CUC faces another protest • Losing bidder demands reimbursements for money spent preparing proposals

Saipan Power Partners/Hawaiian Electric Inc. has joined the protests against selection of Enron as contractor of the controversial 80-megawatt power project as it sought scrapping of the “conditional” award to give way to another round of bidding.

It also demanded from the Commonwealth Utilities Corporation reimbursement for hundreds of thousands of dollars spent in preparing proposals during the three-year procurement process.

SPP/HEI, through its lawyer Rexford C. Kosack, filed its 29-page formal protest Monday on the heels of the first complaint lodged earlier by the consortium of Tomen, Alsons, Singapore Power and Tan Holdings.

Both protests opposed the decision by the CUC board to “conditionally” hand out the estimated $120 million contract to Texas-based conglomerate Enron based on the evaluation by independent consultants from Burns & McDonnell and provisions of Public Law 12-1.

The two said the recently enacted law is unconstitutional and should not be the basis for the award. Signed last March, PL 12-1 forced the government-owned utility corporation to reinstate the mothballed 80-MW plant and allow phase in of the project, beginning with a 60-MW capacity.

While the Tomen consortium considered the report from the Kansas City-based engineering firm “flawed,” SPP/HEI cited three major grounds for its protest:

– one, that CUC violated its own procurement regulations by not complying with the procedures required for competitive sealed proposals, notwithstanding PL 12-1;

– two, granted that law is constitutional, the utility firm failed to follow the procedures for an award set out in that law; and

– three, that CUC violated its covenant of “good faith” when it forged ahead with the award without asking the three front-runners — Enron, Tomen and SPP/HEI — to submit new offers under the new requirements of the law.

Unfair

“After three years of pursuing this project through competitive bidding, SPP cannot sit idly by and watch CUC award this project to another company on a non-competitive basis without protesting,” Mr. Kosack said in the protest addressed to Executive Director Timothy P. Villagomez.

“SPP never got its fair shot at winning because after its bid was placed, the rules were changed,” he added.

There was no immediate reaction from utility officials, but CUC Board Chair Jesus T. Guerrero earlier has said that they expect to draw strong opposition for its latest action which came nearly two years after handing out the same contract to Marubeni Corp. of Japan and its U.S. partner, Sithe Energies, Inc.

The decision, announced last May 26 after a 3-2 vote by the board to meet the deadline set by PL 12-1, would allow CUC to negotiate with Enron before sealing a final agreement on the project touted to be the largest deal ever in CNMI’s history.

A 25-year deal under BOT scheme, the project has come under a storm of protests for the past two years due to highly-questionable selection process and missteps by utility officials.

SPP/HEI is seeking to block such agreement in its protest until the utility corporation has addressed the objections. It has 30 days to respond to the complaint as required under its procurement regulations.

According to Mr. Kosack, CUC should cancel the award immediately and allow the three finalists which had “essentially equivalent” scores by Burns & McDonnell to offer final proposals incorporating the new specification under the law — the low-speed power generators which Enron had included in its bid.

In fact, his client had previously asked the board prior to the decision to give it that chance in view of the new technology that would have pulled down costs of the project.

“It is in the best interest of Saipan consumers to get the lowest price possible to keep our power bills down. When the project was downsized, CUC should have asked the finalists for their best prices on a 60-MW plan in order to get the most competitive price possible for the smaller project,” he said in a separate statement.

“The cost savings to the people… would clearly have justified taking a little more time. In fact, it is likely that it will spend more time resolving these protests than it would have taken to ask for new proposals,” added Mr. Kosack.