‘Shocking’ contract cancellation raises doubts about tourism management agency
HONOLULU (HawaiiNewsNow) - After spending months trying to hammer out a deal, a troubled contracting process to market and manage Hawaii tourism was killed by a state official just before he lost his job with the transition from the Ige to Green administrations.
Even though the contract was to be issued by the Hawaii Tourism Authority, Gov. David Ige’s Business, Economic and Tourism Director Mike McCartney brokered a deal between longtime marketing contractor Hawaii Visitors and Convention Bureau and non-profit Council for Native Hawaiian Advancement (CNHA) to share $40 million to execute the marketing and management tasks.
However, he said he was told by state procurement and legal authorities that dividing the work between two competing contractors in a single contract might not be legal under state procurement rules.
Although urged by state senators to consult with HTA before taking action, just eight minutes before the Ige administration left office, McCartney canceled the contract award to the CNHA (which had been challenged by the visitors bureau).
The move “shocked” leaders of CNHA, who said the move was illegal because McCartney did not identify any irregularities in the procurement process in his notice rescinding the award.
Kuhio Lewis, CNHA CEO, said the organization would appeal the cancelation.
“If you’re going to rescind an award, you need to do it based on merit, that there was some unlawful action that was taken, and there was none expressed in his rescission decision. So we believe that the law is violated I think the action is unlawful,” Lewis said.
Also upset were tourism experts, who said the state is falling behind in marketing its number one industry while other destinations ramp up.
Keith Vieira, owner of KV and Associates Hospitality Consulting, called it a mess.
“The timing is what’s real concerning, you know, coming out of the pandemic,” he said.
Lewis said the non-profit did nothing wrong and spent hundreds of thousands to prepare for the contract and to fight challenges.
But they are still hoping to work with HVCB to reform Hawaii tourism.
“Where we could start to better manage tourism in a way that it’s balanced and focused on people of Hawaii versus visitor,” Lewis said.
“But I think that we need to revisit as to whether that’s a priority of HTA.”
And that’s the bigger question being asked: Whether a board of mostly visitor executives has the will or ability to reform the industry.
State Sen. Donovan Dela Cruz’s Ways and Means committee held an informational hearing last week, where McCartney first revealed plans to potentially rebid the contracts.
Dela Cruz said having the state department take over the procurement raised the question of whether HTA is still relevant.
“What’s the purpose of HTA?” Dela Cruz asked. “Do we really need HTA?”
Dela Cruz said the state Legislature removed HTA’s automatic funding from hotel taxes and its ability to contract without state oversight at the last legislative session, and now he said the mistakes in this contract made him wonder how many discrepancies have happened in the past.
“One of my concerns is how long has this been going on previously in in the way it’s being conducted, when the legislature was not included,” he said.
He’s planning another hearing to discuss that issue.
Meanwhile, even some in the industry are asking the same thing.
“I think there’s a role for what they do,” Vieira said. “But that should be under state government. That shouldn’t be someone that’s contracting out, that just doesn’t have the experience and knowledge to do it right.”
HTA CEO John DeFries said the organization is willing to work with all parties to reach a settlement or move on with a new procurement process.
The authority has scheduled an emergency meeting for Wednesday afternoon. Gov. Josh Green says he will be there to try and salvage a solution — before it all falls into the courts.
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