DGS Rejected $0 Bid to Operate Saturday Flea Market

Diverse Markets Management Sought Exception to $3,300/mo Licensing Fee

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The 300 block of Seventh Street SE, pictured from Pennsylvania Avenue SE, has been without a market manager since Dec. 2018. DGS rejected the lone applicant to an RFP seeking a new contract and will undertake management itself.

The DC Department of General Services (DGS) will manage the Saturday flea market on the 300 block of Seventh Street SE after the only response to a February Request for Proposals (RFP) requested a complete exception from the $3,300 monthly licensing fee.

That proposal was rejected by the agency. “DGS received only one response and it did not meet the RFP requirements,” DGS Director Keith A. Anderson said. “Herein, DGS is now managing these 30 spaces on Saturdays until further notice.”

The lone application was made by Michael Berman of Diverse Markets Management (DMM). “The RFP specified terms of the contract that we felt were not in the best interests of a new market, the Eastern Market District as a whole, and were unfair and burdensome to the selected operator,” said Berman.

“I understand a $0 bid would be shocking and unacceptable, but also no one has tried to start a new market from scratch here before, and none of our valid operational concerns were taken into account.”

The RFP for new management of the space was issued on Feb. 7 and closed on Feb. 18. It called for a $3,300/month licensing fee to operate a market on the approximately 13,328 square feet of street space on the 300 block on Saturdays from 6:00 a.m. to 6:00 p.m.

Berman holds a lease with DGS for the Sunday market on the 300 block of Seventh Street SE. That lease runs to June 1, 2019. He also has an additional contract with Stanton-Eastbanc, the landlords of 700 Penn. Ave. SE to simultaneously operate a flea market on adjacent C Street SE .

In rejecting the bid from DMM, DGS takes on management of the Saturday flea market on the 300 block of Seventh in addition to managing vending near the Eastern Market building, on the 200 Block of Seventh St. SE, and on the plaza of the adjoining William H. Rumsey Aquatic Center.

Request For Exception

In the Addendum justifying the request for an exception, DMM argued that it was difficult to attract vendors to the space due to the short, six-month term of the contract as well as the competing private flea market on C Street SE. The Addendum also listed exceptions including the costs of licensing the market, the constraints on market activity, and the presence of a competing market on the 600 block of C Street SE.

The competing Saturday market is operated by Carol Wright of Washington Arts, Antiques, Crafts & Collectible Associates (WAACA) under a contract with Stanton EastBanc, the developers of 700 Penn (the Hine Project). Until December 1 of last year, WAACA had also leased the 300 block of Seventh Street SE on Saturdays from the DGS, locating as many as 30 vendor tents there. The lapse of the DGS agreement with WAACA led to the February RFP.

DMM also cited the Temporary Occupancy Permit, issued by the District Department of Transportation (DDOT) to allow DGS to close the 200 and 300 blocks of Seventh Street SE for the flea markets for the period from Oct. 1, 2018 to Sept. 30, 2019. The permit appears to indicate that both the Permit Fee and Meter Fee (the compensation for lost income from parking meters), a sum in excess of $120,000, had been waived.

“As the license further proclaims that Licensee is responsible for all operation costs, DGS, the Licensor, incurs absolutely no costs, but reaps huge benefits in licensing an operator for an Outdoor Market,” the proposal notes. “Therefore, no license fee should be required, as it performs a public benefit, the street is closed regardless, and DGS bears no cost that must be reimbursed or subsidized.”

Update: DGS said that while DDOT waives permit fees for DGS use of Seventh Street SE, the meter fees are not waived. “For payment of the meter fee, DDOT and DGS enter into a Memorandum of Understanding in order for DGS to repay that annual amount,” said Anderson.

Anderson said that, on an annual basis, it costs the agency about $232,588 to manage and operate the Saturday and Sunday outdoor markets located in both the 200 and 300 blocks of Seventh Street SE. “These costs to not include expenses connected with operating the [market on] the plazas and sidewalks,” Anderson said.

Berman said he was confident that DMM’s proposal exceeded the scoring criteria outlined in the RFP, and said that he was surprised the application was rejected outright by DGS.

“We fully expected a discussion on the merits of our request, on the terms, for which there is no logical reason on why they couldn’t be changed, and would have expected to negotiate a compromised solution.”

“I suspect that they never intended to award the RFP at all,” Berman told the Hill Rag.

Anderson said that DGS did not negotiate with DMM because terms in the proposal received from DMM did not meet the RFP requirements. “As a result, in accordance with the terms of RFP, the DMM proposal was deemed non-responsive,” Anderson said.

EMCAC Supports DGS

Although the Eastern Market Community Advisory Committee (EMCAC) members had the opportunity to review the RFP before it was issued, DGS acknowledged that they made the decision to manage the Saturday Seventh Street flea market without the input of the EMCAC. The committee was created to advise DGS about the operation and management of Eastern Market and surrounding area.

Nonetheless, EMCAC Chair Donna Scheeder said that she personally viewed the decision as a positive step forward. “The Eastern Market legislation speaks to unified market management,” Scheeder said. “This is in keeping with that mandate.”

Scheeder said that she was aware of costs to DGS associated with the closure of Seventh Street SE that are being paid from the Eastern Market Enterprise Fund. “Eastern Market Management needs to put the best interests of Eastern Market first and their rejection of the one proposal does that. Accepting a no rent proposal is not in the best interests of the Market,” she said.

“It makes more sense for Eastern Market to run this rather than accept a no-rent proposal because it has an infrastructure already in place to cover both days for the 200 block.”

ANC Opposes DGS

A different view was taken by Advisory Neighborhood Commission 6B (ANC 6B). ANC 6B EMCAC Representative Gerald Sroufe is also the commissioner of Single Member District 6B02 which contains Eastern Market. He said that DGS should have sought the advice of EMCAC prior to making the decision to take over management.

”EMCAC is the advisory committee but there was no opportunity to give advice,” he said. “It may be a good decision — I have no opinion on the decision — but they [EMCAC] should at least have had an opportunity to give an opinion on whether the RFP should have been reissued.”

At their March 12th meeting, ANC 6B approved a letter requesting that DGS not assume control of the 300 block of Seventh Street, writing that they believed the action runs contrary to the intent of the Mayor’s orders defining the Eastern Market area. Instead, the commission requested DGS return to an open and unbiased solicitation process of private operators.

“We continue to believe that Mayor’s Order 2012-86 & 2013-064 was intended to allow DGS to support entrepreneurs and budding small businesses by expanding the area available for vending and to retain the weekend Flea Market of small vendors which was at risk of closure due to the new Hine development, not [to] take over as the operator of the area,” read the draft letter to DGS.

DGS is managing the market with the future in mind, said Anderson. “Funds have been allocated for an Eastern Market Five-Year Strategic Plan. This will direct the future governance of the Eastern Market building and special use district and will ensure that Eastern Market remains a treasured historic venue.”

This story has been updated with comments from DGS on costs and permitting for the outside markets at Eastern Market.