Business

He won a national small-business award. Now his company is defaulting on projects.

Performance Systems Inc., a Meridian contractor, defaulted earlier this year on a project to replace this aging bridge in Maili, Hawaii.
Performance Systems Inc., a Meridian contractor, defaulted earlier this year on a project to replace this aging bridge in Maili, Hawaii. Hawaii Department of Transportation

A Meridian construction company’s fate is unclear after it quit work to replace a bridge in Hawaii soon after it started.

Calls to Performance Systems Inc. went unanswered Monday after a Honolulu TV news service reported that the company defaulted on the $14 million project in Oahu, forcing the Hawaii Department of Transportation to turn to the company’s bonding agent to get its money back.

The company completed just 5 percent of the job before it notified the Hawaii DOT in late March that it would not be able to finish.

It was a troublesome development for a once-promising company. Performance Systems’ president, Kaleo Nawahine, a native Hawaiian, was named the national minority small-business person of the year in 2012 by the U.S. Small Business Administration.

“Prior to its selection in the bidding process, the company was verified to be in good standing,” Tim Sakahara, a spokesman for the Hawaii DOT, told the Idaho Statesman. “Moving forward, the surety company will be responsible for the completion of the project under the specifications and satisfaction of the state.”

Public agencies typically require contractors to post bonds to protect taxpayers in situations like this.

No one answered the phone Monday afternoon at Performance System’s Meridian headquarters. A voice-mail message left there for Nawahine was not returned.

News of Performance Systems Inc. abandoning the project was first reported Thursday by Hawaii News Now, a news department shared by three television stations in Honolulu.

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The four-lane bridge over Maili Stream was built in 1966 and widened three years later. In 2008, the state rated the bridge’s condition 3 out of 10 and said it was nearing the end of its useful life.

The project was one of at least eight city, state and federal contracts that Performance Systems abandoned in Hawaii in the past several years, Hawaii News Now reported.

They included an unfinished $3.4 million road repair in a Honolulu suburb, a $9.3 million contract to build a solar farm and a $2 million contract for a garbage-transfer station.

Nawahine has taken part in the Small Business Administration’s 8(a) program, which helps disadvantaged businesses gain access to federal contracting opportunities. “The 8(a) program is one of the most effective tools we have to help small businesses and entrepreneurs in underserved communities grow and succeed,” said SBA Deputy Administrator Marie Johns in announcing Nawahine’s award in 2012.

Nawahine (whose name is pronounced kuh-LAY-oh NOW-uh-hee-nay) was chosen from 10 regional winners.

Performance Systems has worked on Treasure Valley projects, too. The 2012 announcement noted that it had worked at the Boise Airport and the West Boise Waste Water Treatment Plant.

Nawahine graduated with a bachelor’s degree in mechanical engineering and a master’s in engineering management from Brigham Young University and landed his first job as a project manager for a manufacturing company in Fruitland, according to the SBA. Two years later, he became a project manager for a cement and building materials manufacturer, where he worked for five years.

In 2004, Nawahine bought an interest in Performance Systems Inc., then a small construction company in Emmett. He later obtained ownership of the entire company. He relocated its headquarters several times — to Fruitland, Caldwell and then Meridian.

The company has two branch offices, in Waipahu, Hawaii, northwest of Honolulu; and in Lakewood, Wash., south of Tacoma. Calls to both of them Monday resulted in fast busy signals.

In May, The Masonry Center, a Boise company, sued Performance Systems Inc. and Travelers Casualty and Surety Co. for $113,000 worth of materials that went unpaid. The goods were delivered for a U.S. Army Corps of Engineers project at Schofield Barracks, an Army installation on Oahu. Travelers put up a bond on behalf of PSI for the project.

The Masonry Center dismissed the lawsuit Thursday in federal court in Boise, indicating that a resolution had been reached.

In 2013, the U.S. government sued the company for $436,066, saying PSI failed to pay a subcontractor for an Army Corps project in Kent, Wash. That lawsuit was also later settled.

John Sowell: 208-377-6423, @IDS_Sowell

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