Procurement voids NMHC-Xerox supply deal

The Division of Procurement and Supply has instructed the Northern Marianas Housing Corporation to reissue a bid solicitation for a photocopier, following the public auditor’s recommendation that NMHC terminate its lease agreement with Xerox Corporation.

The Office of the Public Auditor, in deciding on the appeal of Xerox’s competitor in the previous bid, had said that NMHC’s contract with Xerox did not comply with CNMI procurement regulations.

Procurement and Supply director Herman S. Sablan agreed with OPA’s decision.

“Based upon the facts presented in this appeal, and as requested by OPA, I determine that there is no valid contract, lease or otherwise, between NMHC and Xerox for the photocopier in question. Accordingly, NMHC is directed to request Procurement & Supply to bid out it copier requirements in compliance with the CNMI-PR,” Sablan said in a letter to the housing agency.

He added that NMHC may continue to use the copier obtained from Xerox until it is replaced, or legitimated, through a proper competitive procurement.

On May 26, 2005, NMHC sent a one-page facsimile to Xerox, Island Business Systems & Supplies, and National Office Supply requesting quotations on a copier machine. Each company responded.

On July 13, 2005, NMHC entered into a lease agreement with Xerox for a 60-month lease of a Xerox photocopier. The five-year contract cost a total of $25,230 in base charges, or $420.50 per month.

IBSS filed a protest 10 days after the contract was signed. The protest, among other things, alleged that the lease or purchase of machinery and equipment in excess of $2,500, as in this procurement, should be procured through competitive sealed bidding as prescribed in the CNMI procurement regulations.

OPA agreed with IBSS that the photocopier should have been procured pursuant to a competitive sealed bidding because the transaction was in excess of $2,500. A letter bidding should also not be used as an alternative solicitation practice, according to the public auditor.

Furthermore, OPA noted that the lease of the photocopier was not approved as an expedited purchasing in special circumstances, or through another exception to full and open competition set forth in the CNMI procurement regulations.

“OPA finds that the solicitation and the resulting lease agreement for a photocopier from Xerox were not in conformity with the CNMI-PR and, therefore, grants the appeal as set forth therein,” OPA had said.

“The Office of the Public Auditor, therefore, grants the appeal and remands the issue to the [Procurement] Director for appropriate action, including termination or other appropriate disposal of the lease agreement, and re-solicitation for the photocopier in compliance with the CNMI-PR,” OPA had added.