Court reverses OPA dismissed baggage procurement appeal

HAGÅTÑA (The Guam Daily Post) — Superior Court of Guam Judge Elyze Iriarte has determined that Public Auditor Benjamin Cruz improperly dismissed the procurement appeal filed by JMI-Edison Inc. regarding baggage conveyance system management and support services at the A.B. Won Pat International Airport.

The decision boiled down to procedural issues, including whether JMI understood that its appeal would be dismissed, whether the company was heard on the matter, and if enough evidence was established to show that JMI was involved in a scheme to defraud the Office of Public Accountability and justify dismissal as the sanction.

The court remanded the case to the OPA for further proceedings.

“On remand, the public auditor may proceed to determine, upon due notice, whether JMI committed fraud on the tribunal and any other issues raised by JMI in its appeal, such as the completeness of the procurement record and the merits of the action,” Iriarte stated.

JMI was competing with another company, Menzies Aviation, to become the contractor for the airport baggage project. The airport authority went with Menzies. JMI protested the selection, was denied, and then appealed to the OPA.

However, the OPA ultimately dismissed the appeal, a decision that implicated Cecil “Buddy” Orsini, the former executive director of the Guam Contractors License Board.

Orsini reportedly acted to help JMI by doing as the company requested and issued a document determining that Menzies required a contractor’s license to perform the scope of work for the baggage project, and Orsini did so without the concurrence of his board, according to the OPA.

Orsini resigned shortly after the release of the OPA decision, at the request of the governor’s office.

Meanwhile, JMI took its case to court.

“The public auditor made a determination that JMI committed fraud upon the OPA and its proceedings. That finding is one of fact; it cannot be reversed unless it was arbitrary, capricious, fraudulent, clearly erroneous, or contrary to law,” Iriarte stated in her decision, filed Dec. 29, 2023.

“However, a different standard applies when reviewing procedural due process issues, which is the central question here,” the judge added.

Iriarte determined that the OPA did not afford JMI an opportunity to address dismissal as a sanction. The company lacked information that its alleged involvement in the creation of the CLB document would be relied upon by the OPA as grounds for the dismissal of its appeal, according to the judge.

“The motions (in the procurement appeal) did not seek such dismissal, and the public auditor did not warn JMI of the dismissal sanction. Not being prompted to defend itself, JMI never addressed such a sanction either. Overall, JMI lacked a reasonable opportunity to be heard on the issue,” Iriarte stated.

The judge also determined that the OPA imposed a severe sanction on JMI without considering lesser remedies and without making necessary findings.

According to a case cited by the OPA, “fraud on the court” occurs when it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion “some unconscionable scheme” to interfere with the judicial system’s ability to impartially adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of an opposing party’s claims or defense.

The public auditor cited JMI for influencing the creation of a document to gain advantage in litigation, Iriarte stated.

“This single act may or may not be part of a pattern of misconduct that satisfies the definition of a fraud on the tribunal. As there is no evidentiary record that details JMI’s involvement in the CLB findings and decisions, this court questions whether there is enough evidence to show JMI was involved in a pattern or scheme to defraud the court, and therefore, enough of a justification for a dismissal of JMI’s entire case,” Iriarte added.

Although the short correspondence between JMI and Orsini holds some weight because the company had no notice that the OPA intended to rely on that correspondence to dismiss its appeal and did not have a reasonable opportunity to proffer evidence to rebut the implications of that correspondence, the court cannot simply defer to the public auditor’s findings, Iriarte stated.

“In summary, based on the authorities provided by the OPA, the court finds that there is more to a dismissal stemming from a fraud on the court. The OPA should have afforded JMI an opportunity to respond, considered lesser sanctions, and examined whether JMI was involved in a pattern or scheme as required under the definition of a fraud on the court,” Iriarte added.

JMI celebrated the Superior Court decision in a press release.

“The legal grounds for JMI’s procurement challenge were also vindicated by the Office of the Attorney General and the CLB. On March 16, 2023, the Guam Contractors (License) Board made public a legal opinion it received from the (OAG) confirming that the baggage system work at the airport ‘requires that the selected offeror hold a specialty contractor license from the CLB in the C-13 Electrical Contractor subclassification,’” the JMI release stated.

According to Post files, the CLB had decided to issue a cease-and-desist notice to Menzies and an initial fine of $300,000 plus $1,000 per day until the company obtained a license.

Procurement law violation

JMI also cited a Dec. 18, 2023, decision by the OPA regarding an appeal the company made over the airport authority’s continuing emergency procurement of management, infrastructure and support services for its baggage conveyance system.

In that case, the OPA determined that the extension of the airport authority’s emergency procurement is in violation of procurement law. The OPA concluded that the emergency procurement contract with Menzies should be terminated as of 60 days from the date of the decision.

“Because of a myriad of public comments made about JMI by Public Auditor B.J. Cruz, this more recent case was heard by an independent appointed hearing officer,” the JMI release stated.