Government flip-flops on bids burn businesses, taxpayers
Written by Michael Lewis on January 22, 2014
Irresponsible bid handling by Miami-Dade governments is costing businesses and taxpayers hundreds of millions.
Bidders incur high costs. Every time government changes its mind and starts over, bid expenses become losses.
The more that happens, the more bidders raise prices to compensate – and the more taxpayers pay.
And governments are changing their minds more frequently.
In the past week, Miami Beach junked a chosen convention center plan that cost proposers millions. Everyone lost – including taxpayers who pay more for contracts to compensate for vacillation. Taxpayers have been waiting decades for a pivotal project that went back to the starting post.
Also last week, Miami-Dade County flip-flopped on who would get to oversee a vital $1.6 billion sewer project to meet a federal consent agreement.
Want more? The county last week told proposers for attractions at Zoo Miami that bids were set aside and the two would have to negotiate with the county in a new structure.
Not enough? The county decided last week that years of dealings with a Coral Gables subsidiary of Brazilian giant Odebrecht for an Airport City that had cost millions to plan were void because most of the site is no longer surplus. Now they’ll deal on a far smaller project.
Four big-ticket reverses in just one week.
Plus, there was more. Along with Airport City, a zoo project to rival Universal in Orlando, a hub to put Miami Beach back on the convention map and a countywide sewer upgrade, the airport last week changed its mind on a pizza counter.
It’s just 225 square feet, but for a bitter taste of contract flip-flopping in action – worse, in inaction – look at how a pizza chef got burned.
In March 2012 the airport wanted North Terminal pizza by the slice run by a small business. Nine applied, and 305 Pizza at MIA won. In April 2013 the company signed a contract with the airport. All that was left was passing the contract through the commission.
But the airport director retired, and the new director told the mayor he didn’t want the pizza that the old director had ordered because the site had no provision for cooking.
An airport consultant then looked at the deal and found that none of the nine bidders had proposed cooking pizza there at all. They’d just reheat.
So the issue then became pizza smell, which new Aviation Director Emilio Gonzalez determined would endanger the airport’s position as the county’s crown jewel. “My job as the airport director is to make sure there’s no damage,” he told a commission committee last week in asking that all the pizza bids be scrapped, which they were.
In protecting the airport from pizza smell, Mr. Gonzalez had also cost the winning bidder $110,000. Those expenses, according to Lillian Ser, the bidder’s attorney, include, naturally, her fees.
But they also include the cost of printing and binding more than 400 pages of proposals, graphics for the proposal, architectural and engineering fees, not to mention hiring another attorney who also spoke for the pizzeria before the committee.
The company designed uniforms for the airport. It even had packaging made for its bid presentation showing what an airport pizza box would look like.
And Ms. Ser cited more: to provide better service, the owners had bought a food preparation facility on Northwest 36th Street near the airport.
Of course, she admitted, company operator Gustavo Sidelnik had jumped the gun: he bought the land before the commission OK’d the contract. But then, if you’d signed a contract last April, it’s logical to think the county would live up to the deal and not later realize that pizza can be smelled, supposedly endangering a multi-billion-dollar crown jewel airport.
In this case, the airport wasn’t dealing with global giant Odebrecht, which has backing to get past an airport flip-flop that found a site long planned on suddenly was no longer available.
At Pizza 305, the airport is dealing with an architecture-trained Argentine immigrant of 20 years who with a high school friend started fast food operations here. He has both Pizza Pizza and Hamburguesa at Bayside and Coco Gelato.
“It’s a very sad situation,” said Ms. Ser, who represents him.
Commissioners who turned him down last week though so too, saying they were torn between keeping the county’s bargain and supporting its new aviation director. The director won.
“It bothers me that we go through a process and companies go and do what is asked of them and then we change the rules of engagement,” Esteban Bovo Jr. said at last week’s meeting.
“For anyone out there that is looking and thinking of doing business, don’t count your money at the table,” he advised. Small businesses, he said, went out to provide good services “and then basically are left out to dry.”
And nobody wants dry pizza.
“I have to question how much of good faith have we put forward to try and make this thing work,” Mr. Bovo said.
And that, in a nutshell – or pizza box – is the question: how much good faith do businesses find in government bidding? If they jump through all the right hoops the right way and win the bid, barring Acts of God shouldn’t they also get the contract as advertised?
This week commission Chairwoman Rebeca Sosa is calling for a report on how much the county spends yearly re-advertising contracts. It’s a great question, and the answer is easy: way too much. Why not stick with the first request?
We suggest that Ms. Sosa also ask two more questions: How much do businesses waste each year responding to bids that are later re-advertised, and how much of that waste will come back to bite taxpayers in higher bids from fewer bidders because some who get burned won’t try again?
Mr. Sidelnik of Pizza 305 won’t. Getting burned on pizza has left a bad taste. Ms. Ser says he won’t bid again on a county contract because “this has been such a disappointing and irresponsible outcome.”
Everybody lost. Mr. Sidelnik is out $110,000. If all nine pizza bidders spent the same, they’re out $1 million. Fliers get no pizza. Taxpayers will pay more as fewer bidders raise prices.
Is that smell at the airport burnt pizza or something else?