More Trash Talk
Posted by Jeff Pruitt - 10/7/09 @ 1:41 pm - Filed Under Local Politics
I saw this quote from councilwoman Karen Goldner ( INC via AWB):
Fellow democrat council member Karen Goldner is most outspoken, saying she’s firmly against accepting the bid presented by start up company “Earth First”.
She fears the company won’t be able to deliver the service it says it can.
She worries “Earth First” is mistakenly presuming that fuel prices will stay low over the next several years.
The people investing their time, money and energy in to this venture know more about what service they can deliver than a councilmember. And why would it be a “mistake” to presume fuel prices will stay low over the next several years? Nobody can say with any reasonable amount of certainty what is going to happen to fuel prices over the next several years so basing the decision on that is just a guess.
Until someone can give a logical economic reason why Earth First can’t provide the service they claim they can then I say award them the contract. It may be a foreign concept to the administration but they can insert termination clauses and clawbacks into contracts to protect themselves if the company fails to meet its obligation.
I also wonder why so much energy is being devoted to this when an existing company under contract, Barry Real Estate, hasn’t delivered on a damn thing they promised - and that’s AFTER we gave them millions in subsidies. Goldner and Liz Brown should look at fixing that mess while they’re worried about non-performing contractors…
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6 Responses to “More Trash Talk”
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I agree they should be given a chance to perform here. However I think the burden of proof is on Earth First to show that it can fulfill the contract.
There is a risk here that isn’t being addressed. If Earth First suddenly goes bankrupt or cannot meet their contract obligations (here’s where the track record is helpful) does anyone really think that NSA is going to come in and pick up the pieces without gouging us to teach us a lesson? Having trash pile up around town doesn’t make for a very strong negotiation position.
Requiring a performance bond on Earth First would help solve any issues like this for the city, and make me much more comfortable.
City Resident: The successful vendor will have to provide a $3 million performance bond, which theoretically covers about 4 months worth of service. That is not to say that such an abrupt transition would be desirable in any way, but we do require such a bond.
Jeff: you might be aware that OCCASIONALLY the media doesn’t always deliver someone’s entire thought (this was a sarcastic statement, just in case that was unclear.) I do think that it is unwise to think that fuel prices won’t go up over the next 7 years. But more significant than the fuel issue, which is speculative, is the fact that the vendor needs to have about 2 months worth of operating cash available in order to handle the accounts receivable from the City. We pay in a couple of weeks, but the contractor will begin incurring expenses in mid-December when they hire their crews for training and their trucks arrive, and then they will make weekly or bi-weekly payroll, truck payments, etc. in December and January, and they don’t bill the City until Feb. 1 for January services. We take a week or two to review the bill, cut the check, etc., and the contractor has to be able to finance that time period - LIKE ANY OTHER BUSINESS. We pay promptly, but we don’t pay weekly, and we shouldn’t have to. Based on the numbers provided BY EARTH FIRST, the company can’t cash flow that time period. I’m not sure what their plan is, exactly, but it looks to me that by Valentine’s Day they will be in big trouble, regardless of fuel prices. I would like to think differently but when I ask EF for a business plan I am directed to extremely sketchy information that does not make me feel more secure.
Look, Jeff, I would LOVE to have a local contractor and I hope that the EF folks build themselves up into a vendor we can use in the future - both because they are local and because I believe that competition is good. However, performance and capacity matter. During the ATOS discussion, never once did I suggest that you and I (as an example of wonderful people who don’t have experience running an IT business) start up a company using the City as our only customer.
If I were a city councilperson in a smaller city, I probably WOULD give EF a chance because their financials support a smaller contract. As it is, there is no way that I can support entering into a contract that I think is entirely unwise and irresponsible.
Karen,
Then the city made a mistakes writing that RFP. You should have ask for additional financials or ask that only companies with a certain number of years can bid. If they don’t meet the spec then you do not accept there bid.
If you award this contract back to National Serv-all then you won’t get anyone to bid on this contract in the future. So your response of competition is good is out the window. No one will bid and therefore NSA will price it however they want since they know they will get the bid no matter what.
But its good to see Giaquinta will be able to milk his client at the tax payers expense.
The whole idea that Mark Giaquinta is on this “Blue Ribbon” team is disgusting. I grew up with his kids for years and I always thought he was an honest hard-working man, but now I don’t know if I have any respect left for him. And Karen I wouldn’t be surprised if your involved with this too. People are talking about how sketchy EarthFirst looks, I say take a look at the media on this issue, looks much sketchier to me.
Karen,
I think your concern about fuel prices is significantly more founded than this concern. Don’t you think that even if EF came upon a temporary cash shortage that they would be able to use the city’s contract to secure short-term financing to cover them. In fact, given the city’s strong credit position I think EF could secure that financing in less than 24 hours.
After reading this comment one might think that the people involved with EF have absolutely no experience in the trash business - that is obviously not the case…
Fuel prices in this situation have an escalation factor. With most bids and proposals I have done that extend a number of years, you use escalation factors based on some index. In this case it could be based on oil, gas, inflation. I thought I heard the CEO of Earth First say they used fuel prices today and added an escalation factor.
Karen should be able to identify if there is any type of escalation factor built into their proposal.