Subject: RE: CAF
From: "Neil Callahan" <[email-masked]>
To: "'Eric Schwerin'" <[email-masked]>, "'Hunter Biden'" <[email-masked]>, <[email-masked]>
Date: Tue, 27 Jul 2010 20:43:03 -0400

Hi guys,

A couple of questions / comments:

1.       Agreed with all the additional Advisory type services we can tack
on 

2.       Did we know the size of the deal going in - $258m?  Or was the
Success Fee $800k pertaining to winning the bid?  To me the winning bid is
for $25.8m, and our $800k is on that.

3.       Our position could/should be that our success fee is $800k on the
first 10% - $25.8m or 3% which is fair and reasonable, and we expect
equivalent (3%) on all additional awards under the bid 

4.       10% sales commission is customary across the board to their
internal folks, deal teams, etc.   RSP claiming 3% or about a 1/3 rd of the
commission is not outrageous

5.       Or we give them a choice - 3% on this deal and 3% on all deals
going forward - or 0.2% on this deal and 5% on all deals going forward.

6.       Offer them a tangential service / Line of Business such as RSP
Promotions, or RSP Business Meetings, RSP Research, RSP International, etc.
- we'd offer an additional line of business with an expectation of $1m-$1.2m
annually of revenue and sign a 3 year contact.  They will say "oh, I did not
know you guys did that" and we'll just build a mini-delivery team around the
3 year $3.6m contract.  (This is a fairly common and effective tactic, the
thesis is they will hire someone to that service, why not us, and we will
deliver it to an acceptable level of service.)  But is clearly not our Core
Business, which is also being expanded as noted in point #1.

7.       Going to Spain for a negotiation session where it will be RSP vs
CAF/TA is lose lose proposition, I'd rather hit the spas of Pyongyang - the
trip to Spain should just be a big fat party and discussion of the next
contract, collecting a check and nothing more. 

8.       The Governor could give some grandfatherly advice to CAF - "make
sure you treat your partners right, especially RSP" - basically do the right
thing.

9.       I suspect the main indigestion is that Jesus does not have the
budget approved to cover it, or he is/was not authorized to make such a deal
and the people in DC will be basically be like, thanks, but I never hired
you and it's not coming out of my budget, a nice pat on the back from the DC
team is anticipated.

Best,

Neil

 

----------------------------------------------------------------------------
--------------

Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile) 

866-749-8879  (fax) 

From: Eric Schwerin [mailto:[email-masked]] 
Sent: Tuesday, July 27, 2010 5:42 PM
To: Hunter Biden; [email-masked] Archer
Cc: Neil Callahan
Subject: CAF

For discussion tomorrow at 10:30am.

Here's what we should propose to CAF.   The deal was for approx an $800K
success fee as I recall.  This always (as standard operating procedure) was
contingent on the actual award and when the money is obligated by Amtrak.

Amtrak has so far only allocated $25.8m of the $258m contract.  (It is a
five year contract at $258m, with the first year only being valued at 10% of
the total, $25.8m).   So, we would only be receiving 10% of the $800,000
anyway had we had a signed agreement on the success fee.  And by the way,
$800,000 is .2% of $298m.   Way, way below the going rate for these types of
things.

I think we should send CAF a letter saying that per our agreement we want to
memorialize our understanding on payment of success/sales percentage fees.
We should ask for our $80,000 now (the 10%) and agree that the rest is paid
out as the money in obligated.   We could also look at increasing our annual
retainer by $80,000.   

We should also agree to help them with the following things:

1) Advice and strategy related to Amtrak

2) Advice and strategy as related to work CAF can do to help Amtrak secure
financing for the remaining 90%

3) NY State relations - including work with the Governor (to include a press
event ASAP in Elmira)

4) Federal Government Strategy (no lobbying, but this could include a
recommendation to hire a lobbyist)

5) Labor Relations

We may even want to look at expanding the relationship to focus on Light
Rail.

FYI, Lorenzo wants to schedule a trip to Spain in September to talk to Jesus
about this.  I don't think we should go until this is finalized.

 

Eric D. Schwerin

Rosemont Seneca Partners, LLC

1010 Wisconsin Ave., NW

Suite 705

Washington, DC 20007

(202) 333-1880

[email-masked] <x-msg://59/[email-masked]> 

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