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Bid It Up

Public Records Reveal Even More Questions About the State’s Contract to Purchase Gasoline From a Mount Airy Company

Christopher Myers
IN THE TANK: The only company qualified to bid in 2002 on the state's contract to supply and run its filling stations--like this one at the state office building in Baltimore--was the one that already had it.

By Edward Ericson Jr. | Posted 9/14/2005

Documents released last week under the Maryland Open Records Act raised new questions about the state’s gas contract with Mount Airy-based Commercial Fuel Systems and what steps state purchasing agents took to interest or accommodate other potential businesses to bid on it.

City Paper recently questioned the state’s contract with Commercial Fuel, revealing that the contract was written with the help of Commercial Fuel’s founder in 1989, awarded to Commercial Fuel over a lower bid, and that Commercial Fuel was the only bidder when the contract was up for re-bid in 2002 (“Pumpin’ Ain’t Easy,” Feature, Aug. 31). According to the contract, Commercial Fuel receives just over 12.6 cents per gallon from the state, plus its cost for fuel and transportation, to keep the state’s 92 fuel depots stocked and to keep track of approximately 11,000 state vehicles’ fuel and oil use. The contract is worth about $1.76 million per year to Commercial Fuel, according to state documents.

The Maryland Department of General Services, which oversees the contract, released several hundred pages of bid specifications, contract amendments, internal memos, and e-mails in response to City Paper’s request. The file did not include some key documents, such as the résumés of key Commercial Fuel employees, which were required by the 2002 bid specifications, and requests by Commercial Fuel for increased payments because of inflation. Department of General Services spokesman Dave Humphrey says the file is complete.

The available documents shed new light on the contract’s history, including the state’s refusal to adjust the bid specifications to allow an established fuel-management company, Mansfield Oil Co. of Gainesville, Ga., to participate in the bidding process. On March 29, 2002, Josh Epperson, representing Mansfield, e-mailed the state and requested changes to some of its more restrictive requirements, but he was rebuffed.

“It is not our intention to change the scope of the bid,” Epperson wrote, “but to clearly address what is unclear or restrictive and seek a remedy such that the state of Maryland still meets its desired results.”

Mansfield’s request, addressed to Nancy Fabula, the procurement officer at General Services overseeing the fuel bid, contained eight questions and 16 requests that the bid specifications be changed, either to reflect industry standards or because the state’s specifications were “unique to the incumbent”—that is, only Commercial Fuel could fulfill them.

“The changes as noted below have been requested to level the playing field,” Epperson wrote. “Although the state may have good reason to place restrictions on the bid, in many cases, they are unnecessary to meet the state’s goals or exceed them. They may, in fact, be a hindrance.”

The state made eight of the 16 changes Epperson requested, including dropping the requirement that the contractor have an electrical engineer on staff. The other changes were minor, however. The state dropped a requirement that any fuel spills be cleaned up within two hours, for example, since that might be impossible; and the state dropped a requirement that the contractor “top off” underground fuel tanks for testing purposes because Epperson pointed out that federal regulation forbids that.

On most substantive issues, the state did not budge. Epperson asked that Maryland allow his company to subcontract with technicians certified to work on equipment that would be serviced under the contract, as is the practice across the industry. Fabula’s response: “Due to the operational requirements of our user agencies who provide critical/essential services we will not change the bid specifications. Subcontracting of these tasks will not be permitted.”

Epperson also requested that that state drop the requirement that the contractor perform a preventative maintenance check on equipment each month, noting that manufacturers typically require only a six-month or annual check. Fabula refused. He also asked for the repair records of the state’s fuel-management equipment, reasoning that, to bid intelligently, his company had to know what it was taking responsibility for. Fabula’s response: “We do not have a history of repairs and maintenance because we are not invoiced separately for maintenance and repairs.” That’s all covered in the per-gallon fee with Commercial Fuel.

Fabula also would not change to an “industry standard” response time for nonemergency repairs, or allow the contractor to locate equipment more than 60 miles from Baltimore, as had been done until 1997 under the contract. “This is restrictive and unique to the incumbent contractor,” Epperson wrote to her, explaining that the state’s system was built on old technology and machinery that would more than likely need to be replaced soon. “The likelihood that the state can find two or more competitors capable of meeting the requirements of this bid within 60 miles of Baltimore is unlikely. . . .”

Fabula wouldn’t yield. “We will not waive this requirement,” she wrote. “This requirement is not unique to the incumbent contractor.”

But it is. One of the state’s requirements was that bidding contractors have five years’ experience with Fuel-Net software, a program written specifically for Maryland and not used by anyone else. Since Commercial Fuel has held the Maryland contract for more than five years, it’s the only company that could possibly meet that requirement. When Epperson asked that Fabula waive that one as well, based on the fact that his company purports to deliver more than 1 billion gallons of fuel annually to customers across the United States, she responded by telling him that “the specification accurately identifies the State’s minimum needs and will not be changed.”

Epperson and Mansfield did not reply to Fabula or not attend the bidders conference. Reached at his Georgia office, Epperson said coming to Maryland after the state’s response would have been pointless. He had no further comment.

Fabula wrote the remarks included with the information provided in the state Board of Public Works’ agenda for May 22, 2002. The remarks explained that 39 vendors had received notification of the bid opportunity by e-mail, including one certified minority-business enterprise. But only Commercial Fuel bid. “Of the venders who were sent the solicitation and did not bid, many cited that the magnitude and complexity of the services exceeded their ability,” she noted.

Yet the documents released by the Department of General Services do not reflect that. No correspondence from any potential bidder other than Mansfield was included, and the Mansfield complaints concerned fairness, not complexity.

Bill Flannery says he still has those 2002 bid specifications on his desk, so he won’t miss the chance to bid when the contract comes up again, two to seven years from now. Flannery, who owns L.A. Fritter and Sons, a Hyattsville-based fuel-management company, says the state’s system is unlike others in that it combines the delivery of fuel with maintenance of the equipment and record keeping. Echoing Epperson, he says the state’s aging equipment—much of it not replaced since its installation 15 years ago—could be tricky and expensive to maintain.

“It was pretty convoluted,” Flannery says of the 2002 bid specification. “It’s got to make sense for the state—but there was so much weird stuff in there that nobody else can really bid it.”

If the bid solicitation was weird, the records surrounding it were as well.

Some of the documents released go into extreme detail, itemizing every piece of office furniture and equipment Commercial Fuel bought in 1989 after receiving the contract. Yet major amendments to the contract—the first was in February 1990, just two months after the Board of Public Works approved it—included little or no supporting documentation. Particularly bare was an amendment made in 1997, which increased Commercial Fuel’s “administrative fee” from 9 cents per gallon to more than 12 cents, separating out the “freight fee” out so that Commercial Fuel actually received about 15 cents per gallon, including freight.

The 6-cent-per-gallon increase paid to Commercial Fuel was sold to the Board of Public Works as a small decrease in cost, apparently because the board did not realize that most of the 6 cents had previously been earmarked to pay for new equipment. The new equipment was paid for in full, but the payments to Commercial Fuel continued—now justified by the “increasing volume” of fuel sold to the state, according to remarks included in the 1997 Board of Public Works meeting in which the contract extension was approved. Yet, until that time, Commercial Fuel’s contract had stipulated a reduction of its administrative fee by about .08 cents on every gallon over 5.5 million.

Why would a higher fuel volume reduce costs before 1997 and increase them afterward? There is no explanation in the documents provided. The Department of General Services’ Humphrey declined to answer new questions about the contract last week, saying that responses will come “within the time required by” the Freedom of Information Act.

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