Losing vendors for DMV award seek contractual enforcement


Bidding on a project can be very competitive, as many New Jersey vendors can attest. Because most companies are looking to save as much money as possible, they are often looking for vendors that can provide the necessary services at the lowest possible cost. That was what two vendors for the New York Department of Motor Vehicles aimed to do. Instead, the DMV chose the highest bidder, resulting in a nearly $38 million increase over the current contract that is likely to have taxpayers fuming. Two of the losing vendors are now seeking contractual enforcement from the courts because they believe that the company that won the contract did so illegally.

The New York DMV was looking for a vendor to produce driver's licenses at a reduced cost in accordance with the Department of Homeland Security's "Real ID" measure. The current vendor of 16 years, De La Rue North America, Inc., and another vendor, MorphoTrustUSA, kept this in mind and bid the project appropriately. De La Rue even reduced its current amount by 10 percent in an attempt to secure the contract.

However, New York has tentatively awarded the contract to CBN Secure Technology Inc., a Canadian-based company, for a whopping $88.5 million - approximately $38 million more than the current contract. In addition, CBN created a black-and-white card that is less secure than the current color versions. The other vendors were not aware that the state wanted black-and-white cards, which they thought was unfair.

Since the two losing vendors are disputing a contract that neither of them one was awarded, it may be difficult for a court to rule in their favor. Not everyone who bids low wins the award, but if it can be proven that the bidders were not all given the same requirements, then there may be a solid case.

Because the case has resulted in a lawsuit, the DMV may need to provide a contractual defense as to why it would tell a vendor to reduce its prices and then end up choosing one that was not just slightly more expensive, but almost $38 million more expensive. This decision does not affect just the department and the vendors, but the taxpayers who will be forced to foot the bill, as well.

Source: Greenwich Time, "NY DMV taps high bidder for licenses," Michael Gormley, Nov. 13, 201