By Haidee V. Eugenio
Variety Assistant Editor

TELESOURCE CNMI Inc. filed a formal protest against the Commonwealth Utilities Corp.’s issuance of a request for proposal for the multi-million-dollar privatization of Saipan’s power operations on Feb. 22, but CUC and the Division of Procurement and Supply, according to Telesource, have ignored the protest.
CUC, despite the Feb. 22 protest, went ahead with the deadline for the submission of proposals on April 2 and did not officially respond to Telesource regarding the protest.
Telesource cited five grounds for its protest, including the “improper” use of the RFP process and the “unreasonable and unlawful” prequalification fee of $25,000 and the $50,000 RFP package fee,
Telesource counsel Robert J. O’Connor said CUC and Procurement and Supply’s inaction more than 30 days after the filing of the protest is “inexcusable.”
“In fact, CUC is proceeding, contrary to procurement regulations, as if no protest has been filed,” said O’Connor.
Telesource, through its counsel, thus filed an appeal with the Office of the Public Auditor on March 30.
“We consider this inaction tantamount to a denial of our protest and we ask the public auditor, by a copy of this letter, to consider this an appeal of the de facto denial of the Telesource protest,” O’Connor said in a letter addressed to Public Auditor Mike Sablan, CUC executive director Anthony C. Guerrero and Procurement and Supply director Herman S. Sablan.
On Wednesday, April 4, OPA’s Sablan wrote a letter to O’Connor, Guerrero, Procurement and Supply’s Sablan and Attorney General Matthew Gregory requesting more information regarding Telesource’s protest, specifically from CUC.
“It is evident that the protest has been pending for well over 20 days. OPA, however, cannot determine from the appeal if all interested parties’ views have been submitted or if any action has been taken by CUC in this matter,” said the public auditor.
OPA’s Sablan said procurement matters are to be handled as expeditiously as possible and, in this instance, the underlying procurement involves vital services and is of great concern to both the public and private sectors; thus, OPA gave the officials involved up to April 10 to provide needed information, considering that April 5 and 6 are government holidays.
OPA wants to know if CUC issued a decision on the protest, among other things.
“In the event that the attorney general believes OPA would not have authority to entertain an appeal related to this RFP or if CUC has been granted procurement authority other than that set forth in (Executive Order No. 2006-4) and the CNMI Procurement Regulations, OPA would ask for immediate notification so as not to delay this matter further,” said the public auditor.
EO 2006-4, issued by Gov. Benigno R. Fitial on May 5, 2006, reorganized CUC and states in part that CUC shall comply with the procurement regulations of the CNMI or such other procurement rules as may be issued.
CUC and Procurement and Supply officials could not be reached for comment as of press time regarding Telesource’s protest dated Feb. 22, Telesource’s appeal letter dated March 30, or OPA’s letter dated April 4.
The protest
Telesource, through O’Connor, said the company has already been certified by CUC — in its previous RFP attempts at privatization — as a qualified offeror.
“Now CUC is requiring Telesource and other offerors to pay a fee of $25,000 just for CUC to determine whether or not the offeror is qualified to pay an additional $50,000 to obtain a privatization RFP package,” said O’Connor, adding that these fees “bear no logical relationship to the cost of work to be done or the services to be rendered in return by CUC or its representatives.”
He said neither the CNMI Constitution nor the CNMI Legislature authorized CUC to assess taxes.
Telesource cites these five grounds of protest: an invalid use of the RFP process, unreasonable and unlawful fees, vague and ambiguous evaluation criteria capable of unilateral modification, criteria for pre-qualification violating procurement regulations, and the procurement process involving an RFP and not a sealed bid which O’Connor said is a “major” reason for the protest.
“We protest CUC’s decision to solicit offers via the RFP process for its privatization plans instead of going through the more economical and more sensible process of using competitive sealed proposals,” said O’Connor.
He said CUC should have hired an engineering firm to put in writing exactly what CUC wants power generating companies to do. CUC could then solicit bids from qualified bidders and then one afternoon unseal all the bids and award the contract to the low bidder.
“The RFP has a value and ambiguous set of criteria and it foreshadows the privatization RFP which will employ much the same criteria. The inevitable result will be, as before, a series of protests tying up the procurement in litigation for years,” said O’Connor, adding that a sealed bid is the most cost-effective and most logical procurement approach.
After more than 30 days since Telesource filed a protest on Feb. 22, it wrote another letter dated March 30 addressed again to CUC and Procurement and Supply, as well as OPA and the attorney general to serve as its appeal of what it described as a de facto denial of the Telesource protest.
“This situation calls out for the swift intervention of the public auditor. This project, the ultimate privatization of CUC, requires deliberation, oversight and a strict adherence to procurement regulations and policies,” O’Connor told the public auditor..