Monday, August 5, 2013

Friggin With The Riggins

Those of you out there in business-land probably have from time to time had to make a decision on what your company should purchase and decide on which vendor to select. And you've probably had to justify that decision to higher ups. If you've done much of this you have also run up against rules about just how this is done. These often include "competitive bid", "minimum number of bids" and the every popular "lowest cost".

If you've done this much you also know how to scam the system--colloquially known as "bid rigging". The core of all these techniques is creating, and then manipulating a "scoring system" where the details of the rubric -- the weightings for each value -- are buried deep beneath a spreadsheet teaming with numbers. All to look cold, analytic and official. Another tried and true technique is to include in the RFP items that are finely crafted to favour your pre-selected winner. Generally you want these to be easily overlooked and not something as egregious as "employs my cousin at twice the pay of those who do real work" or "has a long term relationship with a high ranking official" or better still "brought a brand new sixty inch plasma to my super bowl party and forgot to take it home". These are the kinds of blatant malfeasance that gets folks, like Pope and Reed, dragged into court. Even subtle missteps cause bureaucratic heartburn as we have recently witnessed with the re-letting of bids for Department of Community Health's plan management.

We all know it happens and we suspect it happens more in government than in the private sector. We also know how to do it and it would surprising if we didn't recognize it when we see others do it. So those of you out there in the Wold that recognize one of these, take close hard look at the proposal selection for our latest mini-me NSA wanna be effort--the Iron Sky Watching You Proposal.

When you look at the score sheet one thing leaps out. Iron Sky is by far the most expensive of the bids but it also scores highest (bigger is better) on the "cost" metric. By a factor of four over the lowest price bidder. In fact, Iron Sky is higher than the amount budgeted which should have been a very precise "estimate". Read on to decipher why that might be.

In the pre-award promotional effort Iron Sky was ballyhooed as the anti-privacy provider for Sandy Springs--the big sister we want to be if we grow up. Hooray for that. What seems to be glossed over is the relationship between Iron Sky and the City of Norcross which just happens to be the former employer of the Dunwoody City Manager. Now this is of little or no consequence and can be written off as nothing more than a coincidence except for the opacity of City Hall and the rather strange conclusion that the highest price bidder wins the "cost war" by a such a large margin. Now you're beginning to wonder why that estimate wasn't spot on.

In real estate there is the concept of an "arms length deal" which is critically important when contesting a property assessment based on the most recent sale price. Basically "arms length" means there was no prior relationship between the two parties and the property changed hands in a fair deal at market price. Now look at our Iron Sky deal and you decide if you see an "arms length" deal or just another Dunwoody arms deal.