DFS Group is accusing Guam Airport of allowing Lotte Duty Free to increase a contract bid after a deadline to enable it to win.

This represents the latest and potentially most serious twist in the ongoing legal dispute between incumbent Guam Airport retailer DFS Group, Guam International Airport Authority and Lotte Duty Free over the award of the now well documented duty free concession won by Lotte Duty Free at A.B. Won Pat International Airport.

DFS Guam is now alleging that Lotte Duty Free Guam ‘substantially increased its financial offer for the airport duty free concession after the deadline date for all proposals of October 17, 2012 had passed. But Lotte Duty Free has formally denied there was any new or altered proposal, as alleged by DFS [See Lotte Duty Free responds, below-Ed].

In its latest claim, DFS adds that ‘the late proposal’ should have been disqualified and ignored by the A.B. Won Pat International Airport Authority, Guam (GIAA), ‘but instead the GIAA improperly awarded the contract to Lotte in April 2013 on the basis of the improper, second proposal’.

DFS’ legal counsel Maurice M. Suh representing Gibson, Dunn & Crutcher said: “This latest evidence that Lotte altered its proposal highlights how fundamentally corrupted this bidding and selection process became.

“Through Sunshine Act requests, DFS recently obtained evidence from the GIAA that shows that the airport authority allowed Lotte to submit a new bid proposal, which significantly altered several key terms, more than a month after the final deadline for submissions and after the GIAA had seen all of the competing bids.

 

SERIOUS ALLEGATIONS…

“Most disturbingly, the GIAA allowed Lotte to increase its minimum annual rent guarantee, boosting it from $13 million to $15.4 million, such that it was just enough to top DFS’ proposal by 1%, which the GIAA received a month before.”

In its latest general statement on the case, DFS asserts that this ‘new evidence’ contradicts the assertion made by Gerry Perez, Lotte’s transition director (May 21, 2013) to the Pacific News Center when he told the organisation that ‘any contention that Lotte changed its rent proposal, post bid is false.’

DFS’ legal counsel said: “In fact, Lotte’s proposal materials demonstrate that this is precisely what occurred. Mr. Perez further stated that, ‘Lotte’s rent proposal came directly from the company’s original bid tender submitted to the Airport in response to the Airport RFP’. The documentary evidence shows that Mr. Perez’s statement and similar statements by Cesar Cabot, Lotte’s attorney, were untrue.

“None of the other bidders were allowed this unfair opportunity to change their proposal after the deadline and after the competing bids had been disclosed to GIAA,” said William Blair of Blair, Sterling, Johnson and Martinez, who is also counsel to DFS.

He added: “The evidence of Lotte’s improper modification of its bid comes directly from Lotte’s proposal materials. DFS is in possession of a growing body of evidence that may explain why Lotte was given special treatment: Lotte was attempting to shower GIAA officials with gifts throughout the bidding period and was engaging in other conduct in violation of Guam law. Thus, DFS intends to amend its current lawsuit to add the additional wrongful conduct of Lotte and the GIAA regarding this improper, second proposal from Lotte.”

DFS’ other legal counsel Maurice M. Suh said: “To be clear, we don’t believe that the contract between GIAA and Lotte is legally valid, and we are confident that we will ultimately be vindicated on that point. Although DFS felt compelled to take the next step and seek judicial review of what we believe is a pattern of serious misconduct, we want to stress that we still remain fully committed to working cooperatively with the GIAA, bearing in mind the best interests of the people and the government of Guam, who shouldn’t have to shoulder any financial burdens as a result of this dispute.”

 

LOTTE DUTY FREE RESPONDS….

Responding to these latest claims by DFS, Lotte Duty Free’s Counsel Attorney Rawlen Mantanona from Cabot Mantanona LLP said: “By and through their California-based lawyer, DFS has lodged another round of complaints in another attempt to stall this procurement.

“The latest procurement protest and complaints from DFS are more of the same. The previous protests and complaint were so frivolous and without merit that Lotte Duty Free Guam, LLC filed a Motion to Dismiss, asking the Superior Court to dismiss the Procurement Lawsuit earlier lodged by DFS. DFS, after their bid was scored, was not even the second-highest bidder for the concession contract, they lack legal standing to continuously delay this process.”

Responding to DFS latest claim that its bid was amended, Lotte Duty Free Counsel Rawlen Mantanona said: “Lotte submitted one timely proposal to the RFP. There was no new or altered proposal, as alleged by DFS. The airport conducted a lawful review of all timely proposals, and conducted interviews with all the proposers, as allowed by the evaluation rules and Guam procurement law for RFP’s.

“At the November 29, 2012 interview, Lotte presented the airport with an explanation of their proposal, and provided the airport with its plans, which were helpful in demonstrating Lotte’s commitment to Guam and its ability to develop and operate the concession.

“Based on the evaluation of Lotte’s timely proposal, GIAA made a determination that Lotte was the most qualified proposer and that it is in the best interest of the Territory of Guam to award to Lotte. The selection criteria for the bid was based on five separate evenly weighed factors. Price was only one component. Lotte never changed its proposal. Lotte was evaluated on the basis of their overall proposal and nothing else.

“Following the award of the concession, Lotte entered into intense negotiations with GIAA, in accordance with the applicable procurement law, to negotiate the final contract. The airport drove a hard bargain for a final contract that guarantees even more revenue for the Territory of Guam than expected. The award of this contract to Lotte is in the best interest of the Territory.

NEW RECRUITMENT PROCESS
“The people of Guam are looking forward to the upcoming changes and revitalization of the airport. The 1,000 potential hires who stood in line at the Lotte Job Fair this week to apply for one of the 200 positions that Lotte is offering at the airport are excited about the changes Lotte will bring. Lotte is looking forward to the official handover date of July 21.”

There were four original bidders for the Guam Airport duty free concession, who included the incumbent DFS Guam, plus Lotte Duty Free, James Richardson and Shilla Duty Free. For further recent background on this dispute see the following recent archived stories:

18 JUNE: LOTTE ASKS COURT TO DISMISS LAWSUIT

http://www.trbusiness.com/index.php?option=com_content&view=article&id=13329:lotte-asks-court-to-dismiss-dfs-lawsuit&catid=3:asia&Itemid=11

11 JUNE: GIAA MOVES AHEAD WITH ‘AWARD’ TO LOTTE

http://www.trbusiness.com/index.php?option=com_content&view=article&id=13290:giaa-moves-ahead-with-award-to-lotte&catid=3:asia&Itemid=11

 

31 MAY: GIAA AND DFS LAWYERS MAKE THEIR CASES
http://www.trbusiness.com/index.php?option=com_content&view=article&id=13232:giaa-and-dfs-lawyers-make-their-cases&catid=3:asia&Itemid=11