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Philadelphia's Procurement Overhaul Includes Reverse Bidding, Open Data Practices

The new system is rife with enhancements that also include fully automated processing procedures, among other things.

As recently as last year, Philadelphia required any vendors interested in working with the city to submit bids by physically bringing in a box with three paper copies. When it came to sealing subsequent contracts, the vendors could do so online, but the final nine internal steps were all paper-based.

Simply put, Philadelphia had procurement problems and the city knew it. Officials in the procurement department knew they had an aging, outdated system that was making it difficult for vendors to compete for city work, for the city to get the best available quality and prices, and for public servants to process the necessary bids and contracts. And so Philadelphia got to work creating and installing upgrades to nearly every facet of its procurement procedures.

In a meeting with reporters on Tuesday, Aug. 1, the city detailed the fruits of this labor, describing a new system rife with enhancements that include reverse bidding, fully automated processing procedures, and open data practices aimed at fostering better collaboration between prime and sub-contractors, among other things.

Although officials acknowledged that their work remains ongoing, they said recent adaptations of new tech and changes to city regulations have brought them closer to a procurement system that produces better results for all of the stakeholders, including the city, vendors, residents and local economic prospects.

“We’re really sort of late bloomers coming to this,” said Trevor Day, Philadelphia’s procurement commissioner, “but we haven’t had significant changes coming to the procurement charter code for a number of years. So, for us this is a big win.”

Perhaps the most impressive improvement is to the bidding system. Those days of lengthy bids hauled to the city in hefty boxes are gone. Now, the city is able to handle procurement bids through a platform that one official said was like “reverse eBay.” Whereas on eBay there is one seller with an infinite number of buyers vying to make a purchase, Philadelphia’s new procurement system uses an online platform that connects one buyer — the city — with a group of pre-screened potential sellers, competing to give the city the best price.

In 2017, Philadelphia has so far used reverse auctions to secure bids on between eight and 10 projects, officials said, emphasizing that the results had involved saving a good deal of money. They pointed to the recent purchase of new recycling bins for the streets department to distribute to residents throughout the city.

The initial bid for these bins had come back considerably higher than the previous contract from 2008. So the city tapped its reverse bidding platform, on which three vendors signed up to compete.

“We got to a price point that was the same as we paid back in 2008. It was a 30 percent savings on pricing [from the initial bid],” Day said. “The streets department is extremely happy.”

And why shouldn’t they be? Because of this savings over their initial expectations, they were able to purchase recycling bins for thousands of additional residents, which also reduced the number of man hours that streets employees would have had to spend fielding calls from residents wondering why they hadn’t received a new bin.

The entire bidding process took about 20 minutes, whereas the previous version took between three and seven days. Philadelphia hired Pennsylvania-based company Procurex to collaborate on this reverse-auction process.  

The city has also started PHL Contracts, which allows vendors to register electronically with the city, receiving in exchange a host of benefits, including access to all current open bids within the city. This registration system first went live in late 2016, and more than 1,500 vendors have signed up for it, said Nicholas Susi, Philadelphia’s deputy procurement commissioner.

PHL Contracts also lets participating vendors see which other companies have submitted bids to work on jobs, as well as their plans and specs, which has led to collaboration between potential sub and prime contractors.

“Not only is it improving the bids we get internally, but from what we can tell, it’s improving networking between companies in the area,” Susi said.

Another benefit of removing the physical and paper components from the bidding process is that a wider group of vendors are now able to bid for city work, from anywhere in the country. This ease has already yielded results in the diversity of the business owners collaborating with the city. Traditionally, about 1 percent of bids for work with Philadelphia come from businesses owned by women or minorities. Since the partial institution of the electronic processes, that number has climbed to 11 percent, and the city has already awarded such entrepreneurs with five contracts, where that number is traditionally one or zero.

Christina Saggiomo, project director with Philadelphia, said that the city has also started using an e-signature platform to expedite how quickly vendors are paid, which was the No. 1 complaint about city work determined by a recent survey of those who do work for Philadelphia. This platform has reduced last fiscal year’s total average wait time for signing off on payment for professional services from 76 days down to 34.

“We hope this will all encourage more folks to do business with us, create better competition and better partnerships,” Saggiomo said.

Associate editor for Government Technology magazine.