During March, The Haines Agency, a Stephens City-based security firm began providing personnel for Lake Holiday’s front gate. Their friendly staff is a nice addition to the community. We think it is important to look at the process by which the board of directors made the decision to select Haines.
GM Ray Sohl solicited proposals from security firms by sending out Requests For Proposal (RFP). LHCC’s Front Gate RFP sets forth what LHCC expects of the operator of the front gate.
So far, so good.
But Ray Sohl apparently forgot to include important requirements listed in the RFP in the actual contract. For example, the RFP requires that contractors provide pre-employment “screening, background investigation, drug testing, and a minimum of 40 hours of training.” This requirement never made it into the signed contract. Sohl apparently considered the training requirement very important. During his presentation to the board, he discusses “ongoing” problems with Wackenhut’s operation of the front gate and states: “Training is at the root of it.” Despite having a training requirement in the RFP to address an identified problem, there’s no such requirement in the contract. Oops.
Sohl also makes a point of comparing the pay rate for Wackenhut’s employees and Haines’ guards. He relates:
Haines offers $12 an hour, so he gets a much more…better caliber of employee.
Really? A Lake Holiday homeowner has reported to us that Haines’ pay rate is actually $10 per hour – not $12 as Ray Sohl represented to the Board. Our focus is not on Haines’ actual pay rate. Rather, our focus is on whether Ray Sohl made accurate representations to the board and whether the board carefully scrutinized those representations. The Haines contract calls for LHCC to reimburse Haines $14 per hour. If Haines were paying its employees $12 per hour, that would leave Haines only $2 per hour to cover unexpected overtime, payroll taxes, insurance, and overhead – and make a profit. With a $12 per hour pay rate, there’s very little – if any – margin for Haines. In fact, if paying higher wages to get a better caliber of employee were so important, directors should have insisted that this requirement be included in the contract. Just like the training requirement that went missing, there’s no pay requirement in the contract. A director applying common sense and a reasonable degree of scrutiny would have caught the fact that Sohl’s claim about pay rate was simply not believable.
Despite these glaring holes in Sohl’s presentation, LHCC’s directors ask hardly any questions. No one questions why important provisions from the RFP are missing from the proposed contract. Only 1 director questions the guard uniform that Haines specifies in its proposal: a military-style black jumpsuit with jump boots and beret. The rest of the board was apparently ready to approve the proposed contract with that uniform! With the sole change to the uniform, after a few chuckles the board approves the front gate contract unanimously.
Lake Holiday needs directors who can do simple math. 24 hours per day X 365 days per year X $12 per hour would leave essentially no margin for Haines to perform for the quoted price. Sohl’s promise of a $12 per hour pay rate was simply not credible. The directors should have recognized that Sohl’s presentation was riddled with inconsistencies. Instead, they were wowed by his trendy management-speak, including phrases like “invested for the future” to describe Haines. Sohl should have paid less attention to cute phrases and more attention to making sure commitments in the RFP were in the final agreement.
Lake Holiday also needs directors who can critically evaluate important contracts. Why didn’t any director recognize that there were no training and screening requirements in the Haines contract – particularly when Sohl said lack of training was a big source of complaints?
LHCC’s directors accept the incredible without question. In this instance, its GM didn’t demonstrate a grasp of contract-writing basics and making accurate, straightforward presentations to the board. The combination of an unquestioning board and a GM that can’t execute the basics could be very, very costly.