There were few concrete answers to be had Tuesday as senators looked into the suspension of federal funding for Main Street enhancements in Charlotte Amalie. But one testifier, St. Thomas/St. John Chamber of Commerce President Sebastiano Paiewonsky-Cassinelli, did suggest that putting the project back out to bid may be the fastest solution. And a Supreme Court order on the contract dispute may bolster that view.
The Federal Highway Administration announced Feb. 7 it had suspended funding for the work, saying contractor Tip Top Construction had improperly subcontracted management and bonding to another company, Prestige Building Co., in breach of federal oversight requirements. It suspended funding for the work indefinitely, pending a resolution of the problem.
Plans for the work began at least as far back as 2010 and, in 2013, former Gov. John deJongh Jr.’s administration put the work out to bid. There were two serious bids: one from Tip Top Construction and one from Island Roads.
Tip Top Construction sued after its $8 million bid for the work was rejected in favor of a $10.4 million bid from Island Roads. The government argued in part that Tip Top’s bid was rejected because it was "mathematically unbalanced," meaning its estimates did not line up well with the government’s engineers’ estimates. V.I. Superior Court initially granted a temporary restraining order but dropped the restraining order in January, ruling that Tip Top was unlikely to succeed on the merits.
But in April 2014, the V.I. Supreme Court reversed the Superior Court decision, saying that court applied too strict a standard of review. The Superior Court determined that the bid process would need to be arbitrary and irrational to be overturned by the court, but the Supreme Court disagreed, saying the government "is not entitled to any special deference with respect to legal questions, such as whether it complied with pertinent statutes and regulations."
While the government said the bid was unbalanced, federal regulations require "a careful evaluation" of unbalanced bids, and the law requires a careful evaluation and a detailed written justification of why the bid was rejected, according to the Supreme Court opinion. But the court has not seen either a careful evaluation or a sufficiently detailed written justification, the justices concluded and overturned the Superior Court ruling and concluded that the government did not provide enough documentation to meet the law’s requirements for rejecting a lower bid. [Tip Top Main Street Supreme Court Opinion]
The Supreme Court opinion said not having enough written explanation for rejecting the bid may have been a statutory or regulatory violation of the procurement process. But it said the legal remedy "is considerably narrower than outright awarding the contract to the disappointed bidder; rather, the disappointed bidder is only entitled to restoration of the status quo prior to the illegal act, which, in this case, would entail reopening the procurement process so that the procuring agency may issue a new decision pursuant to procedures that are consistent with the law."
It sent the question back to Superior Court for adjudication but that court had not acted on the matter when, in August of 2015, Gov. Kenneth Mapp’s administration awarded the contract to Tip Top. In October of that year, Mapp administration officials said work should begin in November of 2015. The start of work was delayed until July of 2016 and halted Nov. 7.
Although invited, no one showed up from Public Works, the Department of Property and Procurement or Tip Top Construction, frustrating Economic Development, Agriculture and Planning Committee Chairwoman Janette Millin Young and other senators present.
Attorney General Claude Walker appeared but said he could not answer many of the questions because of "attorney-client privilege."
Property and Procurement Commissioner Randolph Bennett submitted written testimony, saying that "since the courts ruled that Tip Top’s bid was not properly justified as non-responsive or was in fact responsive, Tip Top was eligible for the award as the lowest bidder," and the Mapp administration issued an $8.4 million contract to Tip Top.
Sen. Jean Forde said Bennett’s’ testimony "gives me the impression that the court ruled upon this question" and asked Walker what the court ruled on, regarding the Tip Top bid.
"I am not sure what he is referring to. What happened is that the court did not rule but a settlement was reached by the parties," Walker said.
Forde asked Walker if he was part of that settlement. Walker said he was not sure if he was with the administration at the time or not. "I can’t recall – when you say ‘a part of it,’ there are so many settlements. … I am not sure when the settlement discussions started because the suit began before I took over as attorney general," he said.
Paiewonsky-Cassinelli and Downtown Revitalization Inc. President Gautam Daswani both said they had serious concerns about Tip Top’s ability to carry out the work. Paiewonsky-Cassinelli said Tip Top was awarded a contract to renovate Fort Christian, but after a decade, the renovations remained unfinished.
Work on downtown Charlotte Amalie was also going too slow, he said. "At their present pace they will be working on this project – a project we were told would take 18 months at the longest and 300 days optimally. This would be disastrous for downtown businesses," he said.
Former Federal Highway Program Manager Wystan Benjamin appeared at the hearing. Benjamin was recently terminated from his position and did not speak on behalf of the administration. He did say he was part of the contracting team that initially determined there were problems with Tip Top’s bid and recommended awarding the contract to Island Roads.
Forde asked Walker if Benjamin’s termination was linked to the suspension of federal funds. Walker said he did not have the information to answer.
Benjamin said it was connected.
“Have we lost the monies from the federal government?” Millin Young asked of Walker.
“The letter states that the funds were temporarily suspended not lost," Walker said.
“What can we do to ensure that we don’t lose the money?” Millin Young asked.
Walker said, “A meeting has to be held with officials from the Department of Property and Procurement, the Department of Public Works and the Federal Highway Administration on what needs to be done to restore the funds."
Paiewonsky-Cassinelli suggested the way forward may be to start the bidding process over again.
"If there are grounds for termination, we may want to consider terminating the contract and putting it out to bid and just starting the process over because, really, the current situation is so untenable," he said. "This stop, start, stop, start has been occurring since the beginning of this year … at every juncture it is a mess. I am suggesting that should be on the table. Yes that will be terrible but it may be the quickest way to move forward," he said.