Imagine you’re an expert carpenter. And, solely out of altruism, you spend six weekends a year volunteering to build houses for Habitat for Humanity. You wake up early on a Saturday morning, walk away from your family, and spend two full days putting up a house for the greater good. Habitat’s not paying you in anything but the lunch and snacks they bring you, but its fulfilling – you’re giving back.
You get so good at leading teams to build houses you get a call from Jimmy Carter. Carter calls you up and invites you to Habitat for Humanity’s headquarters for lunch to thank you for your hard work.
But driving up to Habitat’s headquarters, things seem out of whack. You, as a builder can take one look at it, and understand that the place is about to fall apart. Structural beams are in the wrong place. There are two toilets in every stall in the bathroom. The water in the building is pumped into a large pool at the top of the building, and then trickles down to where it needs to go, and the pool is held up by very narrow wood beams. And the furnace and water heater are insulated with dry pine straw.
You don’t even want to go into the building, but it’s to meet president Carter, so you decide to essentially risk your life and get in the elevator and hit the button to go to the top floor. And of course even though you’re the only passenger on the elevator, the car stops at every floor on its way up to the top.
By the time you get to Carter’s office you’re terrified. Now this is an organization you’ve given a lot to, and that you care a lot about. You certainly don’t want the building to fall apart. You’ve got to say something, or at least figure out how an organization with so much access to excellent carpenters, plumbers, and electricians, could end up with such a terrible, dangerous building.
You sit and say to the former president, “Thanks for having me here for lunch. This building is something else, isn’t it?”
President Carter responds, seemingly well aware that his building is a disaster: ”It’s amazing, isn’t it? Have you ever seen a more poorly designed building?”
“No, no Mr. President, I haven’t. It’s really dangerous – it’s not only aesthetically bad, it’s also structurally unsound.”
“Oh, I know. Our contractors told us it was. They’re fixing it now, thankfully. After they’re done fixing the insides, hopefully we’ll have enough budget to upgrade the aesthetics, too.”
“That’s a relief, Mr. president. Who built this thing? I hope they’re not building any houses.”
“Well, we bid this out and the only people who bid on this was Master Builders, Incorporated or MBI.” He says.
“I had no idea MBI still built buildings. Who is cleaning up their mess?” you ask.
“Well, MBI is on the hook to fix it too. The good news is, they’ve put 50 new people on the project. Including 45 new project managers.”
“Mr. President, I’m sorry, but you really should switch vendors. I wouldn’t trust the people who built this building to clean it up.” you say.
“Well, it was a 500 Million dollar project and there really aren’t that many builders out there that can qualify for a project of this size and scope. So we have to use them. They’re the only ones that have a track record of doing half-billion dollar projects.” he says.
“500 million dollars? For this office? How many people do you have in here, 60?”
“It has room for 60, but 30 of our people work in remote offices – out in the field building houses.”
“Mr. president,” you say, “I don’t know how to tell you this, but it’d probably take the crew I had this weekend to build a habitat house about 500k to build an office building like this. Half a billion dollars more than you need to build a town, not an office building.”
He raises an eyebrow: “I think there’s a lot more that goes into building a building of this size than one of the residential buildings our volunteers build. We have to be compliant with many more building codes.”
“Like what?” you ask.
“For instance, we need to be accessible to people with disabilities. This means we need ramps to our doors, urinals that are installed a bit lower, and braille on our elevator buttons. And we need to control access to the building. Stuff like that” he says.
“Mr. President – that’s generally cosmetic stuff – it shouldn’t increase the cost and scope of your building by 1,000x. And if you build your building with standards, most of that stuff is already done for you. Let me and a team come in here and fix this. We’ll do it for a tenth of the cost, and you can take the money you were planning to spend on your building, and spend it on building more houses and putting more people in them.”
“Really? I have to confess I don’t know much about actually building houses these days. I’m going to look into this. But for now, let’s just enjoy our lunch.”
You find president Carter charming, and he takes a liking to you too. At the end he gives you his card and says, “we really appreciate your help. And if you know how we can do anything better, you call me directly and let’s talk about it.”
You finish up your lunch with president Carter and get out of the building as soon as you can. Then on your way home, you drive past a home that you built for Habitat. It’s empty. By the looks of it, nobody’s been on the lot since the press event that happened right after it was built. You decide to take a look around at the other houses you’ve helped build. They all seem to be in some stage of disrepair and neglect.
By the time you get home, you’re outraged. You decide to sleep it off, but the neglected houses keep you up. By 9am, you find yourself with your phone in your hand dialing president Carter.”
“Hey there! Good to hear from you! I’ve been asking around about our building issue. It seems like MBI is the only builder that’s managed to go through our vendor qualification program, and thus they’re the only ones qualified to do the building. But if you went through the process, you could probably bid on the project and compete against them in the open market for the next round of work.”
“How long does that process take?”
“To register? I don’t know. Shouldn’t take that long, should it?”
“I guess not,” you say, “but Mr. President, I have a more pressing question – why is it that all the houses I helped to build are all vacant and neglected?”
“Ah, yes that’s really unfortunate. But the problem is, we don’t have the budget to hire the people needed to keep the property maintained and to put them in houses.”
“But… you’re spending a half billion dollars on your office building. Do you know how many people you could put in houses with that money?”
Carter chuckles. “Wow, that would be a lot, huh? Hey – I’ve got to run to a fundraiser. But it’s good talking to you. I’ll introduce you to our procurement people about getting registered as a vendor for us.”
You’re frustrated, but think you can solve the problem. You’ll just form a company with your friends from Habitat to get that building’s cost down so that money can get freed up, and then people can get in those houses. A few days later, you get a terse email from Habitat for Humanity’s procurement division:
“Dear Ms. or Mr. Smith,
Please see the attached documentation for signing up to be a supplier for Habitat for Humanity. Please note that your business must meet the minimum requirements in order to bid on our projects.”
Out of the 14 attachments on the email, you manage to find the document (titled 2012_AU776-REQS.PDF) describing the requirements. It says:
All Vendors must be at least 2 years old. Vendors for projects that cost more than 150,000 must have a one billion dollar liability insurance policy.
Well, so much for that. You won’t even be eligible to bid on the project for another two years. And there’s no way you’ll get an insurance policy like that. Only huge mega corporations have insurance policies like that. You call president Carter.
“Hey, it’s good to hear from you. You get connected with our procurement people?”
“Yeah, I did. It’s unfortunate though, because they say that I have to be two years old and have a huge insurance policy in order to even get a seat at the table to help you out. So, I guess that’s that.”
“Well, why don’t you partner up with an existing company and just subcontract through them. I think our procurement people have encouraged a mentoring program for this.”
You have to admit, you hadn’t thought of that. So you call up the procurement people at Habitat. They’re very accommodating and they give you a list of companies who say they’ll partner up with smaller contractors to “learn the trade.”
You set up meetings with MBI’s biggest competitors: Dynamic General Builders, Whiskey Elon Jackson, and Whiterock. And when you meet with them it’s clear that they don’t know anything about building houses. Not a single one of them uses termite treated wood, for instance. They all connect copper pipes to iron ones, not understanding that over time, that will cause corrosion and the pipes will have to be replaced. And when you mention these issues, they’re condescending about it: “Listen,” they say, “you may know a lot about building homes – but you have no idea how to build enterprise-grade buildings. You have to do things this way. Work with us and you’ll learn this in time.”
You just can’t bring yourself to do it. 99% of all new houses today use PVC piping and termite treated wood for damn good reasons, and you’re not going to go back and use tools and techniques from 50 years ago.
Then you realize it: this is, of course, the problem. This is the reason why the building costs a half-billion dollars in the first place. Habitat is trying to build a modern building using the tools from 50 years ago. It’d be like trying to buy a car with 300 horsepower by buying 300 actual horses and trying to get them to all go at the same time. Horses cost $5,000 each.
Defeated, you head home. The phone rings, and it’s president Carter.
“Hey there – I was calling to see if you’d lead a build-a-thon this weekend to put up a house in your neighborhood. Homelessness is way up because of the economy, but if we work together, we can give people a helping hand up.”
You get sick to your stomach. “Mr. president, I’d be happy to help, but I can’t very well build houses for you for free while you’re paying people a half billion dollars to build yourself an office. And I know you don’t have the budget to actually maintain and get people in the house.”
“Oh, I’m sorry to hear that. Is there anything I can do to change your mind?”
“Yes. You can make it so that your own volunteers who’ve built these houses can come in and fix yours. And that starts with changing who can compete for your contracts,” you say.
“Gosh, I’d really love to do that, but to be honest with you I really don’t want to pick a political battle with our procurement people. It’s an issue that doesn’t win me a lot of support with my board. They’re much more concerned with getting new homes up or meeting fundraising numbers,” he says.
“So you don’t think that spending a half billion dollars on your office building is a high priority problem?” You say, steaming.
“Well, I do. But I don’t think my board is going to let me do anything about it.”
“I think they’d be really concerned about it. Who is on your board?
“Well, we have a ‘representational board’” he says, proudly. “80% of the board votes belong to our members – people who donate under $250, and people who volunteer. Then we have 20% of the board represented by our large corporate sponsors: people who have given more than $50,000.”
“Really? Do those people usually vote on stuff?” You ask
“No, most are just happy donating. It’s the corporate sponsors who normally care about our operations.” he says.
“And who are they?” you ask.
”MBI, Whiskey, Dynamic General, Whiterock, you know them.” He says.
You want to give up. But you think about it, and for some reason, you just can’t.
“Mr. President,” you say, “we’ve got to fix this procurement problem. And if it’s not an issue for you now, I’ve got to make it an issue. But for now, no. I can’t lead the build-a-thon this weekend. I’ve got a bigger problem to solve than building houses on the cheap.”
“Okay!” he says. “Well, hope to hear from you soon then!”
You grin and say ”You bet!”