A city's purchasing threshold can determine whether buying something involves calling up a few people for quotes or spending a year trudging through a rigid contracting process. So where's the line?
Purchasing thresholds — the dollar amount above which a government agency must put out a call for competitive bids — can be pretty important. They determine when a government that needs to buy something can do so quickly and with minimum paperwork, and when it needs to put itself through a yearlong process filled with legalese and risk.
That process has shouldered a lot of the blame for why big technology projects in government fail. On the other hand, companies like Binti have found that if they price their technology under purchasing thresholds they can sign new clients very, very quickly.
Of course, the competitive bidding process was established for a reason. It protects the government from corruption, and implies a minimization of wasted tax dollars. So the purchasing threshold is often set low.
Low, yes — but local governments have a different idea of what “low” means.
To get a preliminary idea of just how widely the purchasing threshold ranges, we’ve pulled the data for 97 of the most populous cities in the U.S. from the Center for Digital Government’s** Navigator database. Above is a chart showing where those cities clustered along the purchasing threshold spectrum.
To determine a city’s threshold, we looked for the dollar amount at which the city started using words such as “sealed bids,” “formal process” and “competitive,” as well as when it started directing purchasing departments to handle the procurement. That’s a key distinction; below the purchasing thresholds many cities leave it up to individual departments to do their own buying.
One caveat: Just because a city isn’t required to go through a “formal, competitive” process with sealed bids doesn’t mean it doesn’t need any competition at all. Many of the cities on the list called for departments to solicit a certain number of quotes from vendors, even for tiny purchases. In those cases, though, an employee could simply call up a few competitors and ask for a verbal quote on the phone.
Here’s what we found for the 10 most populous cities:
Of all the cities examined, St. Louis had the tightest purse strings — anything costing more than $5,000 needs to go through a formal bidding process. The city with the highest threshold was Colorado Springs, Colo., which can go all the way up to $200,000 before it needs to dive into formal procurement. Compare that with the city’s traditional identity as a bastion of small-government conservatism.
There are also a lot of standard purchasing thresholds. Of the 97 cities on the list, 37 set their threshold at $50,000. Another 16 set theirs at $25,000, and 15 more set a threshold at $100,000.
All told, about three-quarters of the cities — 72 of 97 — set their threshold at $50,000 or less.
Obviously this data can’t bring much insight into the average American city, which is far smaller, and it doesn’t entirely capture the nuance of purchasing rules in the governments listed. Many of these cities have special rules and their own ways of doing business.
Here are two different views of where cities cluster on purchasing thresholds. The first shows all 97 cities examined; the second excludes the four most populous cities to provide a more nuanced view of the majority of the cities on the chart.
*Cities marked with an asterisk are consolidated city/counties.
**The Center for Digital Government is part of e.Republic, Government Technology's parent company.
Moriah Chace contributed to this story.