It’s official: Paramount has lost the airport construction project due to bond issues

Insufficient evidence of financial strength of local insurance company cited

The wait is over for one local company. After weeks of waiting to see if the American Samoa Government's Procurement Office will keep them on board for the Pago Pago International Airport Rehabilitation Phase 2 Construction project, Paramount Builders has been informed that McConnell Dowell has been selected for the job, to the tune of $11,217,909.16.

Paramount’s bid was for  $9.8 million — about $1.4 million less; however, Paramount lost the bid to McConnell Dowell due to bond issues — the Procurement Source Evaluation Board doubted the financial strength of the local insurance company, Aeto to support the bonds it issued to Paramount for the project.

In a December 13, 2017 letter signed by Chief Procurement Officer Dr. Oreta Mapu Crichton informing Paramount of the news, she noted that the decision "has been guided by the findings of the Source Evaluation Board (SEB)."

The project award has been a topic of debate between Paramount's legal counsel Roy J.D. Hall Jr. and ASG, including the Attorney General's office.

The main reason the contract between ASG and Paramount Builders was terminated last month was due to bond issues, specifically the performance bond, and the labor and materials payment bond certificate issued by local company, Aeto Insurance.

Crichton wrote in a Nov. 17th letter that surety was a condition of awarding the job to Paramount.

And while the company managed to come up with a 100% performance bond and 100% payment bond for the project, Crichton argued 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.

Counsel Hall has since inquired numerous times 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.

Hall said none of these Circular 570 insurers are licensed in American Samoa by the ASG Insurance Commissioner, as required by law, 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 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."

(See Samoa News Dec. 5, 2017 edition for details).

Currently, Hall and Paramount are still waiting for a list of duly licensed insurers listed in the US Treasury Circular 570, who have been issued Certificates of Authority from the American Samoa Insurance Commissioner.

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

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