health or Daggs?

Daggs accepted the construction on behalf of the state. Okay. So unlike Rep. Mariyoshi, I don't live in Kaneohe, but I do know it rains. And so there must have been at some point where our building inspectors noticed that the water was coming through the roof pretty in large quantities.

So why wasn't that pinpointed as a major fault before we accepted the building?

I can't really answer that question because I wasn't one of the Inspectors. But I can only imagine that our inspectors simply didn't noticed that and that it started to occur after the project was accepted.

Okay, well, I guess what I'm driving at is there's a long period of time while they're building the building in its final stages. And the time we accepted it, I just don't understand why it wasn't noticed. I mean, we're talking about massive leaks. I don't understand that. And I'm.

I'm sure we're not assigning blame, but it seems like there should have been some kind of proactive action before we accepted the building. I don't disagree with you.

Now, it's my understanding that under design build, there's actually a third party who is selected to oversee the construction, and that's paid for out of the initial $160 million or so.

Who is that third party? Okay. We did have a group of consultants who were there not just to oversee the construction itself, but also to help us in putting together the RFP and all of the prior studies leading up to the rfp.

And then during construction, we did engage a construction management consulting firm to be there on site on a daily basis.

And this on site construction management firm was not Hensel Phelps? It was not Hensel Phelps. It was a third party? That's correct. So is this person or company being held accountable? Because in theory at least, they should have been exercising supervision over what was going on in the project.

Who are they? The firm that we hired is Ryder Levitt Bailey. I think it is RLB. And. What responsibility do they have for the defects? I think that I will fall back with Mr. Kim here and say that we are looking at all remedies.

Yes. Like I indicated, Hands of Doubt is not the only party that we're looking into. We're looking into other parties that was involved in the construction, including the third parties, including the subcontractors.

Okay, so correct me if I'm wrong, but the third party that was brought on was paid for out of what, 10% of the construction project?

No, we had a separate budget for the construction management consultant. And how much was that for? See? Eric, do you recall RLB? Yeah.

Yeah. That's one and a half to $2 million. A considerable amount of money, I would think. Certainly. Okay, in your experience with dags, have you encountered any other state project with this amount of deficiencies?

Not in my experience, no. Okay.

And Hensel Phelps, as we speak now, are they still eligible to bid on state contracts? State construction contracts? Yes, they are. Even though they're under this so called cloud of possible litigation with the state.

I will say at this point it's merely a cloud.

Okay. All right.

Okay. I don't have any other questions. Members, any other questions for our testifiers?

One quick one. So Hensel Phelps has to have insurance for this and so does rlb. What's their maximums for their policies?

The bond on the project is 100% of the construction value.

Okay. So their bond is large enough to pay us back for this 40 mil if or n plus if we need it? That's correct. Okay, thank you.

I have a follow up question and following up on chair's inquiry about them being able to bid on other contracts. Contracts and then a bond. If they have other multiple contracts, do they carry other bonds and EO insurance on each respective project or is it within a portfolio?

I don't know how they conduct their business.

I think what I'm leaning in on is if this work, one contractor has had multiple defects and they bid on other contracts, if that liability insurance doesn't cover all the other projects within their portfolio, I'm not sure if we're going to be able to get all the money back in the claims.

And I'm just asking that question for the lessons learned. If we do do future projects, is there a requirement under the procurement law that they hold liability insurance for each and every asset that they are contractors on?

The bonds that we require are bonds.

For each project and then their liability insurance separate and apart from that bond?

Well, for design build, they have to have EO insurance and that is separate from the bond.

Yes, but do they use that E and O insurance for multiple projects?

If they have multiple design build projects, the answer is yes. Yes. Okay.

Thank you, Representative Olds.

Thank you. What was the retainage percentage for the project? Do you guys know?

Yes, it's 5% as provided by statute.

Was that already released?

Much of that has been released, yes.

So even when you guys first walked into the new building and the showers were flooding out because they were built wrong, you guys still release that money back to them?

That was the release of the retention was part of the project acceptance, which occurred before we realized that these problems were occurring.

I guess for me, I don't have a construction background, I don't have a legal background. But as a new rep that just knocked on thousands of doors last year, public safety was the platform that we ran and my district's very concerned and the state hospital plays an integral part with correcting that.

I had a whole bunch of things I wanted to say about State Hospital, but I'm not going to bring it up here. I guess for me, the big part is it's $40 million right after we just gave 160.

If we release this money, I go back to my constituents who already were not speaking a lot of faith about this. Right. We had someone walk out not that long ago, and then we had someone else escape just a couple years ago.

You know, they questioned the integrity of the State Hospital already and why we spent so much money to build it. When they thought, you know, it's not, it's not working, people can just walk out.

And then I would have to go back to them and say, hey, we're going to give them 40 more $1.0 million to fix this brand new building that through somebody's fault, because it is somebody's fault. We have to repair because leaks and mold and safety hazards.

In a time where finances and budget is already in question, we need to have the State Hospital. It's vital for the overall continuum of care that we need. But I'm going to have a really.

Hard time going back to my constituents and telling them, hey, we have to drop $40 million that we may or may not get back because we don't want to go through litigation to make this company upset. So for me, it's just, I really appreciate what Representative Matayoshi was saying.

Again, just giving out $40 million after we just gave 160 is not going to go good with the people of Hawaii. They're going to be very upset about this and they're going to want to know who was incompetent and why are we giving up our tax monies for this.

And we are all going to be held accountable to that. So. And I guess, you know, as state employees, you guys will too. So that's. I don't know if you guys can answer that question.

Not even sure if that is a question, but that's a big concern for me is it's $40 million now, how much more money are we going to have to spend 23 years down the road when we find more defects? So sorry for rambling. Sorry, Chair.

Well, there being no other questions, I'd like to thank you to the testifiers and thank you Members. It's been informative yet the disturbing. Thank you.

Sa.