Guam Auditor Says $100 Million School Construction Procurement Process 'Flawed'

Department of Public works in considering options

By Haidee V Eugenio

HAGÅTÑA, Guam (Pacific Daily News, Nov. 24, 2016) – While the Department of Public Works still is weighing its options for the $100 million project to reconstruct Simon Sanchez High School and repair 35 other public schools, other stakeholders have mixed reactions to the public auditor’s findings that the procurement is flawed.

Public Auditor Doris Flores Brooks, in a 45-page decision Tuesday night, said Public Works may cancel the solicitation and start over, or re-evaluate all the existing proposals and enforce the $100 million cap.

Three parties submitted proposals for the single largest procurement in Public Works’ history: Guam Educational Facilities Foundation or GEFF, Core Tech International and Pernix Guam.

GEFF is Public Works’ intended contractor for the project. Core Tech protested and appealed the intended contract award to GEFF. The public auditor partly granted and partly denied Core Tech’s appeals.

Pernix Guam, which ranked third, welcomes the options that the public auditor presented.

Scott Kroll, vice president for operations and general manager of Pernix Guam, suggested that the government tap a third party to re-evaluate the existing proposals and ensure all proposals comply with the request for proposals and relevant laws.

He said this will help ease doubts about conflict of interest and ethical questions in the procurement process.

"If done by a third party, I'd like to think that Pernix has a fair and equal chance in this procurement," Kroll said.

GEFF said Wednesday it is disappointed with the public auditor’s ruling on the procurement appeal because it will further delay the procurement by three months to more than a year.

Construction of Simon Sanchez High School alone may take 730 days or two years to complete, from the date of award of the negotiated task order.

But just the same, GEFF director Phil Flores believes the foundation has the best proposal that is why it was the highest ranked offeror in the first place.

Flores said GEFF hopes Public Works pursues the shorter of the two options, which is to re-evaluate the existing proposals, rather than restart from scratch and cause the greatest amount of delay.

“It’s a choice between delaying the project further by three to six months or by at least one and a half years. GEFF remains to have the best proposal and we are ready to go,” Flores said. “The further the delay, the higher the cost of construction.”

He said filing an appeal with the court will further delay Simon Sanchez High School’s reconstruction.

In a statement, GEFF said its team is comprised of highly qualified, leading experts in school design, planning and construction, and it believes it has the best project proposal.

“Management of GEFF and GEDP are the same individuals who financed, built, insure and maintain Liguan Elementary, Adacao Elementary, Astumbo Middle and Okkodo High School. All schools and an expansion of Okkodo were completed on time and on budget. We are the most qualified bidder and want to get started on this project for the kids at Simon,” Flores said in a statement.

GEFF chairman Rick Inman said GEFF is proud of the four schools that it has already built on Guam and would like to continue that track record with a new Simon Sanchez High School.

“This has been a long process, and we are eager to get to work so that we can bring a 21st century learning environment to the students of Simon Sanchez,” he said in a statement.

Public Works Deputy Director Felix Benavente, the chief procurement officer for the $100 million GovGuam contract, said the department, along with its counsels from the Attorney General’s Office, is still reviewing the public auditor’s decision as of Wednesday.

Benavente said after the discussion and review, the department will determine its next step.

Moving forward

Joseph Sanchez, the acting superintendent of the Guam Department of Education, separately said on Wednesday he’s happy a decision has been made on the matter, giving clearer understanding of how to move forward.

Sanchez said Guam DOE and certainly the Simon Sanchez High School family is grateful for all the work that has been put into this effort so far by its partner agencies.

“But as patient and understanding as they have been over the years, the bottom line is that they need a new school and they expect to see more progress,” Sanchez said. “The department looks forward to working closely with DPW and the other agencies on the next steps needed to move forward.”

Simon Sanchez High School has one of the worst physical conditions among Guam’s public schools, making it a priority for reconstruction and repair. It has also been a subject of health and sanitation citations by the Department of Public Health and Social Services.

Deficiencies

Core Tech, through attorney Joyce Tang of the law firm Civille & Tang, said on Wednesday that the public auditor’s decision affirms Core Tech’s belief that the solicitation that Public Works conducted was deeply flawed and violated the RFP and Guam procurement law.

“Core Tech deeply appreciates the prompt action by the public auditor and the thoughtfulness and commitment to upholding the law that reflected in her decision. The procurement law ensures not only that all bidders are treated fairly, but it protects the government and the public from the corrupting influences of special interests,” Core Tech said in a statement.

The Office of Public Accountability found Public Works’ multiple violations in the solicitation and processing of the $100 million procurement.

Public Works failed to properly review proposals to ensure they met minimum requirements, the public auditor found. As an example, GEFF failed to include required expenses in its proposal, such as architectural and engineering work and the cost of equipment, the auditor found.

DPW also failed to properly consider whether GEFF met minimum experience requirements for this type of work, the auditor added.

Public Works also improperly allowed the total cost of the project to exceed the $100 million cap, the auditor found.

“Given this procurement has a price tag of $100,000,000 and that the government of Guam infrequently administers a single procurement of this magnitude, these deficiencies cast a shadow for the people of Guam as to the transparency and openness of the procurement process. Accordingly, DPW is admonished for not exercising due diligence in this procurement,” the public auditor said.

Conflict of interest

Edward J. “E.J.” Calvo, board of directors chairman of the Guam Economic Development Authority, said OPA is “absolutely incorrect” on its assessment that he had a conflict of interest in the request for proposal.

“When I appeared as a witness for the OPA, it was made clear that I had not participated or influenced the RFP in any way. If there were, in fact, a conflict of interest, I would recuse myself from involvement. That was all made clear at the OPA's hearing,” Calvo said. “For the sake of Simon Sanchez High School, I hope DPW finds resolution with their project soon.”

As GEDA chairman, Calvo would have had the duty to recuse himself from any GEDA discussion, or any GEDA decision that concerned any of his personal financial interests, OPA said.

OPA said Core Tech established that while serving as GEDA chairman, Calvo also was serving as the chief executive officer of Pacific X-Treme Combat LLC, which had a direct interest in the Guam Education Development Partners, or GEPD, GEFF’s project developer.

GEDP is a Guam limited liability corporation that is 60-percent owned by Copper Ridge, a Georgia limited liability company owned by Richard Inman and James Wilson, and 40-percent owned by FOL Guam LLC.

FOL Guam LLC is owned by E.C. Development Group LLC and Pacific X-Treme Combat.

“This would give E.J. Calvo financial interest in the procurement because he is an officer of PXC (Pacific X-Treme), which would stand to gain financially by virtue of its partial ownership of FOL Guam LLC and that entity’s partial ownership of GEDP,” OPA said.

E.J. Calvo is Gov. Eddie Calvo’s cousin.

Another Calvo conflict

The public auditor also said it appears that E.J. Calvo has a second financial interest.

This is because his father, John T. Calvo, has an interest in E.C. Development Group LLC because he signed FOL Guam LLC’s articles of organization as the authorized representative of E.C. Development Group LLC.

“Hence, as John T. Calvo has a financial interest in E.C. Development Group LLC, which has an interest in FOL Guam LLC, which has an interest in GEDP, his son, E.J. Calvo, has a conflict of interest concerning any discussion or decision made by GEDA’s board or management concerning the RFP,” the public auditor said.

The public auditor holds that E.J. Calvo did not participate directly in the RFP solicitation because of his limited involvement in the RFP.

However, the public auditor finds that E.J. Calvo came very close to indirect participation by his request for a draft RFP and by his attempts to be informed of the RFP’s solicitation progress from GEDA’s management.

Pacific Daily News
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