What's your view? Click here to add your comment to this story.

COLUMBIA -- For two days last year, officials with an Atlanta-based company thought their offer to pay the state Department of Transportation $3 million annually had won a contract to oversee the state's highway sign logos.

But days after being told they had the top-ranked offer, it was rejected.

Months later, documents show, state officials awarded the contract to a firm that was doing the work and which offered more than $1 million less over the life of the deal.

Officials with the Atlanta firm, Corey Media, say they were stunned and believe taxpayers also lost when the contract was given to South Carolina Logos.

Advertisement

"South Carolina's DOT apparently is not as concerned with the financial revenues that benefit the taxpayers as they are with keeping the incumbent (firm) in place," said Ken Rickert, general counsel for Corey.

Lee Stewart, general manager for South Carolina Logos, said the state considered factors other than money in its decision.

"The state chose us for a reason," she said. "We have the experience. There was weight put on financial, but there was weight put on other stuff, and we happen to do well on the other stuff."

Corey's appeal to state procurement officials failed, but it was pointed out that DOT's bids should have been clearer. During its protest, the firm said an executive with the winning firm's parent company is a DOT commissioner, John Hardee. Corey did not allege any impropriety.

Hardee said he had nothing to do with S.C. Logos, the bid proposal or any DOT decision on the matter.

"I can't even tell you what the panels rent for," Hardee said. "If somebody asks me a question about it, I refer them to the appropriate party at DOT."

Stewart said her firm "absolutely" won the contract fairly. Her firm had previously won the contract and administered the South Carolina program for 10 years.

Thousands of logos dot the 1,200 rectangular blue signs along state interstates, highways and exit ramps. The signs tell drivers of gas stations, restaurants, lodging and attractions near exits.

DOT oversees the signs, but since 1996, it has contracted out administration of the program to a private firm. The firm that administers the signs is paid through the fees collected from businesses. DOT sets the fees and is guaranteed a minimum annual payment by the firm administering the program.

Since 1995, according to state records, sign sales have totaled more than $18 million, $7 million of which has been paid to DOT.

Last year, when the contract was up for renewal, the agency asked another agency, Materials Management -- part of the state Budget and Control Board -- to help it with bids. DOT officials crafted a request for proposals, and Materials Management, using a team of DOT employees, evaluated the bids using a scoring system created by DOT. The firm scoring the most points would get the contract.

DOT executive director Elizabeth Mabry told the state's chief procurement officer, who heard Corey's first protest, that Corey's complaints were unsupported, according to a copy of her letter. She also asked the panel to allow the contract to go forward, arguing DOT needed the money because of sinking gas-tax revenues.

She recently told The Greenville News she didn't know any details of the contract or the process for selecting S.C. Logos.

"I don't get involved with contracts," she said. "I know it went to (Material Management). I know there was a final contractor selected. I don't even know who that was."

Andy Leaphart, DOT's traffic programs engineer, said money has never been the most important factor in deciding what firm would win the contract. DOT's bid scoring originally gave a maximum of 40 points for the firm offering the most money, he said. When the contract was re-bid, the scoring for highest payment dropped to 30 points.

"This is a motorist service program," Leaphart said. "We didn't want to base it just on money because someone could come in here, give a substantially higher bid and secure the contract without having any experience or knowledge of the program requirements."

Michael Sponhour, a spokesman for the Budget and Control Board, said it is not unusual for agencies to select firms for a service based on factors other than money.

"When you are buying a service, part of what you are trying to get is someone who will do the service well to the specifications that you have laid out," he said. "It would be like buying a car. Price is a factor, but what that car will do and whether that car will meet your needs are factors as well. The procurement law allows all different kinds of methods that take into account different factors."

Tee Hooper, chairman of the DOT Commission, said he knew nothing about the contract other than some discussion about bids being issued. He said he knew nothing about Corey's protest.

Rickert said his firm was not alleging Hardee has done anything improper. He said the firm believes DOT was influenced by its ongoing relationship with S.C. Logos and its parent company, for whom Hardee works.

S.C. Logos' contract expired in the summer of 2005. State officials sent out a request for proposals, asking, among other things, a proposed guaranteed annual payment to DOT. The payment would be the greater of the guarantee or a percentage of the gross program revenue.

Each bid was scored on a 100-point scale. In addition to proposed payment, firms were scored on their resources, financial strength, marketing strategy and program schedule, records show.

Corey's bid was rejected, records show, because of a requirement that firms propose refurbishing all the state's signs within two years, half within the first year. Corey proposed refurbishing all the signs over the life of the contract because it could not determine how many needed fixing before the deadline, Rickert said.

S.C. Logos proposed fixing all signs needing repair within two years, half within the first year.

A second bid went out in December of 2005. Corey offered to pay the most money, $3.025 million to S.C. Logos' $2.7 million, records show.

When four bids were evaluated, SC Logos won by a score of 573 to 554 for Corey. After getting the top score, S.C. Logos increased its offer to $2.85 million, records show.

Corey appealed, first to the state's chief procurement officer and then to the Procurement Review Panel, whose members are appointed by the governor.

One of Corey's complaints, records in the protest file show, was that the state changed the scoring system after the initial bid. The official hearing the first appeal ruled the complaint was "untimely" because objections to the bidding process should be filed within 15 days of the request for proposals being issued.

Leaphart said the scoring was changed because officials decided DOT, not the firms, should set the sign rates.

"Because what we were asking for changed, we felt it was necessary to change the scoring weights," he said. He said DOT changed all of the scoring.

The seven-member Procurement Review Panel did not find enough of a problem to overturn the bid but noted DOT should have been more clear in its request for proposals.

"We take this opportunity to exhort the DOT to provide more clarity in the future RFPs," wrote J. Phillip Hodges Jr., the panel's chairman. "In this instance, it could have better described what it meant by gross revenue, especially when it could mean additional revenue coming to the DOT and the citizens of South Carolina."

Corey brought up the subject of Hardee's position in its first appeal by introducing as an exhibit a Senate resolution honoring Hardee for his service as a DOT commissioner. The resolution mentions Hardee is director of governmental affairs for Lamar Advertising, the parent company of S.C. Logos.

Sponhour said the state's chief procurement officer recalls that "an attorney for Corey Media verbally mentioned something about Mr. Hardee during the hearing but backed off when asked if he was suggesting some improper activity had taken place."