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GUAM. DFS Group’s protest over the duty free and specialist retail tender at A.B. Won Pat International Airport in Guam could be a long-running affair, with the possibility of court action depending on the outcome of the challenge.
On 23 April the long-time incumbent lodged its protest with Guam International Airport Authority (GIAA), citing
concerns over the “regularity and transparency associated with the process of awarding the retail concessions”.
As reported, GIAA is set to award the business to South Korea’s Lotte Duty Free after naming it recommended bidder ahead of DFS, JR Duty Free and The Shilla Duty Free. The tender was called in July 2012 for a concession that was due to begin after the tenancy of DFS expired on 20 January, 2013. However, after a series of delays and running controversy, Lotte was not named as recommended bidder until 12 April.
In its hard-hitting protest letter DFS says: “Please be advised that due to the significant nature of the allegations made by the Proposal Protest, we reserve DFS’ right to administrative and judicial review.”
It continues: “DFS places GIAA on notice that if the proposal process is not immediately halted pursuant to 5 GCA Section 5425(g) pending a final resolution of this protest, DFS will pursue injunctive relief in court to require adherence to those requirements.”
A GIAA board meeting has been scheduled for 25 April. DFS has requested assurance that no award to Lotte will be made at that meeting, while the protest continues.
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“We respect DFS’ right to protest the decision of the GIAA, and will cooperate in any way possible during this protest“ |
Steve Park CEO Lotte Duty Free Guam |
Normally, Lotte and GIAA would move swiftly to conclude terms, sign the contract and the newcomer would take over from DFS. While the protest is happening, the incumbent’s existing extended contract will continue (on the same terms), bad news for GIAA in financial terms.
In the interests of fairness and balance (Lotte is not in a position to respond publically to the validity of the allegations) and in light of the acute sensitivity of the situation, The Moodie Report will limit its coverage of DFS Group’s claims at this point.
Lotte Duty Free Guam CEO Steve Park told The Moodie Report today: “We respect DFS’ right to protest the decision of the GIAA, and will cooperate in any way possible during this protest.”
Gerry Perez, Lotte Duty Free’s Transition Director, told Pacific Daily News: “We are confident that the airport’s decision shall be upheld as fair, unbiased and in the best interest of Guam.”
Perez, a former DFS Guam President, told The Moodie Report today that he was disappointed with some of the accusations. Repeating comments made earlier to the local Kuam News he said that despite the setback, Lotte will move forward in preparation for the transition, assembling merchant, operating and logistics and information technology teams. “I am confident that the airport under the guidance of their legal team followed religiously the procurement process under Guam law,” he said.
He said that Lotte has ambitious plans to build a “truly world class retail facility”, adding: “We are very excited actually about the retail concept we brought in because it would completely renovate the airport and the centerpiece of our concept is to intensify a sense of place about Guam”.
DFS refers to “serious ethical concerns” related to GIAA’s selection of Lotte. These included the alleged giving of gifts by Lotte to members of a Guam tourism delegation, including GIAA board members, to Seoul last September to celebrate the opening of a new air route. It appears that DFS and Lotte differ sharply on the value and importance of those gifts. Lotte is adamant that it has done nothing wrong and is continuing with its plans to take over the concession.
As reported, GIAA Board Chairman Frank Santos and Board Member Linda Tolan stood down from voting on the concession decision, saying they wanted to avoid any appearance of a conflict of interest after they accepted but then returned gifts from Lotte on that Seoul trip.
The Moodie Report understands that DFS is keeping all its options open. The company is declining further comment.
We’ll examine this dispute in more detail in today’s edition of The Moodie Report e-Zine.
