Saturday, August 15, 2009

Governmental Contracts

I spent all day yesterday going over a contract that was issued by Pinellas County (which is part of the Tampa Bay area). By the end of it, my head was swimming.

There were so many errors, omissions, and downright disagreements in that contract that it took pages to document it all.

I'm a moderate that believes in governmental healthcare (I've discussed this previously) and I think that we desperately need to reform our healthcare system. I've heard the conservative pundits claim that over 80% of us are insured and I know that this is not true. I've seen the evidence to the contrary and I find it remarkable that someone can repeat such a fabrication with a straight face. In fact, experience alone has shown me that this simply is not the case.

But insurance companies make a huge profit (they are known as "The Silent Bankers" among financiers) and you can be guaranteed that they are throwing everything they can into the fight, including paying off whomever they can to spread their message.

On the other hand, the system will need to be run efficiently and well and common sense will be required. They cannot do as they have always done by giving contracts to the lowest bidder, as this results in a continual drop in the quality of service. There must be a better way.

And the government must do the same with their personnel: Cheapest is by no means best. A poorly paid employee is no bargain. At best you have an employee filled with resentment who is continually looking for work elsewhere. At worst, you have someone who has been promoted to his level of incompetancy.

To do governmental healthcare the right way, the government needs to rethink it's entire system. If they don't, they might as well hand it over to Pinellas County.


daveawayfromhome said...

Are you seriously suggesting that private companies dont use lowest bidders and the cheapest suppliers that they can get away with?

Ed Abbey said...

Dave - As part owner of a company, I can say we don't. I am constantly bombarded with cheaper services for tools, etc from China and don't take them up on it. But then my company doesn't compete on price, we compete on quality and are known worldwide for it.

The Lazy Iguana said...

Going for the lowest bidder is not the problem. What lowers quality is when the bid contract is lowered.

For example, say I put out an open bid contract for 1 pound of gold. I get 10 bids, I go with the lowest amount. I get 1 pound of gold for the best price.

Now lets say I decide that the contract should be for "any yellowish metal". Ill probably not get gold.

The people making crap up - mostly on the radio but also on TV - have to do so. They make a lot of money, and they have to maintain their audience. And how do you do this? Make stuff up - like 80% are insured and the 20% that are not are all illegals. So you want to tax us to pay for illegals??!?! Well I say NO!

Sound familiar?

They make crap up because that is what their audience wants to hear. And if they do not deliver the proper message, someone else will come along and make crap up and steal their audience. No audience, no big fat contract. Heck your show might even be canceled. Then how will you be able to afford a fancy high price lawyer to keep you out of jail when you get busted for drugs?

daveawayfromhome said...

Ed, without knowing what your company does I cant really comment on it. I do know that my company (that I work at, not own) provides signage for other companies, and the slowing economy has resulted in those companies forcing bargain basement prices on my company in order to "compete". We in turn, seek the lowest prices from our vendors, while trying not to skimp on quality.
As Lazy points out, it's not the "lowest bidder" issue that's the problem in government, it's the specifications given when collecting bids (and the corruption often accompanying the awarding of contracts - which is a whole seperate issue).

Saur said...

Dave, Dave, most definitely. I'm not suggesting it - I'm stating it as a fact. Businesses that are successful realize that you cannot always award to or buy something from the lowest bidder because, as Ed points out, cheapest is often just that.

Ed, Agreed!

Lazy, From what I can understand, it doesn't look as if I agree w/ you about what lowers the quality of a bid. It makes sense but it's too simplistic. Here's the odd reality of it all:

2007: Company A wins The Job because they bid it at $100K. This allows them a profit of $50K a year.

2008: Company B wins The Job for $75K because they know what Company A bid it at the year before, and they figure a profit of $25K is better than nothing, though that barely covers the additional bills such as rent, electricity, and clerical payroll.

2009: Company C is desperate. They really need that job to stay afloat. They just lost a major contract due to the recession and they simply need something that will allow them to keep their staff through the recession. Their goal isn't to make a profit - their goal is to just stay alive.

Company C bids the job to make a profit of only $5K a year and they pare everything back to the bare bones. They fire some people, and persuade the others (who are unskilled workers) to do jobs for a lump sum, which means that overall these workers are working for less than minimum wage. This is illegal, but done often in such cases. As a result, work standards are lowered and everyone suffers.

This is the reality of going to the lowest bidder.

So what will happen in 2010? Will Company A want to compete with Company C? Will Company C continue to do business at the bare minimum of profit and service? My bet is on Company C.