Airport Authority appeals judge’s decision to void Lotte contract

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Guam – Both DFS Guam and the Guam International Airport Authority have reacted to Superior Court Judge Arthur Barcinas’ four decisions and orders in the long-standing disputes that involve a lucrative concession contract.

Barcinas issued several rulings in favor of DFS regarding the DFS-Lotte-Airport dispute. One of those rulings involves voiding the $154 million agreement Lotte has held since 2013.

The dispute stems from a number of allegations.  Of note in its protest, DFS alleges Lotte bribed airport officials with gifts and hotel stays. DFS also lodged complaints over improper handling of the contract’s procurement and a violation of procurement regulations when GIAA proceeded in awarding the contract to Lotte Duty Free.

DFS Guam previously held the concession contract for three decades. The losing bidder took Lotte and the Airport to court.  Judge Barcinas ruled in his decision the challenge should have halted the awarding of the contract to winning bidder Lotte. Judge Barcinas also noted that DFS’s protests filed with the airport and the Office of Public Accountability beforehand had the same effect of staying the procurement.

Nonetheless, the airport proceeded to award the contract to Lotte.  The decision not only kicked out DFS from its concession space to allow Lotte to take over, but also seized millions of dollars from DFS for back rent. That particular case went to an arbitration panel who ruled in DFS’s favor.  DFS argued in that dispute the airport was retaliating because of the protested contract.

Judge Barcinas ruled on four motions.  Three were filed by the airport seeking summary judgment of DFS’ three protests.  The fourth ruling was on DFS’s motion for summary judgment or partial summary judgment.

Judge Barcinas denied all of the airport’s motions for summary judgment, ruling that DFS’s protests were all timely filed and that DFS did have standing.  Therefore, the judge had jurisdiction to hear the cases.

But it’s the fourth ruling: the one filed by DFS for summary judgment, that stunned many.

Judge Barcinas granted DFS’s motion and voided Lotte Duty Free’s contract with the airport. He also ruled if the airport “wishes to issue another procurement for a duty free concession operatior,” they must “do so in complete compliance with the procurement code and the AAIA’s enabling statute.”

Does this mean Lotte Duty Free, which has operated inside the airport for the last four and a half years, has to leave?  No; at least not yet.

Judge Barcinas acknowledged kicking out Lotte could be harmful to the public.  Instead, he is allowing Lotte to continue to operate its retails spaces until the airport can “procure a new duty free concession operator.”

“We are very pleased that the Guam Superior Court has found that GIAA violated the Guam Procurement law in wrongfully awarding the duty free concession contract to Lotte. Although this is a significant step in the right direction, DFS looks forward to continuing to press its claims against both GIAA and Lotte to seek redress for its misconduct and the considerable damage done to both DFS and Guam. We are confident in the rule of law in Guam, which was clearly vindicated by these decisions. This is a case about speaking truth to power, and the people of Guam are the true winners today,”DFS legal counsel Maurice Suh said in a release.

The airport also issued a statement, saying they strongly disagree with Judge Barcinas’s decision.  The autonomous government agency claims the procurement for this contract was an open, transparent and fair process, especially for DFS Guam. The airport authority said Lotte’s contract is the most advantageous agreement they’ve ever had.

Their legal counsel, Genevieve Rapadas says they will be seeking an appeal with the Supreme Court and that the airport is surprised Judge Barcinas “chose to accept DFS’s excuses for not following the rules for protests in the Guam procurement law.”

You can read GIAA’s notice of appeal here and motion to stay here.