SUPERIOR Court Presiding Judge Roberto C. Naraja has set aside the decision of then-acting Procurement & Supply Director Francisco Aguon regarding the termination of Micronesian Environment Services’ Marpi landfill contract with the Department of Public Works, saying it was arbitrary and capricious.

In his 25-page order, Judge Naraja also ratified Contract No. 701144-OC between DPW and the petitioner, Micronesian Environment Services or MES, for the operation and maintenance of the Marpi landfill.

“Ratification was an especially important consideration here given that petitioner had already begun performing on its contract with DPW and termination of the contract would have required the Commonwealth to pay compensatory damages to petitioner,” the judge added.

“Even if it is true that the Procurement & Supply [or P&S] director had broad discretion to determine an appropriate remedy, here the record shows that the P&S director abused his discretion by entirely failing to consider an important aspect of the problem of what to do about DPW’s contract with petitioner, and by claiming that his actions were ‘in the Commonwealth’s best interest’ without providing any meaningful support,” the judge said.

He said, “Even if a violation of the procurement regulations had occurred — and the court finds no violation of the procurement regulations based on the extensive record before it — the P&S director’s failure entirely to meaningfully address the issue of ratification when said issue had been raised to him numerous times by multiple entities was unreasonable, arbitrary, capricious, and an abuse of discretion.”

Attorney Robert T. Torres, who represents MES in its petition for judicial review of an agency action, issued the following statement:

“MES appreciates the court’s ruling which affirmed that 1) the contract was properly awarded to MES; 2) the decision to terminate the contract and claimed grounds were rejected by the court as arbitrary and capricious by Procurement & Supply; and 3) assuming the contract procurement had defects (which there were none) the remedy of ratification was requested by DPW as the contracting agency but entirely ignored by Procurement & Supply.

“The island today has a qualified contractor with MES continuing the proper waste management for DPW and our community at the Marpi landfill. The facility is compliant with EPA and DEQ standards. The contract remains in place without any problems from the beginning to today. It is frustrating that MES had to expend substantial resources but the company remains committed to continuing its good work in spite of the disappointing handling of the protest by Procurement & Supply. The Court’s decision speaks to confirm MES’s position which it appreciates.”

MES, through attorneys Robert Torres and Sean Frink, named as respondents in its petition then-Public Auditor Kina B. Peter, then-DPW Secretary James Ada, then-acting P&S Director Francisco C. Aguon, then-Finance Secretary David DLG Atalig, and Tang’s Corporation.

Background

In October 2019, DPW issued a request for proposals for the operation and maintenance of the Marpi landfill. Five companies, including MES, submitted proposals in response to the RFP, and DPW ultimately awarded the contract to the petitioner. 

But two of the losing companies filed protests objecting to DPW’s decision to award the $3.833 million contract to the petitioner.

The dispute over the award of the contract was decided by Francisco C. Aguon in his official capacity as the acting director of Procurement and Supply.

On Sept. 15, 2020, he issued a decision stating that the procurement regulations had been violated during the RFP evaluation process. He then terminated the contract that DPW had awarded the petitioner.

MES filed a protest against the P&S director’s decision. 

The dispute was elevated to the Office of the Public Auditor which, at that time, was the agency tasked with reviewing appeals of decisions made by the P&S director. 

On Oct. 9, 2020, OPA stated that it was declining to hear the appeal based on an internal conflict created by OPA’s involvement in a parallel investigation into the Marpi landfill contract.

On Dec. 18, 2020, OPA affirmed its decision to recuse itself from the dispute. 

MES then filed a petition for judicial review of agency decisions in Superior Court. 

According to MES, OPA’s recusal had adversely affected and aggrieved MES because it was deprived of the opportunity to have its appeal of the P&S decision heard by OPA.

Then-Public Auditor Kina B. Peter, represented by attorney Joseph J. Przyuski, moved to dismiss all claims against her on March 8, 2021, for failure to state a claim upon which relief can be granted.

Judge Naraja orally denied Peter’s motion at a hearing on April 21, 2021. He reaffirmed his decision at a status conference on Oct. 13, 2021. 

Peter then filed a motion to reconsider on Jan. 6, 2022, after the CNMI Supreme Court issued its decision in RNV Constr. v. GPPC, Inc., 2021 MP 13, declaring that OPA lacks the constitutional or statutory authority to decide administrative appeals for other Commonwealth agencies. 

Due to an intervening change in controlling law and based upon a review of the filings and relevant law, Judge Naraja granted Peter’s motion to reconsider and dismissed all claims against her with prejudice.

On Feb. 9, 2022, Judge Naraja found that then-DPW Secretary James Ada was not a necessary party to the petition of MES for judicial review.

“This is an administrative appeal, not a breach of contract case. That DPW was a party to the underlying Marpi landfill contract has no bearing on the instant case,” the judge added.

Later, Judge Naraja also dismissed with prejudice the petitioner’s claims against Peter.

Reporter

Bryan Manabat studied criminal justice at Northern Marianas College. He covers the community, tourism, business, police and court beats.

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