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  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
  • Digital Gadgets, Llc v. The New York City Health And Hospitals Corporation, Barupon, Llc, Abc Llc a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,, Xyz Corporation a fictitious name used for a limited liability company with a potential interest in the outcome of this proceeding, the identity of which is presently unknown,Special Proceedings - CPLR Article 78 document preview
						
                                

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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. 1 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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. 2 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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 3 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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 4 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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. 5 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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 6 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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 7 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 8 of 9 FILED: NEW YORK COUNTY CLERK 09/10/2022 05:47 PM INDEX NO. 157735/2022 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 09/12/2022 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 9 of 9