FORMER CNMI OFFICIAL GETS CONTRACT WITHOUT LICENSE

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Ada got business license after $392,000 nonbid contract award

By Haidee V. Eugenio SAIPAN, CNMI (Saipan Tribune, Oct. 19, 2010) - Gov. Benigno R. Fitial’s administration awarded a US$392,406 sole-source contract to Michael J. Ada’s Integrated Professional Solutions LLC even before the private company applied for and obtained a business license from the Department of Finance, Saipan Tribune learned yesterday.

IPS applied for and obtained a business license to engage in professional consulting on Oct. 14.

That was a day after the government completed the processing of IPS’ 18-month contract to manage the American Recovery and Reinvestment Act program in the CNMI.

The administration planned to award a contract to Ada as early as September, when Ada informed the governor he’s stepping down as Commerce secretary.

Right before his resignation took effect on Oct. 9, Ada made sure that the CNMI submitted a 1512 report to ARRA before the Oct. 10 deadline.

Ada, in a phone interview yesterday, said while it’s true that he didn’t get a business license before his consulting firm was awarded a contract, his company didn’t receive a single cent until they completed all the requirements that included obtaining a business license.

He said IPS got an advance payment only on Oct. 15.

Based on the 13-page contract, IPS was to be paid US$78,418 or 20-percent of the total contract price once all contract signatures have been completed.

Ada also said his private consulting firm retained three of four ARRA program employees. He said he didn’t absorb the program manager because the position will duplicate his post.

A government official who has spent several years in procurement matters said yesterday that the government should have made sure that the local company it is awarding a contract to has a business license.

He said if the company is from off-island, the government sometimes foregoes requiring a CNMI business license prior to considering that firm’s proposals.

In the case of Ada’s private firm, the procurement expert said it should be noted that Ada was able to promptly secure a business license.

The Integrated Professional Solutions LLC’s business license, a copy of which was obtained yesterday, shows that it was issued on Oct. 14, 2010 and expires on Oct. 14, 2011. The business license authorizes IPS to engage in professional consulting.

Ada said had the government bid out the contract to privatize ARRA management; he would have submitted a bid.

"It’s unfortunate that it’s a sole-source contract but I would have submitted a bid," he said.

Fitial had said Ada’s extensive historical knowledge and non-public information of all ARRA funds gives him clear advantage should the CNMI bid out the services according to procurement regulations.

The governor said he does not want to risk losing US$100 million in ARRA funding or portions of it for not having an effective and continuous management of the ARRA program.

Ada said IPS has four employees, including himself, that will manage the ARRA program.

"People have to realize that because this service is now privatized, I now have to pay for office and vehicle lease, insurance and salaries of my employees, and other expenses. Even before I could pay myself, I have to pay all my other obligations. It’s not as if I have all this money to myself," he said.

The new ARRA office is now on the third floor of the Marianas Business Plaza in Susupe, but it is still under renovation.

In the meantime, people who have questions about the ARRA program could still call the Commerce office at 664-3010.

When Ada was still in government, he was paid by the government only for being a Commerce secretary and not for also serving as CNMI state lead for ARRA.

His annual salary as Commerce secretary was some US$43,000 after a 10-percent pay cut, which he said was the lowest salary paid to a department secretary.

In addition, he was also the one overseeing all ARRA-related projects, applications and funding worth some US$100 million but was not paid a single cent for it.

Many jurisdictions across the U.S. have outsourced the management of ARRA to large consulting firms but Fitial had said the CNMI was not in a financial position to follow suit at the onset of the ARRA program.

Ada said ARRA allowed the CNMI to have a budget of US$500,000 for the management operation, including payments for employees. The US$392,406 contract is the balance of that US$500,000 which Ada said will be used for 18 months until the ARRA program expires.

But former representative Tina Sablan had said the Fitial administration "has made a regular practice of creating emergencies, real or perceived, in order to justify sole-sourcing contracts to political supporters."

"This latest and very lucrative contract to Mr. Ada is extremely questionable but it’s just one of many questionable contracts sole-sourced by this administration," she added.

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