Street furniture franchise challenge rebuffed

Losing bidders challenged DOT’s selection of Spanish-based outdoor advertising franchisee. In May 2006, the City approved a 20-year franchise to Cemusa, Inc. to construct and maintain citywide street furniture, including bus shelters, news racks and pay toilets, on which Cemusa would be permitted to sell advertising space. Approval by the City’s Franchise and Concession Review Committee came after a DOT-initiated request for proposals, a DOT-review and award process, and a public hearing. 3 CityLand 129 (Sept. 15, 2006).

Losing bidders NBC Decaux and Clear Channel challenged the City’s approval, claiming that DOT improperly communicated with Cemusa two months before its decision, leading to Cemusa’s bid edging out the competition, and Deputy Mayor Daniel Doctoroff colluded with City officials to offer franchise criteria that favored Cemusa due to its ability to provide worldwide ad space for the 2012 Olympic bid. The parties also alleged that DOT improperly computed Cemusa’s plan for scrolling ad space by counting it as guaranteed revenue even though it was unclear whether the City would allow scrolling ads. Finally, NBC and Clear Channel argued that Cemusa was not the most experienced bidder and that Cemusa’s bid did not represent measurable cash values required by the RFP, since it offered worldwide ad space in lieu of cash.

The City argued that it evaluated all bids according to the same standard and no improper communication took place. DOT claimed that a follow-up email to Cemusa became necessary when it realized that Cemusa, unlike the other bidders, failed to receive a letter that explained the treatment for scrolling ads.

Justice William A. Wetzel denied Decaux and Clear Channel’s claims, finding that the City treated all bidders fairly and evaluated the scroller ads under the same standard. As an RFP process subject to review of numerous officials, the court said the burden to show error was higher. The court found the Doctoroff conspiracy theory to be baseless and the DOT e-mail to be a permitted communication under the RFP. The City held no obligation to choose the largest company or the most experienced local bidder. Finally, the court ruled that DOT properly evaluated Cemusa’s noncash offering because it followed the RFP and applied only 20 percent of all bidders’ non-cash offerings to the final scores.

NBC Decaux v. NYC, Index No. 109233/06; Clear Channel Adshel v. NYC, Index No. 108831/06 (N.Y.Cty.Sup.Ct. Dec 19, 2006) (Wetzel, J.) (Attorneys: Ed Wallace, for NBC Decaux; Randy Mastro, for Clear Channel; Anthony P. Coles, for Cemusa; Michael A. Cardozo, Eric A Runderbaken, Jonathan S. Becker, for NYC).

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