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It was only 20 years ago that the world was in the thrall of American-style capitalism. Not only had it vanquished communism, but it was widening its lead over Japan Inc. and European-style socialism. America's companies were widely viewed as the most innovative and productive, its capital markets the most efficient, its labor markets the most flexible and meritocratic, its product markets the most open and competitive, its tax and regulatory regimes the most accommodating to economic growth.
Today, that sense of confidence and economic hegemony seems a distant memory. We have watched the bursting of two financial bubbles, struggled through two long recessions, and suffered a lost decade in terms of incomes of average American households.
We continue to rack up large trade deficits even as many of the country's biggest corporations shift more of their activity and investment overseas. Economic growth has slowed, and the top 10 percent of households have captured whatever productivity gains there have been. Economic mobility has declined to the point that, by international comparison, it is only middling. A series of accounting and financial scandals, coupled with ever-escalating pay for chief executives and hedge-fund managers, has generated widespread cynicism about business. Other countries are beginning to turn to China, Germany, Sweden, and even Israel as models for their economies.
No wonder, then, that large numbers of Americans have begun to question the superiority of our brand of free-market capitalism. This disillusionment is reflected in the rise of the Tea Party and the Occupy Wall Street movements and the increasing polarization of our national politics. It is also reflected on the shelves of bookstores and on the screens of movie theaters.
Embedded in these critiques is not simply a collective disappointment in the inability of American capitalism to deliver on its economic promise of wealth and employment opportunity. Running through them is also a nagging question about the larger purpose of the market economy and how it serves society.
In the current, cramped model of American capitalism, with its focus on maximizing output growth and shareholder value, there is ample recognition of the importance of financial capital, human capital, and physical capital but no consideration of social capital. Social capital is the trust we have in one another, and the sense of mutual responsibility for one another, that gives us the comfort to take risks, make long-term investments, and accept the inevitable dislocations caused by the economic gales of creative destruction. Social capital provides the necessary grease for the increasingly complex machinery of capitalism and for the increasingly contentious machinery of democracy. Without it, democratic capitalism cannot survive.
It is our social capital that is now badly depleted. This erosion manifests in the weakened norms of behavior that once restrained the most selfish impulses of economic actors and provided an ethical basis for modern capitalism. A capitalism in which Wall Street bankers and traders think peddling dangerous loans or worthless securities to unsuspecting customers is just "part of the game," a capitalism in which top executives believe it is economically necessary that they earn 350 times what their front-line workers do, a capitalism that thinks of employees as expendable inputs, a capitalism in which corporations perceive it as both their fiduciary duty to evade taxes and their constitutional right to use unlimited amounts of corporate funds to purchase control of the political system—that is a capitalism whose trust deficit is every bit as corrosive as budget and trade deficits.
As economist Luigi Zingales of the University of Chicago concludes in his recent book, A Capitalism for the People, American capitalism has become a victim of its own success. In the years after the demise of communism, "the intellectual hegemony of capitalism, however, led to complacency and extremism: complacency through the degeneration of the system, extremism in the application of its ideological premises," he writes. "'Greed is good' became the norm rather than the frowned-upon exception. Capitalism lost its moral higher ground."
Pope Francis recently gave voice to this nagging sense that our free-market system had lost its moral bearings. "Some people continue to defend trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world," wrote the new pope in an 84-page apostolic exhortation. "This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system."
Our challenge now is to restore both the economic and moral legitimacy of American capitalism. And there is no better place to start than with a reconsideration of the purpose of the corporation.
In the recent history of bad ideas, few have had a more pernicious effect than the one that corporations should be managed to maximize "shareholder value."
Indeed, much of what we perceive to be wrong with the American economy these days—the slowing growth and rising inequality, the recurring scandals and wild swings from boom to bust, the inadequate investment in research and development and worker training—has its roots in this misguided ideology.
It is an ideology, moreover, that has no basis in history, in law, or in logic. What began in the 1970s and 1980s as a useful corrective to self-satisfied managerial mediocrity has become a corrupting self-interested dogma peddled by finance professors, Wall Street money managers, and overcompensated corporate executives.
Let's start with the history. The earliest corporations, in fact, were generally chartered not for private but for public purposes, such as building canals or transit systems. Well into the 1960s, corporations were broadly viewed as owing something in return to the community that provided them with special legal protections and the economic ecosystem in which they could grow and thrive.
Legally, no statutes require that companies be run to maximize profits or share prices. In most states, corporations can be formed for any lawful purpose. Lynn Stout, a Cornell law professor, has been looking for years for a corporate charter that even mentions maximizing profits or share price. So far, she hasn't found one. Companies that put shareholders at the top of their hierarchy do so by choice, Stout writes, not by law.
Nor does the law require, as many believe, that executives and directors owe a special fiduciary duty to the shareholders who own the corporation. The director's fiduciary duty, in fact, is owed simply to the corporation, which is owned by no one, just as you and I are owned by no one—we are all "persons" in the eyes of the law. Corporations own themselves.
What shareholders possess is a contractual claim to the "residual value" of the corporation once all its other obligations have been satisfied—and even then the directors are given wide latitude to make whatever use of that residual value they choose, just as long as they're not stealing it for themselves.
It is true, of course, that only shareholders have the power to elect the corporate directors. But given that directors are almost always nominated by the management and current board and run unopposed, it requires the peculiar imagination of corporate counsel to leap from the shareholders' power to "elect" directors to a sweeping mandate that directors and the executives must put the interests of shareholders above all others.
Given this lack of legal or historical support, it is curious how "maximizing shareholder value" has evolved into such a widely accepted norm of corporate behavior.
Milton Friedman, the University of Chicago free-market economist, is often credited with first articulating the idea in a 1970 New York Times Magazine essay in which he argued that "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits." Anything else, he argues, is "unadulterated socialism."
A decade later, Friedman's was still a minority view among corporate leaders. In 1981, as Ralph Gomory and Richard Sylla recount in a recent article in Daedalus, the Business Roundtable, representing the nation's largest firms, issued a statement recognizing a broader purpose of the corporation: "Corporations have a responsibility, first of all, to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs and build the economy." The statement went on to talk about a "symbiotic relationship" between business and society not unlike that voiced nearly 30 years earlier by General Motors chief executive Charlie Wilson, when he reportedly told a Senate committee that "what is good for the country is good for General Motors, and vice versa."
By 1997, however, the Business Roundtable was striking a tone that sounded a whole lot more like Professor Friedman than CEO Wilson. "The principal objective of a business enterprise is to generate economic returns to its owners," it declared in its statement on corporate responsibility. "If the CEO and the directors are not focused on shareholder value, it may be less likely the corporation will realize that value."
The most likely explanation for this transformation involves three broad structural changes that were going on in the U.S. economy—globalization, deregulation, and rapid technological change. Over a number of decades, these three forces have conspired to rob what were once the dominant American corporations of the competitive advantages they had during the "golden era" of the 1950s and 1960s in both U.S. and global markets. Those advantages—and the operating profits they generated—were so great that they could spread the benefits around to all corporate stakeholders. The postwar prosperity was so widely shared that it rarely occurred to stockholders, consumers, or communities to wonder if they were being shortchanged.
It was only when competition from foreign suppliers or recently deregulated upstarts began to squeeze out those profits—often with the help of new technologies—that these once-mighty corporations were forced to make difficult choices. In the early going, their executives found that it was easier to disappoint shareholders than customers, workers, or even their communities. The result, during the 1970s, was a lost decade for investors.
Beginning in the mid-1980s, however, a number of companies with lagging stock prices found themselves targets for hostile takeovers launched by rival companies or corporate raiders employing newfangled "junk bonds" to finance unsolicited bids. Disappointed shareholders were only too willing to sell out to the raiders. So it developed that the mere threat of a hostile takeover was sufficient to force executives and directors across the corporate landscape to embrace a focus on profits and share prices. Almost overnight they tossed aside their more complacent and paternalistic management style, and with it a host of inhibitions against laying off workers, cutting wages and benefits, closing plants, spinning off divisions, taking on debt, moving production overseas. Some even joined in waging hostile takeovers themselves.
Spurred on by this new "market for corporate control," companies traded in their old managerial capitalism for a new shareholder capitalism, which continues to dominate the business sector to this day. Those high-yield bonds, once labeled as "junk" and peddled by upstart and ethically challenged investment banks, are now a large and profitable part of the business of every Wall Street firm. The unsavory raiders have now morphed into respected private-equity and hedge-fund managers, some of whom proudly call themselves "activist investors." And corporate executives who once arrogantly ignored the demands of Wall Street now profess they have no choice but to dance to its tune.
An elaborate institutional infrastructure has developed to reinforce shareholder capitalism and its generally accepted corporate mandate to maximize short-term profits and share price. This infrastructure includes free--market-oriented think tanks and university faculties that continue to spin out elaborate theories about the efficiency of financial markets.
An earlier generation of economists had looked at the stock-market boom and bust that led to the Great Depression and concluded that share prices often reflected irrational herd behavior on the part of investors. But in the 1960s, a different theory began to take hold at intellectual strongholds such as the University of Chicago that quickly spread to other economics departments and business schools. The essence of the "efficient market" hypothesis, first articulated by Eugene Fama (a 2013 Nobel laureate) is that the current stock price reflects all the public and private information known about a company and therefore is a reliable gauge of the company's true economic value. For a generation of finance professors, it was only a short logical leap from this hypothesis to a broader conclusion that the share price is therefore the best metric around which to organize a company's strategy and measure its success.
With the rise of behavioral economics, and the onset of two stock-market bubbles, the efficient--market hypothesis has more recently come under serious criticism. Another of last year's Nobel winners, Robert Shiller, demonstrated the various ways in which financial markets are predictably irrational. Curiously, however, the efficient-market hypothesis is still widely accepted by business schools—and, in particular, their finance departments—which continue to preach the shareholder-first ideology.
Surveys by the Aspen Institute's Center for Business Education, for example, find that most MBA students believe that maximizing value for shareholders is the most important responsibility of a company and that this conviction strengthens as they proceed toward their degree, in many schools taking courses that teach techniques for manipulating short-term earnings and share prices. The assumption is so entrenched that even business-school deans who have publicly rejected the ideology acknowledge privately that they've given up trying to convince their faculties to take a more balanced approach.
Equally important in sustaining the shareholder focus are corporate lawyers, in-house as well as outside counsels, who now reflexively advise companies against actions that would predictably lower a company's stock price.
For many years, much of the jurisprudence coming out of the Delaware courts—where most big corporations have their legal home—was based around the "business judgment" rule, which held that corporate directors have wide discretion in determining a firm's goals and strategies, even if their decisions reduce profits or share prices. But in 1986, the Delaware Court of Chancery ruled that directors of the cosmetics company Revlon had to put the interests of shareholders first and accept the highest price offered for the company. As Lynn Stout has written, and the Delaware courts subsequently confirmed, the decision was a narrowly drawn exception to the business--judgment rule that only applies once a company has decided to put itself up for sale. But it has been widely—and mistakenly—used ever since as a legal rationale for the primacy of shareholder interests and the legitimacy of share-price maximization.
Reinforcing this mistaken belief are the shareholder lawsuits now routinely filed against public companies by class-action lawyers any time the stock price takes a sudden dive. Most of these are frivolous and, particularly since passage of reform legislation in 1995, many are dismissed. But even those that are dismissed generate cost and hassle, while the few that go to trial risk exposing the company to significant embarrassment, damages, and legal fees.
The bigger damage from these lawsuits comes from the subtle way they affect corporate behavior. Corporate lawyers, like many of their clients, crave certainty when it comes to legal matters. So they've developed what might be described as a "safe harbor" mentality—an undue reliance on well-established bright lines in advising clients to shy away from actions that might cause the stock price to fall and open the company up to a shareholder lawsuit. Such actions include making costly long-term investments, or admitting mistakes, or failing to follow the same ruthless strategies as their competitors. One effect of this safe-harbor mentality is to reinforce the focus on short-term share price.
The most extensive infrastructure supporting the shareholder-value ideology is to be found on Wall Street, which remains thoroughly fixated on quarterly earnings and short-term trading. Companies that refuse to give quarterly-earnings guidance are systematically shunned by some money managers, while those that miss their earnings targets by even small amounts see their stock prices hammered.
Recent investigations into insider trading have revealed the elaborate strategies and tactics used by some hedge funds to get advance information about a quarterly earnings report in order to turn enormous profits by trading on it. And corporate executives continue to spend enormous amounts of time and attention on industry analysts whose forecasts and ratings have tremendous impact on share prices.
In a now-infamous press interview in the summer of 2007, former Citigroup chairman Charles Prince provided a window into the hold that Wall Street has over corporate behavior. At the time, Citi's share price had lagged behind that of the other big banks, and there was speculation in the financial press that Prince would be fired if he didn't quickly find a way to catch up. In the interview with the Financial Times, Prince seemed to confirm that speculation. When asked why he was continuing to make loans for high-priced corporate takeovers despite evidence that the takeover boom was losing steam, he basically said he had no choice—as long as other banks were making big profits from such loans, Wall Street would force him, or anyone else in his job, to make them as well. "As long as the music is playing," Prince explained, "you've got to get up and dance."
It isn't simply the stick of losing their jobs, however, that causes corporate executives to focus on maximizing shareholder value. There are also plenty of carrots to be found in those generous—some would say gluttonous—pay packages, the value of which is closely tied to the short-term performance of company stock.
The idea of loading up executives with stock options also dates to the transition to shareholder capitalism. The academic critique of managerial capitalism was that the lagging performance of big corporations was a manifestation of what economists call a "principal-agent" problem. In this case, the "principals" were the shareholders and their directors, and the misbehaving "agents" were the executives who were spending too much of their time, and the shareholder's money, worrying about employees, customers, and the community at large.
In what came to be one of the most widely cited academic papers of all time, business-school professors Michael Jensen of Harvard and William Meckling of the University of Rochester wrote in 1976 that the best way to align the interests of managers to those of the shareholders was to tie a substantial amount of the managers' compensation to the share price. In a subsequent paper in 1989 written with Kevin Murphy, Jensen went even further, arguing that the reason corporate executives acted more like "bureaucrats than value-maximizing entrepreneurs" was because they didn't get to keep enough of the extra value they created.
With that academic foundation, and the enthusiastic support of executive--compensation specialists, stock-based compensation took off. Given the tens and, in more than a few cases, the hundreds of millions of dollars lavished on individual executives, the focus on boosting share price is hardly surprising. The ultimate irony, of course, is that the result of this lavish campaign to more closely align incentives and interests is that the "agents" have done considerably better than the "principals."
Roger Martin, the former dean of the Rotman School of Management at the University of Toronto, calculates that from 1933 until 1976—roughly speaking, the era of "managerial capitalism" in which managers sought to balance the interest of shareholders with those of employees, customers, and society at large—the total real compound annual return on the stocks of the S&P 500 was 7.5 percent. From 1976 until 2011—roughly the period of "shareholder capitalism"—the comparable return has been 6.5 percent. Meanwhile, according to Martin's calculation, the ratio of chief-executive compensation to corporate profits increased eightfold between 1980 and 2000, almost all of it coming in the form of stock-based compensation.
All of this reinforcing infrastructure—the academic underpinning, the business-school indoctrination, the threat of shareholder lawsuits, the Wall Street quarterly earnings machine, the executive compensation—has now succeeded in hardwiring the shareholder-value ideology into the economy and business culture. It has also set in motion a dynamic in which corporate and investor time horizons have become shorter and shorter. The average holding periods for corporate stocks, which for decades was six years, is now down to less than six months. The average tenure of a Fortune 500 chief executive is now down to less than six years. Given those realities, it should be no surprise that the willingness of corporate executives to sacrifice short-term profits to make long-term investments is rapidly disappearing.
A recent study by McKinsey & Company, the blue-chip consulting firm, and Canada's public pension board found alarming levels of short-termism in the corporate executive suite. According to the study, nearly 80 percent of top executives and directors reported feeling the most pressure to demonstrate a strong financial performance over a period of two years or less, with only 7 percent feeling considerable pressure to deliver strong performance over a period of five years or more. It also found that 55 percent of chief financial officers would forgo an attractive investment project today if it would cause the company to even marginally miss its quarterly-earnings target.
The shift on Wall Street from long-term investing to short-term trading presents a dilemma for those directing a company solely for shareholders: Which group of shareholders is it whose interests the corporation is supposed to optimize? Should it be the hedge funds that are buying and selling millions of shares in a matter of seconds to earn hedge fund–like returns? Or the "activist investors" who have just bought a third of the shares? Or should it be the retired teacher in Dubuque who has held the stock for decades as part of her retirement savings and wants a decent return with minimal downside risk?
One way to deal with this quandary would be for corporations to give shareholders a bigger voice in corporate decision-making. But it turns out that even as they proclaim their dedication to shareholder value, executives and directors have been doing everything possible to minimize shareholder involvement and influence in corporate governance. This curious hypocrisy is most recently revealed in the all-out effort by the business lobby to limit shareholder "say on pay" or the right to nominate a competing slate of directors.
For too many corporations, "maximizing shareholder value" has also provided justification for bamboozling customers, squeezing employees, avoiding taxes, and leaving communities in the lurch. For any one profit--maximizing company, such ruthless behavior may be perfectly rational. But when competition forces all companies to behave in this fashion, neither they, nor we, wind up better off.
Take the simple example of outsourcing production to lower-cost countries overseas. Certainly it makes sense for any one company to aggressively pursue such a strategy. But if every company does it, these companies may eventually find that so many American consumers have suffered job loss and wage cuts that they no longer can buy the goods they are producing, even at the cheaper prices. The companies may also find that government no longer has sufficient revenue to educate its remaining American workers or dredge the ports through which its imported goods are delivered to market.
Economists have a name for such unintended spillover effects—negative externalities—and normally the most effective response is some form of government action, such as regulation, taxes, or income transfers. But one of the hallmarks of the current political environment is that every tax, every regulation, and every new safety-net program is bitterly opposed by the corporate lobby as an assault on profits and job creation. Not only must the corporation commit to putting shareholders first—as they see it, the society must as well. And with the Supreme Court's decision in Citizens United, corporations are now free to spend unlimited sums of money on political campaigns to elect politicians sympathetic to this view.
Perhaps the most ridiculous aspect of shareholder--über-alles is how at odds it is with every modern theory about managing people. David Langstaff, then–chief executive of TASC, a Virginia--based government-contracting firm, put it this way in a recent speech at a conference hosted by the Aspen Institute and the business school at Northwestern University: "If you are the sole proprietor of a business, do you think that you can motivate your employees for maximum performance by encouraging them simply to make more money for you?" Langstaff asked rhetorically. "That is effectively what an enterprise is saying when it states that its purpose is to maximize profit for its investors."
Indeed, a number of economists have been trying to figure out the cause of the recent slowdown in both the pace of innovation and the growth in worker productivity. There are lots of possible culprits, but surely one candidate is that American workers have come to understand that whatever financial benefit may result from their ingenuity or increased efficiency is almost certain to be captured by shareholders and top executives.
The new focus on shareholders also hasn't been a big winner with the public. Gallup polls show that people's trust in and respect for big corporations have been on a long, slow decline in recent decades—at the moment, only Congress and health-maintenance organizations rank lower. When was the last time you saw a corporate chief executive lionized on the cover of a newsweekly? Odds are it was probably the late Steve Jobs of Apple, who wound up creating more wealth for more shareholders than anyone on the planet by putting shareholders near the bottom of his priority list.
The usual defense you hear of "maximizing shareholder value" from corporate chief executives is that at many firms—not theirs!—it has been poorly understood and badly executed. These executives make clear they don't confuse today's stock price or this quarter's earnings with shareholder value, which they understand to be profitability and stock appreciation over the long term. They are also quick to acknowledge that no enterprise can maximize long-term value for its shareholders without attracting great employees, providing great products and services to customers, and helping to support efficient governments and healthy communities.
Even Michael Jensen has felt the need to reformulate his thinking. In a 2001 paper, he wrote, "A firm cannot maximize value if it ignores the interest of its stakeholders." He offered a proposal he called "enlightened stakeholder theory," one that "accepts maximization of the long run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders."
But if optimizing shareholder value implicitly requires firms to take good care of customers, employees, and communities, then by the same logic you could argue that optimizing customer satisfaction would require firms to take good care of employees, communities, and shareholders. More broadly, optimizing any function inevitably requires the same tradeoffs or messy balancing of interests that executives of an earlier era claimed to have done.
The late, great management guru Peter Drucker long argued that if one stakeholder group should be first among equals, surely it should be the customer. "The purpose of business is to create and keep a customer," he famously wrote.
Roger Martin picked up on Drucker's theme in "Fixing the Game," his book-length critique of shareholder value. Martin cites the experience of companies such as Apple, Johnson & Johnson, and Proctor & Gamble, companies that put customers first, and whose long-term shareholders have consistently done better than those of companies that claim to put shareholders first. The reason, Martin says, is that customer focus minimizes undue risk taking, maximizes reinvestment, and creates, over the long run, a larger pie.
Having spoken with more than a few top executives over the years, I can tell you that many would be thrilled if they could focus on customers rather than shareholders. In private, they chafe under the quarterly earnings regime forced on them by asset managers and the financial press. They fear and loathe "activist" investors. They are disheartened by their low public esteem. Few, however, have dared to challenge the shareholder-first ideology in public.
But recently, some cracks have appeared.
In 2006, Ian Davis, then–managing director of McKinsey, gave a lecture at the University of Pennsylvania's Wharton School in which he declared, "Maximization of shareholder value is in danger of becoming irrelevant."
Davis's point was that global corporations have to operate not just in the United States but in the rest of the world where people either don't understand the concept of putting shareholders first or explicitly reject it—and companies that trumpet it will almost surely draw the attention of hostile regulators and politicians.
"Big businesses have to be forthright in saying what their role is in society, and they will never do it by saying, 'We maximize shareholder value.'"
A few years later, Jack Welch, the former chief executive of General Electric, made headlines when he told the Financial Times, "On the face of it, shareholder value is the dumbest idea in the world." What he meant, he scrambled to explain a few days later, is that shareholder value is an outcome, not a strategy. But coming from the corporate executive ("Neutron Jack") who had embodied ruthlessness in the pursuit of competitive dominance, his comment was viewed as a recognition that the single-minded pursuit of shareholder value had gone too far. "That's not a strategy that helps you know what to do when you come to work every day," Welch told Bloomberg Businessweek. "It doesn't energize or motivate anyone. So basically my point is, increasing the value of your company in both the short and long term is an outcome of the implementation of successful strategies."
Tom Rollins, the founder of the Teaching Company, offers as an alternative what he calls the "CEO" strategy, standing for customers, employees, and owners. Rollins starts by noting that at the foundation of all microeconomics are voluntary trades or exchanges that create "surplus" for both buyer and seller that in most cases exceed their minimum expectations. The same logic, he argues, ought to apply to the transactions between a company and its employees, customers, and owners/shareholders.
The problem with a shareholder-first strategy, Rollins argues, is that it ignores this basic tenet of economics. It views any surplus earned by employees and customers as both unnecessary and costly. After all, if the market would allow the firm to hire employees for 10 percent less, or charge customers 10 percent more, then by not driving the hardest possible bargain with employees and customers, shareholder profit is not maximized.
But behavioral research into the importance of "reciprocity" in social relationships strongly suggests that if employees and customers believe they are not getting any surplus from a transaction, they are unlikely to want to continue to engage in additional transactions with the firm. Other studies show that having highly satisfied customers and highly engaged employees leads directly to higher profits. As Rollins sees it, if firms provide above-market returns—surplus—to customers and employees, then customers and employees are likely to reciprocate and provide surplus value to firms and their owners.
Harvard Business School professor Michael Porter and Kennedy School senior fellow Mark Kramer have also rejected the false choice between a company's social and value--maximizing responsibilities that is implicit in the shareholder-value model. "The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges," they wrote in the Harvard Business Review in 2011. In the past, economists have theorized that for profit-maximizing companies to provide societal benefits, they had to sacrifice economic success by adding to their costs or forgoing revenue. What they overlooked, Porter and Kramer wrote, was that by ignoring social goals—safe workplaces, clean environments, effective school systems, adequate infrastructure—companies wound up adding to their overall costs while failing to exploit profitable business opportunities. "Businesses must reconnect company success with social progress," Porter and Kramer wrote. "Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do, but at the center."
If it were simply the law that was responsible for the undue focus on shareholder value, it would be relatively easy to alter it. Changing a behavioral norm, however—particularly one so accepted and reinforced by so much supporting infrastructure—is a tougher challenge. The process will, of necessity, be gradual, requiring carrots as well as sticks. The goal should not be to impose a different focus for corporate decision-making as inflexible as maximizing shareholder value has become but rather to make it acceptable for executives and directors to experiment with and adopt a variety of goals and purposes.
Companies would surely be responsive if investors and money managers would make clear that they have a longer time horizon or are looking for more than purely bottom-line results. There has long been a small universe of "socially responsible" investing made up of mutual funds, public and union pension funds, and research organizations that monitor corporate behavior and publish scorecards based on an assessment of how companies treat customers, workers, the environment, and their communities. While some socially responsible funds and asset managers and investors have consistently achieved returns comparable or even slightly superior to those of competitors focused strictly on financial returns, there is no evidence of any systematic advantage. Nor has there been a large hedge fund or private-equity fund that made it to the top with a socially responsible investment strategy. You can do well by doing good, but it's no sure thing that you'll do better.
Nineteen states—the latest is Delaware, where a million businesses are legally registered—have recently established a new kind of corporate charter, the "benefit corporation," that explicitly commits companies to be managed for the benefit of all stakeholders. About 550 companies, including Patagonia and Seventh Generation, now have B charters, while 960 have been certified as meeting the standards set out by the nonprofit B Lab. Although almost all of today's B corps are privately held, supporters of the concept hope that a number of sizable firms will become B corps and that their stocks will then be traded on a separate exchange.
One big challenge facing B corps and the socially responsible investment community is that the criteria they use to assess corporate behavior exhibit an unmistakable liberal bias that makes it easy for many investors, money managers, and executives to dismiss them as ideological and naïve. Even a company run for the benefit of multiple stakeholders will at various points be forced to make tough choices, such as reducing payroll, trimming costs, closing facilities, switching suppliers, or doing business in places where corruption is rampant or environmental regulations are weak. As chief executives are quick to remind, companies that ignore short-term profitability run the risk of never making it to the long term.
Among the growing chorus of critics of "shareholder value," a consensus is emerging around a number of relatively modest changes in tax and corporate governance laws that, at a minimum, could help lengthen time horizons of corporate decision-making. A group of business leaders assembled by the Aspen Institute to address the problem of "short-termism" recommended a recalibration of the capital-gains tax to provide investors with lower tax rates for longer-term investments. A small transaction tax, such as the one proposed by the European Union, could also be used to dampen the volume and importance of short-term trading.
The financial-services industry and some academics have argued that such measures, by reducing market liquidity, will inevitably increase the cost of capital and result in markets that are more volatile, not less. A lower tax rate for long-term investing has also been shown to have a "lock-in" effect that discourages investors from moving capital to companies offering the prospect of the highest return. But such conclusions are implicitly based on the questionable assumption that markets without such tax incentives are otherwise rational and operate with perfect efficiency. They also beg fundamental questions about the role played by financial markets in the broader economy. Once you assume, as they do, that the sole purpose of financial markets is to channel capital into investments that earn the highest financial return to private investors, then maximizing shareholder value becomes the only logical corporate strategy.
There is also a lively debate on the question of whether companies should offer earnings guidance to investors and analysts—estimates of what earnings per share will be for the coming quarter. The argument against such guidance is that it reinforces the undue focus of both executives and investors on short-term earnings results, discouraging long-term investment and incentivizing earnings manipulation. The counterargument is that even in the absence of company guidance, investors and executives inevitably play the same game by fixating on the "consensus" earnings estimates of Wall Street analysts. Given that reality, they argue, isn't it better that those analyst estimates are informed as much as possible by information provided by the companies themselves?
In weighing these conflicting arguments, the Aspen group concluded that investors and analysts would be better served if companies provided information on a wider range of metrics with which to assess and predict business performance over a longer time horizon than the next quarter. While it might take Wall Street and its analysts some time to adjust to this richer and more nuanced form of communication, it would give the markets a better understanding of what drives each business while taking some of the focus off the quarterly numbers game.
In addressing the question of which shareholders should have the most say over company strategies and objectives, there have been suggestions for giving long-term investors greater power in selecting directors, approving mergers and asset sales, and setting executive compensation. The idea has been championed by McKinsey & Company managing director Dominic Barton and John Bogle, the former chief executive of the Vanguard Group, and is under active consideration by European securities regulators. Such enhanced voting rights, however, would have to be carefully structured so that they encourage a sense of stewardship on the part of long-term investors without giving company insiders or a few large shareholders the opportunity to run roughshod over other shareholders.
The short-term focus of corporate executives and directors is heavily reinforced by the demands of asset managers at mutual funds, pension funds, hedge funds, and endowments, who are evaluated and compensated on the basis of the returns they generated over the last year and the last quarter. Even while most big companies have now taken steps to stretch out over several years the incentive pay plans of top corporate executives to encourage those executives to take a longer-term perspective, the outsize quarterly and annual bonuses on Wall Street keep the economy's time horizons fixated on the short term. At a minimum, federal regulators could require asset managers to disclose how their compensation is determined. They might also require funds to justify, on the basis of actual performance, the use of short-term metrics when managing long-term money such as pensions and college endowments.
The Securities and Exchange Commission also could nudge companies to put greater emphasis on long-term strategy and performance in their communications with shareholders. For starters, companies could be required to state explicitly in their annual reports whether their priority is to maximize shareholder value or to balance shareholder interests with other interests in some fashion—certainly shareholders deserve to know that in advance. The commission might require companies to annually disclose the size of their workforce in each country and information on the pay and working conditions of the company's employees and those of its major contractors. Disclosure of any major shifts in where work is done could also be required, along with the rationale. There could be a requirement for companies to perform and disclose regular environmental audits and to acknowledge other potential threats to their reputation and brand equity. In proxy statements, public companies could be required to explain the ways in which executive compensation is aligned with long-term strategy and performance.
If I had to guess, however, my hunch would be that employees, not outside investors and regulators, will finally free the corporate sector from the straitjacket of shareholder value. Today, young people—particularly those with high-demand skills—are drawn to work that doesn't simply pay well but also has meaning and social value. You can already see that reflected in what students are choosing to study and where highly sought graduates are choosing to work. As the economy improves and the baby-boom generation retires, companies that have reputations as ruthless maximizers of short-term profits will find themselves on the losing end of the global competition for talent.
In an era of plentiful capital, it will be skills, knowledge, and creativity that will be in short supply, with those who have them calling the corporate tune. Who knows? In the future, there might even be conferences at which hedge-fund managers and chief executives get together to gripe about the tyranny of "maximizing employee satisfaction" and vow to do something about it.


text:
Walsh Investors, LLC
B-407717,B-407717.2: Jan 28, 2013
Additional Materials:
- Full Report:
(202) 512-8278
Kenneth E. Patton
(202) 512-8205
Office of Public Affairs
(202) 512-4800
Walsh Investors, LLC, of Chicago, Illinois, protests the award of a contract to Fedcar Company Ltd., under solicitation No. VA-101-12-R-0087, issued by the Department of Veterans Affairs (VA) for the lease of a healthcare center in Fayetteville, North Carolina. Walsh contends that the agency engaged in misleading discussions, considered unstated evaluation criteria, and made an unreasonable tradeoff decision.
We deny the protest.
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Matter of: Walsh Investors, LLC
File: B-407717; B-407717.2
Date: January 28, 2013
Joseph J. Dyer, Esq., Bennett Greenberg, Esq., and Erica L. Marshall, Esq., Seyfarth Shaw LLP, for the protester.
Robert J. Symon, Esq., and Aron C. Beezley, Esq., Bradley Arant Boult Cummings LLP, for the intervenor.
James C. Wagner, Esq., Department of Veterans Affairs, for the agency.
Cherie J. Owen, Esq., and Sharon L. Larkin, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
1. Protest that agency improperly misled protester to raise the amount of its building and maintenance reserve by advising during discussions that the firms reserve appeared to be low in relation to other offerors is denied where information provided by agency was accurate, was provided to all offerors, and the record indicates that protesters decision to raise its reserve was a business decision not compelled by the agency.
2. Protest that agency used unstated evaluation criteria in evaluating awardees proposal is denied where agencys consideration of protesters offer of additional land adjacent to the development site was reasonably related to the stated evaluation criteria for development of the site.
3. Protest challenging the agencys conclusion that the advantages in the awardees non-price proposal merited selection of its higher-priced proposal is denied where the agencys judgments were reasonable, consistent with the stated evaluation scheme, and adequately documented.
Walsh Investors, LLC, of Chicago, Illinois, protests the award of a contract to Fedcar Company Ltd., under solicitation No. VA-101-12-R-0087, issued by the Department of Veterans Affairs (VA) for the lease of a healthcare center in Fayetteville, North Carolina. Walsh contends that the agency engaged in misleading discussions, considered unstated evaluation criteria, and made an unreasonable tradeoff decision.
We deny the protest.
On April 9, 2012, the VA issued the solicitation for offers (SFO) seeking offerors to provide a 20-year lease of approximately 250,000 net usable square feet of space at a pre-determined site located in Fayetteville, North Carolina. The successful offeror will construct a new building on the site that will house a VA healthcare center. Agency Report (AR), Tab F1, SFO, at 11. The solicitation informed offerors of the agencys minimum requirements with regard to the development of the building and land, and the services to be provided.
The SFO set forth the following evaluation factors in descending order of importance: (1) price, measured in annual price per net usable square foot, including any option period; (2) technical quality, including the quality of the building and the design concept; (3) the offerors qualifications, including past performance; and (4) the adequacy and efficiency of the operations and maintenance plans. Id. at 20. The solicitation explained that the non-price factors, when combined, were approximately equal in importance to the price factor. Id.
With regard to the technical quality evaluation factor, the solicitation listed three sub-factors: (1) quality of building and design concept; (2) quality of site development; and (3) site physical security. Id. at 22-23. Under the first subfactor, quality of building and design concept, the agency stated that it would consider the following: architectural concept; building design; sustainable design and energy efficiency; and quality of construction materials. Id.
Under the second technical subfactor, quality of site development, the solicitation specified that the agency would consider, among other things, the offerors development of the site to accommodate the VAs conceptual building footprint, including the required setbacks, the ingresses and egresses to and from the entrances, traffic patterns to maximize flow of vehicles to and from the main thoroughfare, and how the landscaping design fits the surrounding areas. Id. at 23.
With regard to the evaluation of price, the solicitation stated that prices would be evaluated on the basis of the annual shell rental rate per net usable square foot. Id. at 21.
The VA received offers from twenty-one firms, including Walsh and Fedcar, by the closing date of June 5, 2012. After initial evaluations, the agency established a competitive range consisting of eleven offerors with which the agency conducted discussions. Contracting Officers Statement at 1. During discussions, the agency advised each offeror of how different aspects of its price proposal related to the average prices of all competitive range offerors. Specifically, the agencys notes of its discussions state:
We gave a general review of lines 1-27 vs. the averages of the other offers. We then reviewed the insurance, maintenance and reserve[,] and management lines. Again we compared the offered price to the average of the other offers.
-Then we utilized the abstract of offers to tell each offeror how they related to the mean average of the price elements that we analyzed.
-We told each offeror how the average cost of [certain listed] items related to their offered price.
AR, Tab D1, Negotiation Meeting Notes, at 2 (notes from discussions with Walsh); see also, id. at 6 (notes from discussions with Fedcar).
As relevant here, with regard to Walshs reserve, the agency stated that Walshs reserve of $[deleted] was low compared to the average.[1] Id. at 2. Similarly, the agency advised Fedcar that its reserve of $[deleted] was low in comparison to the average. Id. at 6; see AR, Tab C1, Abstract of Initial Offers, at 1.
After engaging in discussions, the agency requested that offerors submit their final proposal revisions (FPR). As relevant here, Walshs FPR included a building maintenance reserve of $[deleted], which was an increase of $[deleted] over the amount of the reserve in its initial proposal. Fedcars FPR included a building maintenance reserve of $[deleted], which was an increase of $[deleted] over the amount of the reserve in its initial proposal. AR, Tab C3, Abstract of FPR Offers, at 1.
In evaluating the non-price evaluation factors, the agency assigned weighted point scores and ranked each offerors proposal. As relevant here, Fedcars final proposal was ranked first under the non-price factors with a score of 41.21, while Walshs final proposal was ranked second with a score of 38.27. AR, Tab B4, TEB Score Summary, at 2; Contracting Officers Statement at 3. With regard to price, Fedcar was ranked fifth with a net present value fully-serviced rental rate of $29.78 per net usable square foot, while Walshs proposal was ranked fourth in the price evaluation with a rate of $28.90.[2] AR, Tab E, Price Negotiation Memorandum, at 34.
In the contracting officers best value analysis, he noted that Fedcars proposal presented a building design that featured many well thought out elements that enhanced the buildings function, a maintenance plan that showed a full understanding of the health care requirements and the financial ability to perform. AR, Tab E, Price Negotiation Memorandum, at 33. The contracting officer acknowledged that Fedcars proposal was ranked first in the technical evaluation, fifth in the price evaluation, and first overall. Id.
The contracting officer also noted that Fedcar had proposed to provide an additional five acres of land adjacent to the VAs pre-selected site. The contracting officer described the benefits of the additional land as follows:
-Increased visibility and frontage
-An additional point of ingress/egress at the Old Raeford Rd/Raeford Rd intersection
-A site access point at an existing traffic signal
-Provide significantly improved on-site traffic circulation
-Allow an overall site adjustment to shift planned perimeter parking from under the existing power-line easement
AR, Tab E, Price Negotiation Memorandum, at 34.
In his source selection decision, the contracting officer acknowledged that Fedcar was ranked fifth in price, but also noted that Fedcars proposal offered the lowest unserviced first-year rental rate. Id. at 34. The contracting officer considered that Walsh ranked second in the technical evaluation and fourth in the price evaluation, but found that the multiple benefits associated with Fedcars proposal to provide additional acreage outweighed the price difference between Fedcars and Walshs proposal. Id. Therefore, the contracting officer determined that Fedcars proposal offered the best value to the government and selected that firms proposal for award. Id. at 33.
This protest followed.
Walsh contends that the agency engaged in misleading discussions, considered unstated evaluation criteria, and made an unreasonable tradeoff decision.[3]
Misleading Discussions
The protester contends that it was misled during discussions into raising its building and maintenance reserve from $[deleted] to $[deleted], despite the fact that Fedcars lower reserve was later evaluated to be acceptable. Protest at 4. Walsh argues that it was misled by the characterization of its reserve as too low, and misled by the agencys use of the average amount proposed for building and maintenance reserve to provide feedback even though the agency did not rely on this average when evaluating proposals. Comments at 4-5.
The Federal Acquisition Regulation (FAR) requires that when conducting discussions pursuant to FAR part 15, contracting officers must raise with each offeror proposal deficiencies and significant weaknesses; contracting officers are also encouraged to discuss other aspects of the offeror's proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposals potential for award. FAR § 15.306(d)(3). During discussions, agencies may not consciously mislead or coerce an offeror into raising its prices. Eagle Tech., Inc., B-236255, Nov. 16, 1989, 89-2 CPD ¶ 468 at 3-4. However, we will not find coercion in discussions where an agency in good faith provides accurate information to an offeror, even where the offeror uses that information to its ultimate competitive detriment. XtremeConcepts Syst., B-406804, Aug. 31, 2012, 2012 CPD ¶ 253 at 5; EMR, Inc., B-406625, July 17, 2012, 2012 CPD ¶ 209 at 5.
Here, the record does not support the protesters assertion that it was misled or coerced into raising the amount of its building and maintenance reserve. During discussions, the agency informed each offeror of the relationships between the average prices proposed by all offerors and the prices proposed by that offeror. In this regard, the agency informed both Walsh and Fedcar that their building and maintenance reserve was low compared to the average proposed by all offerors.[4] As GAO has long made clear, it will not sustain a protest where, as here, an agency has treated offerors equally by providing them with the same information during discussions, and where the protester responds by increasing its proposed price primarily for reasons within its business judgment. XtremeConcepts Sys., supra; see Robinsons Lawn Servs., Inc., B-299551.5, June 30, 2008, 2009 CPD ¶ 45 at 8. We therefore find nothing unfair or improper about the agencys discussions.
Further, we find no basis to sustain the protest based on the agencys decision to advise offerors of the average amounts proposed by all offerors. We find the decisions cited by the protester, Ranor, Inc., B-255904, Apr. 14, 1994, 94-1 CPD ¶ 258 and DTH Mgmt. Group, B-252879.2, B-252879.3, Oct. 15, 1993, 93-2 CPD ¶ 227, to be distinguishable from the case here. In Ranor, the agency repeatedly advised the protester that its price was too low in comparison to the governments cost estimate. After the agency advised the firm to raise its price, the agency made award to an offeror with a price lower than the protester without regard to the government estimate. In DTH Mgmt. Group, the agency advised the protester that its price was so low in comparison to the government estimate that it had been evaluated as unrealistic. The protester raised its price based on the agencys advice, but the agency then awarded to a lower-priced offeror, disregarding the government estimate.
In contrast to those cases, the agency here never advised Walsh that its price was too low, despite the protesters numerous claims that it did. Rather, the agency advised each offeror of where various portions of their price proposal stood in relation to the averages of all offerors. Both the protester and the awardee were informed that their reserve prices were below the average and both the protester and awardee decided to raise their reserve prices when submitting their FPRs. Further, the agency here made award to the higher-priced offeror. Under these circumstances, we cannot find that the information provided by the agency during discussions was misleading.[5] This protest ground is denied.
Unstated Evaluation Factor
Walsh also contends that the agencys evaluation of the proposals was based upon unstated evaluation criteria. In this regard, the protester alleges that the solicitation did not contemplate the consideration of the adjacent land proposed by Fedcar. The protester also argues that the VAs source selection plan did not provide for the consideration of proposal aspects that exceeded the solicitations requirements, except with regard to issues of accessibility for handicapped people. Comments on Supplemental Agency Report at 5.
Although a solicitation must identify all major evaluation factors, it need not identify all areas within each factor that might be taken into account in an evaluation, provided such unidentified areas are reasonably related to, or encompassed by, the stated evaluation factors. The Dixon Group, Inc., B-406201, B-406201.2, Mar. 9, 2012, 2012 CPD ¶ 150 at 4; Coley & Assocs., Inc., B-404034 et al., Dec. 7, 2010, 2011 CPD ¶ 6 at 5.
Here, while the solicitation did not expressly provide that the agency would take into consideration an offerors plan to include adjacent land in the lease, it did provide that the agency was to evaluate the offerors development of the site to accommodate the VAs conceptual building footprint, including the required setbacks, the ingresses and egresses to and from the entrances, traffic patterns to maximize flow of vehicles to and from the main thoroughfare, and how the landscaping design fits the surrounding areas. Agency Report (AR), Tab F1, SFO, at 23. We find that the agencys consideration of the additional acreage was reasonably related to these evaluation criteria. Specifically, the agency found that Fedcars additional five acres of land adjacent to the proposed site would allow for increased visibility, an additional point of ingress and egress, a site access point at an existing traffic signal, significantly improved on-site traffic circulation, and the possibility of shifting the planned perimeter parking from under the existing power-line easement. AR, Tab E, Price Negotiation Memorandum, at 34.
Further, with regard to the protesters argument that the agency was not permitted to consider aspects of proposals that exceeded the solicitations requirements, we have held that where, as here, a solicitation indicates the relative weights of evaluation factors, as opposed to providing for selection of the lowest-priced, technically acceptable proposal, the agency is not limited to determining whether a proposal is merely technically acceptable; rather, proposals may be evaluated to distinguish their relative quality by considering the degree to which they exceed the minimum requirements or will better satisfy the agencys needs. ViroMed Laboratories, Inc., B-310747.4, Jan. 22, 2009, 2009 CPD ¶ 32 at 5; IAP World Servs., Inc., B-297084, Nov. 1, 2005, 2005 CPD ¶ 199 at 4. An agency can properly consider both the extent to which proposals exceed the RFP requirements and the extent to which offerors used innovative measures to respond to those requirements. ViroMed Laboratories, Inc., supra. Accordingly, under the circumstances here, the agency's consideration of Fedcars proposal to exceed the solicitations requirements by providing additional land adjacent to the agencys pre-determined site does not amount to reliance on an unstated evaluation criterion. This protest ground is denied.[6]
Tradeoff Decision
Finally, Walsh contends that the agencys tradeoff decision was unreasonable because, according to county tax assessment records, the value of Fedcars additional land offered by the awardee is $64,587. Protesters Comments at 11-12. The protester argues that the net present value of Fedcars 20-year lease is $4.5 million more than the net present value of Walshs lease.[7] Therefore, Walsh concludes that the agencys determination that Fedcars proposal offered the best value to the government is not reasonable.
Source selection officials have broad discretion in determining the manner and extent to which they will make use of the technical and cost evaluation results, and their judgments are governed only by the tests of rationality and consistency with the stated evaluation criteria. Client Network Servs., Inc., B-297994, Apr. 28, 2006, 2006 CPD ¶ 79 at 9. It is not our function to second guess the agencys judgment as to the value of the advantages associated with a higher-rated proposal. CLS Worldwide Support Servs., B-405298.2 et al., Sept. 11, 2012, 2012 CPD ¶ 257 at 17. Rather, in considering the rationality of an agencys tradeoff determination, we look at whether the reasons given for preferring one proposal over another are consistent with the stated evaluation scheme, and not whether we agree with the source selection authority as to the relative value of the advantages. Carothers Constr., Inc., B-405241.4, July 26, 2012, 2012 CPD ¶ 225 at 9.
We find the agencys tradeoff decision to be reasonable. The protester provides no basis for its assumption that the benefits associated with Fedcars provision of the additional land--including increased visibility, an additional point of ingress and egress, a site access point at an existing traffic signal, significantly improved on-site traffic circulation, and the possibility of shifting the planned perimeter parking--can be calculated simply by multiplying the number of acres by the most recent numbers from the county tax assessment. See Comments at 12. In its tradeoff decision, the contracting officer considered that Fedcars building design featured many well thought out elements that enhanced the buildings function, a maintenance plan that showed a full understanding of the health care requirements, and the financial ability to perform, noting that Fedcars proposal was ranked first under the non-price factors. AR, Tab E, Price Negotiation Memorandum, at 33. The contracting officers comparison of the strengths and weaknesses associated with Fedcars and Walshs proposals was reasonable, consistent with the solicitation criteria, and treated the offerors equally. Thus, in our view, the agency has adequately justified its selection of Fedcars higher-rated proposal in accordance with the stated evaluation criteria.[8]
The protest is denied.
Susan A. Poling
General Counsel
[1] The average reserve proposed by offerors was $328,916.72. AR, Tab C1, Abstract of Initial Offers, at 1.
[2] During the pendency of this protest, the agency submitted a revised abstract of FPR prices, which reflects that Fedcar was ranked fourth in the price evaluation and Walsh was ranked fifth. AR, Tab C3, Abstract of FPR Offers, at 1 (dated Nov. 16, 2012). In an e-mail, the agency explained that, during its review of the file, it made administrative revisions to the abstract of offers. E-mail from VA Attorney, Nov. 21, 2012. In the revised version, Fedcars net present value fully-serviced rental rate was $28.83 per net usable square foot. Walshs rate remained $28.90. AR, Tab C-3, Abstract of FPR Offers, at 1. The protester states that, according to its calculations, using the original abstract, Walshs proposal offered a price advantage of approximately $4.6 million for the twenty-year lease in present value. Protesters Comments on the Supplemental AR at 11. Using the revised abstract, Fedcars proposal offered a price advantage of approximately $351,000. Id. The protester does not challenge the price evaluation so we need not resolve the issue of which abstract is accurate. For purposes of this decision, we rely upon the original abstract of prices.
[3] In its various protest submissions, Walsh has raised arguments in addition to, or that are variations of, those discussed below. We have considered all of Walshs various arguments and allegations and find no basis to sustain its protest.
[4] Although the protester repeatedly quotes the agency as stating that the firms prices were too low, Protesters Comments at 3-5, the record shows that the agency simply stated that the amount was low in comparison to the average. See AR, Tab D1, Negotiation Meeting Notes, at 2. There is no support in the record for the protesters allegations that the agency informed Walsh that it should raise its reserve amount.
[5] The protester also argues that the agencys evaluation of Fedcars proposal was flawed because the agency failed to discredit Fedcars proposal even though its building and maintenance reserve was below the average. Comments at 5. This allegation provides no basis on which to sustain the protest. The protester does not demonstrate how the awardees building and maintenance reserve amount could be considered unacceptable or flawed; nor does it identify any provisions of the solicitation that contemplated this type of evaluation. We find the agencys evaluation of Fedcars reserve amount to be reasonable.
[6] Further, we have consistently held that an agencys source selection plan is an internal guide that does not give rights to parties; it is the RFPs evaluation scheme, not internal agency documents such as source selection plans, to which an agency is required to adhere in evaluating proposals. J5 Sys., Inc., B-406800, August 31, 2012, 2012 CPD ¶ 252 at 13 n.14; Meadowgate Techs., LLC, B-405989, B-405989.3, Jan. 17, 2012, 2012 CPD ¶ 27 at 6 n.7.
[7] Assuming we rely on the original abstract of prices and not the revised abstract, which reflects that Fedcar offered a price lower than the protester.
[8] We assume for the sake of this decision that Walshs proposal offered a price advantage. As set forth above, during the protest the agency produced a revised abstract of offers that shows that Fedcars price was lower than the price proposed by Walsh. If the revised abstract of prices is accurate, then Fedcars proposal was both higher-rated and lower-priced; thus no tradeoff between Fedcar and Walsh would have been necessary.
Sep 20, 2019
ServeFed, Inc.
We dismiss the protest.
Semper Valens Solutions, Inc.
We deny the protest.
BZ Defense, LLC
We deny the protests.
Sep 19, 2019
Department of Health and Human Services, Centers for Medicare & Medicaid Services: Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2020 Rates; Quality Reporting Requirements for Specific Providers; Medicare and Medicaid Promoting Interoperability Programs Requirements for Eligible Hospitals and Critical Access Hospitals
Sep 17, 2019
Chenega Federal Systems, LLC
We deny the protest.
Sep 16, 2019
Sigmatech, Inc.
We deny the protest.
Sep 13, 2019
Sanford Federal, Inc.
We deny the protest.
William Schaeffer
We deny the protest.
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subset: commoncrawl


text:
Clinton visited Kosovo refugees, but ...
On May 14, 1999, first lady Clinton visited a refugee camp in Skopje, Macedonia, for ethnic Albanians leaving Kosovo. The trip received extensive press coverage focused on the plight of families trying to escape violence at the hands of Serbian forces.
"I want to send a message to the refugees that we do not intend to let the evil which (Yugoslavia President Slobodan) Milosevic perpetrated against these people keep them away from their homeland and their homes," Clinton said on the trip.
Hillary Clinton's campaign has put forward statements from former Bill Clinton administration officials about the importance of the trip. Richard C. Holbrooke, who negotiated the 1995 Dayton Accords ending the war in Yugoslavia and is supporting Sen. Clinton's presidential bid, said the first lady pressed officials on her trip to keep borders open and then continued to lobby for refugees when she returned to Washington.
"After visiting refugees and gaining a first-hand assessment of the situation, the first lady had intense talks with President Gligorov and Prime Minister Georgievski," Holbrooke said in a written statement. "In these talks, one in the Presidential Palace, another in the residence of the American Ambassador, Christopher Hill, Mrs. Clinton pressed the Macedonian government to fully open the border so that Kosovar Albanian refugees could flee the war zone to safety."
The trip seemed more designed to gain media coverage than to conduct substantive diplomacy, however. Clinton visited the area for less than 12 hours, arriving at 9:20 a.m. and leaving at 5:45 p.m. According to the itinerary provided to news organizations, she arrived at the camp and was briefed on relief efforts at 10 a.m., toured the camp at 11 a.m., and met with nongovernmental organizations (NGOs) at 1:30 p.m.
Her meetings with officials appear to have been brief. Holbrooke is correct on some of the details he mentions, but the meetings all took place within the space of a single afternoon. The itinerary shows photo opportunities for the traveling press at 2:20 p.m. with Prime Minister Branko Crvenkovski at the U.S. Ambassador's Residence; at 2:50 p.m. with President Kiro Gligorov at the president's residence; and at 3:30 p.m. with first lady Gligorov at the president's residence.
The New York Times reported that her visit to the camp was "so carefully scripted that administration officials chose which refugees Mrs. Clinton would speak with."
Macedonia opened its borders before Clinton visited, so it seems unlikely that she personally negotiated for border openings. But the Clinton administration wanted to make sure the borders stayed open amid concern that Macedonian officials were trying to keep refugees out. In this context, her trip suggests a diplomatic visit intended to reinforce U.S. goals in the region. In her biography Living History , she mentions her visit and describes it as supporting the administration's diplomatic agenda around the world, but she does not mention taking part in specific negotiations.
We tried and failed to find an independent expert who could speak to her role in negotiating open borders. Janusz Bugajski, an expert on the region with the Center for Strategic and International Studies in Washington, D.C., said via e-mail of her visit, "No doubt she tried to help the plight of refugees, but whether she was mandated by President Clinton to speak on behalf of the U.S. administration concerning policy in the region one would need to ask the former president."
Our reading of the record shows a good deal to suggest Clinton was concerned about the plight of the people of Kosovo, but almost nothing to indicate she was a major player in border negotiations. We'll give her the benefit of the doubt for traveling to Macedonia and meeting with officials, but the way her statement is phrased, it makes her sound primarily responsible for the United States' efforts in the region. We don't find evidence to support that aside from her less-than-12-hour visit, and so we find her statement to be Barely True.
Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.


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Filmed in the new Science Center at the Rockville Campus
From its dramatic four-story atrium to its gleaming new laboratories, recitation rooms, and faculty offices, the new 140,000-square-foot instructional building provides much-needed space for students increasingly seeking affordable, high-quality programs in science, engineering, and mathematics -programs.
Located on the south side of the Rockville Campus at the Mannakee Street entrance, the Science Center houses the departments of biology, chemistry, physics, engineering, and geosciences.
The Science Center (SC) building features a green roof, high-efficiency chillers, solar panels, an underground cistern, and recycled construction materials. The College expects to achieve Leadership in Energy and Environmental Design (LEED) Gold certification from the United States Green Building Council for its environmentally friendly elements. Part of the building's architectural design are the eco-resin panels depicting elements of the solar system, hanging in the east entrance to the atrium, as well as a large ceiling fan that circulates air and accentuates the four-story ceiling.
Outside, grass terraces serve as an outdoor classroom, and a dock provides students with direct contact to the pond or "living laboratory" for outdoor experimentation and data collection. Other exterior features include native planting, extensive bicycle racks, a variety of seat walls and a greenhouse.
The need for a new Science Center at the Rockville Campus was evident long before the groundbreaking in February 2009. In recent years, more students have enrolled in science, engineering, and mathematics courses than ever before, up 57 percent since 2000. Demands for additional courses, instructional space, and equipment strained aging facilities and created waitlists for many classes. Leaders at the College, county, and state levels agreed: investing in a new building would benefit the entire community. Montgomery County, already home to numerous biotechnology, science, and health research facilities, expects continued growth well into the next decade. As the local science industry grows, so too does demand for a STEM educated workforce.
In fall 2009, 1,500 students tried to register for mathematics and science classes, but classes were full; 57% eventually registered, but 43% (647 students) were not successful in getting the math/science class they needed.
"What started as a renovation to two existing buildings… developed into the dream of a new building. We now have enough space to grow our STEM programs and to innovate with technology."—Dr. Judy Ackerman, vice president and provost, Rockville Campus
Throughout design and construction, architects Stantec (formerly Burt Hill) and Cho Benn Holback Associates, and Clark Construction worked with the College's Facilities Office to maximize energy efficiency and optimize new technology and building materials.
College faculty provided expert advice on what today's science and engineering majors need to succeed. Highly qualified in their respective academic fields (a majority hold Ph.D.s), faculty contributed ideas based on their experiences with students in the old buildings. One key suggestion: create gathering spaces for students, whose classroom discussions often spill into hallways at the end of class.
The result: four stories of instructional space, organized into "neighborhoods" of program-specific labs, recitation rooms, and study areas. Students and their professors can consult in the nearby department office suites.
"One of the best features of the Science Center is the presence of research labs for student-faculty research projects… Many of us are thinking of new lab exercises that would take advantage of our new high-tech equipment."—Aubrey A. Smith, Ph.D., biology professor
The new Science Center marks the beginning of Montgomery College's STEM education growth at the Rockville Campus. Renovations to Science East (built in 1965) and Science West (built in 1971) will enhance student experiences with modern classroom and math labs. Once complete, the three buildings will form a science/math/engineering complex, converging via connected hallways and walkways.
July 7, 2009 July 7, 2009 July 7, 2009
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October 9, 2010
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It's no good having the latest electronic safety technology on trailers if it's not connected to the prime mover, as some drivers and operators are finding out the expensive...+MORE
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Reporting from Freightliner facilities across the United States,we take a close look at the right-hand drive development work heralding the upcoming launch of Freightliner's...+MORE
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I used to work on cereal.
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Click here if you wanna get some Cubby Blue stuff. Please note that MLB owns the rights to everything, and while I'm free to talk and paint about Cubs on the blog, MLB will not allow anything I do (with Cubs, Wrigley, etc) to be sold by anyone but them. I can't even give it away on Zazzle


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The W.P.A. approved a grant of $127,858 for the construction of the Outpatient Clinic Building in 1937, and the county pledged an additional $99,338.
The five-story, red brick, Georgian structure, built at a cost of $300,00, was turned over to Jefferson County by W. G. Henderson, State Administrator for the W.P.A. in dedication ceremonies held on Sunday, November 19, 1939.
The Hillman Outpatient Clinic was demolished in 1964 to make way for the Psychiatric Unit.
-- from A History of the University of Alabama Hospitals by Jack D.L. Holmes, p. 37-38.


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New student service trips spur community engagement
September 28, 2009
Before classes begin, before New Student Orientation starts, students entering Lewis & Clark College come together for an adventure.
Participants in the Breakaway Adventures program get a head start on making friends while getting to know the Pacific Northwest. Co-sponsored by College Outdoors and the Center for Career and Community Engagement, the trips offer experiences ranging from kayaking to community service.
Two of the trips encourage students to establish connections and offer service in the Portland community. The trips—which focus on issues like hunger, poverty, and sustainable food systems—bring students together for a week of service before they begin their first year at Lewis & Clark.
Learn more about the trips and what this year's participants learned from the experience in this video.


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What does the Brookings Institute's Study on Transit & Jobs Really Tell Us?
On May 12, 2011, the Brookings Institute released a first-of-its-kind study that looked at job accessibility in metropolitan areas via transit. This exhaustive study took on the issue of job sprawl – the decentralization of jobs from the traditional downtown or urban core and out into the suburbs – and found that Western US cities' transit systems, such as Los Angeles and Honolulu, have better job accessibility than their compact East Coast counterparts. The reason is because Western cities' transit systems were designed post-automobile. That is to say, Western transit systems were designed to connect suburbs to central cities.
In summary, the Brookings study made the following conclusions:
- Nearly 70% of large metropolitan residents live in neighborhoods with access to transit service of some kind. This includes bus and light rail.
- In neighborhoods covered by transit, morning rush hour service occurs about once every 10 minutes for the typical metropolitan commuter.
- The typical metropolitan resident can reach about 30% of jobs in their metropolitan area via transit in 90 minutes.
- About one-quarter of jobs in low- and middle-skill industries are accessible via transit within 90 minutes for the typical metropolitan commuter, compared to one-third of jobs in high-skill industries.
- Fifteen of the 20 metro areas that rank highest on a combined score of transit coverage and job access are in the Western US and 15 of the 20 metro areas that rank lowest are in the Southern US.
Download the Study Here!
The Brookings study did not do one thing that has some critics crying foul. The study did not look at performance as a function of ridership. Because the study ignored ridership, instead to focus on job accessibility, does that make the study flawed? Are its conclusions and ranking of transit systems somehow incorrect because of it? Some say yes. I say no.


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Not in a book club and looking to join in on the discussion, or perhaps you are already in a club and looking for a fun second club... well here you have it! You are welcome/ encouraged/ and all around WANTED in our BB Book Club! Each month we like to choose books that are debut novels, up and coming authors, possible new discoveries of the next best book for book clubs, and occasionally a mainstream best seller or author.
The Gentleman
By Forrest Leo
When Lionel Savage, a popular poet in Victorian London, learns from his butler that they're broke, he marries the beautiful Vivien Lancaster for her money, only to find that his muse has abandoned him.
Distraught and contemplating suicide, Savage accidentally conjures the Devil -- the polite "Gentleman" of the title -- who appears at one of the society parties Savage abhors. The two hit it off: the Devil talks about his home, where he employs Dante as a gardener; Savage lends him a volume of Tennyson. But when the party's over and Vivien has disappeared, the poet concludes in horror that he must have inadvertently sold his wife to the dark lord... read more
Just another fun option for book lovers with no obligations!! Every registered individual of BookBundlz becomes an automatic member of the BB Book Club. This gives you immediate access to be a part of a book club. If you are not in a book club and still looking to join in on a great book discussion, or perhaps you are already in a club and looking for a fun second club... well here is the book club for you!
Each month we like to choose books that are debut novels, up and coming authors, possible new discoveries of the next best book for book clubs, and occasionally a mainstream best seller or author. (Click on the "past book club picks" tab to see the choices) We rate, review, and discuss each book. You are welcome/ encouraged/ and all around WANTED to participate in our BB Book Club!
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July "Book Off"
2013 Book Picks:
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Although EVERY clubie is part of the BB Book Club (as seen on this "Club House" page), to be a BB Reader simply means you are taking a more active part of our "book club of the month" fun... no obligations... just the opportunity to be more involved and be a part of our online BB Book Club.
SO... our "Secret Club" is not so secret anymore as we have made it SO easy for you to jump on board.
Once you are in the book club the benefits and fun begin!
Here's how it works:
1. The BB reader's will show up as one of your book clubs so you can easily enjoy it as you would any other book club. (To check out what the club has read so far, go to our "Past Book Club Picks" tab. To find out more about how we chose our book club picks, go the our "About the BB Book Club" tab.)2. As an added benefit to you - you will get to know the choice a month ahead of the rest of the BB Book Club. Our BB staff likes to get our reviews in on the 1st of the month to help generate discussion right away and now YOU can be part of the early discussion!
4. All the book club information comes to you so you can easily review, rate and discuss the book with us every month because that is what makes it fun! Although, it is certainly not required....the more the merrier! Join in whenever you can all month long!
And as our numbers grow, we will be adding more opportunities for this club to interact.
* except for the two months we have "The Book Pick" contest winners.
Sweet Girl
By Travis Mulhauser
With the heart, daring, and evocative atmosphere of Winter's Bone and True Grit, and driven by the raw, whip-smart voice of Percy James, a blistering debut about a fearless sixteen-year old girl whose search for her missing mother leads to an unexpected discovery, and a life or death struggle in the harsh frozen landscape of the Upper Midwest.
Filled with the sweeping sense of cultural and geographic isolation of its setting—the hills of fictional Cutler County in northern Michigan—and told in Percy's unflinching style, Sweetgirl is an affecting exploration of courage, sacrifice, and the ties that bind—a taut and darkly humorous tour-de-force that is horrifying, tender, and hopeful.... read more
The Ramblers
By Aidan Donnelley Rowley
Set in the most magical parts of Manhattan—the Upper West Side, Central Park, Greenwich Village—The Ramblers explores the lives of three lost souls, bound together by friendship and family. During the course of one fateful Thanksgiving week, a time when emotions run high and being with family can be a mixed blessing, Rowley's sharply defined characters explore the moments when decisions are deliberately made, choices accepted, and pasts reconciled...
...an accomplished, sumptuous novel about fate, loss, hope, birds, friendship, love, the wonders of the natural world and the mysteries of the human spirit. read more
2013 Winner of "The Book Pick" Contest:


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ernestob needed a new logo design and created a contest on 99designs.
A winner was selected from 47 designs submitted by 22 freelance designers.
Need a logo/stationary/business cards/letterhead design for new business website. The Company is PPC Marketing Consultants and the logo will be the basis for the website design.
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this way
We went outside to enjoy the beautiful fall colors in our neighborhood today. We live in a wooded pocket of our city, and are surrounded by charming old homes and a 55 acre nature preserve. After nearly 3 years here, sometimes I find myself taking all of it for granted, but in the fall it's sort of smack-you-in-the-face beautiful, so that's more difficult to do.
The neighborhood is sort of changing over to be filled with more young families with kids, so I have my fingers crossed for more happily engaged children over the coming summers and school breaks. One of Elliot's best buddies just moved in 8 doors down, so today we picked him up on the way to the neighborhood school playground for an impromptu playdate.
those cheeks
Lucie and I are still recovering from a cold we had last weekend, so this may be the extent of our adventures today, except possibly grabbing some carryout later. I have some goody bags to stuff and one mermaid tail to make before Monday and the view from the couch is looking pretty good.
our pretty street
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Milwaukee M18 Fuel 1/2-inch Drill/Driver Kit
At nearly five pounds, the best-in-class Milwaukee is a big tool and has the power to match, with a brushless motor churning out 725 in./lbs of sawdust-spewing torque. "It got through concrete, cinder, and brick almost as easily as wood," says Grundy. Bonuses include a side handle for more control on serious surfaces and a torque collar that prevents you from stripping screws. It's tough, too, shrugging off multiple drops. [$280; milwaukeetool.com]Back to top