Achilles Heel of Municipal Golf Torn – Irreparable Damage to the Business of Golf

We recently learned why municipal golf courses will continue to underperform their peers. Five examples within the last 60 days underscore why the vast majority of these courses have no chance.

What is broken? Simply, the municipal procurement process is so bureaucratic and institutionalized that it has rendered timely and meaningful acquisition of goods and services nearly impossible.

It is this recognition that leading consulting firms, like the very astute Henry DeLozier, a principal at Global Golf Advisors, and recently ourselves, had largely withdrawn from submitting proposals only picking and choosing carefully.

The municipal procurement process is strewn with inefficiencies, secrecy and extended timeframes to accomplish the relatively simple.

While they hail their independent, comprehensive and unbiased review process, the selection of a firm is completely subjective and encased with a scoring system to create the illusion of propriety where none exists. Review committees are formed with most largely unqualified people to evaluate the products or services being acquired.

An example of this is found in a recent bid.   The highly qualified and knowledgeable Director of Parks had a score dispersion of 4 points between the firms she rated first and third. Two Golf Advisory Committee members, with a love for the game and little knowledge of the business, had a dispersion of 24 points and 11.5 points, respectively between their highest and lowest rated firms.

By the simple mathematical process of totaling individual scores, the least qualified to judge determined the firm selected.

In so doing so, they passed on the opportunity to have the most talented female golf executive in the United States guide them as they cited the reason for her rejection “No direct project history exactly to ours”.   She was never contacted for an interview.  This PGA Master Professional managed two world renown courses and oversaw the Public Golf Division for a leading management company before creating her consulting firm.  Instead, they choose an institutional entity that has no operational experience and who is skilled at highlighting operational flaws in long boilerplate reports that provide little strategic value.

The prerequisites to submit a proposal is sometimes overbearing and ludicrous requiring a response be organized and tabbed in a precise format. Other requirements create a cost where the expected probability of success is so low that investing the time to submit a proposal is questionable.

To illustrate, with the submission of a bid for another municipality, they require respondents:

“Provide a Certificate of Insurance with a commercial general liability limit minimum of $1,500,000 per occurrence that must list the City as an additional insured on the Commercial General Liability Policy.”

Failure to do so results in immediate disqualification. The cost of such insurance is $1,230.   A vendor should only be required to obtain said insurance as a condition of a contract award.

You would you think complying with such would garner respect and establish a mutual dialogue.

Seventy-five days after proposals have been submitted, the City’s Purchasing Agent has lacked the courtesy to notify vendors of the progress being made in reviewing proposals only stating in an email at the time of bid opening:

“The evaluation team is still making their decision, and we have no updates to share at this time. It is the City’s policy to not release any results for a Request for Proposal (RFP) until a contract has been executed.”

Such is surprising considering the City Manager is one of the nation’s best, and in his prior position, shepherded a $4 million renovation by an acclaimed golf course architect that has produced a renewed excitement and increased revenues for that facility.

Another example of peculiar requirements can be found within RFPs issued by another municipality that states:

“The Evaluation Committee shall reject Proposals which do not meet the following minimum requirements.”

Of the ten items listed, of note is item #3:

“3. Possess all necessary current licenses and registrations, as applicable, either within the firm or through independent consultants, to qualify under State law to perform the stated services.”

Further, complete proposals must also include 12 items to preclude disqualification such as submission of the following:

f.  If… the company is not registered in the State, proof of registration with the Secretary of State as “foreign” corporation authorized to do business in the Commonwealth. See website at http://www.sec.state…;

Such registration should be required after the award of the contract.

Beyond the nits and nats designed to create the superficial appearance of an impeccable audit trail in the selection of a vendor, there are substantive issues where purchasing has gone amok.

We recently learned of a purchasing department that authorized the expenditure of $300,000 to undertake a feasibility study and drafting all of the construction documents for renovating a golf course. What they didn’t do is ascertain if there was sufficient money to fund the project via internal capital or through underwriting a bond. There wasn’t, and the money was largely wasted.

Even when funding is available, the cycle from concept to implementation can often exceed two years. For another municipality, City Council authorized a master plan in November 2015 and allocated several million dollars for the renovation. With the submission of the plan is April 2016 and the identification of the investment quantified, the costs were included as line-items in the City’s budget for approval in October 2016.

By the time the approval is received, an RFP has to be issued, and a winning vendor selected to create the construction documents. Once the documents are drafted, another RFP has to be issued, and a winning vendor selected to do the construction work.   Each process takes about 120 days. Thus, they will miss the 2017 window for renovation. It is likely that the improvements will not be complete until September 2018 forfeiting thousands of dollars in incremental revenue from the benefits of the renovation.

We recently interviewed a new Director of Parks and Recreation who had a successful business career. He has taken back by the attitude of government workers regarding money. He commented that they view the funds paid by taxpayers as entitlements and gifts for which they are not held accountable, sort of like a Dad giving their children an allowance to do what as they please.

It any of this likely to change? Unfortunately not. These deficiencies shall remain is why municipal courses can’t effectively compete against their daily fee peers.   Whether it is changing rates, retaining qualified personnel or acquiring goods or services, all are unencumbered by governmental constraints that render effectively managing a business near impossible.

Why comment on something that is not likely to change?

Our niche is serving the innovators and early adopters to create value for golfers on a foundation that optimizes the financial performance of a golf course.

Because municipalities serve as the buoy in the water, it is important that these flaws be brought to the light of day with the sincere hope that over time, change will occur. We realize in the short-term we may offend those who are inefficient as they are part of the late majority and laggards. If this is the cost of moving the industry in a positive direction, we will make that investment for we are outliers that create astute insights that generate meaningful value for those who truly care.  Are you one?