Negotiation Bait and Switch

I was pretty frustrated after my negotiations with Florida State Parks on Friday.  We were apparently the winning bidders for one of their park concessions, but their process requires a "negotiation" after the winner is accepted, something that is very unusual in these situations.  Typically, these Request for Proposals (RFPs) for these projects include all the minimum requirements the bidders must accept.  The RFP then lays out a point system that will be used for scoring the submissions (e.g. 20% of score on bid rent, 20% on financial stability of bidder, 30% on experience, etc).  Usually, the relevant agency reviews proposals to see if they meet all the minimum requirements, throwing out proposals not meeting these minimums, and then choose a winner from the remaining proposals based on the scores.

In this case, in the Florida State Park RFP, there was no minimum rent payment set (rent is usually bid as a percentage of concession sales).  Also, in the scoring, of the 800 total potential points, only 20 or 2.5% were assigned to the size of the bid rent payment.  The other 97.5% of the points were allocated to experience and services offered, etc.

Well, after spending a lot of time and money on the bid response itself, I was called to Tallahassee as the winning bidder to "negotiate".  After we sat down, the first thing they said was "your bid of x% is too low -- we won't accept anything less than twice that".

This is a classic bait and switch.  I assume it is legal under Florida government contracting law but it is illegal for federal contracts and in most other states.  They caused me to spend a lot of time and effort bidding and then flying to Florida on the assumption that there was no minimum rent amount and that the rent amount was a trivial requirement, as compared to quality and experience.  In their negotiations, the revealed the opposite.  They are hoping that now that I have gone through all this time and effort, I will agree to up the $ given my sunk costs.  What they don't know is that I am the world's number one believer in "sunk costs are sunk and therefor irrelevant".

If Best Buy issued an ad in the paper saying they were selling Sony plasma TV's for $500, and I rushed to the store only to find no $500 Sony's for sale but instead a pushy salesman trying to sell me up to the $2500 model that is on hand, they would be breaking the law in most states.  What Florida is trying to do is no different.

I am going to tell Florida that I need a few more days to respond to their hijack demands concerns.  I was taught long ago not to get emotional in a negotiation, and right now I am emotional.  When I calm down, I will sit down and try to calmly evaluate if it is still a good deal at twice the rent.  I will also call up some other concessionaires in Florida to see if this is an isolated incident or see if it is representative of ongoing arbitrary behavior I can expect in the future.

  • Ric Locke

    My experience is nearly twenty years old, but is otherwise almost identical. We told them to stuff it and went home; the contract went to a competitor, which suited us fine -- it's always good to see the competition losing money.

    They appeared to be "honest" in the sense that the later concessions weren't going to individuals. But one of the reasons you won the first cut is that you didn't know this goes on, so you didn't allow for it in your initial bid, which was therefore very attractive.

    I'd be interested to know what happens if you stick to your guns. Your post, below, about the other contracts you've won indicates that you might be able to afford it.

    Regards,
    Ric

  • James Burns

    I know nothing about the area of law, but it looks like this concept is sanctioned by law in Florida as long as they run the process properly. They seem to have 3 methods of procurement, sealed bids (your traditional low bid wins), sealed proposals (reads like a sealed bid but maybe more flexibility by the vendor to propose the solution), and sealed replies (make an offer and the state will negotiate from there). This is all set forth in State Statute 287.057 (see http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0287/SEC057.HTM&Title=->2003->Ch0287->Section%20057#0287.057).

    I would make a guess that you actually submitted a "sealed reply" without realizing there is a difference.

    Anyway, it's Florida, why would you want to go there?

    James Burns