Traverse City Record-Eagle

Michigan

October 11, 2013

Contract for cigarette stamps questioned

(Continued)

“The other bidders were not aware of the State’s preference for its current system, and did not have the opportunity to address this in their bids,” De La Rue’s attorney, Jeffrey Theuer, wrote on Aug. 7. He said Xerox was credited for providing other optional services like stamp storage that are unnecessary.

Treasury spokesman Terry Stanton stood by the Xerox recommendation, saying the move would avoid additional costs to change systems.

“Xerox’s bid was determined to be the best value for the state due to stamp samples, stamp storage at no cost, longer stamp warranty, and all deliverables would be performed on-shore, among other issues,” he said.

If awarded the contract, De La Rue would do software development and updates, or 25 percent of production, outside the U.S. It argues that actual operation of the cigarette stamp program would be in the U.S.

“We’re continuing to pursue all of our options because De La Rue’s industry experience and proven technology met the required criteria set out in the (request for proposal), and at the same time offered the most cost-effective solution,” De La Rue spokesman Rob Hutchison said.

SIPCA, whose parent is in Switzerland, declined to comment.

Regardless of disputes over the process, De La Rue says the state’s reasons to choose Xerox are negligible considering the higher price tag.

The state initially requested bids to produce 605 million stamps a year. Three of six responders surpassed the minimum threshold to be considered.

De La Rue would charge $10.5 million, Xerox $12.5 million and SICPA — which does similar work for California and Massachusetts and whose bid ranked the best technically — $17.4 million.

The state now wants 450 million stamps per year. De La Rue would charge $7.9 million, Xerox $9.6 million and SICPA $13.3 million.

Xerox spokesman Carl Langsenkamp said its bid provides the best value on a number of factors.

“With experience in numerous excise stamp programs internationally, along with delivering over a billion security stamps per year in the U.S. alone, Xerox and its partners are well qualified and experienced for the Michigan program,” he said.

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Email David Eggert at deggert@ap.org and follow him at http://twitter.com/DavidEggert00

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