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H2O Process Systems was awarded millions of dollars in sole source contracts for upgrades and replacement parts for Maui County’s wastewater system.

Maui County has spent millions of dollars in the last two decades upgrading aging sewer and wastewater infrastructure after a series of legal challenges over sewer spills put the county under federal monitoring.

After the consent decree with the Environmental Protection Agency, county administrations decided to put a renewed emphasis on using more recycled wastewater to irrigate crops.

One company that seems to have benefited from this renewed focus on improving wastewater infrastructure was H2O Process Systems, which has been  awarded more than $12 million in sole source contracts since 2016. The purchase and installation of new filtration systems at wastewater facilities made up the majority of those contracts.

Now, the owner of H2O Process Systems, Milton Choy, is at the center of an ongoing federal investigation into bribery of government officials that has already resulted in one state lawmaker being sent to prison with another due to be sentenced later this year.

Choy was already being monitored by the federal government as part of a separate public corruption investigation. He’s been working as a federal informant since at least 2019.

Michael Green, Choy’s attorney, expects criminal charges to be filed in the coming weeks. He told Civil Beat earlier this month that he advised Choy to plead guilty.

Maui’s Department of Environmental Management, which oversees wastewater systems, did not respond to inquiries on Monday regarding contracts awarded to H2O Process Systems. Former county employees who worked directly on H2O Process Systems contracts also couldn’t be reached.

Complex wastewater systems like those in Hawaii have lots of moving parts: pumps to keep water flowing; agitators and chambers to remove and dispose of grit, gunk and human excrement; activated sludge to remove nutrients from the water and prevent them from leaching into the ground or ocean.

There are just a few companies in Hawaii able to provide the parts necessary to keep the whole process going. H2O Process Systems is one of those companies.

If an agency believes that only one company is able to deliver the goods or services an agency requires, it’s allowed to skip over most procurement requirements, like those that require an agency to solicit at least three bids from potential contractors.

Other circumstances allow government agencies to exempt contracts from competitive procurement rules, but the county doesn’t have an online listing for those contracts awarded before 2020.

H2O Process Systems has won no-bid and sole source awards in other Hawaii counties  for wastewater equipment and cleaning supplies, but its business has been perhaps most prolific in Maui County.

Most of the publicly accessible award notices for contracts to H2O Process Systems say that it’s the only company in Hawaii authorized to provide products required for some of the wastewater upgrades and other equipment that needed to be replaced.

Most of those contracts were awarded between 2015 and 2017, when Maui County gave Choy’s business nearly $12 million worth of wastewater work, far more than other companies during the same time period.

Contracts to H2O Process Systems during those three fiscal years also made the environmental management department one of the biggest spenders on sole-source work compared to all other county departments.

In fiscal year 2016, H2O Process Systems got about $5 million worth of sole-source contracts. During the same time period, the department doled out about $910,000 to other companies.

In fiscal year 2017, H2O Process received $4.3 million in sole-source work; other companies got about $600,000. In 2018, the company got $2.2 million worth of work while all other contracts for the department that year totaled about $922,000.

Contract awards to H2O Process Systems appear to have dropped off starting in 2019. That’s about the same time Choy began working as a federal informant. The company got $531,000 worth of contracts in 2020 and $81,243 in 2021.

The biggest contracts since 2015 were for new water filtration systems provided by Aqua-Aerobic Systems.

H2O Process Systems is the only company authorized to sell Aqua-Aerobics products in Hawaii, and received at least $6.6 million worth of contracts from Maui County to deliver and install those new filters.

Filtration systems come into play late in the water treatment process after most particles and sludge have already been removed from the wastewater. The filters remove more particles before the water is disinfected.

The county previously used sand filters but around 2014 decided to instead use cloth filters like those from Aqua-Aerobic Systems. The new filters are more efficient at cleaning the water and can handle a greater volume of water compared to the older sand filters, according to Steve Parabicoli, who was the wastewater operations program superintendent until 2014.

Parabicoli said those Aqua-Aerobic Systems filters also help to prevent clogging of other pipes and injection wells after wastewater leaves a treatment plant.

Four wastewater plants at Kaunakakai, Lahaina, Kihei and Kahului currently use the Aqua-Aerobics filter systems, but records only show contracts related to new filtration systems in Kahului and Kaunakakai.

Around 2016, the county purchased two filtration systems for a wastewater treatment plant in Kahului. Publicly accessible records only show details for the second filtration system.

The total cost to purchase and ship the second unit came to about $3.5 million. The county then spent about $1.6 million to install that filtration unit, and later awarded H2O Process Systems $229,000 for electrical work.

Records show the installation of another filtration system on Molokai cost the county $1.1 million, but there’s no record that shows the purchase price for that unit.

While the largest purchases to H2O Process Systems was for the new filtration systems, the county also spent millions on replacement parts for various pumps, clarifiers and other wastewater parts.

Whatever the total cost for all the systems, it appears to have paid off for Maui’s wastewater system.

“The water quality coming out of those filters is definitely better than it was coming out of the sand filters. It makes our program better,” Wastewater Reclamation Division Chief Scott Rollins said.

Rollins previously planned for and oversaw the county’s capital improvements program for wastewater. But he said he wasn’t involved in awarding contracts to H2O Process Systems.

Rollins said that the awards for the new filtration systems were handled separately from the division’s capital improvements budget, and instead came from each facility’s operating funds.

“I think the people involved in it are no longer working for us, to tell you the truth,” Rollins said.

Michael Miyamoto was a deputy director for the department between 2016 and 2019 and signed off on most of the contract awards that went to H2O Process Systems. Attempts to reach Miyamoto were not successful.

He was appointed director of the environmental management department in 2019 but left in April of that year. Maui Mayor Mike Victorino cited health concerns.

Stewart Stant was director of the department at the time H2O Process Systems was being awarded most of its wastewater contracts. His signature is on a handful of contract awards to H2O Process Systems.

Earlier this year, Stant said in an interview with Maui journalist Deborah Rybak that he is close friends with Choy. Regarding the sole source contracts, Stant said that the federal government can look at any records it likes and that he has nothing to hide.

Wilfredo Savella, a supervising wastewater treatment plant maintenance mechanic, also appears on most of H2O Process Systems’ contracts prior to 2020. Savella would have had oversight of the installation, maintenance, repair, overhaul and inspection of wastewater equipment, according to the county’s job description. Other purchasing records show some bid documents for purchases by the environmental management department also went to Savella.

He appears to no longer be working with the county, according to salary records. Savella also couldn’t be reached.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.

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