November 7, 2004 Sunday
SECTION: NATIONAL; Pg. 1
LENGTH: 2064 words
HEADLINE: Trash bin contract smells, some say;
No-bid deal in N.O. raises questions
BYLINE: By Gordon Russell, Staff writer
A no-bid deal that gives a New Orleans firm the exclusive right to sell advertising on hundreds of city-owned trash cans in the Central Business District has raised eyebrows among others in the industry, who wonder why they weren't given a chance to compete for the potentially lucrative job.
Moreover, the company selling the ads and supplying the cans, Niche Marketing USA, had a business relationship with Terrence Rice, the brother of New Orleans Chief Administrative Officer Charles Rice, at the time the deal was announced, according to the company president. The company's chief executive later denied that Terrence Rice had worked with Niche.
City officials have been tight-lipped about the deal, refusing on numerous occasions during the past three months to answer basic questions about it. They say they have no paperwork on the arrangement because it is technically a subcontract between Niche Marketing and Waste Management, the city's trash collector, which buys the receptacles, known as "Jazzy Cans," from Niche at the city's direction.
The Nagin administration's reluctance to provide details on the matter has been unusual, given the aggressive stance the mayor has taken against patronage and in favor of transparency in the awarding of city contracts.
According to Charles Rice, Niche representatives had demonstrated the cans, purported to be bombproof, to him and other city officials. Along with the antiterrorism feature, the cans also contain four panels to display advertising.
City officials were impressed, Rice said, and so far have ordered Waste Management to buy 600 from Niche Marketing, using money donated by private companies to the mayor's "Imagine It Clean" campaign. The cans, which are not manufactured by Niche, cost $750 apiece, for a total of $450,000, Rice said.
Though the cans belong to the city, Rice said the city has no written agreement or contract with Niche Marketing on the company's exclusive franchise to sell advertising on them. However, he said the city does have a letter in which Niche promises to give 15 percent of its ad revenue to the city.
City officials have yet to provide the letter to The Times-Picayune, though the newspaper submitted a public-records request in August asking for all contracts and agreements between the city and the company. City officials also did not respond to a request for information about how much revenue the city has earned from the arrangement. Relatively few ads appear to have been sold so far.
Charles Rice declined to directly answer questions about whether his brother had a relationship with Niche Marketing.
"That's something you would have to ask my brother about," Charles Rice said. "But I think you've spoken to Niche, and I think they've given you that answer."
Terrence Rice has not responded to numerous e-mails and phone messages.
Shortly after the cans were unveiled at a Nagin news conference in July, a receptionist at Niche Marketing answered a reporter's call asking for Terrence Rice by saying she would take a message for him.
In a later conversation, company President Stacey Mays-Douglas said Terrence Rice "no longer works here."
When asked what job Rice had performed, Mays-Douglas answered: "He was simply selling advertising. His goal was to sell ads on the Jazzy Cans."
Not long afterward, Kerry Brown, the firm's attorney, called The Times-Picayune and said Mays-Douglas "may have been mistaken." He said Terrence Rice "had been utilizing office space" leased by Niche but "has not received a penny from Niche."
He added that "there is no employer-employee relationship" between the company and Terrence Rice, and that Rice "has not received a paycheck, directly or indirectly." Brown described Rice as a "jack-of-all-trades."
Later, Niche CEO Rodney Whitney, who founded the firm, categorically and vehemently denied that Rice had any ties to the company.
"Terrence Rice has no relationship with Niche. He has never had a relationship with Niche," Whitney said.
Asked why the company's No. 2 official had said otherwise, Whitney said: "I don't know why she told you that. Evidently, you weren't talking to the right person."
'Imagine It Clean'
When asked why the city did not go through a bid process or a request for proposals to buy the new cans or to select an advertising vendor, Rice said a bid process was unnecessary and would have been unfair to Niche. He said the city's contract with Waste Management allows the city to direct the trash hauler to buy garbage cans and does not require a bid process.
The money for the cans came from the "Imagine It Clean" campaign, which Nagin's press office describes as a public-private initiative. Money for the effort had been donated by private companies, including $150,000 from Harrah's and $50,000 apiece from Waste Management and from Browning-Ferris International, another major trash hauler.
Technically, Waste Management has bought the cans at the city's direction, and then been reimbursed by the city, Rice said. A similar process was used for 508 new cans, costing $675 apiece, in the French Quarter and along St. Charles Avenue.
Waste Management bought those cans through Celtic Distributors, a company run by James "Dutchie" Connick, who is a lobbyist for Waste Management and also is the brother of Jefferson Parish District Attorney Paul Connick Jr. In that case, city officials apparently did not order Waste Management to buy cans from a specific vendor.
Rice added that when Marc Morial was mayor, the city was buying cans through Waste Management that cost $1,000 apiece, so the new cans represent a substantial savings.
Chuck Dees, area vice president for Waste Management, said his company had purchased a large number of concrete-based cans, adorned with the "Mayor's Clean Team" logo, for $490 apiece through Dutchie Connick. The company also bought a smaller number of fancier cans for the French Quarter at $840 apiece under the direction of the Morial administration, Dees said.
The Nagin administration did not respond to questions about which cans cost $1,000 apiece.
Lawsuit against Niche
When asked if a bid process might have resulted in a better price, Rice said he wanted the cans marketed by Niche, which he said embodied "patented technology" making them bombproof. Niche is the exclusive distributor of such cans in Louisiana, he said.
Rice said he took Niche officials at their word that they were the sole providers of such cans. Niche also "showed me a patent," Rice said, though the company's attorney said Niche has yet to receive a patent.
Rice said it would have been unfair to seek bids to select an advertising vendor because the idea of putting ads on trash cans was Niche's.
"Look at this realistically," Rice said. "If you brought me an idea, would it be fair for me to steal it and profit from it? This was their idea."
However, a federal lawsuit against Niche filed last month by City Media Concepts, a company based in New York City, alleges that Niche parroted the design and concept of City Media Concepts, which has placed similar cans in Times Square.
The suit claims a violation of City Media's "trade dress" and trademark. In a nutshell, that means that the company has pioneered a trash can with a certain look and features, much in the way that McDonald's restaurants have certain looks and features, said Andy Langsam, City Media's attorney.
"You and I could not open a hamburger chain and call it McDougal's," Langsam said. "Or, if we called it Sam and Andy's, but it had golden arches, they'd stop us, too."
The suit asks the court to seize all litter cans provided by Niche and to order the company to change its design.
As evidence for its claim, City Media pointed to Niche's Web site, which used language strikingly similar to that used by City Media to pitch its product.
In a letter to Niche, Langsam demanded changes to the site owing to its "blatantly copied portions of our client's copyrighted materials."
As an example, the letter noted that City Media's Web site described its cans this way: "Crafted of heavy steel and weighing over 325 pounds, the Receptasign kiosk's sleek frame houses an outsized 45-gallon container that discreetly hides greater quantities of unsightly refuse."
Niche's site until recently described its cans like this: "Crafted of heavy metal and cement weighing more than 900 pounds, 'Jazzy Cans' have a 39.9 gallon container area, and a dome top that discreetly covers large quantities of unsightly refuse."
Said Langsam: "That told us that they knew of us, they copied us, this wasn't accidental."
Niche's Web site was redesigned shortly after the company received the letter from Langsam. Kerry Brown, the firm's attorney, said he suggested the changes after receiving the letter because he always advises clients to try to work out disagreements amicably rather than get bogged down in costly litigation.
"I want to get rid of any and all possibility that we did something wrong, because we didn't," he said.
Brown said the suit is baseless and promised that it will be dismissed within a week. He said Niche's cans differ substantially from City Media's because they are bombproof rather than bomb-resistant. He said the company has applied for but not yet received a patent.
"City Media does not have a mitigating can, a can that's capable of absorbing explosions," Brown said. "That's what Niche brought to the city. And City Media didn't see that."
Brown said he and Langsam had already agreed in principle to a settlement that essentially would involve City Media dropping the case. He said he couldn't discuss the exact terms.
But Langsam gave a different version. He said Brown had called him, explained that Niche, which was sued in federal court in North Carolina earlier this year in an unrelated action, could not afford to defend another suit. Brown wanted to discuss a settlement, Langsam said.
Langsam said he agreed to drop the claim only if Niche either agrees to remove all the trash cans from New Orleans' streets within two months, or pays City Media a licensing fee for each one. He would not disclose an amount.
Brown said he disagreed with Langsam's version of events but declined to offer his own.
"He's not going to get what he's asking for," Brown said.
Other companies irked
City Media is not the only company taken aback at the appearance of Jazzy Cans on New Orleans' streets.
Representatives of several companies that produce and sell display advertising said they would have welcomed a chance to bid for the right to sell ads on the garbage cans, but there was apparently no bid process to purchase the cans or sell advertising space on them.
"We did not receive an RFP (request for proposals) or anything," said Jodi Senese, a spokeswoman for Viacom, a major player in the outdoor advertising market.
Asked whether the company would have bid given the chance, Senese said: "It's in line with our business. It is an out-of-home advertising product, and we're in the out-of-home advertising business. We would have evaluated it and made a decision based on that."
Several other companies in the outdoor advertising business said they, too, would have welcomed a chance to compete. But none wanted to speak on the record for fear of hurting their chances of getting future city business.
It's possible the city could have gotten a better deal had it sought bids for the job.
Peter Arbor, vice president of operations for City Media, characterized Niche's arrangement in New Orleans as a sweetheart deal.
City Media pays for the cans it provides in New York, Arbor said, and also continues to own and maintain them around the clock, with crews that come out hourly to wipe the cans off so the advertising remains visible. That's not cheap, he said.
City Media shares 10 percent of its ad revenue with New York City, he said.
By comparison, New Orleans must buy and maintain the cans Niche provides. And although the city gets 15 percent of the ad revenue, the extra 5 percent doesn't nearly cover the other costs, Arbor said.
"It appears on the surface that it's a very good deal for Niche," Arbor said.
But Brown said Niche's cans are of far better quality and thus far more expensive than City Media's. Also, it's unfair to compare the advertising markets in New Orleans and New York City.
"They get tons more for advertising," he said. "You're comparing Times Square to Poydras Street."
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