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Decision No. 15,032

Appeal of AMERICAN QUALITY BEVERAGES, LLC from action of the Oswego County Board of Cooperative Educational Services, Coca-Cola Bottling Company of Syracuse and Jerry J. Vecchio & Co. regarding a cooperative purchasing contract.

Decision No. 15,032

 (March 5, 2004)


Ross E. Getman, Esq., attorney for petitioner

Ferrara, Fiorenza, Larrison, Barrett & Reitz, P.C., attorneys for respondent Oswego County Board of Cooperative Educational Services, Norman H. Gross, Esq., of counsel

Greene, Hershdorfer & Sharpe, attorneys for respondent Coca-Cola Bottling Co., Ronald V. Sharpe, Esq., of counsel


MILLS, Commissioner.--Petitioner appeals the selection of vendors for a cooperative purchasing contract coordinated by respondent Oswego County Board of Cooperative Educational Services ("BOCES") on behalf of the BOCES and 13 of its component school districts.  The appeal must be dismissed.

On July 11, 2002, BOCES received bids pursuant to an invitation for bids ("IFB") that BOCES had issued for the supply of soda, juice and water products to the BOCES and 13 component school districts.  The IFB"s specifications listed the total estimated quantities of five different categories of beverages that would be ordered by the participants in the contract, but advised vendors that each participating school district would prepare its own individual purchase order for the products.  The IFB further advised that the bids would be awarded by category, but that BOCES reserved the right to award the bid on an aggregate basis, by line item, by groups of categories or combinations of items "in whatever manner is deemed to serve the best interest of the bid participants."  The participants agreed to purchase products from the successful vendor(s) in each category.  The term of the contract was September 1, 2002 to June 30, 2003.

The IFB contained five categories of beverages, and petitioner submitted a bid on two categories " spring water and sports drinks.  The spring water category included four separate items of spring water in different sizes and four items of flavored water.  Petitioner submitted bids on two of the eight items -- $7.50 per case for 20-ounce spring water and $5.50 per case for 16.9-ounce spring water.  Respondent Jerry J. Vecchio & Co. ("Vecchio") bid $8.00 per case for 20-ounce spring water and $5.50 per case for the 16.9-ounce bottles.  Vecchio, however, had submitted a bid for all eight items in the category, and BOCES awarded Vecchio the bid for the entire spring water category.

As to the bid for sports drinks, the IFB listed three specific varieties of sports drinks, Powerade (distributed by respondent Coca-Cola Bottling Company of Syracuse ["Coca-Cola"]), Gatorade and Z"lektra (made and distributed by petitioner), and also solicited bids for any "nutritional equal."  Petitioner submitted a bid of $11.50 per case for 20-ounce bottles of Z"lektra, Vecchio submitted a bid of $9.60 per case for 10-ounce bottles and $14.90 for 20-ounce bottles of Gatorade, and Coca-Cola submitted a bid of $13.99 per case for 20-ounce bottles of Powerade.  A fourth company submitted a bid for Gatorade, which was higher than Vecchio"s bid.  BOCES accepted Coca-Cola"s bid for Powerade, Vecchio"s bid for Gatorade and petitioner"s bid for Z"lektra.

This appeal ensued.  Petitioner"s request for interim relief was denied on September 9, 2002.

Petitioner contends that it was the low bidder for the two spring water items that it bid on, and therefore should have been awarded the contract for those two items.  Petitioner also contends that Z"lektra, Powerade and Gatorade are equivalent products, and since petitioner had submitted the lowest bid for sports drink products, it should also have been awarded the contract for all sports drinks.

Respondent contends that it awarded Vecchio the bid for the entire spring water category because the IFB had specifically advised that BOCES could select by category, Vecchio was the lowest bidder on most items and the only bidder who had submitted a bid for all eight items in the category, and a single vendor was most advantageous.  Moreover, petitioner bid lower than Vecchio only on the 20- ounce size, which accounted for just 22 cases per month of product.

Respondent further contends that it properly awarded the sports drink bid to the lowest bidders for the three separately named products, because the beverages are not nutritionally equivalent and have significantly different tastes.  Respondent also argues that petitioner did not claim at the time it submitted its bid that the bid for Z"lektra was also intended to be responsive to the bids for Gatorade or Powerade on the theory that Z"lektra was nutritionally equivalent to the other two products.

Respondent also raises a procedural objection.  It contends that the 13 participant school districts are necessary parties because their rights to purchase products from respondents Coco-Cola and Vecchio could be affected.  A party whose rights would be adversely affected by a determination of an appeal in favor of petitioner is a necessary party and must be joined as such (Appeal of Lynch, 42 Ed Dept Rep ___, Decision No. 14,892; Appeal of Roff, 41 id. 346, Decision No. 14,708).

In the instant appeal, the IFB clearly stated that the bid was a cooperative bid through BOCES.  BOCES had prepared the specifications, reserved the right to waive any informalities or accept reasonable substitutes for specified items, and reserved the right to reject any or all bids and to re-advertise.  Moreover, any unresolved complaints about the contract were to be submitted to the BOCES bid coordinator.  The school districts had thus delegated to BOCES all authority and responsibility for establishing the specifications, issuing the IFB, receiving bids, and determining the winning bids in each category.  BOCES is therefore the proper party to an appeal challenging the specifications and bid process, and the school districts that would purchase products under the contract bid and award by BOCES are not necessary parties to this appeal (seeAppeal of Pitney Bowes, Inc., 31 Ed Dept Rep 290, Decision No. 12,646). 

However, I must dismiss this appeal as moot.  The Commissioner of Education only decides matters in actual controversy and will not render a decision on a state of facts which no longer exists or which subsequent events have laid to rest (Appeal of L.D. and M.D., 43 Ed Dept Rep ___, Decision No. 14,947; Appeal of Deborah F., 42 id. ___, Decision No. 14,813; Appeal of Johnson, 41 id. 407, Decision No. 14,727).  The contract at issue expired on June 30, 2003.  Therefore, the appeal is moot.

Even if this appeal were not dismissed as moot, it would be dismissed on the merits.  BOCES may request alternative bids and it may exercise reasonable discretion in the selection of the alternative it desires (Acme Bus Corp. v. Board of Educ. of the Roosevelt Union Free School Dist., 91 NY2d 51; Appeal of Mitchell, et al., 40 Ed Dept Rep 88, Decision No. 14,428; Appeal of World Network Int"l Services, Inc., 39 id. 30, Decision No. 14,164).  The IFB clearly stated that bids would be awarded by category, although BOCES also reserved the right to award the bids in other formats.  Thus, I find BOCES" award of the spring water bid by category to be within its discretion.  Moreover, Vecchio submitted a bid for all eight items in the spring water category, whereas petitioner submitted a bid for only two of the items.  Of those two, petitioner"s bid was equal to Vecchio"s for one item and lower for one item that represented an estimated order of 22 cases per month.  Vecchio thus had the matching lowest bid or the lowest bid for seven of eight items, totaling an estimated 142 cases per month.  I conclude that it was reasonable for BOCES to obtain all of the water products from the only vendor who had bid for all eight items in the category, who had submitted the matching or lowest bid for seven out of the eight items, and who was only $0.50 per case higher for one item representing only 22 cases per month or 13% of the total category. 

Petitioner"s challenge to the awards in the sports drink category must also be dismissed.  Petitioner contends that its product, Z"lektra, is nutritionally equivalent to the other two sports drinks listed in the category.  The IFB provided for bids to be submitted for the three brand-name sports drinks or a "nutritional equal."  However, the record indicates that petitioner submitted a bid solely on the specific brand name "Z"lektra" category, did not submit its product as a "nutritional equal" to the other sports drinks, and made no factual assertions in the bid documents that its product was equivalent to the other listed name brands.  Petitioner"s failure to advise BOCES in the bid documents that it was submitting a substitute "equal" or "equivalent" product for the other brand names listed in the sports drink category precludes petitioner from belatedly challenging the award on this basis.

Although I must dismiss this appeal, I am compelled to further comment on the record in this case.  It is a violation of General Municipal Law "103 to manipulate the specifications of a bid to assure the award of the contract to a specific bidder or to shut out competitive bidding or permit favoritism, in the absence of a showing that it is essential to the public interest (Gerzof v. Sweeney, 16 NY2d 206; McNutt Co. v. Eckert, 257 NY 100; Appeal of Service Dynamics, 38 Ed Dept Rep 530, Decision No. 14,087).  A brand name item may be used as a standard or example (Appeal of Pitney Bowes, Inc., supra), but the bid cannot discriminate in favor of the specific brand name if there is a product that is equal to or better than the brand name item available at a lower price.  If a competitive bid purports to establish what are essentially single source items within a generic category, there must be sound and essential reasons for such discriminatory contracting that are documented in the procurement record and based on objective criteria.

The record before me contains no apparent criteria for determining a "nutritional equal."  Respondent"s papers indicate that the number of calories and the percent of the minimum daily requirement of sodium per serving are the distinguishing factors.  However, respondent fails to explain and justify which differences in these factors would be acceptable.  In fact, according to the record, Powerade and Z"lektra are identical in those two respects.  Respondent also argues that the products taste significantly different.  However, respondent specified a "nutritional equal" and taste is not a "nutritional"
factor.  Therefore, I strongly caution respondent BOCES and its counsel to ensure compliance with General Municipal Law "103 in all future competitive bidding and contracting.