You would be hard pressed to find a Philly business that more people have general good feelings about than Philly Carshare. It is a locally run nonprofit, environmentally friendly, has good cars, and is reasonably priced.
And, one of the cooler things about CarShare was the partnership they have (had?) with the city government- so that city government had to purchase less cars of its own. Instead of buying new cars for the fleet, employees got access to CarShare. And, as a result, millions of dollars were saved and the environment was spared, as city employees simple shared with you and me.
In fact, CarShare is such a win-win that some veryimportantpeople decided to recognize them:
PhillyCarShare’s groundbreaking car-reduction initiative with the City of Philadelphia is among 18 pioneering finalists for Harvard’s prestigious Innovations in American Government Award, the “Oscar” of American government.More than 1,000 forward-thinking programs from across the country submitted applications to compete for the seven final $100,000 prizes.
PhillyCarShare’s project is among “the best and brightest, and represents government’s great capacity for creating positive change and achieving results,” says Gowher Rizvi, Director of Harvard’s Ash Institute. The project “takes a creative approach to a significant problem and demonstrates that [the] solution works.”
PhillyCarShare and the City of Philadelphia teamed in 2004 to create the first system worldwide in which government employees and local residents would share vehicles by the hour in a major car-reduction effort. Advanced technology facilitates easy independent access to vehicles 24/7, automated cost allocation, and unprecedented superb accountability.
The pioneering project has leveraged the City’s elimination of 330 vehicles, saving taxpayers nearly $2 million annually. Philadelphia residents have sold or avoided purchasing another 1,500 vehicles through the program. They drive 9.9 million fewer miles per year; walk, bike, and take transit 37% more; and save about $6 million annually versus owning cars, according to detailed participant surveys. All participants pollute 90% less while driving PhillyCarShare’s hybrid gas-electric vehicles.
The prize money is awarded specifically to support winning programs in the teaching of their model to other jurisdictions. “By celebrating and disseminating this kind of creative thinking at all levels of government, the awards program helps turn innovative ideas into commonly accepted practices,” said Patricia McGinnis, President of the Council for Excellence in Government.
Wow. That is from about two years ago, and sounds like the kind of company we want to encourage in Philly, right?
That is why I am wondering why the City/Mayor's Office gave CarShare a big smack in the mouth, and switched their contract over to Zipcar, a Massachusetts-based, private, for-profit company.
I don't have the exact numbers, but apparently CarShare was underbid for the City work, by something like 10 or 20k a measly 5k per year, and promptly shown the door. Does this make any sense at all? We have a Philadelphia-based company that is clearly doing a really good job, and created a partnership with the City that has saved us millions. CarShare is effectively turning into a public good for City residents, and is precisely the kind of company and innovative thinking we need more of here. And it is a Philadelphia-based company... (And, while I initially thought this was breaking news, this happened a month ago... The things you miss while sitting in Polish hotels. Gotta learn to use the google better.)
And after that, we are going with some out-of-town, national company, instead? To save a very small amount of money? (And, how long will that last anyway?)
Whoever made that decision in the City needs to have their head examined.
This disgusts me
CarShare is entrepreneurial, effective and innovative: three qualities we need more of in government, business and non-profits that serve this city.
Has Anyone Read Omnivores Dillema?
... cause while I am sure the guy means well and all, there is quite the edge to this comment:
And, I officially blame Ray and Jennifer for not talking about this when it happened last month.
Let me see if I hve this straight...
CarShare helped the city get rid of 100 vehicles right? So that's at a bare minimum let's say $12 k for the vehicle purchase + maybe 2 k in maintenance and gas and insurance? So that's what, 14 k * 100= $140,000 in savings say every 5 years? So that's a total of like $520,000. But for a $5 k savings, or $25 k over 5 years, they dump CarsShare? That employs local folks, who conribute more in local wage tax than ZipCar and have single-handedly helped get hundreds of privately-owned cars off the streets? And whose mission is this:
What a stupid, stingy move. Where the city chooses to spend its money sends a signal to other business and consumers. And this is a really bad message to send, I don't want ZipCar in Philly. I want my homegrown, not-for-profit CarShare. ZipCar already is buying up the competition in other cities. Who wants that here?
Uh, guys.....
I hate to interrupt all of the outrage, but the city did not have a choice. I wrote about this issue over at "It's Our Money" about a month ago:
Now, it's worthwhile to have a debate about if this policy is the best idea. I make a bunch of arguments in that post about the non-financial factors that should be considered. However, the current process requires that the contract be awarded to the lowest bidder. There is no boogyman in the adminstration who decided to stick it to PhillyCarShare.
Hmm
So you are saying my outrage about dumb, overall policies has to be contained to criticisms of those policies wholesale, and not via real-life examples that piss me off? I certainly did not refer to a "boogeyman," but that does not change the fact that this was a dumb move.
More over, I'd guess that most people don't understand the competitive budding process, and how a focus on rock-bottom lowest price is not always the best way to do business. This is further muddled by dummies like Milton Street who get greedy and screw it up for honest business owners. But how could anyone ever begin to wrap their mind around this if they didn't have a concrete example to focus on--like CarShare (which, tangentially, whether they say so or not must be pretty freaked about ZipCar's presence in market and could probably use all the support they can get right now).
My main point is that, even
My main point is that, even if folks in City Hall wanted to keep PhillyCarShare around, they are prohibited from doing so.
I personally think the policy might be worth examining, but I suspect that if the bidding process changed it would be really hard to develop something that would be fair to contractors. What would the non-financial considerations for contract awards be and how could you develop standards that could be applied across the board?
It would be better if the city kept using PhillyCarShare, but I'm not totally clear on we could actually change the rules in a way that makese sense to keep them around. After all, for every PhillyCarShare that gets bumped, there are other companies that are able to offer competitive bids and stay in business.
Finally, I would point out that this contract is really not that large-- $35,000 per year-- and PCS can keep on thriving without it. The best thing that people can do to show support for local carsharing is to actually join PCS.
see below
a- the city apparently (see below and above) could have done something about it--and even if they couldn't, they could have explained themselves better than a one line quote from the fleet director.
b- it may not be much money, but city contracts are as much about symbolism as anything else. the end of this contract sends a pretty crappy message to local business owners who will NEVER be able to compete with larger corporations (see Walmart) but who do MORE for our local economy by far.
First of all
You shouldn't write for such a low brow place. Then maybe we would read it.
Second, what does the bidding process entail? Can impacts be examined? How does the Philly First bill (that Nutter himself passed?) come into play?
Philly Car Share should get a 5% bidding preference
under that legislation (which you can find at Section 17-109 of the Philadelphia Code.) The only problem with applying the ordinance to this situation is that it somehow seems to exclude non-profits from its application since it seems to require the filing of a BPT tax return as a qualification for the benefit. However that should be viewed as a technicality since it seems to be in place mainly as a way of assuring that the company is actually local (and also, secondarily, I suppose, as a tax compliance tool.) So the administration could easily have either waived this barrier, or sought to have the legislation amended. It apparently has done neither.
Ironically...
That low brow place for which Ben is writing (at least the half of Ben we get), just recently signed up with Philly Car Share to take care of our vehicle needs when our fleet (a Focus and a minivan) is otherwise engaged. Just two non-profit ships passing in the night.
Public Contracts
Public contracts 101 requires the City of Philadelphia to award a competitively bid contract to the lowest responsive and responsible bidder. There is no bones about it. Zipcar had a lower bid and satisfied the other requirements (unless, pre contract execution, Car Share could argue that it was neither responsive nor responsible). The companies bidding are provided with the contract and/or specifications before the bid. From their they generate their price (and, in the case of construction, solicit bids from sub-contractors). The bidding process is closed and bids are submitted sealed. There is no impact analysis done related to the businesses themselves--that would be illegal. The business simply has to be responsive (comply with all material aspects of the bid request) and responsible (capable of performing the work).
Stan is correct, the only benefit a Philadelphia based contractor gets is a 5% bidding preference. Some procurement attorneys I work with think this is unconstitutional. I disagree under the market player doctrine.
The 5% preference, however, does not apply to non-for-profits. My view is the rule is in place because non-profits can have tigher margins than for-profits and, generally, since they do not account for a profit return, they have an unfair advantage in the bidding process.
Competitive bidding is about creating an even playing field.
"Competitive bidding is about creating an even playing field."
do you think that goal was achieved here?
You're looking at it wrong.
You have to separate the result you want to see (Car Share getting the contract) from what the law mandates. If Zipcar was truly the lowest responsible and responsive bidder, then under the law they were deserving of the award and subsequently the contract.
Competitive sealed bidding is the best method of awarding contracts because it takes the discretion away from politics. As a system, it works to create an even playing field. What would you suggest is a better method of creating an equal playing field and ensuring that all interested parties have the same information to create a bid while, at the same time, ensuring that there is no collusion? Public procurement has been going on for a very long time. We've come to accept this system because it works well.
There are other systems in place (Requests for Proposals, Requests for Qualifications, etc.), but certain contracts must be competitively bid. This was one of them.
Even under the system in place mistakes are made. I've litigated those cases. They are a lot of fun, but at the same time very time sensitive. If Car Share believed Zip Car was not a responsive bidder, they could have gone to court. Does anyone know if they did? If they haven't yet, it is likely too late.
Do you think a small,
Do you think a small, Philadelphia based non-profit and national company with big investors, playing against each other, is level? You said that for-profits have to worry about making profits. True, in the long term. But, in the short term, they can undersell their competitors, right? Then, of course, if they can corner the market...
ZipCar, in fact, has never made a profit.
Do you think the system is working 'well' in this case, in terms of positive outcomes for Philadelphia?
Again, Dan, you are focusing
Again, Dan, you are focusing on a results based approach here--namely the result that you want. That is incorrect and thus makes your question completely unfair. This isn't cross examination--and if it was, the size of the respective companies would be irrelevant to the matter at hand. You have to look at the particular contract and the process to award. That is all. Anything else renders an advantage under the law.
To try and give you some more perspective. Typically, non-profits and for profits do not compete in the procurement process. It just doesn't happen all that frequently (in my experience). In the standard bid process, the 5% rule kicks in and helps local contractors. In this case, it does not.
Given the nature of the system and rules in place (that are in place for a good reason), the playing field was as level as it could be. It is up to Car Share to determine if they though Zipcar's bid was not responsive. The way to do that would be to enjoin the contract award. I don't know if they did, but one would think we would have heard about it.
Let me ask you a question: how would you create a legally binding, constitutional and fair system of contract procurement that served the best interests of the public, secured the lowest price and gave every interested contractor an opportunity to bid on exactly the same contract?
results based?
if there is already a PhillyFirst exemption, I see no reason why it could not be extended to non-profits of a certain size.
That said, I don't understand why I should focus on anything but results. It's not my job to come up with a solution to the problem that clearly exists in the bidding process.
At the end of the day, a very unique and innovative Philly based Org got screwed by a corporation that is trying to cash in on an energy crisis/change in approach to transit. Car Share does not deserve that, even if it is legal. It still sucks.
No, Ray. The Philly based
No, Ray. The Philly based company put in a bid that lost. When the contract is over, if the City re-bids the contract, Car Share can bid again.
As for this:
Are you serious? On the one hand, you don't like the system because it "screwed" a company you like. On the other hand, you disclaim advocating for changes that, in your view, would make things more fair for Philly car share.
Also, I don't consider this a problem in the bidding area. I consider it a problem with Car Share's bid, actually. That is why they lost. It was too high.
One thing you learn about public procurement, the process is not an entitlement. It is not something someone "deserves." That was the thinking that led us to competitive sealed bidding--to avoid political friends and large companies who can buy clout from getting what they don't "deserve."
That said: does it suck. Sure. But, the system isn't that bad.
Are you serious?
Gaetano, it's nice that you have found a role for yourself as the defender of the faith (of capitalism) but your analysis is missing a piece:
I bet you (another) lunch at the Terminal that ZipCar took a loss, and underbid PCS. In the real world, I bet Car Share's bid was close to actual cost for services. I further bet you that the big investors ZipCar has allowed them to actually take a loss on tis bid in the hopes that the city will help them land bigger contracts that will make them a profit.
That's a competitive disadvantage that non-profits have in the bidding process. That is not CarShare's fault. That is the fault of a lwa that did not take into account this scenario when it was made.
And it might save the city a buck now, but I guarantee you it won't in the long run. And the fact that fleet manager's quote was so cavalier in ditching CarShare, and the fact that there is nothing on record from anyone else at City Hall about this, is sad. Cause they may have to follow the law, but they don't have to like it. And when there is chance to flag a problem with the law that screws a company that has done amazing things for our city, they should.
And it might save the city a
I understand what you are saying, but what I'm saying to you is that we have divested city officials from their discretion on these matters in favor of a system of competitive bidding.
Dan still owes me a lunch! But, okay. I will again bet you a lunch. Furthermore, when (and if) you prove this, I will be prepared to either eat or pay for you to eat at the Terminal.
I'm not a defender of capitalism. But, in this process, what matters is on paper--the bid sheet. That is all that matters. I'm sorry to break the bad news. I've been through this process before and that is really what I'm trying to share with you.
i'm amazed
Gaetano, I am amazed by two things:
You have not agreed that the
I don't know what Zipcar's advantages were. Could their corporate leadership have said, "let's take a loss on this one and see where it goes," sure. But I don't know that. There could be 100 different ways to explain the pricing difference. I don't have the numbers or bid sheets in front of me. Likewise, I can't really comment of PCS's bid sheet. All I know is, Zipcar had the lowest responsive and responsible bid.
Maybe I'm not imaginative enough, but I can't see how to fix a law that is designed to do what it did--provide the city with (1) a contractor who can perform the work; (2) who's bid was materially responsive; and (3) the lowest price, is flawed.
Perhaps this particular contract would have been better served by a Request for Proposal or something like that. But, I'm not sure if the City is empowered to procure in such a fashion related to contracts of this sort.
I think it would be improper for the City to express such remorse in that it is a contracting party and has to maintain contract relationships.
Sorry, we disagree there.
Really? You can't imagine
Really? You can't imagine tweaking the law? Like, for example, including non profits, in Philly first?
Um
You are acting as if we don't already have modifications to the system. But, as you know, we do. Philadelphia for-profit companies get a break. Do you think that is wrong?
When competing against other
When competing against other for-profits for the same contract that is an allowable preference. I don't think that is wrong.
Realize, it is rare that for-profits and non-profits compete for the same types of contracts.
you must not deal with social services much...
go look at DHS, School District, DPW contracts and Dept.of Ed contracts...
I don't, actually. I
I don't, actually.
I believe that many, however, are done through RFPs, which is very common. That is an entirely different process. I
I couldn't imagine a social service provided being decided based on lowest responsive and responsible bidder in the sealed bid process.
Don't know
In general I have heard repeatedly that PCS in the last couple of years has had a lot of problems keeping up with the rate it has been expanding. I've read early adopting PCS diehards say they can't wait for competition because they feel the PCS they used to know and love has lost its focus. Those people could just be sour grapes, or in the long run the story might be that the city has both PCS and Zipcar and they both get along just fine - that customers might benefit from competition. I don't know.
I understand the concern that a private company is trying to force its way into a market controlled by a local non-profit and I sympathize.
Flip it around. How should PCS's special status as local non-profit be given more weight without opening the door for quid-pro-quos? And what evidence do we have that ZipCar is trying to force PCS (which is still rapidly expanding) out of business?
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
It's not about Car Share
Always in the weeds...
In a city where citizens show entrepreneurial spirit that is for the benefit of the common good, the government repays those citizens with public outpourings of support, and cash when they can.
Our city ditched Car Share to save $5,000 a year and that just sucks. It is a short-sighted move. CarShare may be able to do just fine with competition from ZipCar, but if I were them, I'd be worried. And I would want to keep bigger contracts from the city ($35k is probably enough to guarantee one salary a year at their org). And, as the city goes, so could go other big corporate accounts or universities like Penn, etc.
Last, the elephant in the room: we have had competitive bidding in Philly for a while. As Gaetano says:
Competitive bidding, for fleet services for instance, was happening concurrent to Ron White's time on the phone hustling money for Street, (and for that matter for years and years of similarly corrupt behavior before that). Therefore, flagging a problem with the bidding process, and creating a solution which would help home-grown orgs like Car Share is hardly "opening the door for quid-pro-quos."
Beyond bidding though, it is really upsetting that one of our truly great sources of civic pride--at least for me--was passed over for a for-profit company (that can afford to probably take a loss just to get their contract because they are for-profit and have some cash reserves from investors to make moves just like this in the hope they pay off later). It just does not send a good message to those of us who do devote money, time, and energy to making Philadelphia a better place because we love it and care about the people who live it it.
Competitive bidding, for
Ron White's contract were for professional services and, therefore (I believe), were not competitively bid.
Also, there is only so much preference a City or State can give to home growns without running afoul of other legal issues.
That was my point Gaetano
I get that. My point is that fixing problems in the competitive bidding law, or at least acknowledging them, is not opening the door to corruption. That is conflation implied by Sean.
I get that. But stacking a
I get that.
But stacking a system too much in favor of a company like PCS versus an out of City or State player is similarly wrong.
LOL
how can you translate my saying "this sucks" into the creation of a law that "stacks" the system? That's a ridiculous exaggeration. I very much hope the bidding process can be examined and changed to favor non-profits like PCS, but I would never suggest stacking it unfairly in their favor (nor would I want to since many non-profits don't have the stability that PCS has demonstrated).. If it's not possible to do legally, it won't be done. Of course, someone in power would have to agree there is even a problem here which, NO ONE HAS on the record. And that is a real shame.
FWIW
I don't care particularly much one way or the other on this issue. Its neither a death knell for PCS nor a be-all, end-all for city-based entrepeneurial projects anyway. I was just asking for some more flesh to possible schemes for weighting the local non-profit that Ray and Dan want, not trying to suggest that all such schemes are corrupt. Competitive bidding is designed not just to get the best deal for the city but also to prevent corruption so it may be a low level observation but just tossing bidding when we don't like the results is not enough of an answer. You are obliged to come up with a suggestion of a fair system to weight other concerns - i.e. locally based, non-profit, etc. Nothing more.
Discussion has already gotten past this but when I posted it, it hadn't. It remains a valid point that generally when preferences are given to anything other than the best price in any government bidding process whether its Haliburton or PCS, those preferences have to be fair and transparent.
Also found this old PB thread folks may find interesting. A poster crows about Zipcar winning the bidding and it turns out later he's a disruntled former PCS employee.
http://www.phillyblog.com/philly/getting-around-philly/58624-phillycarsh...
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Point of reference.
Assuming the bids were as follows:
PCS $35,000
Zip Car $30,000.
PCS stil would have lost with the 5% preference. Their bid would have only been lowered to $33,500.
Zipcar would still be less.
For what it's worth
PhillyCarShare is still less than Zipcar for consumers, with more locations and (I think) better rides.
So i've heard
Actually PCS does have distinct advantage in terms of more pods, more cars, better citywide coverage.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Maybe more of an advantage than they can handle
On the other hand, another selling point of Zipcar is City workers with Zipcar accounts can use Zipcar vehicles in other Zipcar facilities, for any business that does a lot of out of city travel, Zipcar does have that edge.
As for PCS's "advantage," I think what tcarmody pointed out is precisely responsible for the drop in quality of service Sean's heard about word of mouth. Yes, they have more cars+pods (which means more coverage). That said, I got a feeling PCS may have expanded too soon too quickly to maintain the quality of service they have had to begin with, an expansion that was accelerated in light of Zipcar's entrance into the market. Saturating the Philly market to preempt the Zipcar challenge. Aggressive perhaps, and who would fault PCS in its effort to maintain its dominance and thus its "progressive impact" on the Philadelphia market, but I've noticed, heard, and read of three complaints that seems to be growing in volume in the past year:
1.) Customer Service in general, particularly resolving billing disputes is on the par with Comcast in terms of response time, and quality of response. Particularly non-smokers getting assessed smoking fines because their nose wasn't sophisticated enough to notice a smoke odor in their car and notify PCS (this also means the actual smoker is getting away with the violation).
2.) Penalties designed to intimidate users to reserve (pay for) more time than needed. Citing "abuse" of the 15 minute lateness window (with no statistics I'm aware of made available to the public) users have to pay a $40 fee +overage charges the minute your vehicle is late. This forces a driver to "pad" their reservation to be on the safe side to avoid the fee, allowing PCS to take in cash without having to worry about the wear and tear of use (yes, you can "adjust your reservation" on early arrival but if those dropped hours aren't "recycled" by another use, you're still billed for them). Maybe I sound too much the penny pincher, but I use PCS primarily to take my spouse to and from the airport at hours where SEPTA's R1 is impracticle, airport traffic is always unpredictable so I often find myself padding my reservation by $20+ on weekends which I'll only need 15% of the time. Maybe I should be more willing to take a fiscal risk, but this policy has always smelled fishy and more a scheme to maximize revenue will reducing "use" to a degree that probably pays off very well at the macro level.
3.) Speaking of maintenance, when PCS first got started, I noticed presumably PCS staffers rotating cars and doing maintenance checks of vehicles on a regular basis. In the past year or so, I've found myself on a number of occasions in vehicle that weren't outright undrivable, but had enough issues with braking and/or acceleration to give me pause and call in a maintenance concern to PCS. I tend to find these notices already logged by other users in the car's log, when there's a log in the car. In a nutshell, I'm suspicious whether PCS has the infrastructure to maintain the fleet it rolled out to insist on market dominance. I know they haven't grown their supply lines sufficiently, since they're suppliers aren't able to meet their Prius demands for the coming years (which I believe means Prius's will be disappearing from pods shortly to be replaced by Honda Fits) ... I'll concede this is not entirely PCS's fault, but it sounds like it wasn't just market forces and the run on Prius's currently in the U.S. auto market that is to blame, but PCS's inability (due to mgt size versus fleet size) to effectively network with a enough suppliers to guarantee fleet demands are met.
I thought all the angry fist shaking at the city for "screwing" PCS kinda bogus boo-hooing when it happened a month ago. Gaetamo is right, these are the rules they play by, and shouldn't be colored in some sort of good vs. evil Zoroastrian morality drama. As for the "symbolic" argument, I've never seen PCS on "city business" as far as I know and I doubt city use or lack of city use will really harm PCS's "branding."
I also find the "but they're NON-PROFIT" argument incredibly eye-rolling. PCS is not a charity or an orphanage. PCS opted for non-profit status (in a business started in Europe in terms much more like what Zipcar practices) for tax and accounting reasons (which may also be a complication in the non-profit vs. for profit bidding rules you all are trying to rewrite). Some of the deepest pockets in Philadelphia are also non-profits. The image of PCS and its members as subversive eco-warriors giving the screws to Detroit and Big Oil is Green Marketing. Yes, PCS is cool and we all buy it. The City need not, and I'd say should not have to reflect the tastes of the Philly progressive chic at all times.
The goal of putting contracts out to bid is
to protect the public interest. Somehow in the last few years that goal has been replaced with the free marketers goal of getting the lowest price.
Would anyone support giving a contact to the lowest bid, if that meant paying below the prevailing wage?
The reason for the 5% discount isn’t simply to help City businesses, it is to reflex the net costs to city residents. City businesses pay city wage taxes, property taxes, sales taxes and the hated businesses taxes. Why should the City design a bid process that gives businesses an advantage for moving out of the City?
That being said, contracts that are put out to bid could consider the net cost to tax payers, by considering the multiplier index that every developer uses to justify tax breaks as well as the taxes that are paid.
The question is how have we lost sight of the real goal of competitive bidding, that it serve the public interest and not allow for cronyism and paying to play and replaced it with seeking the lowest possible costs regardless of whether it is the best bid for the public.
Lance Haver
What's a "city business?"
Two things. Not really attacking your point, but I think it begs a couple of questions.
1.) As a non-profit, is PCS subject to all the tax burdens a "city business" usually does?
2.) If they are present in Philadelphia, doesn't Zipcar participate in some respects in the city tax structure?
I agree that bidding should be in the public interest, and you're right that at least with constructon projects, lowest market price seems to have taken place of that interest. But in this particular case, I don't think PCS not getting its city contract renewed is a crime against public interest. Maybe it's irked some of PCS fanbase, but the scale of the contract doesn't really damage the public good in the way you're implying.
Lance, maybe you know
Lance, maybe you know better, but aren't many of the jobs in Philadelphia that are competitively bid prevailing wage jobs by law? I know that in construction, my area of practice, anything contract being let over $25,000 is prevailing wage.
Also, I would agree that the goal is to protect the public interest--but I think having the lowest price is also a part of that. I guess I'm saying that protecting the public from cronyism and trying to get the best price are not mutually exclusive. In fact, I think they may be historically related.
Some answers to your questions
I wasn’t trying to imply that not giving the contract to PCS “is a crime against public interest.” I was trying to make the point that sometimes we confuse the tools to achive a goal with the goal itself.
And yes most contracts call for paying prevailing wages. My point was that most of us don’t want the contracts set based on price alone. We want our tax dollars used to benefit us.
What I was trying to answer was Ray’s overall question of how could the bidding process be structured to quantify some of the qualities many of us support so the broadest public interests can be represented in the bidding process.
The 5% discount is a start, but as I tried to state, it may not be enough to consider the other issues.
Lance Haver
So . . .
Two logical questions
1. Does anyone have a specific recommendation for what they think is a fair extra weight that they would have like to have seen placed on PCS's bid - other than the 5% given to local for-profit businesses? Obviously it would best if they could justify their recommendation on something a little more specific and tangible than they like PCS's homegrown flair.
2. Does anyone have even the slightest idea of what the round numbers (besides Gaetano's hypothetical) of the difference between the bids?
This whole business seems awfully hypothetical.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.
Re the Bid
That hypothetical was based on the total costs of each bid provided in the article. I do not know that (1) the actual bid unit was a total cost versus a unit cost; and (2) if a unit cost, what those numbers were.
I agree with your point 1.
The 5% for a local for profit business has been around for at least the last 10 years. I have never actually had a problem with it. Some lawyers I speak with think it is unconstitutional due to the dormant commerce clause. I disagree with that. But, too high of a % could result in other legal challenges. Plus, while encouraging and facilitating the growth of City business is important, we should also consider this in terms of high dollar contracts. A million dollar electrical contract would allow a grace of $50,000 (upping to 10% equals $100,000!) A ten million dollar project a grace of $500,000 dollars (upping the grace to 10% equals $1,000,000!).
At some point, the City is no longer a rational actor in the market place. What person would pay a $1,000,000 more to have the exact same work done? Further, in a city with budgetary issues, I think the issue of lowest responsive bid is important.
If the true goal is to employ more city residents, then the percentage of union members who live in the city becomes and issue--not who the bids go to. Many of these contractors, regardless of their home base use the city locals.
Why at least 5% makes sense
Take a $10 million construction project. Assume that $5 million ultimately goes to wages of construction workers and workers in supply companies that are based in the city. Those workers will pay a wage tax of roughly $250,000 directly. Then there is a the multiplier effect of some portion of those workers buying goods in the city staffed by to other workers who pay the wage tax. (If more construction workers lived in the city the multiplier would be greater. But commuters buy things in the city.) And then there is the BPT for all those businesses located in the city. And then keep in mind that this extra work might be the difference between certain businesses staying in Philadelphia or leaving or closing. See why that extra 500,000 paid to a city owned business rather than one outside the city comes back to us.
Construction is probably the worst case since construction materials are a substantial part of the cost of construction. Wages are a much higher percentage of the cost in all business and services and probably in many other goods producing industries. (Starbucks pays much more for labor than for coffee beans. In fact, the cost of health care for Starbucks workers exceeds what they pay for coffee beans.)
My guess—and it is only a guess—is that one could easily justify a 10% overbid in any business or consumer service and for most goods.
Hypothetical Outrage!
simulated conflict is the best type of conflict after all, be it warfare or politics