A tip from reader Ambrose Fernandez Jr. has taken the money trail into a parallel dimension of government called "Non-Appropriated Fund Instrumentalities."

NAFIs, as they're known, raise and spend money outside the normal government budgeting process. Elected officials don't vote on the funds. Taxpayers can't debate their uses.

NAFIs are generally used to support "morale, welfare and recreation" programs benefiting government employees, particularly active and retired members of the armed services and their families.

The five-day BayFest bash thrown every July at the Marine Corps base in Kane'ohe is a NAFI event. The Hale Koa Hotel on glorious Fort DeRussy Beach in Waikiki is a NAFI. It's one of four spectacular "recreation centers" run by the military around the world. The others are in the Bavarian Alps, South Korea and Walt Disney World in Florida. Each is a gigantic generator of untaxed NAFI money.

Back to Ambrose Fernandez. He's a former city Building Department deputy director who tried several years ago to land a NAFI contract at Pearl Harbor.

The job was to repair 126 bathrooms in the Arizona Hall Bachelors Enlisted Quarters at Pearl Harbor.

Fernandez says he was told about the contract offering by an acquaintance from his church who worked for a local furniture-importing company.

After Fernandez submitted his bid for the work, he didn't hear back from the Navy about who won the job.

The Navy finally told him in late 2003 that the furniture company had submitted its own bid and won the job at a price of $497,700 — about half as much as Fernandez had offered. That left Fernandez with many questions.

Among them: How could a furniture company qualify to bid for bathroom repair work? How could its bid be so much lower than his? Why wasn't he informed of the bidding results?

Fernandez embarked on a three-year quest for answers through use of the Freedom of Information Act. Now he has piles of records and even more questions than before.

He discovered that bid paperwork supplied to him by his furniture friend had been mysteriously doctored. He learned that the furniture firm's bid had been submitted, and apparently approved, well before Fernandez was asked to submit a bid.

Fernandez tried to formally protest the contract award to the Navy but was told that protests had to be filed within 10 days of the award decision. Your basic catch-22, since Fernandez didn't even find out who won the job until three weeks after the award date.

He tried protesting to the U.S. General Accounting Office, but was told that NAFI contracts were "beyond our bid protest jurisdiction."

In the meantime, the furniture company has gone out of business and the man who drew Fernandez into the deal apparently moved to Arizona where he filed for bankruptcy.

Fernandez did get a Navy legal official in Washington, John Wittman of the Navy Installations Command, to acknowledge that the contract solicitation and award had been flawed.

"Following my review of the documents surrounding this matter I intend to request a contract management review be conducted of the Non-Appropriated Fund contracting activities located at Navy Region Hawaii," Wittman wrote in March 2005.

We asked the Navy in mid- December for a copy of that review. As of last week, they were still looking for it and weren't entirely sure if it had ever been conducted.

If you know that a particular money trail will lead to boondoggle, excessive spending or white elephants, reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com