Saturday was the deadline given to Paramount Builders to come up with a 100% performance bond and 100% payment bond for a $10 million rehabilitation of the Pago Pago International Airport Apron.
Efforts to find out if the company was able to post both by the deadline were unsuccessful.
Calls to the Chief Procurement Officer and the deputy CPO were not answered and KHJ News learned that the procurement officials were called to a meeting this morning in the Governor’s Office concerning the airport project.
On September 8, Chief Procurement Officer Dr, Oreta Mapu Crichton informed Papalii Laulii Alofa, President of Paramount Builders that his company had been selected for the project which was worth $9.8 million.
Dr. Crichton said the decision to award the project to Paramount was guided by findings of the Source Evaluation Board which recommended that Paramount’s bid is the lowest, most responsive and advantageous to the American Samoa Government.
The CPO informed Papalii that the award and subsequent execution of the contract by ASG is contingent upon the submittal of a 100% performance bond and 100% payment bond from a US Department of Treasury Circular 570 approved surety.
The attorney for Paramount, Roy Hall Jr., wrote to the CPO four days later, raising questions about the requirement of a 100% performance bon and 100% payment bond.
Hall wrote that in reviewing the list of certified sureties in circular 570 he couldn’t find any that are licensed to do business in American Samoa.
He informed the CPO that in a recent inquiry with Oxford Pacific Insurance, a locally licensed insurance broker and licensed reinsurer, it was confirmed that there are no circular 570 sureties or insurers admitted or licensed to issue construction performance bonding in American Samoa.
The attorney went on to say that in reviewing the bonding requirements, there’s a provision stating that for contracts performed in a foreign country, sureties not appearing on Treasury Department Circular 570 are acceptable if the contracting officer determines that it is impractical for the contractor to use Treasury listed sureties.
Hall asserts that it’s not that American Samoa is a foreign country but it is an “unorganized unincorporated territory” of the United States to be akin to a foreign country where it is impractical for the contractor to use Treasury listed sureties.
The attorney stated that his review of the CFR section and circular concerning awarding of contracts shows that that the contractor or agency has great leeway in inserting contract clauses regarding bid guarantees,performance of payment bonds.
He cites that the CFR provides that any person required to furnish a bond had the option to furnish a bond secured by an irrevocable letter of credit in an amount equal to the penal sum required to be secured.
Hall attached to his letter to the CPO an irrevocable Letter of Credit from ANZ Banking group for a performance standby Letter of Credit for the sum of $10 million.
The attorney said that this would be a full and complete replacement for performance bond required for the Pago Pago International Airport Apron Rehabilitation Phase 2 construction project as awarded to Paramount Builders Ltd.
The CPO responded to Hall’s letter saying that the bonding certification is a federal requirement, not an ASG mandate.
Dr. Critchon said that Procurement takes great care to comply with federal perquisites in the expenditure of their funds, and the surety provision is in accordance with the Federal Aviation Administration which is funding the airport project.
The CPO insisted that the full award to Paramount is contingent on the company securing the required bonding by a corporate surety approved to issue bonds for federal projects under the US Treasury Circular 570.
She informed Hall that his client, Paramount Builders has 15 days from the date of execution to furnish both performance and payment bonds in order to satisfy the federal bonding requirement.
The FAA has already denied Governor Lolo’s request to waive the performance bond requirements for the airport job.