Traditional public-sector procurement processes have been criticized for being slow, inflexible, and limiting the size of the vendor pool that government can fish in. While challenges in government procurement persist, years of shrinking budgets have led many organizations to devote some energy to improving the process.
California, for instance, is now implementing a redesigned RFP and IT planning process that officials hope will prevent backtracking and speed up the deployment of new projects. In North Carolina, a new innovation center will allow government to try products before committing to purchases. In Philadelphia, the city is challenging the traditional RFP model, incubating new startups that can run pilot programs before commiting to launching a full-scale project. And it’s not just new processes, but new technologies that are adding speed, automation and innovation to government procurement.
One of procurement’s biggest limitations is inherent in the structure itself: Submit an RFP, receive bids, then commit to a big contract that may or may not be what the organization was looking for. A new innovation center in North Carolina will allow government to try before it buys.
Going $356 million over budget with IT projects offered the state some motivation to change the way they were doing things. Now, North Carolina is piloting virtual desktop technology in its innovation center. If those products demonstrate that they can deliver the productivity they promise and meet budget constraints, only then will the organization move forward. This shift takes much of the burden off the organization, while placing pressure on vendors to perform, ultimately giving the government more time and more choices.
Another problem with procurement is that it can be tedious and fragmented. While newer systems eliminate much of the tedium, many are incomplete, focusing only on payments, or only on purchasing. Procurement systems should be holistic and include all relevant elements, said Adam Magalei, product manager of BidSync.
Bidsync consolidates the entire procurement process, from soliciting vendors, receiving bid notifications, managing contracts and requesting purchases. Many organizations call their purchasing system a procurement system, but that’s a misnomer, he said. “There’s so much more to procurement than just purchasing,” Magalei said.
Since procurement is the front line that tows the rest of the organization, according to Magalei, BidSync also creates a marketplace. “It makes a lot more sense for your procurement organization to be able to have a visible snapshot of who vendors are and what they do,” he explained.
Like North Carolina’s innovation center, BidSync shifts the burden of effort from the organization to the vendors. Organizations can get a lay of the land before committing to a solution, and once a commitment is made, the software makes everything simple to manage, in one place.
If a city isn’t happy with the offers it is getting from vendors, one solution is to incubate new startups and use their work to launch new projects. From Philadelphia’s innovation center came a program called FastFWD, which will give the city 10 public safety pilot projects to choose from for further development. Entrepreneurs are given a chance to compete in a market once cornered by a few large companies that had government procurement figured out.
This new model will solve old problems with the city’s RFP process, such as the lack of early engagement with vendors that led to restrictive or limited solutions. By allowing more flexibility and open communication in the procurement process, the city hopes to save money and benefit from more innovative technology.
Traditionally, the city has prescribed a solution, rather than asking for good ideas and taking the best of what’s available, said Story Bellows, co-director of Mayor Michael Nutter’s Office of New Urban Mechanics. The FastFWD model is designed to harvest the most out of the available talent pool, she said.
Lack of accountability is problem common to many government procurement systems. If there’s no sense of urgency and no one is held accountable for things going slowly, then things will continue to go unaccounted for at a slow pace, said David Smalley, application development manager of Franklin County, Ohio.
Calling their procurement process unacceptably slow, Smalley said they designed a new system from scratch that is transparent and engenders speed. Much like a package tracking system used by the U.S. Postal Service or FedEx, Franklin County’s procurement system enables visibility into where procurement requests are in the process, viewable from a Web-based interface. If requests are regularly spending a lot of time in one particular place in the process, steps can be taken to remediate the problem.
Developing the system from scratch also yielded a beneficial side effect, Smalley said, which is that it forced them to analyze their entire process and evaluate whether they were doing things in an optimal way.
Stories of adjacent states working together or several agencies joining forces to get economy-of-scale savings on purchases are common enough that the concept has been integrated into a service that allows any organization to get the same savings from the vendors they use.
Since February, SmartProcure has been harvesting purchasing data from more than 1,500 public organizations and serving the data to their customers through their software. Users of SmartProcure can see what other governments around the country have been buying and how much it costs them, with advanced search and filtering options. “It does what you would you like to do if you had hours for every type of procurement you're going to do -- to go through and properly vet a vendor, find out what all the cities and counties within 100 miles are buying,” CEO Jeff Rubenstein said.
Organizations like the police departments in Aventura, Fla. and Delray Beach, Fla., both identified SmartProcure as a useful way to get fair pricing for products and services. Some SmartProcure customers have even gotten partial refunds from vendors after the system revealed that they were paying more than similar organizations in other parts of the country.
In addition to the information SmartProcure provides users, it also gives them an opportunity to team up with other users for economy-of-scale purchases once they are ready to buy.
How is your agency updating procurement processes to overcome traditional hurdles that hamper innovation? Tell us about it in the comments below.