Court hears arguments in Marpi landfill contract dispute

ATTORNEY Robert T. Torres has requested the Superior Court to dismiss the opposition of the CNMI Office of the Public Auditor, the Department of Finance-Procurement & Supply, and the Department of Public Works in the petition of Micronesian Environmental Services LLC or MES for a judicial review of the agencies’ decision related to the Marpi Solid Waste Landfill contract.

At a motion hearing held before Presiding Judge Roberto C. Naraja on Wednesday, Torres asked the court to dismiss the agencies’ opposition and provide “a pathway for a remedy to protect our rights.”

After hearing from the parties, Judge Naraja placed the motion pleadings under advisement.

MES, through attorneys Torres and Sean Frink, named, in their official capacities, Public Auditor Kina B. Peter, Department of Public Works Secretary James Ada, Procurement & Supply Director Francisco C. Aguon as respondents in the petition.

MES wants the court to find that the Procurement & Supply director issued an improper decision in starting the process of terminating a contract properly awarded to MES.

“P&S director acted arbitrarily, capriciously, abused his discretion, and did not comply with relevant law and regulations, and accordingly the court should reverse the decision of the P&S director and/or ratify MES’s contract,” the petition stated.

MES also asked the court to find that OPA abused its discretion in deciding to abdicate its duty to hear appeals.

“The court should reverse OPA’s decision and remand this matter back to OPA; and additionally, find that the DOF-P&S director’s protest decisions were arbitrary, capricious, an abuse of discretion, and contrary to the law and regulations, and should be reversed.”

Moreover, the petition asked the court to find the DOF-P&S director’s failure to consider ratification was arbitrary, capricious, an abuse of discretion, and contrary to relevant law and regulations, and should be reversed or remanded to OPA to properly consider ratification.

Judicial review

Pursuant to the CNMI Administrative Procedure, MES has petitioned the court for a judicial review of these actions:

(1) The Sept. 15, 2020 P&S Director’s protest decision on the matter of DPW/SMWD19-RFP-005 (Contract No. 701144-OC) to terminate the contract award to MES and start the procurement for services running the Marpi Solid Waste Landfill all over again.

(2) The P&S director’s Oct. 5, 2020 dismissal of MES’s protest.

(3) OPA’s Dec. 18, 2020 recusal and decision not to hear MES’s appeal of the P&S director’s decision.

According to the MES petition, DPW issued a request for proposals for the Marpi Landfill operations and maintenance in DPW/SWMD19-RFP-005 (Contract No. 70114-OC).

The opportunity to submit a proposal in response to the RFP ended on Oct. 28, 2019.

The RFP stated five evaluation criteria: Background and qualification (25 points), experience of the firm on similar projects (20 points), capacity of firm’s key staff/crew and equipment availability (25 points), project approach (20 points), and price (10 points).

Five companies submitted proposals: Hong Ye Construction, MES, SM Enterprises LLC, SARS, and Tang’s Corp.

Pursuant to the RFP, the evaluation team, consisting of four DPW employees, met with the individual proposing teams in December 2019 to interview the proposing teams and allow the proposing teams to present their conceptual designs that best fit the project.

On Feb. 11, 2020, the evaluation team numerically scored the proposals out of a maximum score of 400 and approved a summary of the evaluations.

The top three were MES with a score of 336 points, SM Enterprises LLC with a score of 314 points, and Tang’s with a score of 300 points.

After the summary of evaluations had been approved, DPW issued a notice on Feb. 21, 2020, for MES to submit its best and final fee proposal.

On Feb. 27, 2020, MES submitted a proposal revising its proposal price from $119,989 per month to $109,683 per month.

In March 2020, DPW again requested MES for another best and final fee proposal, to which MES responded and further revised its proposal price downward from $109,683 per month to $106,495.

DPW ultimately awarded the three-year contract to MES for $3,833,820 with options to renew for up to two additional years.

The other bidders were notified of the contract award and SARS, SM Enterprises LLC, and Tang’s filed protests.

SM Enterprises LLC later withdrew its protest.

MES filed comments to both protests and DPW also filed comments to the protests.

The P&S director issued his protest decision on Sept. 15, 2020.

MES received notice of the protest decision also on Sept. 15, 2020.

The protest decision found that the procurement regulations had been violated and determined that it would be in the Commonwealth’s best interest to terminate the contract.

Due to continuous service needs, however, the protest decision determined that MES’s contract would not be terminated until a notice to proceed is issued under a new contract.

Adverse protest

On Sept. 29, 2020, MES filed a protest with the P&S director.

Under NMIAC § 70-30.3- 505(a), a party may appeal a P&S director’s decision to OPA if the appealing party has first submitted a written protest to the P&S director and the P&S director has denied the protest or failed to timely act on it.

MES submitted responses to the protests filed by Tang’s and SARS but before Sept. 29, 2020, MES did not file its own protest as the contract and award was in MES’s favor.

MES position is that the DOF P&S regulations were not intended to preclude appeal from a party who was first awarded a contract and then aggrieved by the termination of a contract under an adverse decision from P&S.

To comply with the regulations, MES filed on Sept. 28, 2020 a protest with the P&S director, based on portions of the adverse protest decision that arose.

On Sept. 29, 2020, MES filed its appeal of the Sept. 15, 2020 protest decision with OPA, also providing copies to the necessary parties.

On Oct. 5, 2020, the P&S director dismissed MES’s Sept. 28, 2020 protest on the stated basis that the P&S director allegedly lacked jurisdiction because the P&S director’s Sept. 15, 2020 protest decision had already been appealed by both Tang’s and MES to OPA.

Two appeals

On Oct. 9, 2020, OPA issued a letter noting that there were two appeals pending before it that were related to the Marpi landfill contracts, including MES’s appeal of the protest decision. OPA declined to hear the appeals based on a conflict created by a parallel investigation into the same issues.

OPA stated that those affected by its decision to not hear the merits of the appeals could pursue resolution in the CNMI Superior Court.

On Oct. 15, 2020, MES timely filed the original petition for judicial review in the original MES appeal.

OPA then decided to allow the administrative record to be developed before issuing final recusal decisions.

In November 2020, several of the respondent parties filed motions to dismiss Civil Case No. 20-0344, arguing that MES had failed to exhaust its administrative remedies because OPA had not yet issued the final decisions as to its recusal.

MES defended its filing based on the wording of the regulations that forced MES to preserve its rights and file the petition in Civil Case No. 20-0344 at the first notice of OPA’s recusal on Oct. 9, 2020.

On Jan. 5, 2021, MES filed a motion for leave in order to amend the original Petition for Judicial Review in Civil Case No. 20-0344 to include the newly appointed public auditor; to include an intervening party (Tang’s); and to include the Dec. 18, 2020 OPA decision to the record.

On Jan. 13, 2021, MES filed a notice of withdrawal of its motion to amend the original petition in Civil Case No. 20-0344, saying that upon additional research and reflection, current CNMI case law required MES to file a new action to include an appeal of OPA’s Dec. 18, 2020 decision instead of amending the existing petition in Civil Case No. 20- 0344.

MES’s Jan. 13, 2021 notice of withdrawal further informed the parties that MES would move to consolidate the action as soon as appropriate.

Failure to state a claim

At the hearing, OPA was represented by attorney Joseph Przyuski who asked the court to dismiss the petition for failure to state a claim upon which relief may be granted.

Pryzuski said, “Agencies have no inherent rights and may only exercise authority vested in them by constitution or statute. No authority or duty has been imposed upon OPA by the NMI Constitution or the Commonwealth Legislature to hear and decide procurement appeals. No authority has been granted to DOF by the NMI Constitution or the Commonwealth Legislature to pass regulations imposing duties upon OPA or to delegate their procurement responsibilities outside of the department.”

DOF-P&S, represented by Assistant Attorney General Abbi Novotny, told the court that because MES’s grounds for relief are without merit and did not state a claim upon which relief can be granted, it should be dismissed.

“MES has provided no evidence that the director’s decisions were arbitrary or capricious. NMIAC § 70-30.3-510 gives the director the authority to either ratify a contract if it is in the best interest of the Commonwealth or terminate the contract. The director chose to terminate the contract citing numerous procurement violations,” Novotny said.

For her part, Assistant Attorney General Leslie Healer told the court that the DPW secretary was improperly named. She asked the court that DPW Secretary James Ada should be dropped as a respondent in the case.

Healer said the DPW secretary is not a necessary party to the proceedings.

“The resolution of this case does not depend upon Secretary Ada’s participation in this appeal. Secretary Ada did not issue any of the contested decisions; he has no power to change them. He should not be forced to defend an agency decision he did not make and over which he has no authority,” she added.