OPA investigates CPA’s sole-sourcing of contracts

The Office of the Public Auditor has opened an investigation on the way the Commonwealth Ports Authority awarded some contracts for services to private companies without the benefit of a public bidding, government documents disclosed.

Public Auditor Leo LaMotte is asking ports authority officials to explain why they canceled the Request for Proposals, which CPA issued last year for marine consultancy services.

The same marine consulting service agreement, which focuses on a thorough study of the seaplane ramp at the Saipan International Harbor, has been awarded by the CPA Board of Directors to Demapan Enterprises last January 28, 2000.

However, existing CPA procurement rules and regulations give the agency the authority to award contract for supply, service or construction without competition.

Its own procurement regulation also allows the ports authority to sole source contracts for supplies, services and construction that are below $25,000.

Under the services contract awarded to Demapan Enterprises, Juan S. Demapan, a marine engineer who has been tapped to conduct a study of the deteriorating seaplane ramp, would be receiving $2,000 monthly for one year, or an aggregated amount of $24,000 in consulting fee.

The consulting fee is payable as compensation for services rendered by Mr. Demapan for 20 hours each month.

Mr. LaMotte is, however, asking for a detailed explanation on the cancellation of the RFP for the same services in January 1999 even when bids had already been submitted by interested contractors.

“In order to help us in our review of this matter, we are requesting that the Ports Authority provide us with a copy of the request for proposals that was made on this project in January of 1999, along with all bids received from contractors that responded to the proposal,” he wrote to CPA officials.

OPA is also requesting for all documents relating to the reasons behind the cancellation of the original request for proposals and the reasons Demapan Engineering was selected to undertake the project as a sole source contractor.

CPA has previously practiced its authority to tap professional services without the benefit of a public bidding and none of these instances were found in violation of its procurement regulations.

The agency has tapped the services of financial consultant Rex Palacios to help CPA during the time it was in deep financial mess. The ports authority also tapped the services of underwriter Nelson Altura when it floated over $50 million in total bonds in 1998.

Ports Authority officials pointed out that the request for proposals has been canceled in 1999 due to budgetary difficulties experienced by the agency then, which rendered CPA unable to finance the project.

When the new CPA administration assumed office during the early part of 1998, the ports authority was in deep financial crisis losing at least $2 million in annual revenues.

CPA has also been spending $148,000 a month during the first few months of the new administration, which is in excess of what the agency’s coffers could actually afford.

This, even as CPA had close to $23 million in surplus funds from the previous administration when the Democratic Party assumed power in 1994. The money, which was reportedly used in all kinds of projects, has depleted in four years and had been reduced to almost zero.

The previous CPA administration had allegedly overspent in various projects as it has continued bringing projects to public bidding without identifying sources of funds.

This was among the various reasons which rendered CPA in a financial crisis, resulting to the suspension of ongoing projects.