Take a Seat—in a $1,000 Chair

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Two weeks ago, I wrote about Residents For Reform (residentsforreform.com) and their concerns about excessive city spending.

I discussed a 2013 Orange County Register article stating that the new city hall was “furnished with high-end furniture and fixtures, including 204 leather Herman Miller chairs designed by modernist designers Charles and Ray Eames, at a cost of $1,073 each, according to city invoices.”

I was so surprised by the $1073 chair that I asked city officials for copies of these invoices but I did not get them.

I spoke to Steve Badum, the Assistant City Manager. He was the city’s project manager for the construction of the new city hall.

I asked Badum about this Register article and the $1,073 chairs. He responded that the cost might be accurate for Herman Miller conference chairs but can’t verify it without reviewing the invoices.

He speculated that $1,073 figure might have come from a retail web site, but that government purchasers often get discounts.

Because it doesn’t make sense to me to spend over $1,000 on a government chair, I asked a lot of questions about the decision making process. I will summarize Badum’s description of the purchasing process briefly because it’s complicated and too long for this article.

Badum said that the city hall project was built using a “Contract Manager At Risk.” This was CW Driver.

Other contractors have told me that CW Driver often manages costs for the general contractor as a check and balance. They commented that CW Driver was both the contractor and the project manager and thus overseeing its own costs in the city hall project.

Badum said the city wanted to hire a Construction Manager / General Contractor at the beginning of the project. Badum then said the city used a “Value Engineering Process.” He added that when the architect proposed designs, furniture, etc., the contractor, the designer and city management were to discuss better alternatives and ways to save money. Badum said the project was overseen by three-member city council working group.

Badum said that the budget for Furniture, Fixture and Equipment (FFE) was under two percent of the cost of the city hall project, which he said is good. He said that FFE is all of the things that would fall down if you turn the building upside down. Critics of the city hall project have told me that the FFE was at this percentage because the building cost so much.

Badum then explained that the selection process of furniture was based upon the goal that furniture in public areas was cost effective, durable and not lavish or extravagant.

I can’t understand how using expensive designer chairs is not extravagant.

Badum said that seats in council chambers were supposed to be nice, comfortable and durable. Conference area chairs were supposed to be durable and similar to airport waiting area chairs, and that is why the city spent extra money to buy these chairs that come with 12-year warranties.

Badum said the city’s goal was to put quality into the public areas and reduce costs in other areas to keep overall costs to within industry standards.

Badum emphasized that he “guarantees” that if you buy a $60 chair you’ll have to buy 10 of them in the 12-year period.

I replied that the office chair I was sitting in during my phone conversation with him (and during the time I wrote this article) was 14 years old and is still functioning. It probably cost $60 or $70. I haven’t had to buy 10 of them, even though I assume that chair had less than a 12-year warranty. My cars have outlasted their warranties too.

In my world of starting, operating and counseling small and pre-public private businesses, I don’t buy designer chairs. I wouldn’t let companies I invest in buy designer chairs, unless they sell fashion clothing or accessories, sports cars or private jets. I can’t think of any of my clients who spend the extra money on designer chairs. The only place I’ve seen luxury conference room furniture is at large law firms whose lawyers charge up to or over $1,000 an hour. I’ll have to ask my lawyer friends with those fancy conference rooms how much their conference chairs cost.

Why are designer chairs being used on any project funded by taxpayers, especially one financed by debt? Weren’t any non-designer chairs available with the same functionality and durability at a lower price?

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