Contracts awarded to insiders, suits allege

A number of companies vying for business in one of the state's largest counties charge that publicly bid contracts appear wired to favor insiders, and several are now going to court over the matter.

While no one is alleging criminal wrongdoing, the four vendors accuse Essex County of cronyism -- steering proposals through carefully worded contract language, or using scoring systems that inexplicably award the bid to companies that have done business in the county for years.

"There is a clear pattern of preferential treatment for certain vendors," said attorney Richard Trenk of West Orange, who has filed lawsuits against the county on behalf of two companies.

County officials defended their bidding procedures.

"I have the best team in New Jersey and they are following the letter of the law when it comes to bidding," said County Executive Joseph DiVincenzo. "Everyone is treated fairly, and that's the absolute truth."

County Administrator Joyce Wilson Harley said price is not the sole factor in awarding non-competitive contracts, with vendors evaluated on a range of benchmarks. "Price can't be the only factor in certain kinds of services," she said.

Public contracts can be awarded in a number of ways. Some are strictly competitive, going to the lowest bidder. Professional services are typically contracted without bids, at the discretion of the governing body. And a so-called RFP -- request for a proposal -- may be awarded on specific criteria, where price, expertise and experience are scored as a package.

The bidders crying foul were vying for contracts -- both competitive and RFPs -- that ranged from $37 million for medical services at the county jail, to a small concession contract for a lakeside boathouse and paddle-boat rental operation at Verona Park.

If the low bids had been accepted, county taxpayers would have saved more than $4 million.

Larry Carr and F. Scott Ponicsan, who lost a bid last year to run the boathouse, said the county's decision still has them scratching their heads.

They underbid the contract by $6,000, but lost after the county selection committee gave the nod to a higher bidder for its "extensive experience in food operations."

The county eventually cited the new operator for health violations at the Verona Park concession.

 

As of last week, county health officers said the concession stand still cannot open until it is sanitized and employees take a course in food handling.

"The bidding was wrong," said Ponicsan, who suggested the winning vendor was selected because he also runs the county courthouse cafeteria.

Essex officials denied the charge, saying Carr, Ponicsan and their other partners simply came up short. According to Wilson Harley, only three vendors submitted bids. One was thrown out because of missing paperwork and Carr failed to provide sample menus and had no experience in the food business.

"We evaluated appropriately," she said. "I'm not sorry we picked this firm. I'm not sorry at all. What I am sorry about is we didn't get more choices."

Carr was puzzled by the response.

"We gave them a full menu. I once owned a restaurant in Wallington. Our chef has cooked everywhere in town. How much more experience do they want?"

ANOTHER CHALLENGE

Experience also was an issue in a far larger contract involving medical services for inmates at the county jail.

For more than 15 years, those services had been provided by Correctional Health Services, founded in 1990 by Verona Councilman Robert Detore and acquired in 2000 by Tennessee-based Prison Health Systems.

CHS again won the contract when it came up for renewal in 2006. County officials said their preference for CHS stemmed from a federal consent order to improve medical conditions at the county jail, including its large number of mentally ill and HIV-positive inmates.

However, a competitor, CFG Health Systems of Marlton, charged the review process had been deliberately rigged in favor of CHS. Attorneys for CFG said the county had rejected their bid for an offer that was $4.2 million higher.

 

In January, Superior Court Judge Hector DeSoto ordered the contract be given to CFG, saying Essex acted "arbitrarily and capriciously" in its award to CHS.

The county indicated it would challenge the ruling, but has since dropped its plans for an appeal.

"It's like an arranged marriage. We're trying to learn to love each other," said Wilson Harley.

The county, meanwhile, is still facing litigation involving two other contracts.

In one case, Suburban Disposal of Fairfield, a garbage hauling firm, charges the county favored another firm that won a contract to service East Orange, by extending it credit for dumping fees at the county's waste incinerator, a violation of the county's own rules.

According to Suburban, the county allowed East Coast Sanitation to run up a $500,000 deficit, which the firm suggested enabled its competitor to underbid the contract. East Coast is the only waste hauler in the county that was allowed to run up a deficit, according to Suburban.

County officials denied those allegations as well, pointing out that a judge last month denied a request for an injunction.

"They wanted me to stop the trucks," said Elmer Hermann, director of the Essex County Utilities Authority. "I would never consider doing anything like that. This is an unmeritorious lawsuit by a dissatisfied vendor that will soon be going away."

insiders, suits allege

In another case, JEN Electric, a Springfield company bidding on a federally funded county project to build a computer-controlled traffic signal network, has a court hearing scheduled for next month on a restraining order to halt award of the multimillion dollar contract.

Company officials contend the county contract smacks of collusion, claiming it was illegally tailored to the only New Jersey distributor of several components specified by the county. JEN officials also said they were told "not to make waves"' when they complained.

 

Essex officials deny the charges, and the county's inspector general said the allegations were unfounded. Attorney Mark Fleder of Roseland, who is representing the county in the case, said there was nothing unusual in the specifications.

"The plans and specifications for this contract were prepared by the county's engineering consultant, one of the largest such firms in the United States," he said. "The county has been assured that the plans and specifications are proper and lawful."

He added that it was not unusual to specify "a brand component or approved equivalent" in complex engineering projects. "It's not like buying caulking compound," Fleder said.

Officials at the State Commission of Investigation said there often can be valid reasons for a low bidder in a public contract to be rejected in favor of a vendor better qualified to do the job. However, they said the vulnerability for abuse is "ever present," despite requirements for open and competitive public bidding in New Jersey.

Without commenting specifically on the Essex contracts, SCI spokesman Lee Seglem said state investigators have no shortage of stories about contract procurements being manipulated, in a variety of ways -- from the local level to the Statehouse.

"It all comes down to manipulating a process that is supposed to be open and competitive," he said.

Ted Sherman may be reached attsherman@starledger.com or (973) 392-4278.