Coyote Blog

California is beautiful.  Many parts have great weather.  There are a lot of smart people there and some good schools.  Both my kids live there right now, though it is really expensive given the state and local governments' propensity to take many steps to limit the supply of housing.

But it is simply impossible to do business in.  Every single legislative session brings a series of new time-consuming and expensive regulatory requirements.  Despite California having some of the best recreation spots in the world, we have systematically reduced our business in California by 50%, and I have a moratorium in place on accepting new business (I won't even look at RFP's and proposals to avoid being tempted.)  I wrote about this process a number of times, including here.

This week, Hans Bader covers this ground and more in his article about businesses fleeing California to places like Texas.

It does not surprise me that service industries, particularly those that provide high-margin services to the wealthy, stay in California -- service businesses have to be close to their customers.  But it always blows me away when I see anyone manufacturing in California.  Why?  Move over the border into Nevada or Arizona or Mexico and costs go down a lot without any real increase in logistics costs.  California does not even want you there -- I am convinced they achieve most of their environmental goals merely by chasing folks over the border, exporting these issues rather than solving them.

This is sort of an odd topic to have on my mind, but I was thinking about it today in the context of a bid package I have in my hands for concession management of a park in Georgia.

The RFP kept referring to "community workers" who do 60% of the labor in the park, and part of our responsibilities included managing these workers.  In my naivete, I thought these were volunteers, and sent a note telling them that while the government could legally use volunteers, it was very problematic under labor laws for a private company to benefit in any way from volunteer labor.

I was quickly informed that I had it all wrong, that this was a euphemism for "prisoners," and that I could take advantage of their close to fee labor to do much of the heavy lifting in the park maintenance.

I must confess this is a new one for me but my initial reaction is queasiness about it.  On the one hand, we are talking about unpaid labor from men in involuntary servitude -- do I really feel good about benefiting economically from this work?  On the other hand, I do understand that work programs can be beneficial for prisoners, though I am not sure the work we need is really going to be teaching many skills.  On the gripping hand, there is "Cool Hand Luke", which is impossible to get out of my head when considering prison labor in the deep south.

One other aspect of the RFP that struck me cold was the pages and pages of requirements, including an actual oath I have to take, that I will do everything possible not to hire an illegal immigrant.  Now, that sort of thing is likely required of them by state law, and is not that unusual (Arizona has similar provisions, I believe).  But juxtaposed with the prison labor, it leaves me cold.  Essentially, they won't allow me to accept the voluntary labor of a Mexican man paid at minimum wage, but they are encouraging me to accept the involuntary labor for free from a group of prisoners.

I just encountered this about 10 minutes ago so I am still thinking on it -- the basic opportunity is attractive.  But I have walked away from opportunities before over these sorts of ethical issues -- most recently, over a refusal to drug test employees when that was a state requirement.

I welcome thoughts in the comments (I know I mentioned immigration, but in this one post I would be thrilled if we could lay off my supposed naivete on immigration and focus on the ethics of profiting from free prison labor).

Tyler Durden finds a creepy RFP at the Fed:

the Federal Reserve Bank of the United States, ... in a Request for Proposals filed to companies that are Fed vendors, is requesting the creation of a "Social Listening Platform" whose function is to "gather data from various social media outlets and news sources." It will "monitor billions of conversations and generate text analytics based on predefined criteria." The Fed's desired product should be able to "determine the sentiment [ED:LOL] of a speaker or writer with respect to some topic or document"... "The solution must be able to gather data from the primary social media platforms – Facebook, Twitter, Blogs, Forums and YouTube. It should also be able to aggregate data from various media outlets such as: CNN, WSJ, Factiva etc." Most importantly, the "Listening Platform" should be able to "Handle crisis situations, Continuously monitor conversations, and Identify and reach out to key bloggers and influencers."

I was pretty frustrated after my negotiations with Florida State Parks on Friday.  We were apparently the winning bidders for one of their park concessions, but their process requires a "negotiation" after the winner is accepted, something that is very unusual in these situations.  Typically, these Request for Proposals (RFPs) for these projects include all the minimum requirements the bidders must accept.  The RFP then lays out a point system that will be used for scoring the submissions (e.g. 20% of score on bid rent, 20% on financial stability of bidder, 30% on experience, etc).  Usually, the relevant agency reviews proposals to see if they meet all the minimum requirements, throwing out proposals not meeting these minimums, and then choose a winner from the remaining proposals based on the scores.

In this case, in the Florida State Park RFP, there was no minimum rent payment set (rent is usually bid as a percentage of concession sales).  Also, in the scoring, of the 800 total potential points, only 20 or 2.5% were assigned to the size of the bid rent payment.  The other 97.5% of the points were allocated to experience and services offered, etc.

Well, after spending a lot of time and money on the bid response itself, I was called to Tallahassee as the winning bidder to "negotiate".  After we sat down, the first thing they said was "your bid of x% is too low -- we won't accept anything less than twice that".

This is a classic bait and switch.  I assume it is legal under Florida government contracting law but it is illegal for federal contracts and in most other states.  They caused me to spend a lot of time and effort bidding and then flying to Florida on the assumption that there was no minimum rent amount and that the rent amount was a trivial requirement, as compared to quality and experience.  In their negotiations, the revealed the opposite.  They are hoping that now that I have gone through all this time and effort, I will agree to up the $ given my sunk costs.  What they don't know is that I am the world's number one believer in "sunk costs are sunk and therefor irrelevant".

If Best Buy issued an ad in the paper saying they were selling Sony plasma TV's for $500, and I rushed to the store only to find no $500 Sony's for sale but instead a pushy salesman trying to sell me up to the $2500 model that is on hand, they would be breaking the law in most states.  What Florida is trying to do is no different.

I am going to tell Florida that I need a few more days to respond to their hijack demands concerns.  I was taught long ago not to get emotional in a negotiation, and right now I am emotional.  When I calm down, I will sit down and try to calmly evaluate if it is still a good deal at twice the rent.  I will also call up some other concessionaires in Florida to see if this is an isolated incident or see if it is representative of ongoing arbitrary behavior I can expect in the future.

Most of the facilities we run are concessions on government lands. To get these concessions usually requires a bidding process, where the government authority evaluates qualifications to run a quality operation as well as the amount of rent (usually as a percentage of sales) "bid" by the concessionaire. Like most government contracting processes, proposals are usually due by a hard deadline (say, 2:00 Tuesday on X date). No proposals are accepted at 2:01 (unlike some arbitrary government regulations, this is actually for a good reason - there is plenty of history of late proposals coming in based on some insider knowledge of the contents of other proposals that have already been opened).

Anyway, we had such a deadline in Florida on Tuesday of this week. Normally, to make a Tuesday deadline, we will ship overnight on Friday, which gives us a buffer day in case of problems. This time, because we only got the RFP last week, we had to work through the weekend and ship Monday.

So we shipped FedEx for 10:AM delivery on Tuesday (paying $155 for 38 pounds, ugghh). And, of course, since this is the one time we had no margin for error, the box ends up sitting in Memphis for a full day, due apparently to excess demand for Florida that day, and arrived a day late and after the deadline. So all the work we did, all went to waste. Bummer (I have cooled down, I was using much worse words than bummer with FedEx this morning).

I learned this lesson once before about 8 years ago. FedEx is NOT for things that absolutely positively have to be there overnight. They are for things that would be best if it were there tomorrow but the world won't end if it is not. In a case like this, where we miss out on a big contract and we could waste hundreds of man-hours of work, I should have gotten on an airplane myself, checked the box as baggage, and taken it to the door. Yes, it would have cost me a few hundred dollars more, but we already had thousands of dollars in time and effort invested in it.