Anomalies found in procurement of hotels used as quarantine facilities

OPA cites conflict of interest

The Office of Public Accountability found several irregularities in the procurement of hotels that have been designated as Covid-19 isolation and quarantine facilities, resulting in $3 million in questioned cost.


The OPA found a potential conflict of interest when Gov. Lou Leon Guerrero's then legal counsel and son-in-law, Haig Huynh, was placed in charge of the initial procurement for quarantine and isolation facilities.


The governor invoked her emergency powers when the government procured hotel facilities that were used to quarantine arriving passengers and government employees.


OPA, however, questioned the governor's role in the acquisition process.


While the executive order authorized the director of public health to exercise all powers set forth in the declaration, the governor delegated her legal counsel to handle the initial emergency procurement for quarantine and isolation facilities.


She, therefore, bypassed the procuring authority already provided to the DPHSS director, the authority of GSA’s Chief Procurement Officer, under Guam Procurement Law, OPA said.


"Through published local media articles, we confirmed the governor’s legal counsel had an immediate family member with a financial interest with one of the awarded hotels," OPA said.


OPA found that the mortgage for the hotel was held with a local bank, where the legal counsel held previous employment and an immediate family member is currently employed with and owns, which would be a conflict of interest.


"Upon discovery of an actual or potential conflict of interest, an employee shall promptly file a written statement of disqualification and shall withdraw from further participation in the transaction involved. The procurement record did not include any such written statement of disqualification," OPA said.


OPA identified four deficiencies" (1) the Governor’s Office lacking procurement authority to procure quarantine and isolation facilities; (2) the governor’s legal counsel had a conflict of interest with one of the awarded facilities; (3) an incomplete procurement record; and (4) the quarantine and isolation facility contracts did not conform to the requirements set forth in the governor’s executive order and Guam Procurement Law. OPA said in the subsequent two emergency procurements for quarantine and isolation facilities, and to their credit, the government of Guam rectified the first two deficiencies by having the appropriate procuring agencies involved.


However, OPA added, the procurement record continued to be incomplete and the services extended beyond the 30-day emergency procurement limit.


The procurement record for the initial Covid-19 quarantine and isolation facilities was incomplete as it lacked sufficient documentation to provide a complete history of the procurement, such as the request for quotations (i.e. solicitations local hotels)and the award of the procurement (i.e. selection of the local hotels.


OPA found no clear indication in the procurement record with regards to who and how the decision to use these facilities was made. Without a proper procurement record, it voids the mandated transparency and accountability in the procurement process.


The contracts for two hotels were not in conformance with the executive order. The contracted dates for example exceeded the 30-day limit for emergency procurement; the renewal terms disregarded the directive; the total rooms procured conflicted with the governor’s requested requirement; and the CPO’s authorized signature was missing.


"It was the understanding of the OOG’s legal counsel that they were acting on behalf of the governor, the E.O., and the governor’s executive powers allowing them to fast track the procurement process and forego the missing items identified in the initial procurement record," OPA said. "However, by doing this, it undermined the integrity of the procurement process and led to non-compliance with Guam procurement law."


“The Covid-19 pandemic was an unprecedented public health emergency, and while there appear to be misjudgments made, we must take the lessons learned in the experience and make necessary changes to improve future plans," Public Auditor Benjamini Cruz said.


"While emergency procurement was acceptable for the initial procurement of the quarantine facilities to use, GovGuam was working on procuring quarantine facilities as far back as January 2020 After three months of emergency procurement, GovGuam had sufficient information regarding room utilization rates and the long-term requirement for quarantine and isolation facilities to prepare and issue an IFB, instead of the extended use of emergency procurement,”he added.



Subscribe to

our digital

monthly edition