Ada’s contract may have violated rules

An investigative report from the Office of the Inspector General of the U.S. Department of the Interior found that former Commerce secretary Michael Ada’s sole-source contract to manage CNMI American Recovery and Reinvestment Act funds may have violated CNMI Procurement and Supply regulations and may have broken several CNMI ethics rules.

In a document made available online by Interior in its website on Saturday, the IG report said the former ARRA state lead’s “contract may have violated CNMI Procurement and Supply Regulations, Part 700 ‘Ethics in Public Contracting.’”

The IG report said, however, that the U.S. Attorney’s Office of the District of Guam and the Northern Marianas Islands declines to prosecute the investigation.

Delegate Gregorio Kilili C. Sablan said he is “deeply disappointed” that the U.S. Department of Justice declined to use the IG’s findings as the basis for prosecution of public officials named in the report, Ada and Gov. Benigno R. Fitial.

“The Inspector General’s report speaks for itself in detailing the violations of numerous Commonwealth laws and regulations in the award of a sole-source contract to Integrated Professional Services to manage some $100 million in federal Recovery Act funds for the Northern Mariana Islands. It does appear that the public trust has been violated.”

Because Attorney General Edward Buckingham was himself a party to the award of the contract, Sablan said the people of the CNMI can have little confidence that the Office of the Attorney General will press charges or seek recovery of funds.

“The Commonwealth and its people have worked very hard over the last years to re-establish respect for our islands and to regain acceptance as part of the American political family. A report of this nature—and the illegal activities of highly placed government officials it points to—represents a setback in our effort and an embarrassment to us all,” he said.

Sablan said this is especially unfortunate at a time when the CNMI and its people continue to struggle economically and need the support of the federal government to protect those who are suffering.

“How can we expect more help to rebuild, when the generous assistance of the American people that is coming to us through the Recovery Act is siphoned off for the personal gain of a few individuals—as the Inspector General reports?” he asked.

Press secretary Angel A. Demapan told Saipan Tribune on Thursday that he can confirm that acting governor Eloy Inos has received the Inspector General’s report, which he said was classified “confidential” by the originating authority.

“At this time, acting governor Inos has not had a chance to review the contents in detail nor has he had a chance to consult this matter with any of the parties involved,” said Demapan when asked for the administration’s comment about the report.

The IG report said the CNMI government’s sole-source contract with Ada’s Integrated Professional Solution “is null and void if the procurement processes or execution fails to comply with CNMI Procurement and Supply Regulations.”

It said the evidence suggests that the CNMI government’s $392,406 contract to IPS violated multiple CNMI ethics rules, including provisions against post-employment restrictions, use of office, staff, or employees of public office, restraint on use of public position to obtain private benefit, and negotiating for nongovernment employment.

The IG report said IPS was awarded the contract just five days after Ada resigned from government, which violates the regulatory one-year period.

“Ada confirmed that he officially resigned his position as secretary of Commerce on Oct. 9, 2010, and signed the contract on Oct. 12, 2010. Review of the contract file showed that the director of Procurement and Supply processed the contract and issued the notice to proceed on Oct. 13, 2010. A $78,418 check was issued to IPS on Oct. 15, 2010,” the IG report stated.

As CNMI ARRA state lead, Ada gained a distinct advantage in obtaining the ARRA management contract, the report said. It said that Ada used information not generally available to the public for his economic benefit.

This was acknowledged by no less than Attorney General Buckingham, the IG report said.

Further, the IG report said the sole-source justification memorandum from Gov. Benigno R. Fitial to Procurement and Supply director Herman Sablan on Oct. 6, 2010, seemed to parrot Ada’s advantage in obtaining the contact.

“Mr. Ada has extensive historical and current knowledge, as well as non-public information of all ARRA funds. His clear advantage with the intricacies of the ARRA funds creates a distinct advantage should the CNMI government bid out the services according to procurement regulations,” Filial memo to Sablan read, according to the IG report.

In addition, the IG investigation revealed that Ada “substantially participated through both discussion and rendering of advice in the IPS ARRA management contract, which affected his own financial interests and the financial interests of his partner.”

At the time the contract was awarded, IPS had not yet been officially formed, but was in the process of being created. Ada began discussions for employment by contract with Fitial in August or September 2010. Ada began discussions with his partner during the summer of 2010, the IG report stated.

The IG said Ada may have also violated the Employee Conflict of Interest and Restrictions on Employment of Present and Former Employees clauses of local procurement laws.

“While still the secretary of Commerce, Ada participated directly in the IPS ARRA management contract in which he and his company had a financial interest. We found no evidence that Ada ever filed a written statement of disqualification with the director of Procurement and Supply. Ada did author the letter from the governor to the public auditor that requested an opinion on the sole-source award. The letter, however, did not address Ada’s conflict of interest, and the public auditor declined to render an opinion on this contract.

“Both Ada and Filial admitted that in addition to several discussions about the contract while Ada was in office, Ada prepared most of the documents related to the contract. Ada researched the precedent for privatizing ARRA management, drafted the scope of work, and drafted the letter requesting an opinion to the public auditor. Ada said that he prepared and finalized the entire contract package, though when asked directly, he denied entering the name of his company on the final contract documents,” the IG report said.

It also added that under CNMI Procurement and Supply regulations (specifically regulations 70-30.3-740), Ada is permanently disqualified from any contract involving his former governmental duties.

The Inspector General conducted the investigation jointly with the CNMI Office of Public Auditor. The OPA will separately provide its opinion to the local government.