News Release

GIAA Makes Its Case to the Guam Supreme Court About the Value and Validity of the Lotte Duty Free Contract

Monday, July 8, 2019

Lower Court’s Erroneous Ruling Puts Airport’s Financial Stability at Risk

After six years of litigation, attorneys for the Antonio B. Won Pat International Airport Authority, Guam (“GIAA”) will appear before the Guam Supreme Court on Tuesday, July 9, 2019 to present GIAA’s appeal of the Guam Superior Court 2018 decision in DFS Guam v A.B. Won Pat International Airport Authority that voided the Airport’s specialty retail concession contract with Lotte Duty Free.

As outlined in GIAA's Opening Brief, this appeal seeks to restore the mandatory administrative and judicial process designed by the Legislature to protect public funds and to ensure fair outcomes. Through a series of clear legal errors, the Superior Court allowed a government contractor, DFS Guam L.P. (“DFS”), to convert the Procurement Law’s remedial scheme into something directly at odds with what the Legislature intended: as a means to gain unfair commercial leverage over Guam agencies and used as a weapon by a losing bidder, like DFS, to destroy the value of a public contract with its competitor.

“The Superior Court made no finding that Airport officials acted improperly, but contrary to the plain language of Guam Procurement Law, threw out the best contract in the history of the Airport based on untimely protests by a losing party that had come in third in an open and fair competition,” said GIAA Executive Manager Tom Ada.

Ada went on to say, “For decades DFS has held the Airport duty free concession exclusively and without any competition. The procurement in question was the first competitive duty free concession RFP in the history of the Airport and resulted in the most favorable concession agreement ever for the Airport. We understand that as the longtime exclusive Airport concessionaire, DFS, who is engaged in world-wide competition with Lotte, was unhappy in finishing third and losing the concession it had held exclusively for decades. However, the Lotte concession agreement has and continues to provide tremendous value and benefits to the Airport and GIAA will do all it can to sustain such value and benefits for the Airport and the people of Guam.”

GIAA’s opening brief goes on to say: “The Superior Court voided GIAA’s 2012 solicitation for the specialty retail concession contract (the “2012 RFP”) almost six years after it was issued and five years after performance of the resulting contract began. Such a result is unheard of and contrary to Guam law . . . in voiding GIAA’s longstanding contract that has resulted in tens of millions of dollars of revenue to the public, and financial security for a $247 million bond issue, it failed to consider the public harm that would result.”

“As airport industry experts have told the court, the procurement process conducted by GIAA in 2012-2013 for the specialty retail contract was fair, open, professionally- run and comparable to similar competitions at the largest international airports.” added Ada. “The Airport is responsible for more than $2.3 billion in economic activity on Guam that has been put at risk by the Superior Court’s erroneous decision. All of us at GIAA are hopeful that the Supreme Court will reverse the lower court’s order and that the DFS lawsuits will ultimately be dismissed.”

For any questions, please contact Genevieve Rapadas at 646-9355 or [email protected].