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CPO terminates Paramount contract for airport apron project

[SN file photo]
Paramount’s legal counsel says entire bidding process is ‘defective’

The contract between the American Samoa Government and Paramount Builders for the construction of the Pago Pago International Airport Apron Rehabilitation Phase 2 project, has been terminated by Chief Procurement Officer Dr. Oreta Mapu Crichton.

The termination has to do with bond issues, specifically the performance bond, and labor and materials payment bond certificate issued by local company, Aeto Insurance.

Paramount was notified of the decision in a Nov. 17th letter from Crichton, who reiterated that surety was a condition of awarding this particular job to Paramount.

The company was given a deadline to come up with a 100% performance bond and 100% payment bond for the project. And while they were able to meet the deadline for both requirements, according to the CPO, the surety was not listed in the current issue of the US Treasury Circular 570 — a requirement noted in the bid documents.

In addition, Paramount was told that there was insufficient evidence of the financial strength of the insurance company — Aeto — that issued the bond certificates. Therefore, the bonds submitted by Paramount are considered non responsive and deficient.

The termination of the contract has led to Roy J.D. Hall Jr, attorney for Paramount, to inquire — again — with the Attorney General's Office, about the insurers listed in the US Treasury Circular 570 that are not only licensed to do business in American Samoa, but also have Certificates of Authority issued by the American Samoa Insurance Commissioner.

"My concern is that none of these Circular 570 insurers are licensed in American Samoa by the ASG Insurance Commissioner, as required by law," Hall wrote in a letter, dated Oct, 14, 2017, to Crichton. He referred to local law pertaining to the ASG Insurance Act, which states in part that "no person may transact insurance in American Samoa as an insurer without a certificate of authority issued by the Commissioner, and when the certificate is issued, that person may not transact any class of insurance which is not specifically authorized by his certificate."

'Conditions of Contract' for said project, according to Hall, specifically provides that the bonds shall be issued by a solvent surety, which is certified to operate within the state/ country the project work is located and listed in the current issue of the US Treasury Circular 570.

This means the insurers listed in the Circular 570 must be certified to operate where the project is located —in this case, American Samoa.

Hall said if the insurers listed in Circular 570 are not admitted as insurers in American Samoa, pursuant to the ASG Insurance Act, "then the requirement that only Circular 570 insurers are qualified to issue surety bonds under this contract (is a) provision or condition (that) is a substantive defect to the contract and the entire bidding process is defective."

Hall wants Assistant Attorney General Christine Kim, who is handling the case, to cite the statutory authorities that exempt or allows a waiver of said insurers from complying with the Foreign Corporation Act, the Business License Act, and the Insurance Act, applicable in American Samoa.

He points to the "Invitation for Bids" for the project, published in Samoa News earlier this year, which specifically states that ASG reserves the right to waive any informality in bidding as may be in the best interest of the American Samoa Government.

The wording, said Hall, mimics the wording in 'Contract Conditions' stating that when proposals are irregular … in such circumstances the ASG has the right to either (1) reject an irregular proposal or (2) waive technicalities … if such waiver is in the best interest of the owners [A.S.G.] and conforms with the local laws and ordinances pertaining to the letting of construction contracts.

Samoa News understands that Paramount is interested in obtaining the appropriate bonds from duly licensed insurers listed in the US Treasury Circular 570, who have been issued Certificates of Authority from the American Samoa Insurance Commissioner.

However, Hall and his client have yet to get a list of such licensed insurers.

In the meantime, Paramount has the option of filing for administrative relief, declaratory judgment, and injunctive relief.