I think the statement following this is much more important and interesting to HN:
> The tendency has become more and more prevalent under electronic auction systems.
While incidents like this are often used as examples of the failures of technocracy, I think the problem is elsewhere. A decision process has been out-sourced to a machine that is not smart enough yet to make a good decision. The decision might be good in a very localized and easy to measure sense (cheap), but lacks an understanding of other economical signals.
When I read this article, I felt a sharp pain, as it sounded as if it could be directed at our company [1]. Acquiring pricing for local governments through online reverse auctions is what we do.
Your observations are poignant. There is strong incentive to treat everything as a commodity these days. Part of our business is in helping buyers structure their RFQ documents so that the product or service can be competitively sourced. In the government sector, however, we rarely participate in this process.
Governments must purchase based on their state and local laws, which often ties their hands. A local school system may want to purchase better quality chalk for a reasonable premium, but the laws pertaining to procurement frequently prevent them. It's a really bizarre circumstance where public perception of government waste has resulted in laws that eliminate buyers' ability to cut deals that are better for everyone. I'm not saying it's impossible; it's just much easier for a procurement officer at a local government to follow the standard process (which prioritizes price) than it is to fight for quality.
There are pockets of innovation, however. Our eRA platform stands out because we offer the ability to incorporate non-price factors in to our ranking algorithm. This gives a buyer the ability to "weight" one bidder over the others. We developed some of our most advanced features jointly with local governments in Arizona. I'm not sure I should name names, but there are people doing really great work out in Arizona.
We have even considered founding a separate not-for-profit organization whose entire purpose would be to assist local governments in improving their procurement laws so that there would be a better balance of good sourcing practices and the ability to incentivize quality over price where appropriate. That's a huge challenge though. You frequently end up directly opposed to special interests with very deep pockets and a financial incentive to keep procurement laws just as they are.
If you instruct a machine to optimize for the cheapest price; it will do that.
The failure is in the instructions given, not the introduction of machines.
> If you instruct a machine to optimize for the cheapest price; it will do that
if (x < y) { // } is a simple optimisation.
The classic "you optimise for what is or can be measured rather than what is important."
There are ways around this of course by setting minimum quality via an objective third party (MIL-STD's for example) but that process introduces a whole new can of worms.
That much should be clear, my (unfortunately) implicit question is: how can we instruct a machine to optimize for the very intangible things everybody seems to love so much about this chalk? What about the more subtle economic things (like signals of economic climate and value of quality).
I once worked for a guy once who claimed he could sole-source a peanut if he had to. Many of them boiled down to colluding with the supplier to find a set of properties that were unique to their particular peanuts; things like soil pH, average temperature of the area they were grown in, not too much rainfall, not too little rainfall. Most purchasers were neither educated sufficiently to question these kinds of specifications, nor were they particularly interested; they also wanted to find the path of least resistance through the process. We probably could have bought most anything we wanted. Later we had a DOE grant get audited and there was some nervousness on our parts about some of these shenanigans that might be found. The guy just chuckled and said nearly everyone has to play this game to some extent. His major complaint about our books was that our overhead costs were above average, and he helped us make a case to the Uni for lowering it. Didn't see that one coming.
For an item like chalk though, my employer now has an arrangement with one of the big office-supply companies who specialize in tolerating (and charging extra for) gov't nonsense. Lately it's been CDW-G, I think. They provide a walled garden of approved products (which don't include the kind of good quality chalk in question) and a semi-streamlined purchasing process. It works great for the purchasing dep't, I'm sure, but it sucks for end-users because it introduces the same kind of uncertainty that a purchasing organization is supposed to fix. For example, the prices quoted on the website are not the actual prices of the products, and the products have variable discounts; this and the latency inherent in dealing with the purchasing process makes budgeting and price-shopping difficult to impossible. In my very small dep't we usually have budget projections rounded to the nearest hundred even for small items like chalk/dry erase markers because doing otherwise is a waste of time. We spent a lot of time a few years ago, working around the purchasing system just trying to get decent chalk before fatigue eventually set in and we just gave up and installed whiteboards.
I do not understand the reference to Arrow's Paradox in a discussion of procurement policy (almost certainly related to my lack of knowledge). Can you elaborate?
Sure --- there's a neat paper by Franssen (2006) that demonstrates the formal equivalence between optimization problems and the social policy problems Arrow was concerned with. Basically, Arrow says that some constituents will always lose out under any social policy. Franssen showed that you can swap out "composite cost metric" for social policy and "components of the cost metric" for constituents, and the same arguments apply.
Here's the full citation. Turns out I misremembered the year (2005).
Franssen M (2005) Arrow’s theorem, multi-criteria decision problems and multi-attribute preferences in engineering design. Research in Engineering Design 16(1):42–56
Sure there is. Sadly you'll need humans for that part, though. You could get several humans who all get a sample of each supplyers chalk, and then ask them to rate the quality of each on one (or several) scales. The computer can then integrate this rating with the rest of its metrics.
I didn't mean to say that it wasn't possible, you probably don't need a subjective measure of quality. I think you could empirically discover some objective characteristics of good chalk that would do the trick. You could at least quickly reject the worst chalk which is too brittle and too hard. I meant to say that there was and is no way that is recognized sufficiently universally that enables one to specify a chalk with the desirable properties to a gov't purchasing agent such that s/he can buy the right stuff.
Specify bending strength, the chalk must not snap under specified force. Next define a writing pressure, angle and stroke speed and require fewer than x blank areas in the line. Require that the line width be within a specific tolerance, not too thick not too thin.
Maybe a spec like this doesn't exist now, but you could use the good chalk and write the spec based on how it did.
The trouble is that the places that sell chalk to universities don't rate chalk like this. Like I said in another post ITT, we derped around for a couple years before we just gave up and installed the damn whiteboards.
I'm totally unaware of conventions used in public purchases.
Isn't an "electornic auction system" just a database anyone can spam - the actual decisions are probably made by humans? My hunch (might be incorrect) that the auction system creates a barrier of disinterest where the official has very little else to go with than the prices quoted. In this case it's not that the machine is stupid - it's way worse, the system stops actively humans doing what humans are particularly good at - separating wheat from chaff based on experience and intuition - if the official will never use the chalks and has no idea what the impact of the product will be.
The problem is that there is no known alternative really. If you just the government official decide, it breeds corruption.
Or at least it used to. Perhaps with the modern IT systems we could create a solution that delivers the transparency to the process - the official would explain his/her choices publicly, and the public would have an opportunity to argue...
i bet on the other side there are teachers complaining about the quality of chalk they end up getting. this is nothing but a case of the employee responsible for inputting the auction parameters being a lazy bastard and not talking to the people that used the product he is buying in great quantities.
it's all a matter of doing your job right. despite the fact that a machine will help you with some portion of it.
that didn't appear to be the main reason, his volume dropped in half since its peak because technology is moving beyond chalk and blackboards.
besides, it is common for many businesses to fall back on the excuse that their quality justifies their price without proving that their competitors are not delivering what is requested.
if you are over delivering and doing well that is fine, but if you are over delivering and losing money your not doing it right and the market will correct you one way or another
just the milkman the chalkboard has been obsoleted.
I think it's neither sad nor happy, it just is. People make the tradeoff between quality and cost, and it's simply down to their tastes. There's no metric to use to say what the right tradeoff is.
High quality commodities are considered nowadays luxury and not bare minimum. Quite sad, really.