CNMI PUBLIC AUDITOR PROBES ADA NONBID CONTRACT

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Office acting on complaints over $392,000 award

By Haidee V. Eugenio SAIPAN, CNMI (Saipan Tribune, Oct. 26, 2010) – In the Northern Marianas, the Office of the Public Auditor (OPA)is now investigating the substance of complaints related to the US$392,406 non-bid, sole-source contract the Fitial administration awarded to former Commerce secretary Michael J. Ada's Integrated Professional Solutions LLC. The contract was for Integrated Professional Solutions (IPS) to privately manage the American Recovery and Reinvestment Act (ARRA) in the Commonwealth of the Northern Mariana Islands (CNMI)

As standard practice OPA cannot divulge more information about ongoing investigations.

Public Auditor Michael Pai could only confirm yesterday that OPA has received complaints on, and is investigating, the matter.

"OPA has received complaints on this matter. However, OPA cannot comment on open investigations," Pai said, in response to Saipan Tribune questions.

At the same time Ada's business partner in IPS, Jose Padilla is a former executive at Red Rock LLC which bagged an ARRA contract when Ada was still the CNMI's ARRA state lead and Commerce secretary, documents supporting Ada's business license application show.

Ada and Padilla are the "initial members" of IPS, and Ada is the organizer based on the articles of organization, a copy of which Saipan Tribune reviewed yesterday.

A few months ago, Red Rock LLC bagged a US$50,000 ARRA contract for the replacement of air conditioning at the Nothern Mariana Islands Judicial Building in Susupe, and installation of energy-efficient and environmentally-friendly air conditioning units at the Legislative Building on Capital Hill.

Based on the CNMI ARRA online postings, Red Rock LLC's Adam Lortz and Jose Padilla were the primary point of contact for the project.

Besides OPA, the office of United States Vice President Joe Biden is also asking for a copy of Ada's sole-source ARRA contract and other related information through the office of Delegate Gregorio Kilili C. Sablan. Sablan wrote to Biden last week, raising concerns about the sole-source ARRA contract award.

Fitial informed Sablan in an October. 21 letter that the information being asked for had been forwarded directly to Earl E. Devaney, chairman of the Recovery Accountability and Transparency Board. Devaney is a former inspector general of the United States Department of the Interior.

In an earlier statement, Fitial said the purpose of the contract to IPS is to outsource the CNMI's management of the ARRA dollars to the private sector.

The governor awarded the contract to Ada shortly after Ada stepped down as Commerce secretary and ARRA state lead, and even before Ada could obtain a business license for his consulting firm.

Ada's inability to "transfer knowledge" to his colleagues in government about ARRA-which he gained mostly during his frequent trips to the United States since 2009 gave him undue advantage over any potential bidders, had the contract for ARRA management been put out for bids, sources privy to the issue earlier said.

The CNMI Ethics Act of 1992 requires post government employment restrictions. Former public officials and employees "shall not for one year after public employment or office assist or represent anyone in a business transaction involving the Commonwealth if they participated personally and substantially in it while in office or employment," OPA said in its analysis of the law.

They also "shall not assist in any judicial, legislative, or administrative proceeding if they previously participated personally and substantially in it while in office or employed by the Commonwealth," said OPA.

The Fitial administration said Ada has an advantage among other possible bidders had the government bid out the management of the ARRA program, because of Ada's extensive and historic knowledge of the program.

The governor said the government will not risk losing some US$100 million in ARRA funding just because there's no continuity of effective management of ARRA, which only Ada can provide.

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