The Government of Guam Retirement Fund must cancel the procurement of a third-party administrator to run the pay and benefit plans for thousands of government retirees, or else revise the procurement to follow the law.
That’s according to a decision made by Public Auditor Benjamin Cruz in a procurement appeal filed by ASC Trust LLC against the Retirement Fund.
ASC Trust filed the appeal on April 30, arguing that the Retirement Fund is supposed to give a preference to local companies when going out to bid on a third-party administrator for GovGuam retirement plans, but did not.
Cruz in a Nov. 26 decision found that the law requires the local preference when selecting a bidder.
Bids were supposed to close on April 24, in the selection of company to oversee the government’s 16,451-member Defined Contribution Retirement System, the 6,287-member Deferred Compensation Plan, and Welfare Benefit Plan.
The procurement was still listed as open on the Retirement Funds’ website as of Monday, with no new procurement or amendments sent out.
While the Retirement Fund initially denied ASC Trust’s protest on the grounds that the local preference did not apply to professional services, the agency gave two different arguments during the appeal and hearing before the OPA, according to Cruz’s Nov. 25 decision.
“Flip flopping” by the Retirement Fund on the issue weighed in favor of ASC Trust’s arguments, Cruz found.
Further, the local preference does apply to the procurement of professional services, like a retirement fund administrator, Cruz found.
Guam law requires that procurement of supplies and services come from businesses that:
- Are licensed to do business on Guam
- Maintain an office or other facility on Guam
- A service business actually in business, doing a substantial portion of its business on Guam, hiring at least 95% U.S. citizens or U.S. permanent residents or nationals from the region
- Off-island supplies and services are only allowed if no local business can supply them, or if an off-island provider can offer the same at less than 85% the cost of local providers.
According to Cruz’ decision, Retirement Fund Director Paula Blas during a hearing conceded that the Fund did not apply the preference in part because, “it is not clear what ‘substantial portion of its business on Guam’” meant.
Blas, “conceded that the local preference was not something that normally was included” when the Retirement Fund went out to bid, and the agency had not faced the issue before, the decision stated.
“She acknowledged that the application she articulated ignores part of the statute,” the decision stated.
Blas further admitted that it “never publicized its position” on the local preference law before responding to ASC’s question about the issue on March 31.
Cruz sent the matter back to the Retirement Fund, and ordered it to cancel its bid for a retirement plan administrator, or else revise it to follow the law.