The V.I. Water and Power Authority faced tough questions and criticism from the Public Services Commission Tuesday over its second attempt at securing a long-term fuel since parting ways with Vitol.
WAPA’s governing board narrowly and controversially approved a contract with Puerto Rico-based Empire Gas in July after respondents to an initial request for proposals issued in April failed to meet the utility’s criteria. The board voted to rescind the contract in August while authorizing WAPA Chief Executive Karl Knight to find a short-term supplier, which ended up being Empire Gas. The utility issued a second RFP on Sept. 8. WAPA’s contract manager, Nicole Aubain, told commissioners Tuesday that the utility directly solicited 36 companies. Approximately 10 vendors participated in a prebid meeting on Sept. 19 and finished proposals will be received by Oct. 24.
Responding to questions from PSC Vice Chair David Hughes, Aubain said she didn’t feel that there were any “major changes” to the second RFP but noted that it was advertised more widely. Hughes noted that vendors who responded the first time “took great exception” to an item requiring local storage of liquefied petroleum gas.
“They thought it indicated a substantial misunderstanding — by WAPA — on how fuel moves and the necessity for local storage, as opposed to just a responsiveness, for instance, in the face of like a hurricane or something,” he said. Aubain said the provision carried over to the more recent request for proposals.
“So you didn’t listen to the vendors that said that that was completely unnecessary — and that was exclusionary to all but one party,” Hughes said. “You kept that local storage requirement in the document.”
The utility’s general counsel, Dionne Sinclair, said the provision wasn’t a mandatory requirement. After Hughes acknowledged that it was unusual for the commission to receive direct inquiries about procurement procedures and noted the volume of feedback the PSC received from vendors frustrated with WAPA’s lack of communication last time around, Sinclair said the utility had done a “deep dive” on concerns raised during the previous procurement.
“And we — in order to safeguard, I think, the integrity of the present process — we copied much of what the federal component asked for, even though the language was previously in the prior RFP,” she said. “We tightened it up in this RFP to make it clear that any communications, and requests for influence, any solicitations that are outside the contract manager and the contract department will result in disqualification.”
“How convenient for you,” Hughes said dryly before the two began briefly talking past one another. “So this is exactly why we have a docket open on this: because of the concerns that were expressed to your regulator and to your board, frankly, that weren’t addressed by the process.”
Hughes later noted vendors’ concerns that fuel volumes described by the RFP “didn’t actually reflect either the current consumption of the utility, nor its projected — did you guys tighten up the actual volumes that you were asking people to bid on this time? Or did we just … stay with the same numbers?”
Sinclair said those numbers “reflect the average of our usage.”
“I think they were not, but I’m not in a position to demonstrate otherwise today. They were well in excess,” Hughes said. “And the situation is quite fluid, as you know, in the Virgin Islands, because we’re bringing substantial components of solar, which are reducing our energy requirements to fossil fuels by about 30 percent on each island. I’m just curious if we reflected the — at least the future potential for — those reductions in this new RFP, or we’re asking people to bid the old … consumption rates.”
Aubain said the utility’s procurement process involves project managers and departments outlining their specific needs and that “most of it is negotiable.”
“When it comes to RFP, it’s a negotiable thing,” she said. “Just like Attorney Sinclair expressed to you when you talked about the storage — all of those are suggestions and what we need, and we’re hoping that we’re going to get the best results back.”
Hughes said he understood how proposals work but he knew the authority “is well aware of the effects to its future consumption” as it replaces old generators with more efficient units and ramps up its development of solar power and battery backups.
“I just find it interesting that you would publish an RFP that makes no attempt to quantify that for the vendors that you’re asking to enter into long-term contracts,” he said. “I understand it’s all negotiable, but when you say something is negotiable, what you’re really saying is: anybody who asks that question, you’ll answer it or enter into a discussion with — but if you have the engineering knowledge, why aren’t you just putting that in the document?”
Sinclair said the RFP was for a two-year contract and based on a two-year usage forecast from WAPA personnel. Hughes maintained that fuel consumption is slated to decrease in that period and said he was simply echoing vendors’ concerns.
“I just find that amazing,” he said. “That we go through a process that — by the director’s admission — failed, and we wouldn’t actually make any changes to that. That makes no sense.”
Sinclair later asserted that the first solicitation failed largely because vendors were unable to meet WAPA’s price.
“For the price point that was being demanded, it would not have availed itself to anything that would have benefited the authority — and certainly would not have benefited the people of the Virgin Islands,” she said. “Because of that, and pursuant to our whole procurement process, we closed out that procurement. We went to direct solicitations and were able, from that process, to get a viable option.”
Sinclair said a number of spurned vendors then voiced concerns to regulators and legislators, which she believed “impeded the integrity of the process.”
“And it’s something that you couldn’t do under federal procurement, just to be clear,” she added. “So in this process, we are tightening that. Undue influence will not be considered or weighed, and it will be a straightforward, transparent procurement.”
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