Hempstead Tire, Inc



06-29-04: Hempstead Tire, Inc.

CITY OF NEW YORK

OFFICE OF THE MAYOR

OFFICE OF CONTRACT SERVICES

______________________________________________________________________

DECISION OF THE CITY CHIEF PROCUREMENT OFFICER

______________________________________________________________________

Application for Declaration of Rehabilitation

from

Hempstead Tire Inc.

By letter dated June , 2004, Hempstead Tire Service Inc. (“Hempstead”) applied to the City Chief Procurement Officer (“CCPO”) for a Declaration of Rehabilitation pursuant to §2-08(p) of the Procurement Policy Board rules.

Hempstead Tire, Inc. (“Hempstead”) was incorporated in New York State on April 8, 1960. Hempstead specializes in tire and other light maintenance duty services for heavy vehicles and trucks. It is owned and operated by Michael Chazen. From 1992 to 1999, Hempstead had several contracts with various City agencies, including a $2 million contract with the Department of Citywide Administrative Services (“DCAS”) in 1996 to provide tire services. Hempstead has also had several public contracts in Nassau and Suffolk counties and with the Metropolitan Transit Authority (“MTA”).

MTA Agreement and Non-Responsibility Determinations

In 1996, the MTA conducted a responsibility hearing regarding Hempstead’s performance on three NYC Transit contracts. One contract was for wheel alignment and suspension repairs, the other two were for heavy duty truck exhaust repairs. The responsibility hearing was held because according to the MTA, Hempstead provided substitute and aftermarket parts and not Original Equipment Manufacturer (“OEM”) parts without MTA permission and did not provide a discount. As a result, the MTA argued that because of this substitution, Hempstead submitted overstated and inflated invoices, and that proper management on Hempstead’s part could have prevented this. Hempstead submitted a remedial plan stating that:

1. Michael Chazen or a manager would personally inspect subcontracted work.

2. Hempstead would adhere to percentage discounts and seek clarification on discounts if they offered parts that are not OEM or are aftermarket.

3. Hempstead would comply with any requirements to use MTA or Transit certified disadvantaged business firms in order to comply with the federal requirements.

4. Hempstead would personally supervise and inspect all vehicles before they are returned to Transit.

The MTA did not find these corrective actions to be sufficient and wanted an Independent Private Sector Inspector General of their choice to monitor Hempstead’s work on MTA contracts.

As a result of the responsibility hearing, by letter dated October 7, 1997, the MTA provided Hempstead ten days within which to establish why it should not be debarred for a two-year period. On June 26, 1998, Hempstead and the MTA decided to settle the debarment matter by a confidential Settlement Agreement (“Agreement”) in which Hempstead and its principals agreed not to bid or do business with the MTA for a three-year period. The MTA agreed to terminate and discontinue any debarment or other disciplinary proceedings against Hempstead.

Despite the MTA’s initial promise to treat the Agreement as non-public, it was published in the MTA’s VITAL report and made public. By letter dated January 11, 1999, DCAS determined that Hempstead was a non-responsible bidder based on the Agreement. Hempstead appealed this determination through the administrative process and eventually appealed to this Office on May 7, 1999.

By letter dated December 19, 2002, the Department of Sanitation (“DOS”) determined that Hempstead was a non-responsible bidder because it failed to mention the DCAS non-responsibility determination and the Agreement in its VENDEX submission. Sanitation determined that these omissions reflected negatively on Hempstead’s business integrity. Again, Hempstead appealed this determination through the administrative process and eventually appealed to this office on April 10, 2003.[1]

Hempstead’s Actions since the Agreement and the Non-Responsibility Determinations

It is clear that it was the intent of both the MTA and Hempstead in settling the debarment issue with the Agreement that the underlying information regarding the improper invoicing was not to be used by other agencies in making future responsibility determinations. The MTA never debarred Hempstead, did not find Hempstead non-responsible and did not report the existence of the Agreement for entry into the VENDEX system. In fact, the reason that the MTA agreed to try to prevent the existence of the Agreement from becoming public was to avoid the exact consequences that occurred here: Hempstead being found non-responsible by another agency.

Hempstead’s Agreement to refrain from doing business with the MTA ended in June of 2001. During that time, Hempstead complied with the terms of the Agreement. According to the New York City Financial Management System (“FMS”), The Departments of Corrections, Transportation, Sanitation and the Fire Department issued purchase orders in varying costs from $1,250.00 to $14,856.80, to Hempstead for tire services subsequent to Hempstead’s agreement not to bid on MTA contracts. There is no record of any negative performance or any complaints about Hempstead’s performance on these purchases.

In October 2002, Hempstead was awarded a contract by the MTA to replace or repair production equipment tires and to provide emergency road services for a period of two years at an estimated amount of $83,866.70. In March 2004, DCAS awarded a requirements contract valued at $4,174,200.00 to Hempstead for the provision of truck tires and tubes along with tire removal services. This contract has been registered with the Comptroller. Furthermore, DOS, the same agency that previously found Hempstead non-responsible in 2002, filed two purchase orders valued at $500,000, using the DCAS requirements contract.

Hempstead has submitted new VENDEX forms that have been thoroughly reviewed by MOCS. Hempstead fully understands that it has an obligation to disclose any non-responsibility determinations on its VENDEX forms, whether Hempstead believes them to be erroneous or not. However, Hempstead is not required to disclose the MTA Agreement itself because Hempstead voluntarily agreed to refrain from bidding on MTA contracts and was not debarred or suspended by the MTA. Hempstead has fully disclosed both the DCAS and DOS non-responsibility determinations in their current VENDEX submission.

Declaration

I have determined that Hempstead has adequately addressed the issues that gave rise to the non-responsibility findings by DCAS and DOS based on the following reasons:

1. Hempstead has corrected the issues with its VENDEX submission and understands its obligation to disclose all the information required to be disclosed in the VENDEX questionnaires.

2. The MTA Agreement has lapsed and the MTA has recently awarded Hempstead a tire services contract.

3. DCAS awarded Hempstead a tire services requirements contract in March of 2004.

4. DOS has purchased tires off of the DCAS contract.

5. Hempstead has no negative performance evaluations for the contracts it has been awarded since its Agreement with the MTA.

Therefore, I find that Hempstead Tire, Inc. is rehabilitated pursuant to PPB Rule § 2-08(p). Pursuant to the New York City Administrative Code, this Declaration of Rehabilitation will be reflected in the VENDEX database.

Decision by:

________________________________ Dated:_______________

Marla G. Simpson

Director, Mayor’s Office of Contract Services

City Chief Procurement Officer

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[1] Hempstead, as part of its application for rehabilitation, has withdrawn both of its appeals from this Office by letter dated June 11, 2004. There are no pending administrative or judicial actions between Hempstead and the City.

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