CUC defends decision on Saipan power project

Saying it’s like comparing apples and oranges, the Commonwealth Utilities Corporation yesterday lashed back at allegation that it has erred in its initial decision to award the controversial Saipan power project to Marubeni-Sithe after independent experts ranked other firms higher.
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Acting CUC Executive Director Patrick Leon Guerrero defended the selection process adopted by the government-owned utility corporation when it chose Japan’s Marubeni Corp. and its U.S. partner, Sithe Energies, Inc., over other competitors last year.
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He said CUC and Burns & McDonnell — the private engineering firm it hired early this year in response to mounting complaints — evaluated the bidders on different proposals submitted as their “best and final offers.”
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“(A)ny attempt at comparing the evaluation… is like trying to compare apples and oranges. The evaluators were simply looking at different proposals,” Guerrero said in a letter to Juan S. Tenorio, chairman of the Commonwealth Development Authority.
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The CDA chief earlier had asked the utility corporation to justify why it opted to award the $120 million contract to Marubeni-Sithe during its controversial decision in June 1998 in light of Burns & McDonnell’s findings that close competitors Enron and the Tomen consortium ranked higher than its choice.
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According to Guerrero, the results from both reviews that put Enron at the top are “remarkably similar,” but added that being ranked first at a certain stage and eventually receiving the award are “two very different things.”
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The first round of evaluation conducted by the Kansas City-based engineering firm, in fact, considered Marubeni-Sithe’s offer “clearly superior” than other proposals, he said.
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While Burns & McDonnell scored completely new “best and final offers” during its second phase of review due to CUC board’s decision to solicit new proposals, the results were still remarkably similar.
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Guerrero noted Enron, Marubeni-Sithe and HEI emerged in the top three of CUC’s in-house selection, while Enron, Tomen and HEI topped the independent evaluation.
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He said, however, that the process of the re-evaluation is not yet complete as CUC at the same stage negotiated with the top two competitors prior to announcing the intent to award the contract in which Marubeni-Sithe was chosen.
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“The Board is again considering its options on how to proceed after the evaluation of the new best and final offers,” added Guerrero.
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CUC has come under fire over the past year due to alleged flawed procurement of the Saipan’s 80-megawatt power plant. Opposition from competing bidders forced the corporation to abandon its initial findings and hire independent experts.
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During its meeting early this month, board directors agreed to extend their review of the Burns & McDonnell’s report for the next three months, including a possibility to scale back the project, before choosing a contractor. (Benhur C. Saladores)