On the morning of Feb. 3, 2022, in the early days of Mayor Eric Adams’ administration, an executive at a national fuel oil company, Sprague Operating Resources, got a surprise email from the City of New York.
Sprague believed they had a draft multi-million dollar contract in hand to provide the entire city government heavy-duty vehicle fleet with renewable diesel, powering everything from garbage trucks to police tow trucks. But to their surprise, a Department of Citywide Administrative Services (DCAS) bureaucrat informed them that the agency had been approached by another vendor — and that DCAS would soon reopen the bidding.
What the bureaucrat did not mention was that the CEO of that other vendor, Approved Oil of Brooklyn, was a three-time donor to Adams’ 2021 campaign. And that Approved Oil had hired Pitta Bishop, the politically wired law firm that advises Adams’ campaign, to lobby the Adams administration to try and procure contracts from the city.
Despite its late arrival after the bidding was already closed and a contract under negotiation, and the fact that the firm had never snagged a city contract worth more than $7 million, Approved Oil won the day. In August, DCAS awarded the company a $91 million, two-year contract through a non-competitive process called “negotiated acquisition” to provide the city fleet with renewable diesel.
This was quite the turnaround for Approved Oil.
In May 2017 the city Business Integrity Commission had raided Approved Oil’s Bay Ridge office, carting out computers and boxes of records. The commission — formed originally to root out Mafia infiltration of the carting industry — had expanded its reach and was now investigating and uncovering massive cheating in New York’s fuel oil industry.
Sources familiar with that investigation say it involved allegations of fraud and that BIC was working with the Manhattan district attorney on a wide-ranging investigation of the company. Approved Oil’s CEO Vincent Theurer told THE CITY the investigation went on into 2019 before he was notified that the Manhattan DA had decided not to bring charges.
“No charges came out,” he said. “They did a thorough investigation and no wrongdoing was found.”
All city vendors must fill out disclosure forms with the Mayor’s Office of Contract Services when seeking major city contracts. The forms require them to reveal whether in the prior five years they had “been investigated by any government agency, including, but not limited to, federal, state and local regulatory agencies.”
Approved Oil would have been required to answer that question in its application for the renewable diesel job it sought in May 2022, and also on two other small city contracts it obtained in 2020 to provide fuel oil to city agencies.
DCAS officials declined to say whether Approved Oil mentioned this investigation in its disclosure forms in 2020 and 2022. THE CITY last week requested the forms but was told to file a Freedom of Information Law request. On Tuesday MOCS informed THE CITY they would respond on May 2.
A key question in play is how Approved Oil knew to approach the city about this contract. At the time DCAS informed Sprague of its intent to stop negotiating with them and re-open bidding, that decision was not yet public. Somehow Approved Oil knew before the public to pursue a contract that was already in the process of being awarded to Sprague.
After DCAS awarded the contract to Approved Oil, Sprague filed a formal protest that DCAS promptly rejected. In December Sprague sued the city, alleging that DCAS had “unlawfully” steered the contract to “a single favored vendor.” That vendor just happened to be a three-time donor to the mayor who’d hired one of the mayor’s closest advisors as a lobbyist.
In its lawsuit, Sprague charged that DCAS’ decision to cancel discussions with them and open a second round of negotiations “was actually window dressing or pretext to permit Approved Oil to submit a proposal that DCAS had predetermined to accept.”
And, Sprague also alleges, city taxpayers are now locked into a more expensive per-gallon price that will ultimately cost them an extra $21 million over the length of the two-year contract with Approved Oil.
“Had DCAS negotiated with Sprague, as it was required to do under the City’s Charter and [procurement] rules, DCAS could have saved the city approximately $21 million,” the suit alleges. “The city made an end-run around the law and procurement rules resulting in an award of a contract that could not — given the anti-competitive nature of the process in which DCAS actually engaged — have been in the best interest of the city.”
Donations, a Lobbyist and a Bid
Speaking with THE CITY, Approved Oil’s Theurer rejected the accusation that his donations to Adams’ campaign and his hiring of Pitta Bishop had anything to do with how he knew to approach the city about a contract long after the bidding period had closed. He says he won on the merits, calling Sprague’s accusations “wild speculation.”
The push to switch the city’s fleet of heavy duty vehicles over to renewable diesel began in 2018 during the de Blasio administration, which hired Sprague to perform a six-month limited pilot supplying 1 million gallons of renewable diesel — also known as Hydrogenation-Derived Renewable Diesel (HDRD).
The de Blasio administration deemed the Sprague-run pilot program a success and decided to expand the program citywide. Because so few fuel oil distributors had the capacity to deliver this difficult-to-acquire special diesel, the city dropped competitive bidding protocols and reached out to vendors through a process called “negotiated acquisition.”
They began soliciting proposals in September 2020, listing a handful of companies from whom they intended to request bids. That list included Sprague and three other firms, but did not include Approved. Ultimately only Sprague put in a proposal. Approved Oil did not.
The bidding closed in November 2020 and Sprague and DCAS began negotiating the details, ultimately crafting a draft contract by late 2021, according to Sprague. While this was going on, Eric Adams won the all-important Democratic primary in June 2021.
Theurer made his first donation to Adams — $350 — in December 2019. Days before Adams’ decisive primary election, Theurer made a second donation, upping the ante with a $1,000 check tied to a June 17, 2021, event that also included a $250 donation from Arthur Aidala, a prominent attorney and longtime friend of Adams. Theurer then followed up with a third donation of $500 in August 2021 for a total of $1,850.
By then Approved Oil had won three contracts that normally would have placed it on an official list of entities doing business with the city that restricts key executives from giving more than $400 to a candidate. But Approved Oil’s contracts were in a category known as “accelerated procurement” that did not automatically put the company on that list.
Evan Thies, a spokesperson for Adams’ 2021 campaign, said the campaign monitored for “doing business” donors giving more than $400. The campaign, for instance, refunded $1,000 given by Pitta Bishop lobbyist (and former Staten Island borough president) James Molinaro, who gave at the same August 2021 event Theurer participated in that was hosted by Brooklyn developers Adam Rothkrug and Eric Palatnik. That fundraiser reaped $48,570 for Adams’ mayoral bid — after he had already won the Democratic nomination.
Because the campaign did not see Theurer on the “doing business” list, Thies said it accepted all of his donations, even though he was doing quite a bit of business with the city and had exceeded the $400 cutoff.
After Adams won the primary and was expected to win the November general election, Theurer took another step beyond writing out campaign checks: He hired Pitta Bishop to lobby City Hall. At the time Pitta Bishop was serving as the Adams’ campaign’s top advisor on compliance with campaign finance and electoral rules.
Approved had hired Pitta Bishop years earlier but hadn’t utilized its services since 2017. In August 2021, Theurer began making bimonthly payments to Pitta of $15,000 that would ultimately total $172,000 by the end of last year, city lobbyist records show.
In an interview, Theurer said he does not recall who asked him to make these three separate campaign donations to Adams, stating, “When we’re asked to do donations for someone who is running, I don’t go to these fundraisers myself. I don’t know these politicians.”
As for hiring Pitta Bishop, the mayor’s campaign counsel, Theurer told THE CITY he did not hire them to lobby the city on procurement.
That appears to be contradicted by Pitta’s lobbyist disclosure forms.
In their initial disclosure form stating that they began working for Approved Aug. 1, 2021, Pitta lists the subject category that they intend to lobby on as “procurement” and the subject details as “contract issues.”
That happened again on disclosure forms filed for March and April 2023 — before Approved Oil was awarded the renewable diesel contract. Pitta described the subject of their lobbying as “Municipal procurement — Heating Oil Industry,” the intended target as Office of Emergency Management Commissioner Zach Iscol.
Theurer insists that despite what it says in the lobbying records, Pitta Bishop had “unequivocally zero to do with” Approved Oil procuring the renewable diesel contract. Instead, he says he was worried about a barge-accessible deep-water fuel depot in the Bronx known as the Buckeye Terminal that Approved relies on to store all of its fuel, including renewable diesel.
Theurer says he hired Pitta to get the city to intervene and prevent the Buckeye owners from selling the depot to Sprague, which would have then given Sprague control of the only two deep-water terminals in New York City. A December 2022 Pitta entry on lobbying forms mentions the Buckeye sale and lists former Bronx City Councilmember Marjorie Velazquez as the intended target.
“We were lobbying to say, ‘Hey there’s only two deep water terminals…you have to keep these terminals open,” he said. “We worried about [Sprague] closing it and putting up luxury condos.”
That sale ultimately went through and Sprague now owns the terminal Approved uses to distribute renewable diesel.
Changed Minds
How Approved came to reach out to the city in the first place on the renewable diesel contract is less clear.
Theurer said he was aware of the earlier 2020 bid solicitations by DCAS on this contract but didn’t submit a proposal because he says he didn’t have access to an adequate supply of the required fuel. He says that changed in late 2021, and his company began investigating whether they could become the city’s supplier on renewable diesel.
“We started to go on city records and said we should be bidding,” he stated. At some point in September 2021 — after he’d hired Pitta and Adams had won the primary but before the Adams’ administration arrived at City Hall — Theurer says Approved sent a “general email” to an unspecified DCAS employee stating they were interested in providing renewable diesel to the city.
At that time, the initial negotiated acquisition had been closed for months and DCAS was deep in negotiations with Sprague, the firm that had successfully performed in the pilot program. Sprague says as de Blasio’s term was ending and the Adams team was soon to enter City Hall, they had completed what they said was a draft contract with minor details still under discussion.
Then came the Feb. 4, 2022, e-mail from DCAS official Adam Buchanan, stating for the first time that the agency had changed its mind about following through on the draft contract because it now felt Sprague was making new demands, including requiring an “independent inspection company” to inspect and test the diesel purchased by the city. Sprague says these were solvable issues they were working on resolving when DCAS suddenly pulled the rug out from under them.
Shortly before DCAS reopened the bidding, Masha Rudina, a top DCAS official, wrote a March 23, 2022, email explaining this decision to Lisa Flores, the veteran city staffer Adams had just appointed to run the Mayor’s Office of Contract Services.
Rudina said after Approved had approached them about the contract while DCAS was finalizing its contract with Sprague, DCAS decided to reopen the bidding in the spirit of finding the vendor “that is most able and capable to complete the project.” Rudina said DCAS planned to solicit bids from “a couple of other vendors, one of which is MWBE.” Rudina did not name those vendors.
It’s not clear whether DCAS contacted any other vendors, and the agency declined to answer any of THE CITY’s questions about this or any other aspect of the selection of Approved over Sprague, citing its policy of not commenting on matters that are the subject of pending litigation.
Ultimately only Approved and Sprague put in proposals in May 2022. After that, Sprague alleges in its lawsuit, DCAS stopped communicating with them and dealt only with Approved.
DCAS has asked a judge to dismiss Sprague’s lawsuit, which remains an open case in Manhattan Supreme Court.
In a court filing last month, Sprague’s attorneys, Daniel Horwitz, Jonathan Jeremias and Tracy Burnett of McLaughlin & Stern, contended that in the end, city taxpayers will shoulder the burden of DCAS’ decision to hire Approved by paying millions of dollars more for the special renewable diesel that is already expensive.
The response states that last June, before DCAS awarded the contract to Approved, Sprague told them the market for HDRD fuel had changed and Sprague could offer a lower per-gallon price then the one Approved was putting forth.
“That the City failed to negotiate at that or any other point with Sprague has meant that City residents and taxpayers are grossly overpaying for HDRD fuel now,” the response stated. DCAS declined to respond to THE CITY’s questions about the per-gallon cost of renewable diesel the city is now paying. The city’s lawyer, Assistant Corporation Counsel Michelle Lee, contended that “even if this claim were true, price is not the sole determinative factor in a negotiated acquisition.”