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FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022
NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022
STATE OF NEW YORK
SUPREME COURT COUNTY OF NEW YORK
DIGITAL GADGETS, LLC,
Petitioner,
AFFIDAVIT
For a Judgment Pursuant to CPLR Article 78
-against-
Index No.: ___________
THE NEW YORK CITY HEALTH AND HOSPITALS
CORPORATION; BARUPON, LLC; ABC LLC, a
fictitious name used for limited liability company with a
potential interest in the outcome of this proceeding, the
identity of which is presently unknown; and XYZ
CORPORATION, a fictitious name used for a business
corporation with a potential interest in the outcome of this
proceeding, the identity of which is presently unknown,
Respondents.
STATE OF NEW YORK )
)s.s.:
COUNTY OF KINGS )
CHARLES TEBELE, being duly sworn, deposes and says under penalty of perjury the
following:
1. I am the President and CEO of Petitioner Digital Gadgets LLC (“Digital”). I
respectfully submit this Affidavit in support of Digital’s Article 78 Petition, and its motion for a
temporary restraining order and preliminary injunction.
2. I have read Digital’s Article 78 Petition in its entirety. I attest that the matters
alleged therein are true to the best of my knowledge except for matters alleged “upon information
and belief,” and as to those matters I believe them to be true based upon the facts of which I am
aware.
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3. Digital is a supplier of numerous commercial products including, among other
things, CoVID-19 tests. Digital was an early responder to the demands of CoVID, having
established its supply chain for CoVID supplies since April 2020. Digital has been a regular
supplier of CoVID supplies to, among other customers, various state and local authorities,
including numerous contracts won through competitive bidding. 1 I am very familiar with the
logistics involved with pricing, selling, shipping and distributing CoVID tests, which I discuss
below in support of certain points set forth in the Petition. 2
4. The FDA has approved a number of CoVID tests, which are compiled on the FDA’s
website. A true and accurate copy of the relevant FDA page is annexed to the Petition as Exhibit
6, pg. 6.007 – 6.015. The FDA has approved these tests through what it calls its Emergency Use
Authorization (“EUA”) procedures.
5. The FDA’s EUA procedures require that distribution of the approved CoVID tests
be conducted by so-called “authorized distributors.” “Authorized distributors” are sellers
designated by test manufacturers in their FDA applications. (For example, see Petition Exhibit 1,
pg. 1.072, footnote 10.)
6. Authorized distributors are usually exclusive by region or by nation. In New York
State, Digital is the exclusive authorized distributor for manufacturer Access Bio. See Petition
Exhibit 6 pg. 6.009 (third row) for the FDA’s base profile of the Access Bio test. Digital’s bid
1
Customers who have awarded Digital contracts to supply COVID-19 supplies, through competitive
solicitations, include Westchester County (NY), City of Dallas (TX), Dekalb County School District (GA),
Des Moines Public Schools (IA), City and County of San Francisco (CA), Orange County (FL), Cook
County (IL), State of Maryland Department of Health (MD), City of Baltimore (MD), City of Pompano
Beach (FL), Kanawha County Public Schools (WV), Advent Health (FL), Colin County (TX), and many
others.
2
The Petition is a more complete statement of Digital’s objections than this Affidavit. I this
Affidavit, I focus on factual matters for which my experience in the industry is evidentiary support.
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included a certification from Access Bio confirming that it was an authorized distributor, and
confirming Access Bio’s ability to supply the IFB’s inventory thresholds on a timely basis. (See
Petition Exh. 1, pg. 1.077.)
7. Access Bio is one of only three manufacturers on the above-referenced FDA list
who manufacture in the United States. In particular, Access Bio manufactures its tests in New
Jersey.
8. Even though only authorized distributors are supposed to sell CoVID tests, there
has been a consistent problem in the industry of unauthorized distributors acquiring tests and re-
selling them, or selling counterfeit tests. For example, earlier this year, the manufacturer Flowflex
put out a release warning against unauthorized sales of “Flowflex” tests and counterfeits. (See
Petition Exh. 6. Pg. 6.017.)
9. I have reviewed HHC’s Bid Tabulation (Petition Exh. 3, pg. 3 of 3.) We are
concerned that some bidders near the lower end of the price spectrum in particular are not
authorized distributors.
10. For example, two bidders near the top of the Tabulation (among the lowest
prices)—Empire Medical & Dental Supplies and Vere Pass—are indicated as having bid to sell
Xiamen Boson tests, from Xiamen, China. But a different company, Revival Health, announced
on May 5, 2022 that it is the “exclusive distributor” of the Xiamen Boson test. It is likely, therefore,
that Empire Medical & Dental Supplies and Vere Pass are not authorized distributors—through
FOIL Digital requested copies of all bids to assess whether they include of authorized
distributorship, but so far HHC has not produced those records.
11. I also note that according to the Bid Tabulation, there are also multiple bidders who
offered the “Genabio” test and the “FlowFlex” tests. But based on my experience, it is unlikely
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there would be more than one New York authorized distributor for those tests. Here again, we have
requested copies of the bids to assess for proof of authorized distributorship, but have so far not
received them.
12. There are also numerous bidders in the Bid Tabulation for which HHC does not
identify the tests that they purport to sell (instead describing them generically as “over-the-counter
swab” tests). Without reviewing those offerors’ bids (which we do not yet have) we cannot
determine whether those bidders are authorized distributors of the products they quoted.
13. Another complaint that Digital has about this procurement is the designation of the
Medline Warehouse at 198 Commercial Blvd., Blakeslee, Pennsylvania (about 100 miles from
New York City) as the location for delivery of the products. (Pet. Exh. 1, pg. 1.012) Though
apparently owned by Medline (which is itself a seller of CoVID tests), that warehouse is also
known to store product shipments by other companies.
14. I believe it is likely that likely that bidders who participated in this procurement
have CoVID test inventories at that warehouse now and had them there at the time the RFB was
published.
15. Part of the reason I believe this is the extraordinarily fast timeframe specified in the
RFB. Unlike Digital’s CoVID tests, most brands are manufactured overseas, and require upwards
of 45 – 60 days of travel time if shipped from the manufacturer. The RFB, meanwhile, was
published on August 11, specified a bid submission deadline of August 17, and contemplated the
first delivery date (of 20 million tests) less than a month later, on September 10. As noted, most
test manufacturers are overseas (in China or Korea). It would be virtually impossible for the sellers
of overseas-manufactured tests to deliver them from the factory to the Medline warehouse by the
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delivery dates. If those sellers do meet the delivery dates, it would have to be from inventories
that are already here.
16. My belief is also based on the RFB’s vagueness about the contract award date. The
RFB did not specify a bid opening or contract award date. In order to meet the specified September
10 and October 1 delivery dates, any bidder who actually has to purchase product from the
manufacturer and/or ship it, will have to place those orders comfortably in advance of the delivery
dates. Yet, the RFB did not inform bidders when the contract would be awarded, leaving at least
most bidders in the dark about when, if at all, it would be prudent to place irrevocable purchase
and shipping orders. Again, by far most of the FDA-approved test brands are manufactured in
China or Korea (including all of the all of the identified 3 tests in the Bid Tabulation, except for
Digital’s). The lowest price bidder’s test (the Genebaio test) is among those manufactured
overseas. And yet that bidder (BaRupOn) and other bidders with overseas suppliers were
nevertheless comfortable bidding without knowing the award date—presumably because they
knew they already had inventory that had completed shipping.
17. I submit that designating the Medline Warehouse as the delivery site gave an unfair
advantage to any bidders who were already storing inventory there, because it would enable them
to bid $0.00 for shipping—thereby undercutting other bidders at no cost.
18. Another issue that is unfair in the management of the RFB is HHC’s apparent
reversal on payment terms. The period of time between delivery and payment is, essentially, a
period of interest-free financing for the buyer, in which the seller absorbs the opportunity cost of
not having either the money or the product in hand. Therefore, generally speaking, the shorter the
3
We say “identified” because, as noted, there are some bidders for whom the Bid Tabulation does
not identify the product, but only generically refers to it as “Over-the-counter CoVID nasal swab test.” See
Exhibit 3 pg. 3.
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payment terms, the more at liberty a bidder is to quote a lower price, whereas for longer payment
terms, most bidders will increase their price quote to offset some of the lost opportunity cost.
19. In this procurement, the RFB plainly specified HHC would pay for the CoVID tests
“net 90 days after receipt of product.” (Exh. 1, pg. 1.018.) Digital formulated its price quote
expecting 90 day terms.
20. In HHC’s questions and answers, which they did not publish until the night before
the bid deadline, equivocated on the 90 day terms and said that they could “be discussed during
contract negotiations.” (Exh. 1, pg. 1.24, Answer 24.) Because Digital has not yet received the
bids of other bidders, I do not know whether those bidders accepted the 90 day terms or specified
something else in their bids. But if the selected bidder (or any bidder) bid its price with payment
terms of less than 90 days, that is unfair and the bidder should be deemed non-responsive and
disqualified. Furthermore, it is doubtful that small bidders like BaRupOn (which appears to have
no website, for example) would be able to lay out tens of millions of dollars to purchase 27,725,000
CoVID tests and sustain 90 days before being paid by HHC.
21. Digital is also concerned about some bidders—including the lowest bidder’s—
compliance with the RFB’s minimum requirements, although we will need the FOIL production
of bids to fully assess these issues.
22. For instance, according to the Bid Tabulation, the lowest price bidder is Respondent
BaRupOn, LLC. (Petition Exh. 3, pg. 3 of 3.) I am skeptical about BaRupOn’s capacity to deliver
such a large quantity of CoVID tests (27,725,000), and its conformity to the RFB’s minimum
qualifications.
23. The RFB required bidders to be in business for at least three years, with three years
of audited financial statements as backup. (Exh. 1, pg. 1.015.) It also required that the bidder’s
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annual revenue “for the past three fiscal years” must have been $10 million per year (id. pg. 1.-
13). Question and Answer 13 further specified that the revenues must have been at least $10
million in each of the 3 prior years (not an average of $10 million). (Exh. 1, pg. 1.023, Answer
13.) The RFB also required that all bidders have at least 2 years experience in providing multiple
shipments of 5 million or more COVID tests for hospitals or hospital systems. (Id. pg. 1.013.)
24. BaRupOn apparently has no website. Digital has been unable to find any
information as to where its place of business is. According to the New York Department of State’s
database for business entities registered to do business in New York, BaRupOn was only
incorporated as a New York domestic limited liability company on July 27, 2022. 4 If BaRupOn
was formed only in July 2022, it obviously does not meet the RFB’s requirements of being in
business for three years and having at least two years experience delivering large quantities of
CoVID tests to hospital systems.
25. It is possible that Respondent BaRupOn is related to or a successor of an older
company by the same name, that registered as a Minnesota limited liability company on April 18,
2014. (See Pet. Exh. 8.) But based on our team’s research, the Minnesota BaRupOn shares
management with another company called QYK Brands LLC. The Minnesota record on BaRupOn
names its manager as Balaji Tammabattula, and Mr. Tammabattula’s LinkedIn page indicates that
he is Chief Operating Officer of QYK Brands. I respectfully suggest this is notable because The
Federal Trade Commission (“FTC”) sued QYK Brands in the United States District Court for the
Central District of California, and won summary judgment for that company’s failure to deliver
on orders of personal protective equipment during the CoVID pandemic. (Pet. Exh. 10.)
4
See https://apps.dos.ny.gov/publicInquiry/NameHistory
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CERTIFICATION PURSUANT TO RULE 202.8-B
I Benjamin F. Neidl hereby certify pursuant to Rule 202.8-b of the Uniform Rules of the
Supreme Courts, that the length of this Affidavit, exclusive of the caption, signature block, and
this certification, is 2,022 words.
Dated: Troy, New York
September 10, 2022
Respectfully submitted,
E. STEWART JONES HACKER MURPHY LLP
By: Benjamin F. Neidl
Attorneys for the Petitioner
28 Second Street
Troy, N.Y. 12180
(518)274-5820
Email: Bneidl@joneshacker.com
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