NY Comptroller Rejects Lucrative Snapple Deal Following Audit

After a lengthy investigation, New York City Comptroller William Thompson has rejected the $126 million contract naming Snapple as the exclusive beverage vendor for all of the city's public buildings. His decision followed the completion of an audit of a separate $40 million exclusive deal to place Snapple in the city's 1,200 schools.

"After thoughtful and thorough review of the matter, I have concluded that Snapple was selected through a tainted process with a predetermined outcome that was not the best deal for the City of New York," Thompson said in a statement.

Thompson said that if New York City Mayor Michael Bloomberg pressed ahead with the vendor deal, he would take the issue to court, according to news reports. Thompson does not have the power to squelch the school deal although he has objected to that deal as well and has requested that it be cancelled.

The audit found that Snapple's monetary offer was less than that offered by competitors. Thompson also charged that the five-year deal was improperly negotiated by a marketing firm, Octagon Corp., which does business with Cadbury Schweppes and Snapple's parent.

Thompson began an investigation into the deal after competitors complained. Last October, he called for the deal, to be cancelled, and in December, he requested the audit of the selection process.

The partnership with the Department of Education, announced last September, was for Snapple to sell juice drinks and bottled water in the city's schools. The deal replaced a previous system that allowed each school to make its own contracts with companies. The vending deal called for Snapple to put vending machines in all 6,000 of the city's public buildings to sell its iced tea, water and Yoo-Hoo chocolate drink. This deal had been set to begin Jan. 1, 2004.

Snapple has said that it followed the guidelines set forth by the city.