CUC Executive Director Kevin Watson gestures as he talks to reporters at his office on Thursday, July 18, 2024.
COMMONWEALTH Utilities Corporation Executive Director Kevin Watson has rejected International Bridge & Construction Marianas’ protest and appeal regarding the procurement of new genset units for the Rota and Saipan power plants.
In his Nov. 6, 2024 report to the administrative hearing officer, attorney Mark Scoggins, Watson said IBCM’s objection to CUC’s notice of intent to award the procurement to M&E Engineering PTE Ltd. does not warrant overturning his decision.
Watson recommended that the administrative hearing officer affirm his decision.
IBCM, represented by attorney Robert T. Torres, is disputing, among other things, that CUC-RFP-24-013 (Saipan Gen Set) and CUC-RFP-24-014 (Rota Gen Set) were not an “Emergency Procurement” and instead were a “Competitive Sealed Proposal” procurement.
Background
According to CUC, on Sept. 12, 2023, Rota Power Plant’s diesel engine Cummins No. 4 experienced catastrophic failure due to a connecting rod piercing the engine block on both sides of the engine, leading to a crankcase explosion.
Rota Power Plant’s Caterpillar diesel engine was subsequently turned on but also experienced an emergency shutdown due to an unusual knocking sound coming from the engine and heavy white smoke coming from the muffler.
The engine failures caused the power generation reserve capacity to be decreased by 2 MW, leaving Rota’s power generation capacity in a critically low state, with little to no reserve power generation capacity available should another diesel engine experience an emergency shutdown or be taken offline for scheduled maintenance.
On Oct. 19, 2023, Saipan Power Plant 1’s diesel engine No. 6 experienced an emergency shutdown due to an engine frame crack causing lube oil leakage. The emergency shutdown caused the power generation reserve capacity to decrease by 10 MW, leaving Saipan’s power generation capacity in a critically low state, with little to no reserve power generation capacity available should one of the other large size diesel engines at Power Plant 1 experience an emergency shutdown or be taken offline for scheduled maintenance.
CUC’s management determined that the loss of power generation capacity posed a threat to public health and safety. CUC is the sole electricity provider to the CNMI, and power generation failure affects water utility services to the community and electrical services for critical infrastructure, such as schools, businesses, clinics, banks, hotels, and the hospital.
On Oct. 25, 2023, CUC’s board of directors held a special board meeting and voted to approve the emergency procurement of a 6 MW engine for Saipan Power Plant 4 to augment the existing power generation supply for Saipan, and the emergency procurement of a 2 MW engine for Rota Power Plant to augment the existing power generation supply for Rota.
On Feb. 15, 2024, CUC published RFP 24-013 and RFP 24-014.
Out of the four proposals submitted to CUC, M&E ranked first while IBCM ranked fourth based on an evaluation by a CUC selection committee.
M&E proposed to install a Selective Catalytic Reduction emissions control technology system on the proposed gensets for Saipan and Rota to reduce exhaust emissions and achieve EPA Tier 4 emissions standards.
CUC issued a notice of intent to award the RFP to M&E on June 6, 2024.
IBCM on June 17, 2024 submitted a protest letter regarding the notice of intent to award the RFP to M&E, asserting that M&E’s proposal was non-responsive and should have been disqualified from consideration and IBCM should have been awarded the RFP.
Denied
Watson on July 24, 2024 issued a decision denying IBCM’s protest on the basis that M&E’s proposal conforms in all material respects to the RFP and is therefore responsive, and that IBCM’s proposals, having been ranked lowest overall, were not reasonably susceptible to being selected for award. On the same day, IBCM sent a letter notifying Watson of its intent to appeal his decision.
On July 25, 2024, the CUC board of directors voted to allow CUC’s management to proceed with awarding the contract for the RFP to M&E despite the protest from IBCM.
In a memorandum, the CUC executive director determined that “the contract should be awarded promptly, notwithstanding the pending protest, because the materials and services were urgently required,” among other reasons.
Appeal
IBCM, in its appeal for both RFPs, alleged that CUC violated the Open Government Act, saying that the executive director relied on inapplicable CUC regulations and federal regulations.
IBCM noted a “phantom assertion that IBCM’s EPA Tier-4-certificate-compliant proposal did not meet the RFP’s delivery period requirement; an oversimplified and inaccurate read of the EPA Tier 4 certificate included in IBCM’s proposal; treating ‘preferably’ qualifiers as somehow determinative; and a ‘fingers crossed’ hope that M&E’s shortcut around CUC’s requirement of pre-approved compliant generators would result in generators that, post-installation, actually measured up.”
According to Torres, “The executive director’s decision is fatally flawed. It demonstrates that the procedure CUC followed in awarding the contract under the RFP was riddled with shortcuts that were arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law and without observance of procedure required by law.”
IBCM has requested the CUC board of directors to overturn Watson’s decision and terminate or cancel the awarded contract.
Torres, however, said IBCM believes that the board is also biased. “This bias is demonstrated in this board’s actions of July 25, 2024, culminating in its award of the contract under the RFP despite the opportunity presented to IBCM in the executive director’s decision to appeal that decision to this same board. From this IBCM believes that the board has already made a determination regarding this appeal before allowing the CUC appeal process … to fully play out, making this appeal futile,” the lawyer added.
Torres also requested the disqualification of Scoggins as the CUC administrative hearing officer due to his representation of AMP LLC, whose sole manager was Allen Perez, the chair of the CUC selection committee.
