A Fantasy

Not Drug Induced, but Will Seem So

Your Ostrich Killer has spent about 30 years working, one way or another, for your US Government.  I've seen contracts and contract negotiations.  Over that span of time I've fantasized about how I would conduct negotiations with the government.  

Without further ado, let me share a short story that fantasy prompted:

I had a dream last night

And woke up smiling.

The dream went something like this, although I confess to expanding it for this short story:

The setting is the corporate offices of the owner of a major American manufacturer.  Six months earlier the Owner had bought the company at great expense.  He is the sole owner.  There are no shareholders, no board of directors. There are only two people in the owner's office, an assistant Secretary of Defense - named Pat - and the owner, named Bill.  The Assistant Secretary of Defense wants the manufacturer to bid on building a new type of weapon system.

  Bill: (upon completing his reading of a lengthy technical specifications and requirements for the future weapon system): "I don't know that we can build such a weapon system, sir."
  Pat: "We believe your firm may be the only one in the world capable of building such a weapon system.  You are the very best at what you do."
  Bill: "Thank you.  We and our customers agree."
  Pat: "We are puzzled why you didn't respond to the RFP (Request for Proposal) to undertake building that weapon system."
  Bill: "Doing business with the government is vastly unpleasant and overly complicated.  But even if that weren't so, the terms of the proposed contract are unsatisfactory."
  Pat (surprised): "But those are standard government contract terms!"
  Bill:  "Yes.  We know that."
  Pat: "You already have contracts in place under those terms!"
  Bill: "Yes we do.  They are leftovers from when this was a public company.  But this is my company now.  When we can legally and without penalty exit those contracts, we will.  The sooner we can contractually raise prices on existing contracts, we will.  They are insufficiently profitable."
  Pat: "But you must build this for us!  You are -"
  Bill (interrupting): "Yes. I know.  The only ones who might be able to."
  Pat: "Why won't you build it?  Profit?  Is that all?"
  Bill: "Yes."
  Pat: "The proposed standard contract provides for a three percent net profit.  That isn't enough?"
  Bill: "It allows up to three percent over a fixed price.  Not even God knows what such a weapon system will cost to produce, even if it is possible to produce it.  So a fixed price is a death sentence for any company that agrees to it.  But even if we could sell it at your fixed price, three percent is it not enough; it is not your business how much I make.  I do not allow my customers, not even government, to clutter my accounting department with civil servant bean counters.  I account to the IRS quarterly, just like any other business.  That is the sole extent of my interface with government accounting.  And that's the way I'll keep things."
  Pat (after thinking that over): "You won't land a lot of government contracts with that sort of thinking, Bill."
  Bill: "At some point government will realize that, in the end, they are just another customer.  The sooner they behave like one, the sooner we'll get along."  (He pauses, then shrugs.)  "And if we don't get along, oh well.  The world is standing in line for our unmatched products."
  Pat (mildly threatening): "That's the sort of attitude that can get you unhappy government attention."
  Bill: "I can build all of our products anywhere.  Brazil has been offering.  So has South Africa.  So be careful."
  Pat: "But this is a matter of national security!  National technological supremacy!  How can you not help your country?"
  Bill: "First, I said I'm not sure that we can build such a weapon system.  Nothing like it has ever been invented before.  So it's possible that I'm unable to help in the manner you want.  But let's assume this company could build it.  Now, let's reverse your last question: How could the country needing it not be willing to pay for it?"
  Pat: "We are willing to pay for it."
  Bill: "I'm not willing to sell it under the terms of the proposed contract."
  Pat: "Don't you think that's a little - well, greedy?  And unpatriotic?"
  Bill: "Call it what you want.  I'm in business to make money."
  Pat: "At your country's expense?"
  Bill: "At my customer's expense, whoever they are.  It's called business.  I have something you want.  You have something I want.  We talk.  We come to terms.  Your terms are unacceptable.  So either re-think the contract terms, or go to any of my competitors."
  Pat: "But your competitors are even more unlikely than you to be able to build it!"
  Bill: "But they are much more likely to agree to the contract terms.  You get to decide which is the more important:  getting that weapon system or limiting profits.  It's your choice. Don't you think that's fair? "
  Pat: "What good is a contract if they can't build the weapon system?"
  Bill: "Exactly."
  Pat (after thinking for a minute or two, sipping coffee from a mug held in a hand shaking ever so slightly.)  "What do you think are the chances that you could build this, to the specifications we listed?"
  Bill: "I don't know.  That would take a staff of skilled engineers from dozens of fields to evaluate."
  Pat: "Could you assemble such a team and undertake that research, and let us know the results?"
  Bill: "Sure.  We'd love to do that."
  Pat: "Well you have the specifications.  When can you start?"
  Bill: "When there's a contract in place to pay for that research."
  Pat (astounded): "But that research is something you'd have to do to build it!  You'd have to do that to - to even submit a bid on this RFP!  Companies absorb those proposal costs and write them off during tax season!"
  Bill: "Correction: we're able to write off some of those costs.  The rest is lost.  I'm not in business to lose money.  You want us to do it?  Pay for it."
  Pat (deciding hardball is the way to go): "I think we can pay others."
  Bill: "Then you should.  Does this conclude our business?"
  Pat (standing, preparing to leave): "I think so.  I don't know how you can stay in business with your attitude."
  Bill: "We do it by being the best at what we do.  The producers and providers of the very best will always have a loyal and enthusiastic customer base.  We'd like to add government to that customer base, but of course they'll have to behave like customers."
  Pat: "You'll be hearing from us.  Perhaps with a writ of eminent domain."
  Bill (smiling): "Seizure?  I own this company.  It's mine.  At the first hint of anything like seizure I take it to Brazil or South Africa, or maybe both.  Do you think it's coincidence that we already have facilities in both countries?"
  Pat: "We won't do such a thing unless it's necessary, of course."
  Bill (laughing): "Let's say you do seize the company.  Who's going to design such a weapon system?  Civil servants?"
  Pat: "We'll hire the talent you already have in place."
  Bill: "No you won't.  You won't pay them what I already do.  All of them will want to go with me.  You'll have a large empty set of facilities across the country with no one to run them.  You'll have to depend on government employees.  And while you're doing that, you'll have to explain to the country and the world why it was necessary to nationalize the nation's largest exporter, lose every dime of future exports and the tax revenue that would have generated, and lose all 193,000 of its jobs and much of its vendor and supplier base as well.  I, on the other hand, will be explaining to the world that every product we make we will continue to make and provide on or ahead of schedule, and every customer will continue to admire our products because our standards of excellence will not change.  Good luck making your explanations.  I don't expect any difficulty making mine."


- and so, when I finished smiling at this pleasant dream, I resumed reading Atlas Shrugged.