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Richards Releases Details of Eagle Contract

July 26, 2005 – After several weeks of anticipation, Lt. Gov. Vargrave Richards released the financial details associated with a contract between the V.I. government and a local commuter airline.
Richards held a press conference Monday, telling reporters the agreement between the government and American Eagle Executive Airlines cost the government a little under $400,000 to provide air shuttle services between St. Thomas and St. Croix, far lower than the $2 million forecast by some critics.
When the agreement was struck several months ago, the lieutenant governor said he was doing so to generate economic activity for St. Croix. On Monday, he said the four-month air shuttle service flew with fewer passengers than expected, but he was satisfied that the service was getting some recognition from a portion of its intended market. He also acknowledged that any future agreement with American Eagle was uncertain.
"This was a public-private partnership that we believe was in the best interest of St. Croix and still is in the best interest of St. Croix," Richards said Monday.
The idea behind the agreement, according to the lieutenant governor, was to increase the number of travel options for passengers traveling between St. Thomas and St. Croix. Three daily flights using the 64-seat American Eagle ATR aircraft ran the route between January and the end of April. But Richards acknowledged that most of those flights flew with empty seats.
As a result, he said, the parties came to terms on the payout for services provided.
"The figure that we settled on is $393,670. This amount reflects 16 percent less than required by the contracts as a result of my negotiations over the last several months. The V.I. received credit for unused tickets. Eagle had some savings, which were passed on, on the government side, and the V.I. received a good-faith allowance for delayed market entry by the Eagle," he said.
Listing the benefits realized during the four-month shuttle arrangement, Richards noted that many of those air shuttle seats were filled by groups from the public school system traveling between the islands for inter-scholastic events. Their activity sparked a number of inquiries by other school groups interested in taking advantage of the opportunity. That alone, said Richards, was incentive for the government to extend the American Eagle arrangement.
"We took a calculated risk here to bring more tourists to St. Croix and help our youth travel between islands. Maybe it wasn't perfect, but it was something that showed that over 8,000 people traveled back and forth. If that does not signify need, then somebody has to ask me why," Richards said.
One day after the press conference, the chief critic of the arrangement appeared ready to ask more questions. Senate President Lorraine Berry on Tuesday said she did not hear Richards' comments first-hand, but after getting calls from reporters seeking her reaction and reading press reports, she felt justified in her challenge over the agreement.
"The purpose of the Legislature is to use its oversight role to justify the use of government funds and to determine the legality of the contract," she said.
Over the course of the contract, Berry asked the lieutenant governor to disclose the details of the contract agreement. Richards responded by saying he would do so, but portions of the agreement had to be kept confidential. After four attempts to get the information, Berry asked the Inspector General's Office for an audit on June 28.
"The audit is still going forward to the inspector general to check the legality of the agreement, and I will await the response to that request," Berry said.
Berry is asking Inspector General Steven Van Beverhoudt to look into four areas of concern: the legality of the contract; the funding source to pay the contract; the authority of the lieutenant governor to execute the contract; and whether the lieutenant governor had the authority to obligate funds without the approval of the Legislature.
As of Tuesday, she said there was no word as to when the inquiry by the inspector general would be complete.

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