LANSING — Two Michigan-based companies say the state is unfairly shutting them out of a shot at a multimillion-dollar office-supply contract.
True North Global Office Solutions of Port Huron and Office Express of Troy met all requirements when the state first called for proposals late in 2010. The first bids were thrown out amid controversy. Now, the state requires bidders to have a network of stores in Michigan.
Only the nation's big three — OfficeMax, Office Depot and Staples — remain in contention.
Nearly all of the state's office supplies are delivered. OfficeMax has held the contract since 1996, but last year, less than 1 percent of the $13.2 million total was spent at OfficeMax stores.
In light of that, "we do not understand this requirement," said Anna Sinagra, sales manager for Office Express. "With the current governor really pushing to awaken our economy, it's shocking."
Kurt Weiss, a spokesman for the Department of Technology, Management and Budget, denied that officials tailored the contract for OfficeMax or for another chain. He said the state is "open to smaller entities aligning to provide the needed service," but 'there are times when immediate retail purchases are necessary."
When the state first called for bids to supply it with paper, printer toner and other office products in 2010, Tony Des Chenes was the official in charge. In January, he accepted a job from Michigan Legislative Consultants, a Lansing lobbying and political consulting firm, and on Feb. 11, while the department negotiated with bidders, he left his job.
Des Chenes registered as a lobbyist on Feb. 22. On March 8, OfficeMax filed papers showing it had hired MLC and retained Des Chenes. On March 24, officials recommended OfficeMax for the contract.
Amid protests, the contract "was canceled due to perceptions that may have arisen from the timing of Mr. Des Chenes' departure," Weiss said.
Recently, another state employee moved to a company he was making decisions about in his state job. In the earlier instance, a Department of Corrections manager who helped award and oversee a $12.9 million energy-conservation contract retired and took a job with the firm that got the contract.
Des Chenes said in an e-mail that while in charge of state purchasing, he was "fully committed to the ongoing integrity of the contracting process."
He said he offered to resign in January, when he received the offer from MLC, and "maintained complete transparency."
Michael Steele, an OfficeMax spokesman, said retaining a former purchasing official as a consultant is "common practice" and "complied with all relevant regulations."
OfficeMax hired MLC and Des Chenes for the first bid but not for the second, which the state withdrew soon after it was issued, or for the third, Steele said. He said the state chose OfficeMax without lobbying help.
"That is not true," Weiss said this week. "No award has been made."
Lansing attorney John Pirich, representing True North, said Des Chenes' move to the lobbying ranks was "a serious and material breach of contracting protocol."
In the first bidding, the state accepted substitutes for some items, but not for printer toner, citing warranty fears. Yet federal law prohibits printer manufacturers from voiding the warranties of owners who don't use the manufacturer's toner. Told of that, state officials said they are accepting substitute toner in the new bids.
But it's too late for True North, which gets a 10 percent price break because it is partly owned by a disabled veteran. The company said its bid was lower with cheaper toner.
"The process is clearly broken and the people who are losing out are ... the taxpayers of Michigan," said Reuben Levy, vice president of True North.
Chris Bates, president of the National Office Products Alliance in Alexandria, Va., said the requirements were "seriously flawed" and "contrary to the state's economic strategy."
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