By Bill Rusteberg
If you’re active in vying for public sector business we extend our deepest sympathies. It’s a tough world out there dealing with politicians and bureaucrats.
It’s an entirely different sales process, one that can be frustrating to newcomers chasing publicly funded, non-disclosed commission dollars and fees.
Yes, that’s right. The new brokerage disclosure rules don’t apply to political subdivisions. That’s good news for brokers working off token disclosed commissions/fees but whose real income is derived off hidden commissions/fees that would make Victor Lustig blush.
Dog gone it, got off message again. Back to the main thrust of this blog posting………………
A public bid process invariably utilizes a point system to determine the best offer. The highest score gets the nod, or at least that’s the intention.
Several years ago we assisted a TPA in a public bid process on a large school district in Texas. The TPA was new to Texas with no name recognition. The incumbent TPA was Blue Cross, a household name. Their “caring” card was recognized far and wide and gave plan members the comfort of knowing they had the best insurance in the universe.
We had zero chance of getting this business. After bids were turned in and the district’s consultant evaluated all offers we were ranked fifth, dead last. Then the interview process began. Instead of limiting the candidates to the top two or three, it was decided to interview all five vendors.
I was tasked with making a 15 minute pitch to the Board of Trustees. ‘How in Hell are we going to go from dead last to first place in a 15 minute pitch when the district’s trusted consultant was recommending someone else?” I thought.
The point system had to be the key. I went through each item one by one, describing how we met each in full and should be awarded full points for each. “We met this one, so we should get all 25 points here, we met this one too and we should get all 40 points on this one” and so on until I concluded “Based on your point system we should get 100 points and be in first place as I’ve shown here tonight!”
The next day the consultant called to inform us we were now ranked number 1. We were awarded the contract.
So what happened? How can a 15 minute presentation make a difference in the award of a $23,000,000 contract to a vendor no one had ever heard of and who was ranked dead last by an “expert and trusted” consultant?
Am I that good? Answer is “No Bill, you’re not that good. It had nothing at all to do with your performance and ability to persuade. It was politics that gave you the most points, nothing else.”
“I don’t understand! I don’t play politics! I’ve never met with any of the board members. I’ve only dealt with the district’s consultant.”
After basking in glory and time went by I eventually discovered why we were chosen. It was indeed politics that drove the decision. The board was split. One side wanted to keep Blue Cross. The other side wanted another TPA. Each was represented by local brokers. When neither side could agree which broker to select, they defaulted to us as, it turned out, a temporary compromise. We got the business through an inverted political decision.
So there’s two sets of point systems in the public sector. One is for public consumption and the other is for internal use only.
Here’s the internal use one:
_____25 points – Price
_____10 points – Reputation
_____15 points – Ability To Meet Members needs
_____50 points – Politics
Post script: We kept the case for 2 tumultuous years. Administration didn’t want us. The board of trustees wasn’t happy with their compromise. Plan members didn’t want us either. In a packed board meeting two years later, with the audience dressed in T-Shirts enblazened with the message “BLUE LIVES MATTER”, the board voted to go back to Blue Cross.