County rejects fuel contract bids, rewrites rules

County rejects fuel contract bids, rewrites rules

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On July 23, Dukes County manager Russell Smith opened the only two bids submitted in response to a request for proposals to supply fuel oil for Island public buildings.

Although both bids met the county’s requirements and one offered a price four cents per gallon lower than the other, a county committee rejected both offers.

Island Fuel, owned by Tisbury businessmen Jay McMann and Dana Thornton was the low bidder. R.M. Packer Company, owned by Ralph Packer of Tisbury, the sole and winning bidder in 2008 and 2009, submitted the higher bid.

In a new request for proposals issued the following week, the county changed the specifications. The new proposal requires the storage of fuel reserves on-Island, a condition that currently leaves only R.M. Packer qualified for the fuel contract to supply most Island schools, town buildings, and elderly housing.

Island municipal and public buildings use approximately 250,000 gallons of fuel oil annually, according to Mr. Smith. Based on that figure, towns would collectively pay approximately $10,000 less annually at the price bid by Island Fuel.

In a letter to Island Fuel, Mr. Smith said both proposals met the requirements of the bid.

“Because there were two bids received, I enlisted the assistance of two representative (sic) of the listed political subdivisions, users,” wrote Mr. Smith in a letter to Mr. McMann. “The committee, Amy Tierney, Michael Dutton, and I reviewed the bids and found both to meet the pre-qualification requirements. There was consensus to reject both bids and develop a new bid package which would more completely address the needs of the users.”

Ms. Tierney is the business administrator for Martha’s Vineyard Public Schools. Mr. Dutton is the Oak Bluffs town administrator.

Bidders were asked to submit bids based on a recognized indicator known as the “Boston low rack price” according to Mr. Smith. That price fluctuates throughout the year based on the wholesale supply and demand of fuel. Island Fuel submitted a bid of $0.64 over the rack price. Packer Company submitted a bid $0.68 over the rack price.

Fuel storage

Mr. Smith said the specifications were changed from the original request for bids, to insure that the Island’s public buildings have an uninterrupted supply of heating fuel, should severe weather prevent the Steamship Authority ferries from transporting fuel trucks to the Island for an extended period. The new request for bids states that bidders must have “a minimum of 10,000 gallons of storage located on the Island, trucks not included.”

Packer Company has a fuel storage facility in Vineyard Haven, and would qualify for the contract under the changed specifications. Island Fuel buys fuel from a Falmouth dealer, and transports it to the Island with three company trucks, but does not have a storage facility that fits the new specifications.

“Within the bid specifications we are allowed to rewrite the rules if we feel it is in the benefit of the community,” Mr. Smith said in a telephone conversation with The Times on Tuesday. “We generally welcome competition, it’s in the public interest.

“We weren’t comfortable putting all the schools, all the town halls, the water departments, elderly housing, committing them to a system where they rely on daily truck transport across on the boat. We just have to make sure we protect everybody’s interest. We have to make sure the availability is there.”

Competitive clout

Island Fuel is in its third year of operation on Martha’s Vineyard, based on Evelyn Way in Tisbury. Before he moved to the Island 12 years ago, Mr. McMann said he owned a fuel company that had experience in public bidding. He said he won public bids to supply fuel to the Boston Water and Sewer Commission, as well as the towns of Arlington, Belmont, Brookline, Cambridge, Newton, Waltham, and Lexington.

“I’ve never seen anything like this,” Mr. McMann said. “We got no input in this, we just basically were cut out of the next bid.”

Mr. McMann said he felt the new specifications were written to favor Packer Company, an opinion that he said was reinforced when he went to the county administration building to get the new bid specifications.

“Russell [Smith, county manager] talked to me,” Mr. McMann said. “He said ‘look, you’re not going anywhere, maybe next year.’ Who is to say next year, if we’ve got 10,000 [storage] they might say you need 20,000?”

On March 18, the Martha’s Vineyard Commission approved Island Fuel’s application to build a 10,000-gallon above-ground fuel storage facility, but construction will not be complete for at least three months.

Mr. McMann said he can store 5,000 gallons of fuel in a truck that is not used for residential deliveries in the winter, but the new requirements specifically rule out storage in trucks. “What’s the difference?” Mr. McMann said. “That really bothered me; when they said not in trucks, that seemed to be aimed directly at us.

“I don’t think it was really logistics,” Mr. McMann said. “We have a good reputation. We have a lot of big accounts. Even if we were to rebid it, Ralph (Packer) knows our bid, that’s not very fair. I think the whole process was flawed.”

Mr. McMann said he is considering whether to approach each of the municipal customers and offer them his bid price individually.

Weather factor

Mr. McMann said he is 100 percent sure he can deliver fuel to the public buildings without interruption . “With good weather forecasting and proper business practices, you don’t let your customers get that low that they run out in a couple of days. If you see a storm coming, you top everybody off. There’s nobody that needs a delivery every couple of days, there’s no one in there that’s that critical.”

Bob Davis, Steamship Authority treasurer, said he could not recall a time when ferry service to Martha’s Vineyard was shut down for more than a day, for weather or any other reason. “We were running the morning of Hurricane Bob (1991), and we were up and running again the next day,” Mr. Davis said. “Hurricane Gloria (1985), the same thing. The large boats may be able to run, but a freight boat might not, but even that wouldn’t be more than day.”

Bungled bid

The on-Island fuel storage provision has not been required in previous fuel contracts negotiated by Dukes County. Irregularities in bids for the same fuel contract have been the subject of controversy in the past. In 2005, the county solicited bids from three Falmouth-based companies with no storage or other facilities on the Island. Those companies would have been entirely dependent on Steamship Authority ferries to transport their trucks.

E. Winn Davis, Dukes County manager at the time, failed to follow proper legal procedures in requesting bids for that fuel contract by personally requesting the bids. According to the state office of the Inspector General, all requests for bids must appear as a legal advertisement. Packer Company was the only bidder for the contract that year.