A major engineering company hired a Honolulu official just days after he signed off on a city consulting contract giving the company $530,000 worth of nonbid work to oversee a Kailua sewer line project.

Timothy Steinberger, director of the city Department of Design and Construction, signed the agreement with URS Corp. on Jan. 26, 2005, then left to work for the company on Feb. 1, 2005, according to public records and interviews.

Two days later, Steinberger's successor as department head, Wayne Hashiro, directed URS by letter to begin work on the contract. URS at the time employed Hashiro's son and was headed by a close friend of Hashiro's.

Hashiro also approved a $900,000 increase to the URS contract late last year that tripled its value to nearly $1.43 million and benefited a new company where Hashiro's son now works.

Both Steinberger and Hashiro deny any ethical improprieties, saying they had nothing to do with the original selections of the companies that got the work.

Conflict of interest?

Steinberger's and Hashiro's actions on the contract and their ties to URS have raised conflict-of-interest questions that are drawing the attention of City Council members.

"It certainly sounds very fishy and warrants further review and explanation," said City Councilman Charles Djou. "I don't know if there's a conflict of interest here but there is an appearance of a conflict."

City Councilwoman Barbara Marshall, whose district includes the site of the Kalaheo work, said Hashiro "was integrally involved in this project and in the expansion of the project," when he was director of the Department of Design and Construction.

"I'm glad you're asking questions about this," said Marshall.

Hashiro was named in January as the city's acting managing director, the No. 2 post in Hannemann's administration. His appointment is the subject of a confirmation hearing tomorrow before the City Council.

In a written statement, Mayor Mufi Hannemann said that neither Hashiro nor Steinberger were involved in the selection of the contractors.

"Mr. Hashiro is a locally born engineer who has been a practicing professional for 30-plus years," Hannemann said. "The fact that he knows other engineers in Honolulu and elsewhere is to be expected. Any implication that his actions here at the city are somehow unprofessional or unethical is without merit."

The contract that Steinberger signed followed the selection of URS by an independent review committee of city civil servants, none of whom talked to Steinberger during the review process, Hannemann said.

"I know it looks kind of odd," Steinberger said of the timing of his signature and his job change. But he said he approved the contract because it was his nondiscretionary, "ministerial" duty as department director to do so.

'NOTICE TO PROCEED'

Steinberger said he could not recall if he sought the advice of the city Ethics Commission before signing the contract.

City Ethics Commission Executive Director Charles Totto would not discuss the specifics of Steinberger's situation. But he said generally: "If a city officer or employee has entered into negotiations with an outside employer, they have a conflict of interest if they take action on a contract that relates to that outside employer."

Totto said even if the official's role is only ministerial, simply signing or reviewing paperwork, the commission recommends that the official seek guidance from the commission and delegate the matter to someone else to avoid the appearance of a conflict.

Steinberger said he did not believe Hashiro, then acting deputy director of the department, could have signed the contract because he wasn't sworn into office until April 2005.

On Feb. 3, 2005, shortly after becoming acting director of the Department of Design and Construction, Hashiro signed an official "notice to proceed" letter to David Yogi Jr., head of the Honolulu URS office, instructing the company to begin work on the Kalaheo contract.

Hashiro and Yogi are close friends and have known each other since they attended the University of Hawai'i in the late 1960s and early 1970s, both men said. Yogi hired Hashiro's son, Reyn, to work at URS.

Yogi said it was he who recruited Steinberger to work at URS in late 2004 when the terms of the Kalaheo Avenue contract were being negotiated with Steinberger's department.

"I approached Tim to come to work for us, to head a group within URS, the civil engineering group, because the person that was heading that group was going to retire at the end of the year," Yogi said. "Tim said, yes, he would come."

Yogi said he had wanted Steinberger, a carryover department head from Mayor Jeremy Harris' administration, to join URS at the start of 2005, but the Hannemann administration asked Steinberger to stay on for a month.

Steinberger was promoted to head the URS Honolulu office after Yogi and another URS official, James Kwong, left in April 2005 to start their own consulting firm, Yogi Kwong Engineers. Several other URS employees, including Reyn Hashiro, also joined the Yogi Kwong firm last year.

Because of the loss of key personnel, URS was unable to perform all the work on the Kalaheo job, so it subcontracted a portion of the consulting job to Yogi Kwong, an arrangement approved by Eldon Franklin, wastewater division chief in the Department of Design and Construction, Steinberger and Franklin said.

Yogi and Wayne Hashiro said they never discussed city contracts and Hashiro had nothing to do with the award of contracts or subcontracts to Yogi Kwong.

"I don't get involved in the awarding of contracts," said Hashiro.

He said he was required by state procurement law to leave all contracting and subcontracting decisions to department staffers and never discussed those issues with them.

Signing contract paperwork was a ministerial function he performed after his staff presented him the documents, Hashiro said.

"I would sign it," he said, "because whenever they make a selection it comes down to me to approve and if I don't approve I have to write a justification why I'm not approving any contract. Whatever came to my desk I basically signed."

SUPPORT FOR COMPANY

But city records show Hashiro performed more than ministerial acts in connection with the Kalaheo project. He wrote a letter to the City Council in May 2005 supporting increased Kalaheo Avenue work for URS, including replacement of a Board of Water Supply pipe in addition to the sewer line.

Hashiro said he wanted to combine all the utilities work, rather than have different contractors work on separate jobs in the same area at various times.

"All I'm trying to do is make government more efficient," he said.

As for why URS and Yogi Kwong hired Hashiro's son, Yogi said Reyn Hashiro "was one of the top students in the University of Hawai'i graduate program in geotechnical engineering."

"That's why we hired him," Yogi said. "It had nothing to do with Wayne, absolutely nothing, even though Wayne is a close friend of mine."

Totto, speaking generally about the ethics code, said the rules forbid city employees from taking actions that benefit family members, including a dependent child.

"In a matter involving an adult child, the official should take steps to safeguard against even the appearance of favoritism or a conflict of interest," Totto said.

Hashiro stressed the close-knit nature of the professional engineering community in Hawai'i, saying he has friends at many consultant firms because he went to school with them or dealt with them during his years as an official with the U.S. Army Corps of Engineers.

"Tell me which engineering firms I don't know and I'm not friends with or have friends with," Hashiro said.

After Hashiro approved the $900,000 for URS, Steinberger signed off on that increase on behalf of his new company. But he first sought clearance from city attorneys since the ethics code also bans former officials for one year from representing a private employer on matters they had direct involvement in while on the public payroll.

EXCEPTIONS TO BAN

Totto pointed out an "exception to the one-year ban that allows a former city officer or employee to enter into a contract with the city to conduct work for the benefit of the city."

Totto, speaking specifically on the case because Steinberger publicly disclosed the Ethics Commission opinion, said Steinberger's action on the contract change for URS was approved because of the exception in the code.

But Totto also said his files don't make clear whether all the circumstances of the case were disclosed to his office.

"I don't have in my notes whether there was a disclosure made that he (Steinberger) signed the original contract on behalf of the city," Totto said. "That would be an important fact to know but whether it would change our advice, I'm not sure.".

Steinberger said he believed the entire history of his involvement with the Kalaheo contract had been disclosed to Totto "because I had also discussed it with the (city) Corporation Counsel."

Under the nonbid consultant contract process, companies are selected based on their qualifications to perform the work. Contract prices are negotiated after the companies are selected.

Officials of both URS and Yogi Kwong Engineers said they are fully qualified to perform the work and received the jobs solely on the basis of merit.

FIRST DIRECT CONTRACT

The value of the work Yogi Kwong received under its Kalaheo subcontracting arrangement with URS was $142,988 as of November 2005, according to invoices filed with the city.

Asked for the total value of the subcontract, Yogi said: "I don't know. One of (our) problems, since we started the business (is) the accounting system, which is driving me nuts."

Yogi acknowledged it was unusual for a company like San Francisco-based URS, one of the largest engineering firms in the world, to assist a group of former employees trying to establish themselves as direct competitors to URS.

"That's true, that's true," Yogi said. "I think (URS) didn't have the resources at the time and we'd been doing such good work that the city really wanted us to continue."

In October, Yogi Kwong landed its first direct contract with the city, a nonbid job to investigate the cause of a sinkhole on Ward Avenue between Beretania and Kina'u streets.

Hashiro approved a $50,000 nonbid "emergency services" consultant contract to Yogi Kwong Engineers for the work, according to city engineer Myron Fujimoto with the Department of Design and Construction.

"We needed a geotechnical consultant to survey the underground conditions and Yogi Kwong was available," Fujimoto said.

"There were several people who came up with the selection of Yogi Kwong. Ultimately our division chief signed off on that selection and our department director (Hashiro) signed off."

Fujimoto said he had no discussions with Hashiro about the contract.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.