Behn’s solution | Readers’ responses | Previous dilemmas

You’ve been here before. Once again, you will put out a request for proposals. Once again, you are looking for quality and innovation. Once again, you will be pressured to accept the low bid.

In your new position as director of the West Dakota Department of Parks and Recreation, you have been charged by the legislature with contracting out the operation of the state’s park system. With 17 parks, your department is a source of pride to a state so small that most people forget it exists. Yet the diversity of your system provides a variety of recreational opportunities for West Dakotans. Moreover, the parks have been an economic plus for the state, attracting thousands of visitors.

Some of the state parks are quite traditional. They have lakes with boating, fishing and swimming. Some parks just have picnic tables and hiking trails. Several include campsites for trailers. One has the West Dakota Lodge, the old resort built by the Northern Dakota railroad. The state also owns and operates Mount Dakota State Park, with its ski trails, chairlifts and a gondola. Finally, your department husbands the Zenith City Botanical Gardens, located on 40 acres between Zenith City Hall and the West Dakota State Capitol.

You would not have chosen to privatize the park system’s operations. Certainly every park needs rejuvenation. But you believe that your department itself could have done this just as well — and just as innovatively.

In fact, that’s why you took the job. That’s why you left the Zenith City Department of Public Works. You were looking for a bigger challenge. And that’s why the governor picked you. She wanted to refurbish the state’s crown jewel and thought you were the ideal person to do it.

The legislature, however, has a different strategy. At the end of the last session, it enacted the Recreation Resuscitation and Parks Privatization Act. You have no choice. The operation of the state’s parks will be contracted out.

Still, you will never forget the headline that, four years ago, blazed across the front page of the Zenith City Tribune. It is burned into your long-term memory: “DPW Scorns Low Bid.” And the subhead made things even worse: “City gives sewer contract to inexperienced firm.” In your previous job as Zenith City’s DPW director, you had not awarded the contract for modernizing the Zenith City sewer system to the lowest bidder, choosing instead a firm that had never won a big contract before.

Your final decision had come down to just two firms: Trog, Lowe, & Dite Construction and Knuphangel Associates. TLD had been in business, it seemed, for centuries. (It had actually built West Dakota Lodge.) But it hadn’t had a new idea in decades. By contrast, the three principals at Knuphangel were innovators. With more than a half-century’s experience in very big projects, they had left their old firms precisely because they were bored with doing the same old projects the same old way.

Thus, when you put the long-needed modernization of the city’s sewer system out for bid, these three engineers jumped at the opportunity. And Knuphangel’s proposal did look risky. But it was state of the art. And once your engineers evaluated the firms and their proposals, the choice was obvious.

Thus, you had rejected the low bid. It was the right decision — both in terms of the money and the substance. For in the end, the city’s new sewer system will be a thoroughly modern one, costing the city less money over the life of the project. Indeed, some opinion leaders are beginning to recognize this, which explains why the governor wanted you to be in charge of revitalizing the state’s parks. What others thought was stupidity she believes was creativity.

Still, you don’t want to be caught again by the low-bid trap. And you know — you just know — that when the bids come in, you will be forced to choose between the low bid and an innovative one. Any contractor that wants to win the low-bid competition can’t put any frills into its proposal; it must devote its energies to squeezing all of the fat out of its proposed operation while barely covering the required basics.

Neither the state’s contracting laws nor its regulations require you to select the low bid. The real constraint comes from political pressures. Journalists, legislators, political candidates and the West Dakota Taxpayers Alliance uniformly believe that a public agency should always accept the low bid. Quality, innovation, better service — none of these can ever be good enough to counter the obvious benefits of the lowest bid.

Still, being parks director isn’t very exciting if all you get to do is prepare RFPs and accept low bids. You took the job because the governor promised you the opportunity to revitalize the state’s deteriorated park system. You wanted the challenge. If you hadn’t, you would never have left the Zenith City job. Now, however, the governor’s promise has evaporated.

What should you do?

For Bob Behn’s approach to this month’s public management dilemma — or to post your own ideas — click here.

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