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Sunday, May 2, 2010

Ratifying illegal contract

It was earlier reported in these "pages" that a procurement controversy on Guam resulted in an Attorney General's opinion to the effect that the government (Port Authority of Guam) had entered into a procurement contract in violation of law.

This post concerns the continuing saga of the events surrounding that controversy, as reported in one article and another Editorial in the Pacific Daily News:

Law ratifies port deal, AG says
A $350,000 port outreach project was procured illegally, according to the attorney general's office, but the island's chief procurement officer recently gave it her approval, citing a procurement law that allows illegal procurements to be ratified after the fact if doing so is "in the best interests of the Territory."

The port board yesterday evening voted to agree with that decision, affirming that the work had been accepted by the port and that the contractor didn't act fraudulently or in bad faith.

According to the law cited by Acfalle in her April 23 memo, illegal government contracts can be ratified and affirmed after the fact if the person awarded the contract "has not acted fraudulently or in bad faith."

"Since (Guam procurement law) provides for remedies after an award where there was no bad faith or fraud committed by either side and affirming the contract would be in the best interest of the Territory. I have affirmed and ratified this purchase order," she wrote in her memo.

In her memo, Acfalle said the vendor had completed the work to the port's satisfaction.
Shame: Government's failure at accountability lets down people of Guam (Editorial)
The Port Authority of Guam's board affirmed there was no fraud or bad faith in a port outreach project that the Office of the Attorney General called illegal. The board's action simply sweeps the issue under the rug.

This is just another part of a continuing process to try to make the controversy surrounding the outreach contract go away and to refuse to hold anyone accountable for what they did wrong.

Exploiting a technicality or loophole doesn't make a wrong right.

COMMENT: I'd like to make a couple of points.

First, on the notion that "the vendor had completed the work to the port's satisfaction". As I recently commented in a post about a New Orleans procurement controversy,
"It seems the oft-used retort to allegations of improper procurement is that the contractor did a damned fine job, so what's the problem? The problem is that the ends are not meant to justify the means. Both must be justified, independently."
If the ends always justified the means, there would be no law and no order.

Second, this "ratification" is interesting both for what it does as well as what it doesn't do. And I'm pretty confident the CPO did not desire either of these things.

What it does do is constitute an admission of "guilt"; that the contract was made in violation of law. Such a ratification can only be made after a determination of a violation of law. By ratifying the contract, the CPO, contrary to all her prior assertions, admits the violation. (5 GCA § 5452.)

What it does not do is actually extricate the government from the illegal contract. That is because no such ratification can be made except in the context of a procurement protest. Ratification is a remedy that flows from a protest decision or decision on appeal of a protest decision. (5 GCA § 5450.) No formal protest or decision occurred. The "ratification", therefore, is ineffective as legal absolution in this case.

The only finding of violation of law came in the form of an Attorney General review and opinion, at the request of the Lt. Governor. As the Official Comment to § 5450 explains, ratification "does not apply to, say, a review by the Attorney General, who determines, in the course of his normal review, that the proposed action would be in violation of law if it were to be made."

If the CPO could avoid all controversies by simply "ratifying" a contract rather than deal with it by protest, the whole review system would come to naught.

Finally, the CPO's mantra was that there was no fraud or bad faith. That is entirely beside the point. Under the ratification law, an illegal contract can be ratified even if the person who got the contract did act fraudulently or in bad faith.

This event is an excellent illustration of the lack of real "remedy" in the procurement law.

Even if a protester is determined to be right and the contract is proven to be illegal, and even if the person who got the contract did so fraudulently, the contract can still be "ratified", leaving neither the protester nor the public in a better-off position.

There will never be accountability until the legislature steps in to demand it with very carefully constructed law. Personally, I would favor such a law, in broad principle, as part of an expert review of the Guam procurement laws and regulations by a broadly represented and knowledgeable Procurement Advisory Council.

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