Contractor sues DPW, Reyes over school project

A local contractor has sued the CNMI government anew over the long-disputed Saipan Southern High School project.

Tano Group Inc. asked the Superior Court on Friday to order the Department of Public Works to pay the balance of its compensation for the design and construction of $4.8-million school project in Koblerville.

The defendants—DPW and its secretary Juan S. Reyes, and the CNMI government—were sued for breach of contract and unfair dealing.

Tano Group, through attorneys Rexford Kosack and Glenn Jewell, said the company has six claims totaling $638,469.53 that have not been addressed by the government since they were raised in November 2002.

The construction firm, which finished constructing Saipan Southern High School in August 2002, said part of these claims is for Tano’s own money held as retention by the government.

Reyes, according to the contractor, has held onto the Tano’s bonds for 2 1/2 years after the completion of the school without explaining why he will not release them. “Simply put, the bonds have not been released because the contracting officer [Reyes] has failed—years after the project has been completed and handed over—to close out the contract,” Tano said.

The firm, a local contractor in existence for 14 years, listed the devastating effects that the government’s acts have caused on its business.

Tano said it has not been able to bid on any capital improvement project for the past 2 1/2 years because it could not get new bonds with all its collateral still tied up in the bonds being held by the government.

As a result, it added, Tano has lost an expected profit of $750,000 and was forced to sell off heavy equipment and lay off one-half of its workforce. The company has also been sued by a vendor because it could not pay for materials used for the school project.

According to Tano, it has been trying everything possible to get Reyes to rule on the claims and pay them over the past two years.

The contractor noted that Tano at its own cost sued for judicial review at the Superior Court when the Public School System claimed to be the contracting authority for the project. The court subsequently ruled in favor of Tano and DPW.

Tano related that upon receiving summary judgment, it negotiated and reached an agreement with DPW while the Attorney General’s Office did the same thing with PSS.

“However, when a new attorney substituted in the AG Office, DPW reneged on the agreement. Four months were lost trying to get that agreement honored. Then, DPW and the new attorney took seven months before they would issue a determination on the matter on July 15, 2004,” Tano said.

But instead of resolving Tano’s claims, DPW’s determination addressed an issue that the contractor did not raise: whether or not Tano should get the same contract price for the project despite substantial changes in project design.

DPW, as it turned out, concluded that the CNMI should get a $418,617 credit on the contract.

“This lawsuit seeks judicial review of the determination that the contract price should be changed. It seeks judicial review of the contracting officer’s failure to determine the six issues that he had been asked to rule on. It seeks final payment, retention, exoneration of bond, all as provided by the contract.

“It seeks damages for the losses which the company has suffered over the past 2 1/2 years while waiting for the contracting officer to do the duties required by the contract, and for the bad faith and unfair dealing which Tano has had to endure at the hands of the CNMI, the contracting officer, DPW, and their agents,” Tano said.