Sam Springer, the supply manager of the City of Springfield, has a hot political potato on his hands. The situation sort of reminds Sam of an experience he had when he tried out for his high school football team.
Sam was the fourth team left guard. One day in a practice scrimmage, Sam picked up a loose ball. Unfortunately, Sam didn’t know which way to run.
Last month, Sam had solicited bids for a highly automated garbage truck. Only three responsive bids had been received by the specified bid opening date. The prices, F.O.B. Springfield, were as follows:
- Mangler Garbage Trucks $95,472
- Springfield Sanitation Trucks, Inc. $99,712
- Chattanooga Cruncher Company $110,000
Mangler Garbage Trucks was located in Warren, a city some 300 miles from Springfield. The second lowest bidder was Springfield Sanitation Trucks, Inc. SST, as the firm was known to most locals, was Springfield’s largest employer.
Sam checked with the chief of the Sanitation Department. The chief said that although he would like to see SST get the order, any of the three trucks would be fine with him. He felt that they were about equal in performance, quality, and maintenance cost.
When the contents of the bids were made public, SST’s president, Paul Percivel, contacted Sam’s boss, Tim Johansen, the city manager. Mr. Percivel acknowledged that his bid was higher than Mangler’s. He then pointed out that SST recently had to lay off workers due to slack orders. He concluded by saying, “Tom, you and I both know that unemployment is the number one problem in Springfield. How can we get manufacturers to locate here if we don’t show them that Springfield takes care of its own?” The city manager winced on this one. He currently was engaged in extended discussions with the vice president for logistics of one of the Fortune 500 companies. This firm had narrowed down its alternatives for a new 2,000-employee plant to Springfield and Warren.
After Mr. Percivel left, Mr. Johansen stopped by Sam’s office and discussed the situation. After hearing what the city manager had to say, Sam threw another coal on the fire by reporting on a discussion he had had with the sales manager of Mangler Garbage Trucks. The sales manager had opened the discussion by saying that he expected Springfield Sanitation Trucks to exert political pressure on Sam to buy its trucks. He continued by saying, “Not only will we save you nearly $5,000, but don’t forget that Mangler purchases $3 million to $4 million worth of components each year from Springfield manufacturers.”
That evening, Sam attended the monthly meeting of the Springfield Supply Management Association. He asked three of his dinner companions what they thought about the situation.
Wilbur Wilson, supply manager of Eagle Tool and Die, offered his advice. “I’d give the order to SST. You’ve got to do business with your friends here in Springfield. We have to keep Springfield dollars in Springfield. We’ve been operating this way at Eagle for years.”
On the other hand, Chuck Connors of Excalibur, Inc., insisted, “Sam, if you compromise now, you’ll start something you can’t stop. Every fly-by-night outfit in town will hound you for a piece of city business. I’d keep Springfield’s good name in mind. Suppliers tell me they think we’re an honest bunch. That’s why they always give us such good service and help so much on the standardization and value analysis committees.”
Roscoe Stevens of Needmore Corporation added this diplomatic note. “You can’t throw the bids out, Sam, but you’ve got to watch your step. The Taxpayers’ League will scream if you give the order to SST, because they were not the low bidder.”
- What factors should Sam consider in making a decision?
- What should that decision be?
- What should have been done to avoid some of the problems Sam faced?