Whitehorn given additional six days to cure default
The American Samoa Government is giving an additional six days to Whitehorn Construction Company to “cure its default” with the bonding issues they are experiencing, says Steven Watson, the Governor’s Legal Counsel, in response to Samoa News queries.
In late May, ASG officials claimed Whitehorn’s initial bond certificates were fake or bogus, while Governor Lolo M. Moliga in a statement released to the media said the bond certificates were forged documents.
The issue of the bonds came to light when an official with Chubb Group of Insurance Companies contacted the local DPW and AG’s offices, informing them that the agent or broker though which Whitehorn Construction Company posted their bond — in the amount of more than $399,000 — did not work for Chubb, according to a government source who wished to remain anonymous as he was not authorized to speak on the matter.
Watson noted that Whitehorn's opportunity to cure its default was scheduled to expire today — July 11, 2013 at close of business. “Since it was late June, when given the additional ten business days to cure the default, Whitehorn made a further request for relief that was not responded to by the Chief Procurement Officer until yesterday, the 9th.
“Because of the delay in responding to Whitehorn's request, the contractor was given an additional six days to Friday, July 19, at close of business, to cure the default,” explained Watson. He further noted that in the “event the default is not cured, the contract will be terminated”.
Watson further stated that some amount of work has clearly been performed, and multiple progress payments have already been made.
“After termination, should that occur, the parties will then negotiate a final settlement. The outcome of the negotiation will determine what amounts of money may be owed by either party to the other. After termination the government will be free to either negotiate with the next lowest bidder, or to re-bid the project in its entirety,” he said.
Two weeks ago, Chief Procurement Officer Tiaotalaga John Kruse informed Governor Lolo that Whitehorn failed to provide evidence that they have acquired satisfactory performance and payment bonds for the $7.9 million airport road project that is now underway.
During a meeting yesterday on this matter between the governor and attorneys from the Attorney General’s Office, Director of Public Works Faleosina Voight and the CPO, Samoa News understands discussions centered around whether or not to terminate the contract immediately, or to allow Whitehorn an additional six business days to produce the actual bonds, as suggested by Federal Highway Administration personnel.
Lolo also told the Procurement and Public Works directors to work with the AG’s Office and his legal counsel Steve Watson to determine the path going forward in the event default is declared.
During Tuesday’s Senate session of the Fono on July 9th, one of the senators brought up the issue of Whitehorn and wanted to hold a hearing with Public Works to find out the status of the airport road and the reason for the delay.
At the time when this matter first surfaced, Crystal Whitehorn, wife of company president and owner, Loran Whitehorn, responded to Samoa News, showing the reporter the Certificate of Bond and wire transfer documents and receipts. However, she declined to provide Samoa News with a copy. Therefore, Samoa News was unable to independently verify its validity.
“We will do everything we can to make this work, even if it means forking up a new bond, we will do it… at the same time, we will pursue legal action in the mainland against this broker,” Crystal told Samoa News at the time. The Airport Road Project has been a highly debated topic with lawmakers and the public criticizing the progress, or lack thereof, for some time.
The multi-million-dollar project was awarded to Whitehorn Construction in August 2012, at $7.99 million, $4 million less than the only other bidder, McConnell Dowell. Government engineers estimated that the work was going to cost $11.84 million.