What an accomplishment for lobbyist Jon Okudara. He managed in the late 1980s to become executive director of a state-created and -funded committee that spent about $833,000 in the 1990s, ostensibly on efforts to address the agriculture industry’s fruit fly problem. Of that amount, about 44 percent went to pay Okudara’s salary, his clerical help, phone bills, and office rent for the law firm he worked for and later his own private consulting agency.
Another 11 percent went to support efforts to gain support for construction of a fruit irradiation facility in Hilo. That left just $372,000, 44 percent of total expenditures, for research, even though the value of research contracts that EPIC and its predecessor, the Hawai`i Fruit Fly Committee, entered into with the University of Hawai`i came to $647,298. Why EPIC and the HFFC chose to spend money this way is a mystery.
When we left our story last month, the Exotic Pest Insect Committee was closing up shop, despite owing the University of Hawai`i a large chunk of money – nearly $200,000 – for research. Even so, the little-known, legally ambiguous organization seems to have gotten away Scot-free.
It could not have done so without the help of the state Department of Agriculture, which stepped in to cover EPIC’s debt. While the DOA had provided EPIC with all of its funds, it was under no obligation to assume such indebtedness, since the unpaid research had been done under contract to EPIC. What’s more, in its rush to tie up EPIC’s loose ends, the DOA appears to have acted without regard to state purchasing rules and had no clear idea of the scope and status of research that EPIC had contracted for.
Contracts
Some time in 1991, the Hawai`i Fruit Fly Committee entered into an agreement for services with the Hawai`i Institute of Tropical Agriculture and Human Resources, an arm of the university’s College of Tropical Agriculture and Human Resources. (Although signed by HFFC chair Dennis Teranishi, UH Contracts and Grants director Marvin Enokawa, and HITAHR director M. Ray Smith, the agreement is undated.) The contract called for the HFFC to pay HITAHR as much as $291,288 over two years. HFFC was to pay $147,322 in fiscal year 1991-1992 for surveys of natural area reserves and other environmentally sensitive areas on O`ahu and Kaua`i. Using traps containing toxicants or lures used in fruit fly control, HITAHR would collect and identify non-target organisms attracted to the traps, and develop materials that would aid researchers in identifying beneficial and endemic insects.
The remaining $143,966 was to be paid in FY 1992-1993 for similar surveys on the islands of Maui and Moloka`i. HITAHR would also identify non-target insects submitted by other entomologists working on federal fruit fly projects. The result of these surveys were to have been submitted to the HFFC in an annual progress report by June 30, 1992 and a final report by June 30, 1993.
Entomologist Dr. John Beardsley served as principal investigator and the university hired Grant Uchida as an assistant entomologist on August 1, 1991. By August 30, Uchida and an assistant had designed a fruit fly trap they believed would resist the wet conditions of the areas to be surveyed and would be more effective than standard traps. Uchida planned to begin studying non-target insects in Koke`e, Kaua`i, and Waimanalo, O`ahu in September. In both studies, the traps were to be checked at regular intervals until June 30, 1992. “The results will be analyzed and published,” Uchida wrote to Beardsley in an August 30, 1991 progress report.
According to Uchida’s October progress report, oriental fruit fly traps were placed in Halawa Valley on Moloka`i to test their water resistance and catching efficiency. Traps for the non-target study were placed on the Pihea and Alakai Wilderness trails on Kaua`i. Melon fly traps were to be set in Waimanalo that month.
In his November progress report to Beardsley, Uchida wrote the at the new traps did catch flies, but were not as water resistant as he had hoped. The Moloka`i study of oriental fruit flies was discontinued on October 10, 1991. The new traps were less successful than the old ones, and “counts could not be made because all of the flies had rotted.”
The non-target studies on Kaua`i continued, while the Waimanalo one was still not set up by early December.
In January 1992, work began to on a non-target study at Maui’s Haleakala National Park. Beardsley and the park’s Lloyd Loope sent a proposal to Jon Okudara for money for helicopter service into Kipahulu Valley. While financial records indicate the helicopter service was purchased, none of the field work reflected in the reports relates to Kipahulu or Haleakala.
Soon after, the researchers appear to have begun questioning whether they could achieve the work called for in the contract. On May 26, 1992, Uchida wrote Okudara, “Due to the overwhelming number of insects collected on the islands of Kaua`i and O`ahu on our non-target project, it will be difficult to identify all of these insects in a timely manner. Also, our intention to conduct non-target studies on the islands of Maui and Moloka`i during the fiscal year 1993 would only cause us to fall further behind. Thus, it would make more sense to concentrate our research of non-target studies on the island of Kaua`i for fiscal year 1992 and on the island of Maui in fiscal year 1993. We plan to continue the field portion of the non-target study on the island of O`ahu, but we would like to withhold the identification of the insects until sometime in the future when other funds become available.”
On July 23, 1992, Beardsley submitted a 37-page annual report to Okudara as required by the agreement. The bulk of the report is a fleshed-out list of the species caught in the traps, including details of their origins.
Okudara’s files don’t contain the final report, but it seems as though Beardsley did submit one. A letter from Beardsley to Okudara that is in his files, dated August 17, 1993, indicates the final report was forwarded, but in the years since then, it seems to have been lost.
Even though the much of the work called for in the original contract appears to have remained undone, in November 1993 the HFFC and HITAHR signed a supplemental agreement to continue Uchida and Beardsley’s work. Under the agreement, the HFFC would pay an additional $258,160 for fruit fly studies. In FY 93-94, $125,370 would be paid for surveys of environmentally sensitive areas on O`ahu; the following year, $132,790 would be paid for similar studies on Hawai`i. An annual report was to be submitted to the HFFC by June 30, 1994 and a final report by June 30, 1995.
No progress reports, annual reports, or hints of final report on this contract are to be found in the files Okudara provided to Environment Hawai`i. At some point, the scope of the study was altered. A June 13, 1995, letter from Beardsley to Okudara asks for his approval of “a no-cost extension” of the study. “Approximately $60,000 of funds approved for fiscal 1994-1995 for this grant remains unencumbered,” Beardsley wrote. “We would like to utilize these funds to complete our survey work on Moloka`i, process and identify insect specimens from our traps there, and prepare a final report on this project.”
EPIC, which itself was under contract to the Governor’s Agricultural Coordinating Committee, submitted its own annual report on research to the DOA in 1994, with the final report in 1997. Unlike the ones under the first agreement, they were not written by Beardsley, but by Uchida and William Perreira. Both were brief discussions of what had been collected in fruit fly traps on Moloka`i, with no mention of trapping on any other islands.
Paying the Piper
While the scope of HITAHR’s work seemed to have been reduced, the costs had not. On June 6, 1997, 24 days before the end of the 96-97 fiscal year, the Department of Agriculture submitted a purchase order to the Department of Accounting and General Services, seeking approval of an after-the-fact payment of $95,000 to CTAHR for the Moloka`i studies. Attached to the request was a “Justification for non-compliance with purchase policy.” The unorthodox use of a purchase order as a means of encumbering payment for a study that had already been completed was “partially due” to changes in the Governor’s Agriculture Coordinating Committee chairperson position “twice within a period of twelve months” and the transfer of the GACC’s functions to the DOA in 1996.
On July 24, the University of Hawai`i sent to the Department of Agriculture two invoices of $95,000 each for the “Fruit Fly Species Survey and Related Environmental Studies.” Despite the fact the work was done under a contract with the HFFC, the invoice indicates that the research was sold to the Department of Agriculture.
On July 30, 1997, the DOA submitted a second purchase order for $95,000 to DAGS for the second installment, this time attempting to encumber FY 97-98 funds.
Under state law, any state contract that exceeds $25,000 must be approved by the governor and the attorney general. And almost always, requests for payments such as this are brought to the Board of Agriculture for approval. Once that is obtained, they are forwarded to the Department of Budget and Finance and the Governor’s office, both of which must sign off before payment can be made.
Still, because there was no formal contract between the DOA and the university for the fruit fly studies, and because the work had already been done, the state Department of Accounting and General Services, which issues all state checks, told Environment Hawai`i it allowed the payments to be made through purchase orders. And so it was that in August 1997, the state issued two checks to CTAHR totaling $190,000. (When Environment Hawai`i examined files maintained by the DOA on the Hawai`i Fruit Fly Committee/Exotic Pest Insect Committee, no records were found relating to these purchase orders.)
This break with purchasing policy led Ed Rogoff of the Department of Budget and Finance to send on September 18, 1997, a questionnaire to DOA’s Elaine Abe about the strange goings on. Abe’s name appears on the purchase orders.
A few weeks before submitting the $95,000 purchase order in June, the DOA had requested approval of a $95,000 contract with EPIC, but then had rescinded it. Rogoff wanted to know why it would rescind that request, but then then turn around and pay CTAHR $190,000 for work done for EPIC? Why hadn’t CTAHR been paid before now and was $190,000 a reasonable cost for the Molokai study? Rogoff asked.
In addition, he wanted to know, “What were the total billings from EPIC (HFFC) and total dollars paid to EPIC (HFFC) for fruit fly control and eradication? If EPIC (HFFC) failed to pay CTAHR, what did they use the monies for? From copies of contracts provided by DOA, EPIC should have received $850,418 in state funds.”
In her response of September 30, Abe wrote that that the DOA rescinded the request for approval of a contract with EPIC because, “EPIC did not want to continue the projectÉEPIC will disband and no longer be involved in the research in the control and eradication of fruit flies in Hawai`i.”
As for the rest, Abe wrote, “Additional reports are being looked for. Although we are still waiting for the additional reports, the amount of work involved in the collection and evaluation of data is substantialÉ
“At the time of these services, funding was approved but the contract was not executed because of misunderstanding and fiscal deadlineÉEPIC (HFFC) was paid $850,418. The research done by CTAHR, but not paid for, was due to the lapsing of funds.”
Abe’s response apparently did not satisfy Budget and Finance. On November 10, Rogoff’s boss, Earl Anzai, director of finance, sent a letter to Abe’s boss, DOA director James Nakatani, asking similar questions.
Among other things, Anzai wanted:
1. Clarification as to why DOA owed CTAHR $190,000. “It appears that the debt was incurred by EPIC, not by DOA,” he wrote.
2. A breakdown of these costs, including time frame and nature of employment relationship. “One report appears to be written in part by a DOA employee [Uchida].” (Uchida left the university and went to work for the DOA, where he continued to help with the fruit fly research.)
3. Information regarding the specific purpose of the DOA’s 1996 contract with EPIC and how the $139,760 EPIC was paid under this contract had been used. “It was reported that EPIC staff intended to reduce its $190,000 debt to CTAHR from the proceeds of its May 1996 contract with the GACC. Apparently, the CTAHR payment was not made and the funds were expended for other purposes.”
4. Information on EPIC/HFFC’s contracts with the state. “Between July 1991 and January 1995, GACC entered into three contracts with the Hawai`i Fruit Fly Committee totaling $719,658. The May 1996 contract with EPIC provided an additional $139,760É Please identify which portions of these contracts were subcontracted, including the name of the subcontractor, cost, timeframe, and purpose of the subcontract, and documentation of GACC authorization to subcontract as provided in the contracts.”
While this letter appears to have been forwarded to Okudara by former GACC administrator Denis Shimamoto, it was Nakatani who responded on November 19.
Nakatani didn’t answer Anzai’s questions. Instead, he explained that the 1995 legislative appropriation of $203,790 for fruit fly research and EPIC had lapsed. In addition, he said, the GACC customarily used purchase orders instead of formal contracts for fruit fly research. “Since the transfer of the former GACC [to the DOA] we have required that funds for these research projects be encumbered under a formal contract.”
Nakatani’s claim that the GACC had used purchase orders for fruit fly research is not true. A review of DOA records shows that the GACC usually used contracts with the HFFC or EPIC. The one time the GACC tried to use a purchase order, in June 1995, it was informed that it could not pay the HFFC with a “claims encumbrance” (or P.O.) and that there needed to be a contract for the money. Because a contract could not be worked out in time, the appropriation lapsed.
Although Nakatani skirted many of Anzai’s questions, the Department of Budget and Finance did not pursue the issue.
“There was no formal ending,” Rogoff told Environment Hawai`i.
Okudara explains the need to have DOA pay his committee’s debt by blaming the GACC’s foot-dragging when it came to encumbering funds. “We [HFFC/EPIC] had contracts in the works, but there is a certain deadline when funds must be encumbered. We always had problems. The fiscal year started in July 1, and [the GACC] often wouldn’t get things through until February or March.”
This could potentially ruin a research project, he says. “If you haven’t continued work for a quarter, the study becomes invalid.” Despite the lapsing funds, he says the scientists continued their work.
But blaming the GACC for CTAHR’s not getting paid is odd, coming from Okudara. Over the 1990s, the GACC entered into about 60 research awards with CTAHR totaling more than $2 million. The money went directly from the Legislature to GACC to CTAHR. But in the case of fruit fly research, the funds were channeled through the HFFC/EPIC, where Okudara would take a cut of 30-40 percent for administrative or other expenses. By the mid 1990s, Okudara told Environment Hawai`i, “The focus has gone to irradiation, driven by Lyle Wong [head of DOA’s Plant Industry Branch]. The question always came up – is eradication worth it?”
Apparently, it wasn’t. And while Okudara found a way to pay for his own services and for trips for legislators and others to the mainland, and meetings and dinners with former Big Island Mayor SteveYamashiro and other politicians, the fruit fly research was left out in the cold.
While Budget and Finance seems to have let its concerns fade away, many of the answers to its unanswered questions lie in records stored by Okudara. When asked why he, and not the Department of Agriculture, had the old HFFC and EPIC records, he began, “Well, they didn’t have room at the time…” then stopped himself, admitting that he didn’t know why.
— Teresa Dawson
Volume 13, Number 3 September 2002
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