Local government contracting: the grass debacle

In the papers for the last week has been a bunch of thundering by the Washington Post about grass cutting no less.

Under the Fenty Administration, they decided it made more sense (and they were right) to have a master lawn cutting contract for DC Govt. facilities, rather than for each agency to do their own contracting.

The city allowed the contract to be awarded either for the whole city or for a select number of subdistricts based on wards.

There are lots of problems with support of local business and jobs development in government contracting. I don't think it's intentional, not exactly, but the problems exist nonetheless.

1. Depending on how the contracts are worded, they have many difficult provisions that often require advancing significant sums of money (an article about a fraud in yesterday's Examiner mentioned in passing that the proposed contractor needed to put $615 million in an escrow account to prove that his relatively small business could perform--that's a lot of money even for the largest contractors)

2. Not to mention fees, licenses, costly legal advice, etc;

3. Lots of time required to complete the proposal;

4. And usually on hyper-short deadlines (e.g., I am working on a response to a $40 million RFP that has less than a 5 week response period--and it requires local partners, partners certified as disadvantaged businesses, being licensed in that state, insurance and bid bond certifications, voluminous economic disclosure requirements for each partner-contractor and those relationships take time to execute besides, plus all the actual response in words to the various requirements, not to mention very specific document preparation requirements).

The main contractor on this grass cutting bid is based in Baltimore and uses zero DC residents on the job. The secondary contractor is DC-based (but that may be in name only).

The Post says that what matters most is the lowest cost. And they mention how the secondary contractor has friends in high places in the city, which may be influencing what's happening with the project.

I think the Post is right to be concerned about contract steering, but wrong to ignore cui bono -- who benefits.

With DC's high unemployment rate and the relatively low skill requirements for cutting grass, this contract is a perfect way to employ under-skilled DC residents who need work.

At the same time the Post could have done a better job thinking (and then writing) about how the local government contracting process works.

If you want local employment, you need there to be local businesses. But local governments, as stated above, usually structure contracts in ways that make it very difficult for local business owners to win contracts and for local residents to be employed. (Plus as discussed the other day, governments, like other large institutions, tend to be more comfortable dealing with other large organizations, which pertains to contracting as well.)

Slicing up the grass cutting contract into smaller pieces actually is a good thing, if you want to foster local employment and business development. It's a way for smaller businesses to be competitive and to develop.

Think of it in terms of trash collection. A small company would have a hard time executing trash collection services for the entire city of Washington. But if the contract were divided into 3 or 4 pieces, small companies could compete.

The other way, only two major companies can successfully compete for this business--Waste Management and Republic (which purchased the company which purchased BFI)--and they are companies that operate on a national scale.

At the same time, you need to build the technical assistance and support capacity to nurture and develop smaller businesses and relationships, and you have to focus constantly on the contracting process to ensure that not only is it fair and transparent, but it isn't unbearably onerous.

Shockingly, in "Spending D.C. money in D.C.," Washington Examiner columnist Jonetta Rose Barras gets the issue exactly right, right on every dimension that the Post got wrong. From the article:

In a city where the unemployment rate in some communities is as high as 20 percent, a debate over whether a grass-cutting contract to a Baltimore firm should continue is an important public policy discussion. Unfortunately, Mayor Vincent Gray didn't prompt it directly. Rather, it was instigated mostly by the Washington Post, which has published multiple editorials about the administration's effort to discontinue its contractual relationship with Lorenz Lawn and Landscaping.

Lorenz is one of two companies sharing more than $2 million in lawn mowing business. The other firm -- Community Bridges Inc. -- is a certified District-based, minority, disadvantaged company; that designation won it preferential points. Still, Lorenz was hired to cut grass in six of the city's eight wards. CBI was chosen for the other two wards. ...

By his actions, [Mayor] Gray was raising legitimate questions: How can he get more residents employed? Should the city spend its contracting dollars only with District-based companies that hire District residents? Under such circumstances, can the city get the best bang for its buck? ...

Confession: I shop almost exclusively in the District. I like spending my money where I live -- where my tax dollars are likely to circulate to help my neighbors, to build critical public institution and to make the city a better place.

There's no reason the government can't make a similar decision -- particularly when elected officials have invested millions of dollars in the city's community college and career-focused high schools. They have argued they want to grow a work force that could satisfy the needs of existing companies. They also want to expand the number of successful small businesses, which experts have documented are responsible for creating many new jobs.

It seems logical, then, that Gray would more closely examine -- and possibly reallocate -- contracting dollars.

But, as Cheh said, "He has to operate in the open and he has to articulate his goals for everyone to understand."