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Decision No. 12,721

Appeal of EDUCATIONAL FOOD MANAGEMENT SERVICES, INC., from action of the Board of Education of the Bedford Central School District relating to the award of a contract to Statewide Industrial Catering, Inc.

Decision No. 12,721

(June 16, 1992)

Martin, Van De Walle, Guarino & Donohue, Esqs., attorneys for petitioner, James M. McGahan, Esq. of counsel

Plunkett & Jaffe, P.C., attorneys for respondent Bedford Central School District, Ronald A. Longo and John F. Burkhardt, Esqs. of counsel

SOBOL, Commissioner.-—Petitioner, Educational Food Management Services, Inc., appeals from respondent board’s decision awarding a contract to respondent Statewide Industrial Catering, Inc., to operate a food service program in the Bedford Central School District in the 1991-1992 school year. Petitioner requests an order annulling the contract to Statewide and directing that petitioner be awarded the contract. A request for a stay was denied on August 8, 1991. The appeal must be dismissed.

Prior to the 1991-1992 school year, respondent district operated its own cafeteria program. Prior to making a decision to seek an outside vendor to operate the food service, the district entered into an agreement with its cafeteria workers represented by the Bedford School Unit, Westchester Local 860 of the Civil Service Employees Association. As a result of that agreement, certain provisions relating to worker retention, pay, medical insurance, and re-employment rights were required to be placed in the bid specifications.

Respondent district prepared bid specifications and put the food service contract out to bids for the first time in May 1991. When bids were opened on June 13, 1991, petitioner and ARASERVE, INC., had submitted bids, but respondent board elected to reject both bids. Petitioner has not challenged that decision.

On June 20, 1991, the district issued an instruction sheet which provided certain changes to the original specifications. In the second round of bidding, petitioner, ARASERVE, and respondent Statewide submitted bids, which were opened June 28, 1991. Although it appeared that petitioner had submitted the lowest bid, respondent board met on July 16, 1991, and rejected petitioner's bid on the ground that it did not meet the bidding specifications in substantial respects. This decision was forwarded to petitioner in a letter dated July 17, 1991.

It is respondent’s position that petitioner’s bid failed to comply in significant respects with the bidding specifications. Respondent contends that its specifications required a performance bond to be issued by a surety company "with at least a Best’s Insurance Reports rating of A to A-(Excellent)," while the surety proposed by petitioner was unrated. Respondent contends that the specifications required that all bidders’ liability insurance coverage should provide for a sixty day cancellation notice, while petitioner’s proposed coverage only provided for thirty days’ notice. Respondent further claims that in several important respects, the health coverage proposed by petitioner did not comply with the model set forth in the specifications and did not comply with the district’s contract with CSEA as to the maximum contribution to be required from employees. Respondent further alleges that petitioner failed to provide figures on federal unemployment tax, menu printing, and telephone costs, all as required by the specifications. Respondent further contends that petitioner failed to submit a copy of its program to comply with the Hazardous Communications Right to Know Law or to provide a copy of its Affirmative Action Plan. Respondent further claims that petitioner's bid was not properly divided into sections to make it readily comparable to the specifications, and that it failed to provide the qualifications and experience of the proposed candidate for Food Service Director.

Petitioner claims that it is fully in compliance with all bid specifications, that it is the lowest responsible bidder and that it is entitled to an award of the contract. Petitioner also makes unsubstantiated claims that it is somehow the victim of bias or prejudice or an unspecified "social as opposed to business relationship" existing between Statewide and respondent district.

I find that the appeal must be dismissed because there are substantial deviations in petitioner’s bid from the specifications. A contract must be awarded to the lowest responsible bidder unless it appears that the bidder does not meet the requirements of the specification (WarrenBros. Co. v. Craner, 30 AD2d 437, 293 NYS2d 763; Appea1 of Educational Food Management Services, Inc., 29 Ed Dept Rep 267). Bids must conform substantially to the advertised specifications, and, where there is a substantial variance, it is the right and duty of the public body to reject the bid (Matter of Cottrell Bus Service, Inc., 21 Ed Dept Rep 409). Where there are minor variations which do not afford the bidder an unfair advantage, rejection may not necessarily be required (Matter of Harran Transportation Co., Inc., v. Bd. of Ed., 71 Misc. 2d 143, 335 NYS2d 971).

There is no question that the surety proposed by petitioner is not rated in the A to A- category by Best’s Insurance Reports. Indeed, petitioner does not contend otherwise and admits that its surety is unrated. Petitioner’s only response is that its proposed surety is properly licensed by the New York State Insurance Department to do business in this State and that proof of licensure should be sufficient for respondent. However, petitioner cites no authority for the proposition that respondent may not, in order to protect itself, require a surety which meets qualifications higher than the minimum required for licensure to do business in this State.

In the same vein, petitioner cannot deny that its proposed liability insurance coverage only provides for a thirty day cancellation notification, whereas the specifications require a sixty day notification. It is not enough to respond as petitioner does, that it "has never had a problem with its insurance much less its insurance cancellation clause at any time in the past. It does not intend to have any difficulties with the same in the future." Because respondent is entitled to write its specifications for its own protection, and because petitioner points out no contrary provision of law, it is clear that petitioner has not met the specification. It is evident that the longer notification period protects respondent by giving it a longer period of time to attempt to arrange adequate insurance coverage in the event of cancellation. I cannot say that this is an insignificant provision.

With respect to the health insurance coverage proposed by petitioner, respondent points out that petitioner's bid offers neither major medical coverage nor prescription drug coverage and that, rather than comply with the specification that no more than $10 per week may be required from any employee toward coverage, petitioner has simply stated that employees will pay fifty percent of the coverage and it will pay the other fifty percent. Because of the necessity that the bid comply with the specifications and the agreement with CSEA, I find that this is a material deviation from the specifications.

In a previous decision, I have found that the failure to provide an Affirmative Action Plan and the failure to provide the qualifications of a proposed director of Food Service Operations are also material deviations from bid specifications. Appeal of Educational Food Management Services, Inc.,supra, at 269.

For all the foregoing reasons, I find that respondent district was justified in rejecting the bid of petitioner and in awarding the contract to Statewide.

In view of the disposition, I will not discuss the remaining contentions of the parties.

THE APPEAL IS DISMISSED.

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