3 contractors protest $3.8M Marpi landfill deal

THREE contractors have filed a protest against the awarding of a contract for Marpi’s landfill operation to a new company.

Success International Corp., and Tang’s Corp. filed their protest on July 14 while SM Enterprises filed its protest on July 15.

In their letters to Procurement and Supply acting Director Francisco Aguon, the three contractors  cited conflict of interest and “major signs of bad faith and nepotism” in the overall process for the request-for-proposals or RFP issued by the Department of Public Works for the operation of the landfill.

DPW awarded a $3.8 million three-year contract to Micronesian Environment Services LLC, which was formed a few months before the RFP was issued.

The proposals submitted by all the contractors were evaluated by DPW Solid Waste Management Division Manager Blas T. Mafnas, DPW highway engineers Henry Bautista and Isagani Salazar and accountant George Sablan.

In his protest letter, Success International president Henry Miao said MES came into existence in August 2019, nearly two months to the RFP deadline. This, he said, makes it nearly impossible to comply with the requirement to submit proof of working capital for the operations. He noted that MES had $40,000 in capitalization, which is very insufficient to run the landfill for the first three months.

He said this, among other things, is an indicator that MES is not financially capable to commit to the contract.

“With unforeseen expenses and uncertainty, there will be major compromises with the integrity of the project. This should have been automatically rejected for the obvious financial standings and other factors involved,” Miao said.

There is also a conflict of interest in the RFP process, he said, adding that Mafnas, one of the evaluation committee members, is the uncle of MES official, James Benavente.

“Nepotism at its finest. DPW committee evaluator Mr. Blas T. Mafnas is biased and showed clouded and favorable judgment all of which are not professional, ethical and acceptable,” Miao said.

Success International, he added, is a locally owned company “with an excellent reputation for its experience and has demonstrated its capability in successful landfill operations, solid waste management, complex construction projects and heavy equipment operations.”

Miao said the RFP process was “reckless and negligent” and there is a strong possibility the awarding of the contract “was pre-determined.”

For its part, Tang’s Corp., through its legal counsel, Mike Dotts, said the contract was awarded improperly due to the following reasons.

  • The evaluation factors and procedures are unreasonable. According to the RFP, proposals were evaluated based on background and qualification (25%), experience (20%), capacity of key staff/crew and equipment, (25%) project approach (20%) and price (10%).

Dotts said there is no further explanation on how the factors are allocated in this way.

Also, the evaluation in the RFP included “technical criteria” listed in the procurement regulation. However, there is no determination in writing that shows that the evaluators are “appropriate qualified personnel” who can conduct the technical evaluation, Dotts said..

A highway engineer and an accountant are not qualified to evaluate the suitability of the bidders of a landfill project, Dotts said. Because the evaluators are not qualified to do that evaluation, the evaluations are not made objectively and independently, he added.

  • The awarding of contract was not processed correctly, Dotts said. According to Section 70-30.3-115 of the procurement regulation, after the Procurement and Supply director reviews the contract, the contract shall be approved by the secretary of Finance to certify the availability of funds. Then, the fourth review shall be made by the attorney general to certify as to the form and the legal capacity of the contract. After all these steps, the contract shall be approved by the governor.

Dotts noted that Gov. Ralph DLG Torres signed the contract with MES on April 21, 2020. However, the Finance secretary certified only on May 29, 2020 that the fund was available and had been committed to the contract. The attorney general certified only on June 11, 2020 that the contract had been approved as to its legal form and legal capacity. The governor made the approval before Finance and the AG did, so the contract was not properly approved and it is void, Dotts said.

  • The notification of award was late and insufficient, he said, adding that the director of Procurement and Supply signed the certification of contract completion on June 17, 2020. As an unsuccessful bidder, Tang’s Corp. should have received the notice on or before June 22, 2020 as required by the procurement regulation. But the one-page notification, which did not include information listed in the law, was sent only on July 9, 2020, Dotts said.
  • There was anti-competitive practice that poisoned the bidding process, Dotts added. He said it seems that by listing Tang’s current employees on the proposal, MES got favorable treatment in the grading process.

Dotts also noted that MES changed its bidding price twice. Its original bid price was $119,989 per month. However, he added, on Feb. 27, MES submitted its “best and final fee proposal” in the amount of $109,683 per month. On March 4, it resubmitted the “best and final fee proposal” further reducing the bid price to $106,495 per month, Dotts said.

Section 70-30.3-210 of the procurement regulation stated that “as provided in the request for proposals, discussions may be conducted with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award for the purpose of clarification and to insure full understanding of, and responsiveness to, solicitation requirements. In conducting discussions, there shall not be disclosure of any information derived from proposals submitted by competing offerors.”

Dotts said it is unclear when and where DPW had discussed with MES it bidding price.

However, if DPW did have any discussion with MES, it is unfair to Tang’s Corp because it was the lowest bidder in the beginning.

The bid that Tang’s submitted was “reasonably susceptible to being selected for award,” Dotts said. If the opportunity of discussion shall be offered fairly and equally, Tang’s shall have the opportunity to have the discussion with DPW and revise its bid and its price if necessary, Dotts added.

SM Enterprise owner Scott Malin, in his letter to Aguon, said his company also believes that there was a conflict of interest and  improper awarding of the contract. He also agrees that there were anti-competitive practices that poisoned the bidding process, and supports Tang’s conclusions that the awarded contract should be declared null and void, the RFP should be cancelled, and a new and revised RFP shall be advertised again. 

Variety was unable to get a comment from DPW or from MES.

Source: https://www.mvariety.com/cnmi-local/73-local/5555-3-contractors-protest-3-8m-marpi-landfill-deal