Another CNMI Sole-Source Secret Deal

August 15, 2012

Click to enlarge
The sole source ARRA contract resulted in a DOI investigation and criminal charges against former AG Edward Buckingham. Still it appears that no lessons have been learned. The same players, Governor Fitial and Edward Buckingham, approved a sole-source contract for a whooping $190 million to another newly established business, Saipan Development, LLC  to "develop a diesel-generated power plant on Saipan."

The agreement is for 25 years. Yet no one except Fitial and Buckingham knew of the agreement, including any member of the CNMI Legislature, the Lt. Governor, or any CUC personnel.

The Saipan Tribune broke the story a day after Governor Fitial left the CNMI for a three-week junket and a week after Buckingham fled the CNMI. A bench warrant was issued for the arrest of Buckingham after he failed to appear in court to face criminal charges which included violations related to the ARRA contract.

The Saipan Tribune says that the 41-page contract has the governor's signature without a date and that former AG Buckingham signed the agreement on August 3, 2012, a day before he left the CNMI. Saipan Development, LLC had not yet signed the agreement on the copy that the Saipan Tribune obtained.

Like so many other companies that are awarded sole-cource contracts, Saipan Development, LLC's registration was within days of signing a contract. The company was not even registered until March 22, 2012. Five days later the agreement was penned. 

Was this deal in the making in February 2012 when Buckingham joined Fitial on one of his many off-island trips to the East Coast of the U.S? It would follow the pattern –make a deal, license the company, sign off secretly and then have the news leak out after all is done.

Who is Saipan Development, LLC? It appears to be another businesses established just for the purpose of landing this particular contract. The registering agent is Keystone Shipping Co. The company is listed in the Wilmington, Delaware yellow pages as a "towing and tugboat services", and the Delaware Division of Corporations lists 1959 as the date the company was registered. Is this company a division of the Keystone Shipping Company out of Pennsylvania?

The Saipan Tribune reported:
Under the agreement, the Commonwealth Utilities Corp. will pay Saipan Development LLC “300 consecutive, equal monthly installments of $636,091.” 
Three hundred months is equivalent to 25 years. If the monthly payment is $636,091, then the yearly payment is $7.63 million. That is equivalent to $190.8 million in 25 years. 
Payment of the guaranteed price “is not subject to alteration, adjustment, setoff, counterclaim, abatement or Force Majeure.” 
In addition to the guaranteed price, CUC shall pay Saipan Development LLC an operations and maintenance fee of 0.0191 per plant-produced kWh per month. 
CUC shall also pay a production fee of .0153 cents per plant-produced kWh to cover the costs of lubricant oils consumables and spare parts. 
Pursuant to the agreement, Saipan Development LLC “has agreed to build, operate and own the [power] plant to be developed on Saipan and CUC has agreed to accept electricity generated by the plant upon the terms and subject to the conditions set.”
Where is the money coming from?

Does this agreement somehow tie in with Fitial's efforts to get a ship recycling facility in Tinian? Fitial was pursuing a deal with Paul Slater and First International Corp. (The guy seems sketchy, as this court order suggests.) Maybe this a is totally separate deal that people should be watching.

What is it with CNMI law that allows a governor, attorney general or heads of agencies like CHC's Juan Babauta, to sign off on expensive and questionable sole-source contracts? Lessons anyone? The Ada-IPS-ARRA and the Kraml-ISP contracts were also sole-sourced, back door deals that led to outrage and investigations. All of these deals show a great disrespect for the people of the CNMI who are denied a chance to express their opinions at a public hearing or any other forum. So undemocratic.

The governor has used the privilege of declaring "states of emergency" to push sole-sourced contracts through. The CNMI legislature needs to review this privilege and change the law to limit the executive branch's use of "state of emergency". The CNMI legislature need to enact legislation to further regulate government contracts, to require a legislative or OPA review before final signatures, and to also put strict limitations or restrictions on sole-sourced contracts.

This latest revelation is just one more item to add to the list of reasons for the governor's impeachment.


Anonymous said...

Solyndra received a five hundred million dollar sole source contract while in bankruptcy! Call it a loan it is basically the same thing.

Wendy Doromal said...

3:17 Aren't you ashamed to repeat such falsehoods? FACT CHECK here.

Anonymous said...

IMPEACH FITIAL, JAIL BUCKY! The OPA has to investigate this! Bucky will try to worm out of the arrest warrant by saying he has medical conditions. Hopefully Hasselback won't let him off and goes after Fitial as well. You can look at Bucky and determine he must have medical problems. This isn't anything new. If that doesn't work then next week it'll be his marriage is in danger, or he can't fly. Arrest him now!

Anonymous said...

there is no shame for these people. none. I hope fitial is impeached. In fact the entire House should impeach itself due to poor performance. what will it take. the hospital closing down and people dying. Making our kids pay billions of dollars for a bogus power generation contract. It is mind-boggling, truly.