CUC terminates DCM contract

The Commonwealth Utilities Corp. has terminated its $5.1-million contract with a company hired to fix the engines at Saipan’s main power plant.

CUC executive director Antonio S. Muña notified the Guam-based DCM Group Inc. of the termination in a letter on Thursday, July 10, 2008. The termination came about a month after the utility issued a notice of default to DCM for falling behind schedule.

“The continuing failure of DCM to meet its contractual obligations and the resulting delays in providing electricity to the citizens of the Commonwealth is unacceptable,” Muña said. “DCM has not cured its default of [the contract]. That contract is terminated.”

CUC hired the DCM Group to repair seven of the eight generators at the main power plant in Lower Base. Under the $5.1 million contract, DCM Group was to complete the rehabilitation by June 2007. To date, however, five of the engines are still down.

DCM says it is having problems getting the necessary parts to perform the repair. It has asked for more time, but Muña denied the contractor’s request.

“The options provided by DCM to cure its default provide nothing more than a significant departure from DCM’s contractual obligations without curing the existing default,” Muña said.

Press secretary Charles P. Reyes Jr. said the administration supports CUC’s decision on the contract, which Muña has called “a mistake.”

“We entered in good faith into this contract with DCM. They told us they could fix our problem, but for some reason, they failed to deliver. CUC is basically moving on,” Reyes said.

For House Speaker Arnold I. Palacios, however, CUC should not have entered into the contract in the first place. He also said CUC must ensure it does not repeat the mistake it made with DCM.

“The question now is, what next? Are they [CUC] going to put out another bid? We’re running out of time. We cannot afford another blunder. We need somebody competent to do the repair. Here we are in this power crisis, and CUC keeps making mistakes to the tune of millions of dollars. It’s a disastrous situation,” said Palacios.

He added that CUC should pursue whatever funds may be recovered from DCM.

It is unclear how much of the $5.1 million has been paid to DCM. The Saipan Tribune made several telephone calls to Muña, but he was not available.

In his letter to DCM vice president Sonny P. Perez, Muña asked for a meeting with the contractors to discuss closeout costs and any billing issues.