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Wednesday, September 30, 2015

Oi, Mate, watcha hidin'?

Transparency is essential for accountability and accountability is essential to good governance; good procurement is the cornerstone of good governance.

But it seems the lads Down Under continually fail to fully take this on board. Can't you hear, can't you hear the plunder?

Confidentiality in government contracts still too common: audit
Federal agencies are still falling short of full compliance with a Senate Standing Order introduced in 2001 to improve the public transparency of government contracting, according to the auditor general Grant Hehir.

The order requires ministers to table lists of all significant contracts and agreements in their respective portfolio areas, highlighting those that contain confidentiality clauses of any sort and outlining the justifications for them.

The Australian National Audit Office’s report explains the reporting practices it observed are “not always adequate or reliable enough to meet the requirements of the Order” despite it being in place for well over a decade and audited every year. “Transparency of contract information can be affected as a result,” the report warns.
Confidentiality in Government Contracts: Senate Order for Departmental and Entity Contracts (Calendar Year 2014 Compliance), Australian National Audit Office (excerpts cut and pasted and rearranged; read the audit report at the link for context, fullness and accuracy)
Confidentiality provisions in government contracts can impede accountability and transparency in government purchasing. A request for specific information to be kept confidential must be assessed against the Confidentiality Test criteria and entities should make sure decisions to include confidentiality provisions are documented.

The [relevant Senate Order] was introduced in 2001 to improve public access to information about government contracting. At the time, the level of information available to the Parliament and to the public about government contracting had not kept pace with the increased rate of contracting out.

In this respect, the audited entities were not able to provide documentation supporting their assessment of suppliers’ claims against the Confidentiality Test, and reasons for agreeing for the information to remain confidential. The results of this audit indicate that processes to capture information about basic contract details and the reporting of existence of confidentiality provisions needs to improve.

Successive governments have agreed to comply with the Senate Order and its subsequent amendments. Under the Order, Ministers must table letters of advice that all entities which they administer have placed on the Internet lists of contracts valued at $100 000 or more, by no later than two calendar months after the end of each financial and calendar years. These lists are to:
>include the details of each contract which has not been fully performed or which has been entered into during the previous 12 months; and
>indicate whether the contracts contain confidentiality provisions or other requirements of confidentiality, and a statement of the reasons for the confidentiality.
The Department of Finance is responsible for providing entities with policy guidance on procurement, including confidentiality in procurement and compliance with the Order. Opportunities exist for Finance to improve advice through direct reference to the Confidentiality Test in the Commonwealth Procurement Rules, and disseminating better practice examples of entity assurance mechanisms.

The results of this audit show that there continues to be scope for entities to improve their assessment of suppliers’ claims for confidentiality of contractual information and implement more rigorous quality assurance processes for reporting confidentiality provisions in contracts. In the ANAO’s sample only 17 per cent of contracts were found to be accurately reported, taking into account the basic contract information and the correct type and reason for confidentiality provisions.

Despite the low proportion of contracts reported as containing confidentiality provisions, specific confidentiality provisions in contracts continue to be incorrectly used and reported in 2014. The ANAO’s examination of a sample of 101 contracts reported to contain confidentiality provisions, found that for 80 per cent of the contracts the use of confidentiality provisions did not comply with the Guidance or was misreported. The level of inappropriate use has increased by 17 per cent compared to the 2013 Senate Order compliance audit.
It should be noted that this report dealt only with the Department of Finance (Finance); Department of the Prime Minister and Cabinet (PM&C); Department of Social Services (DSS); and Department of Veterans’ Affairs (DVA). The 2013 Audit looked at the Australian Federal Police (AFP); Australian Securities and Investment Commission (ASIC); Department of Communications (Communications/DoC); and, Department of Immigration and Border Protection (DIBP).  I wonder if there is any study undertaken of which departments are dragging the chains, relative to others.

The 2013 audit reported
the Finance and Public Administration References Committee noted some concern with the integrity of contract data reported on AusTender. [Nevertheless,] the Committee recommended that the annual audit of Senate Order compliance be phased out.
It also reported
Consistent with the results of previous audits, fewer than 40 per cent of the contracts examined contained confidentiality provisions that had been correctly reported—with most of the issues primarily relating to misreporting of contract information rather than with the contracts themselves. Where there was inappropriate use of confidentiality provisions, it was generally due to a lack of understanding of how to distinguish between the various types of confidentiality provisions.

The contract information reported by agencies on AusTender is used to compile a number of government reports and provides statistics on the actual goods and services purchased by government. It is also used by suppliers and other stakeholders to monitor government business opportunities. This audit highlights that agencies need to improve the quality of data they report to make sure that it is accurate and reliable. The need for agencies to comply with multiple procurement reporting requirements is a factor which influences the integrity of the information reported.

The Senate Order is underpinned by the principle that the Parliament and the public should not be prevented from being able to obtain access to contract information unless there is a sound reason to do so. Once a contract has been awarded, the terms of the contract including parts of the contract drawn from the supplier’s submission are not confidential unless the agency has determined and identified in the contract that specific information is to be kept confidential. An examination of the Senate Order contract listings indicates that 1369 contracts were identified as containing confidentiality provisions. ANAO’s examination of a sample of 95 contracts in four audited agencies found that confidentiality provisions in three of the agencies were often misreported or not applied correctly. Fewer than 40 per cent of the contracts contained specific confidentiality provisions that had been correctly reported. When misreporting occurred, it was generally due to a lack of understanding of how to distinguish between and apply the various types of provisions.

Some agencies still included reasons for the inclusion of confidentiality provisions (such as ‘commercial-in-confidence’ or ‘protection of Commonwealth material’) which did not clearly categorise the information to be protected as set out in Finance’s guidance. There remains a need for agencies to check Senate Order contract listings for completeness, accuracy and timeliness prior to the publication of the listings and the tabling of Ministers’ letters.

Overall, the results of this audit, consistent with previous audit findings, indicate that the intent of the Senate Order—to provide transparency in government contracting—is being addressed. However, as explained above, the application and reporting of specific confidentiality provisions remains problematic and agencies should take steps to improve staff understanding around when and how the provisions apply. The quality of data reported in the Senate Order listings and AusTender also requires attention. The recommendations from the Finance and Public Administration References Committee's recent inquiry into the Senate Order, if implemented, can be expected to assist in streamlining the reporting requirements for agencies. Nonetheless, agencies should take steps to implement stronger quality assurance processes to support accurate data capture and reporting of contract information. This should also include providing staff with practical support, such as decision flow charts and examples relevant to their agency’s work, and encouraging staff to apply them.

Tuesday, September 22, 2015

Protests: "the worst outcome for both parties"

Guam is in the process, over the last few years, of making some essential, if not earth-shattering, procurement reforms.  Many ideas have been floated, but sunk by the Executive Branch, including the Attorney General's office, which is fixated on the idea that protests are typically "frivolous" and all protests should be deterred with protest bonds, as well as shortened -- and "jurisdictional" -- time limits (see, How Draconian are those procurement time limits, really?).

The notion that protests are not the problem -- but that the time to it takes to finally resolve them is -- has been coolly received; efforts to give effect to the authority which procurement agencies already have, to settle and resolve them before litigation, have been beaten back.

For mine, it is worth spending a bit of up front time to try to resolve disputes and get on to the acquisition, where the dispute is clearly without merit, or get on with acknowledging and the fixing the solicitation when the dispute is meritorious or even arguably so. Better a few more days, or weeks, up front than a few more months, or years, spent litigating the dispute to finality.

As the article below opines, "when both sides get so dug into their positions and don’t listen to each other it will lead to a legal action (i.e. protest).  This is the worst outcome for both parties....". 

(As usual in this blawg, I may take great liberties with articles presented here for my own instructional purposes. You need to read the original at the provided link, and not take my version of it as what was intended.)

Deflategate and federal procurement process, by Mike Sade
As I watched the "Deflategate" story unfold, I could not help but consider the parallels between this case and government contracting.

•Source selections officials (in most cases the contracting officer) have absolute authority to make the award decision.
•Clearly identify the process, how the decision will be determined, and what the outcomes will be for failing to meet the standards.
•Fairness in the process is paramount to a successful outcome.
•If an appeal is filed, the agency must ensure that due process is afforded to both sides.

In my experience, within the federal procurement process the rules are well defined; the process is clear; and, the avenues for appeal of a source selection decision are all in statute and regulation. Similar to the process in the NFL collective bargaining agreement.

What remains unclear is the fairness of discovery within the process.

What the NFL failed to do in the case against New England Patriots quarterback Tom Brady was clear to Judge Richard Berman. He did not question the commissioner’s authority; what he questioned was the fairness of the player’s ability to question or cross examine the “right” personnel, and the failure to clearly state facts in support of the finding. Often in government procurement this is what the debrief process should afford.

So what can a source selection official learn from this case? First, a solicitation must clearly outline the requirements, proposal preparation instructions, and most importantly the source selection criteria. Then, after proposals are submitted, if there are serious questions about what a proposal includes, or what the requirements mean, there should be discussions.

Too often I have seen source selection decisions made where there are unanswered questions, or where the government might disqualify a really good proposal because they are in a hurry to get to an award instead of finding the best solution. In the NFL case the commissioner relied solely on the Ted Wells report (i.e. the technical report in government procurement) without questioning what went into the report and how they came to the conclusion.

Second, I have often seen actions in arbitration or other informal ADR processes I would equate to a debriefing. The government is too focused on defending the award decision and not listening. In the “Deflategate” case the NFL failed to ask the right questions and allow the player to address those issues.

In a government debriefing the government should understand a debriefing is an opportunity to identify the reasons for the award decision as well as learn what they might have missed in the process of reaching that decision by listening to a losing contractor’s position.

Finally, when both sides get so dug into their positions and don’t listen to each other it will lead to a legal action (i.e. protest). This is the worst outcome for both parties because it is costly in terms of personnel cost and legal fees.

One of my favorite lines from the movie “Other People’s Money” is when Danny DiVito says “Our side has lawyers because their side has lawyers, but once you use them it gets all [messed] up.” This is not a slam on lawyers but it is the worst state of events when you have a mission to accomplish and distracting resources from accomplishing that mission to defending a decision which is detrimental to the agency mission.

So how does a source selection official avoid the pitfalls of “Deflategate”? Here are my suggestions to improve communications and avoid the pitfalls:

•During market research, understand the market, listen to industry to help define the requirements and outcomes, identify what the best source selection criteria should be, and how to rank those criteria.
•During proposal evaluation, ensure the technical panel clearly identifies strengths and weaknesses in a proposal, and if a proposal has some promise to provide the best solution, give the company the opportunity to address those deficiencies through discussions.
•During a debriefing, give a company a chance to clearly articulate why they felt they had a winning proposal. If the company identifies areas where the evaluation process missed something -- or was wrong – address how you will fix that mistake. If the company is wrong, educate them on how they can improve in the future.

My message is don’t fall in to the “Deflategate” syndrome by standing your ground without listening to others and admitting you made a mistake. It can only embarrass the agency and affect the mission.

Nobody wins in this scenario.

UPDATE October 4, 2015.

Apropos the idea of this post, that resolving and settling well laid disputes, rather than denying the and girding for battle, is better for everyone:


Oak Bluffs advised to reboot bid process for North Bluff seawall project
When Oak Bluffs selectmen unanimously voted on Sept. 22 to accept a $5.25 million bid from MIG Corporation to rebuild the new North Bluff seawall, contingent on additional Community Preservation Committee funding, it appeared that the long awaited project would move ahead. However, due to a bid complaint from Northern Construction Service, Oak Bluffs selectmen, on the advice of town counsel Michael Goldsmith, have called a special meeting this Tuesday to rescind their decision, and to re-bid the project.

“We awarded the bid and then a complaint was filed in regards to the language in the bidding,” chairman of the board of selectmen Mike Santoro told The Times on Friday. “Right away we filed an appeal with the Attorney General for a hearing next Wednesday, but in the process, we found it would be easier to rescind the vote and put it back out to bid again.”

At issue is the wording of the RFP which asked for the bid to be broken into sections—the “base bid” was for construction of the steel sheet seawall and boardwalk from the harbor to the fishing pier, along with hazardous waste removal. Addendums to the bid were requested for the cost of continuing the wall and boardwalk to the SSA terminal. Northern Construction did have the lowest bid for the entirety of the project, at $5.9 million.

However, all bids, including MIG’s, came in well over the $5.6 million the town had received in state grants for the project, once management fees and a 5 percent contingency fund was added to the bottom line. So a decision was made to begin with the most crucial part of the project, e.g. the base bid, where MIG Corporation came in lower than Northern Construction by $103,000.

Once selectmen rescind the bid on Tuesday, the project will go back out to bid, which is a 30 day process. Despite the month long delay, project manager David Lager told The Times that the re-bid would not significantly delay the project.

“It’s in our best interest to deal with the ambiguities in the RFP (Request For Proposal) and start with a clean slate,” town administrator Robert Whritenour told The Times. “A bid protest that goes to hearing and then an appeal can take a lot longer than a month.”

Mr. Whritenour said it is possible that the re-bid process could reduce, and possibly eliminate, the overage that required selectmen to request $230,000 in additional funds from the Community Preservation Committee (CPC), which was approved at last Monday’s CPC meeting.



No wonder it's so much fun

‘It’s more fun of the Philippines’ campaign violated procurement rules finds state auditor
According to the Philippines’ audit commission there was irregularities in the way the tourism authorities assigned their ad agency for a P1.2 billion (US$26 million) project that led to the hugely popular and highly awarded ‘It’s more fun in the Philippines’ campaign.

In a 2014 report released over the weekend, the government’s Commission on Audit said that tourism advertising contracts were not put out to public tender, and were renewed and extended by an amount larger than stated in the original contract. This violates Republic Act 9184, better known as the procurement law, the audit body pointed out.
Aquino need not approve 1.2-billion DOT ad contracts questioned by COA–Palace
Malacañang maintained on Tuesday that the Department of Tourism’s (DOT) P1.2-billion advertising contracts being questioned by the Commission on Audit (COA) for alleged irregularities did not require President Aquino’s approval.

“Unless fully justified by management, the renewal of advertising services contract with the advertising consultant and the extension of advertising services may not be allowed in audit,” the COA auditors said.

They pointed out that the procurement of advertising services was “not even included in the Annual Procurement Plan” of the department’s TPB constituting, the COA said, a violation of the provisions of the Procurement Law.

Monday, September 21, 2015

Integrity: Would that it were so simple and straight forward

But, the devil is always in the details.

First, this heart-warming homily, written by an obviously proud Papa.

Integrity in contracting: lessons from a young Princess
In our house of seven children, it seems that almost every day is an “Essay Day.” Last week, when caught in the middle of a lie — about an issue that was not even important —  one of my young Princesses was required to write an essay about INTEGRITY. The Princess did a great job:
Integrity means to be honest when no one is looking. [Paraphrasing C.S. Lewis] If you have integrity you will have more privileges and trust and friends. If you have integrity your friends will trust you because they know you are trustworthy in all things and at all times. . . . If you have integrity, you are honest, trustworthy and you are a good friend to have especially when your friend needs help with an outfit choice.
Ahh, would that it were so simple and straight forward. In the real world of procurement, the notion of Integrity gets wrapped around several axles, only one of which is honesty. It can include duties of loyalty, accountability, transparency and conflict of interest.

Take, for instance, the U.S. Procurement Integrity Act. It consists of four basic obligations:
A ban on disclosing procurement information;
A ban on obtaining procurement information;
A requirement for procurement officers to report employment contacts by or with a competing contractor; and
A 1-year ban for certain personnel on accepting compensation from the contractor.
Indeed, it gets wrapped around multiple issues of the broader topic, ethics. It is also equally applicable to government employees as well as private contractors.

Christopher Yukins is a renowned government contracts professor at The George Washington University Law School. Here is one of his power point presentations, from 2006 to the Interagency Ethics Council.

He first points out examples of the headline-making train wrecks, the obvious failures of procurement integrity. See, the Darleen Druyun/Boeing affair: Long Fall for Pentagon Star and Ex-Boeing CFO Pleads Guilty in Druyun Case; as well as the David Safafrian/Jack Abrhomoff affair: Ex-Aide To Bush Found Guilty; and the scheme that brought down California's former US Rep. Randy "Duke" Cunningham -- Rep. 'Duke' Cunningham Freed After Bribery Sentence.

He goes on to explore some of the moral hazard associated with the evolution of procurement methods from simple competitive bidder to negotiated contracts via the "best value" proposals, and to the "teed up" if not non-competitively bid task orders, where focus is on faster, more efficient contract letting than fair and fostered competition. Mix in an understaffed and decimated government procurement staff, and outsourcing procurement to private actors, and the ground is tilled for seeds of corruptible influences. He notes it has become a worldwide problem, and requires corrective training and sensitivity at all levels of government -- and industry.

As an example of some of the correctional efforts, Canada, in 2014, has adopted a government-wide Integrity Regime, applicable to both government procurement and real estate transactions.

Federal Government Tightens Procurement Integrity Provisions
With very little publicity or warning, on March 3rd, 2014 Public Works and Government Services Canada (PWGSC) announced significant amendments to the Integrity Provisions which are incorporated in all solicitations administered by PWGSC in relation to federal government procurement and real property transactions. The Integrity Provisions impose rigorous certification provisions which, if not complied with, can result in PWGSC deeming a bid to be non-compliant or result in the cancellation of an awarded contract.
 the list of offenses which result in debarment has been expanded;
 in addition to convictions, suppliers must now certify that they (including their affiliates), have not received absolute or conditional discharges in relation to the expanded list of offenses;
 suppliers must now also certify that they (including their affiliates), have not been convicted in other jurisdictions of offenses that have similar elements to the Canadian offenses listed in the Integrity Provisions; and,
 suppliers are required to impose matching integrity commitments on their subcontractors.
Good procurement is the cornerstone of good governance, and both rely on the honesty and goodwill of the government toward the people and of the trust of the people in the government. In that basic message, The Princess nailed it.

Tuesday, September 8, 2015

Hide and go seek

Procurement award challenges – the disclosure dilemma, by the UK law firm Mayer Brown LLP
Disputes about public procurement contract awards can pose evidentiary problems for both tenderers and contracting authorities. Does the tenderer challenging an award have enough evidence to support its concern that something has gone wrong? If it does not, will its request for more information be rejected as a ‘fishing expedition’?

Does the contracting authority, in turn, stick to the minimum information that it has to give, or, subject to protecting its confidentiality, does it, despite the time and costs involved, try to be helpful and provide more information, at the risk of opening the door to additional requests?

Bristol City Council’s award of a new contract was challenged by the unsuccessful incumbent contractor ["BMLL"] and the new contract award was automatically suspended. The council asked the court to lift the automatic stay. In deciding that there was a serious issue to be tried and rejecting the council’s interlocutory application, the court recognised the council’s dilemma but said that it should not refuse requests for documents relating, say, to the evaluation of the successful tenderer’s bid, or the bid itself, but then, on the application to lift the suspension, provide, for the first time, evidence about the process or the successful bid in support of its case.
The decision had a number of things to say:
Disclosure in procurement disputes is a perennial problem. On the one hand, an unsuccessful tenderer, whose knowledge of the proposed contract will often be detailed (particularly if, as here, he is the incumbent contractor), may feel instinctively that something has gone wrong in the tender evaluation process. But it can be difficult for him to obtain any information to back up that concern, beyond the sometimes scanty material supplied by the contracting authority ("the authority") pursuant to the Regulations. Any application for early disclosure may often be dismissed as a 'fishing' exercise. There is a real risk that, in such circumstances, there is an unlevel playing field, and the unsuccessful tenderer may never obtain the information he requires to mount a claim.

On the other hand, I quite see that the authority may wish to stand on his rights and refuse all requests for early disclosure, in part because of the confidential nature of the information (although that can usually be dealt with by way of a confidentiality ring), in part because of the time-consuming and expensive business of dealing with such requests, and in part because the authority may feel – often with good cause – that the unsuccessful tenderer will never be satisfied with the answers provided, and will always be seeking just one more document.

It is a question of balancing the interests of justice against the background facts of the particular case.

Contracting authorities have to work out, in fairly short order, whether, having provided the unsuccessful tenderer with the statutory minimum information, they are going to retain all other documents relating to the evaluation and the successful tenderer's bid, and let the unsuccessful tenderer take his own course; or whether they are prepared to be helpful and, providing that the confidentiality of the information is protected, offer to provide as much information about the process as they can.

In my view, however, what the authority should not do is to try and have it both ways. It ought not to refuse requests to provide documents relating, say, to the evaluation of the successful tenderer's bid, or the bid itself, but then, on the application to lift the suspension, provide for the first time evidence about the process or the successful bid in support of its case, either that there is no serious issue to be tried, or that he would be prejudiced if the suspension was not lifted. That approach is at least potentially unfair, because it is relying on potentially controversial material which the unsuccessful tenderer has been given no proper opportunity to consider.

I ... conclude that controversial material, and/or material which, because of the absence of prior disclosure, the claimant is simply not in a position to address satisfactorily if it is produced for an interlocutory hearing, should not ordinarily be deployed on an application [to lift the "suspension"/stay], because of the risk of unfairness. I consider that, in this case, the Council has sought a potentially unfair advantage through its attitude to disclosure. There are two reasons for that.

First, their solicitor Ms Nugent purports to give evidence as to how the [preferred] Refuge tender was evaluated (even though she was not involved in this process). She does this by reference to documents which were sought by BMLL but the disclosure of which was refused.

As it happens, BMLL were able to download from the Council's website a document which appeared to be the Council's evaluation of the Refuge bid. The Council have complained that this document has been wrongly obtained by BMLL, but I find the evidence on that unpersuasive. It is much more likely that this document was wrongly downloaded by a Council employee to this particular part of the website, so that it could then be accessed by others, including BMLL. A Council's inability to use its own website facilities properly is hardly unusual.

But now, in order to argue that BMLL do not raise a serious issue, the Council have disclosed a detailed scoring sheet for Refuge that is in a different and fuller form to the one BMLL downloaded from their website in January. As Ms Metters of BMLL says...:

"No explanation was provided as to why it was suddenly felt appropriate to disclose that document where previously it had been withheld. This document has caused us further concern about unequal treatment because it shows that many points of criticism about Refuge's bid were taken out of the feedback that was apparently given to them with their standstill letter, potentially to justify the high scores that were awarded."

I regard it as potentially unfair for the Council to pick and choose what documents they provide and when, as it suits them.

Worse still in my view is the copious evidence in the witness statements of Mr Anderson (a Service manager with the Council) and Ms Nugent, which seeks to extol the virtues of the Refuge tender itself. This is done in order to persuade the court that there would be prejudice to the Council and the service users if the suspension was not lifted and the contract with Refuge was delayed. But it is difficult for BMLL to respond in any detail to such material, when it was not provided when they asked for it. Moreover that problem is compounded here because the evidence consists of a series of assertions based on what it is said is in the Refuge tender, as opposed to the specifics of the tender itself (which has still not been disclosed).

Often, in a suspension/injunction dispute in a procurement case, the contracting authority will accept that there was a serious issue to be tried. But in the ordinary procurement case, where there may be points to be made on both sides, it will often be unproductive for the parties (and a waste of judicial resources) to spend a good deal of time arguing about the merits or otherwise of the underlying claim. The threshold is, after all, a low one: [***] first that, in cases where there are clear issues arising out of individual scores, it will be difficult for the court to conclude that there is no serious issue to be tried; and, second, that this difficulty arises, at least in part, because the relevant documents have yet to be disclosed.
The Court then evaluated the claim to lift the stay/suspension by weighing the relative damages each party might suffer if the stay were sustained or lifted, considering factors described as "the balance of convenience". 

Central to the result was this important element:
"there is a public interest in the avoidance of delay and ... there will be a detriment to that interest if it is necessary to wait a further six weeks .... I do not, however, consider that detriment to be sufficient to outweigh the strong public interest in compliance with the law and the benefits that implementing the scheme in a lawful way may be expected to bring."


There is Guam Supreme Court judicial authority and Public Auditor administrative review authority for the proposition that parties cannot be charged with knowledge of facts unknown to them when they have been withheld by the government. See, Guam Imaging Consultants, Inc. v. GMHA 2004 Guam 15, ¶ 36 (coincidentally also a procurement case involving issues related to the stay and its lifting), and In the Appeal of Town House Dept. Stores (etc.) OPA-PA-08-011.

Guam procurement law also specifically states that procurement records are public information, generally, 5 GCA § 5251 (e.g., 2 GAR § 3114(h) re nondisclosure of proposals/tenders, which in any event would not include the evaluation records). Further, 5 GCA § 5485 provides an expedited judicial action that may be brought by "any member of the public" to obtain withheld "procurement data". The time limit for bringing a judicial review of an administrative protest decision is specifically "tolled" so long as the disclosure action is pending (5 GCA § 5481(a)).

Good governance is rarely sexy

Detroit's Cruise to Nowhere, by Charles Chieppo, a research fellow at the Ash Center of the Harvard Kennedy School. Usual caveat applies: read the original story at the link, because I take liberties in presenting materials, as case studies and other teaching tools.
When the Detroit/Wayne County Port Authority built the $22 million Carl M. Levin facility, named for Michigan's longtime former U.S. senator, the idea was to entice ships from the growing Great Lakes cruise market to dock there. The good news is that dockings are up; the bad news is that they're holding steady at one so far this year after coming in at zero for all of 2014.

U.S. Customs officials refused to staff the terminal so passengers could disembark. According to a Customs spokesperson, "The facility … has not been completed and does not meet the IT and security requirements necessary to properly process cruise vessels and/or cruise passengers. These and other issues were discussed with the Detroit Port Authority over four years ago."

Port Authority Executive Director John Loftus and Port Authority Commissioner Alisha Bell trot out the old warhorse that the facility attracts jobs and visitors. Numerous studies, of course, have documented that projects like these rarely stimulate economic activity on a level that comes anywhere close to justifying their costs.

Bell makes another argument for the project: "It's a beautiful space for weddings and events that enhances our visibility." Weddings, in fact, seem to be the terminal and dock's main business. Continental Services, a catering firm whose founders are big contributors to local officials' election campaigns, holds them there. The company also owns a luxury yacht and offers party cruises from the dock. Lest you think that the fees from weddings and party cruises cover the $22 million facility's costs, all of $140,000 was collected from the company last year.

Even though the terminal and dock isn't a city project, such wasteful spending is particularly hard to stomach in Detroit, where local residents have already endured so much. The city's 2013 bankruptcy declaration, the biggest municipal bankruptcy in American history, has forced retirees to absorb genuinely painful pension cuts. Detroit's population is down to around 700,000 from a high of 1.9 million. So much land has been abandoned that one of the revitalization strategies being pursued is urban farming.

Elective politics rarely attracts small egos, so it's only natural for officials to want to do big things. But good government is rarely sexy. Sometimes it requires resisting the siren song of projects that rely on patently unrealistic economic assumptions.
I like to say, good governance is the corner stone of good community, and good spending through good procurement is the corner stone of good governance.