The State of Local Government Procurement

This post was co-authored with Rebecca Williams of the Sunlight Foundation and Code for America’s policy intern Ryan Driscoll.
This summer, Code for America, Omidyar Network, and the Sunlight Foundation joined forces to investigate municipal procurement trends, best practices, and potential areas of improvement across the country with the Local Government Procurement Survey.

The survey yielded 31 total responses, representing a total of 28 cities and counties, ranging in population from 13,881 to 2.7 million and hailing from every region of the continental United States. The majority of respondents (93 percent) were government employees working with or in the purchasing department.

The Local Government Procurement Survey asked cities about procurement process data disclosure, the formal and informal procurement process for IT contracts, and what challenges existed in their current procurement system. While our exploration of this topic is ongoing, some of the key initial findings include:

• Detailed information about the procurement process, such as selection criteria data, text of contracts, and information about subcontractors, is not widely made available online. The exception is Request for Proposals (RFPs), which 96 percent of cities surveyed reported posting online.

• The survey revealed several specific challenges in technology procurement that were common across municipalities, with writing well-defined Statements of Work topping the list (64 percent of cities identified it as a major challenge).

• IT procurement threshold amounts (the dollar amount that triggers the formal bid process) varied widely across municipalities, ranging from $1,000 to $150,000 dollars.

• Seventy-five percent of respondents reported that improving IT procurement was a medium or high priority for their local government.

Although much attention is paid to federal and state procurement, there’s been relatively little research into the landscape of how US cities deal with this issue and its various technical and legal challenges. The Sunlight Foundation is working to increase transparency into government spending and procurement, and Code for America is striving better enable local governments to acquire the most effective technology solutions from the growing ecosystem of civic startups providing innovative, lower-cost alternatives to legacy vendors. We collaborated to gather data that help us better understand the local government procurement landscape and inform both of our efforts.

Check out more details on our initial findings below.

Open Procurement Data

Of the cities surveyed, the majority (86 percent) provide basic information about the procurement process online, often through a “vendor guide” on the city’s website. But when it came to more granular procurement information, most reported disclosing far less data.

• Although 96 percent of cities surveyed reported sharing RFPs online and slightly more than half of the cities surveyed (54 percent) disclosed contract award amounts, other relevant information as to how that contract was created is less frequently shared online.

• Only 39 percent of surveyed cities reported sharing data about duration of the contract period, 36 percent share selection criteria data, 29 percent share full text of the contracts, 14 percent share contract modification data, and 11 percent share full text of the purchase order.

• Information about the players in the bidding and contracting process was also reported as often not available in the cities surveyed, with 32 percent of cities surveyed disclosing information on the bidders, 14 percent providing information on bidder debarments, and just four percent of cities providing information on subcontractors.

Without all of this data disclosed, it is hard for bidders, citizens, and watchdog organizations alike to gauge reasonable expectations for their bids and be able to judge if there is wasteful spending or favoritism at play. As outlined in Sunlight’s Procurement Open Data Guidelines, to provide a comprehensive set of procurement data, and provide a transparent telling of local government procurement, the following elements of the procurement process should be disclosed and available online: the law, the documents involved (solicitations and tenders for contracts), unsolicited contracts, bid information, award amounts (and criteria), contract text and disputes. As well as all relevant information on the players involved in the procurement process: the contractor’s performance, status, and when and with whom subcontracting takes place, complete with unique identifiers for the contract and the entities participating.

IT Procurement and Procurement Experimentation

In addition to asking cities about the formal procurement process, we asked what exceptions and experimentation with the process had been taken place to both better analysis the process itself and identify opportunities for improvement.

• IT professional services procurement is often subject to the same procurement process rules that regulate other acquisitions.

• IT procurement threshold amounts (the dollar amount that triggers the formal bid process) ranged widely from $1,000 to $150,000 dollars.

• Thirty-two percent of cities surveyed reported trying workarounds or alternative approaches to the traditional IT procurement process in order to attempt to achieve better results.

Almost all local governments reported that they have some sort of waiver or exemption within their formal bid systems — often dictated by state statutes and commonly for emergency purchases, situations in which there is only one vendor providing the product or service requested, and cooperative contracts.

However, some cities have begun to pass policy with an eye towards creating room for experimentation and innovation. Kansas City, Missouri, a current Code for America fellowship partner city, recently passed a resolution that would allow the city to more easily contract with innovative startups and will allow KCMO to “test, evaluate, and/or demonstrate innovative products and solutions using City infrastructure or data.” The City and County of San Francisco’s policy contains an exemption for pilot projects lasting under two years, allowing for time to test and evaluate results. We’re curious to see the results yielded by these policy changes — and if other cities will follow their lead to encourage innovative startups to contract with government.

Additionally, 32 percent of participants reported trying out alternative approaches to the traditional IT procurement process that still comply with the existing rules and requirements. These “workarounds” can enable cities to explore new strategies as an alternative or a precursor to changing official policy. One well-known example comes from Mark Headd, Chief Data Officer for the City of Philadelphia, who solicited bids through GitHub in order to reach the local developer community. Other governments have used software like ScreenDoor to streamline the bidding and contracting workflow and SmartProcure to better leverage data on comparable purchases from other municipalities.

Procurement Challenges and Room for Innovation

Ninety-six percent of the survey respondents indicated that they face “significant” challenges procuring technology. The survey results revealed several specific procurement challenges that are consistent across municipalities. Of the 28 cities surveyed:

• Sixty-four percent identified writing well-defined statements of work as a major challenge.

• Twenty-five percent identified finding enough qualified bidders as a major challenge.

• Twenty-five percent identified screening applicants as a major challenge.

• Twenty-one percent identified lacking institutional knowledge of effective technology as a major challenge.

Other problems identified included: silos within government of who is reviewing the procurement process (e.g. the IT department exclusively steering the procurement of technology), unforeseen legal consequences, risk aversion to changes in the process, and difficulties negotiating contracting and subcontracting terms.

What’s Next?

Perhaps unsurprisingly given the significant amount of challenges faced, 75 percent of respondents listed procurement improvement as either medium or high priority in their city. It’s clear that government employees see procurement as a barrier to innovation: nearly 60 percent of senior-level government IT officials in another survey from Government Technology cited the public procurement process as a significant barrier to innovation. While at the same time, over the past two years over 400 companies have applied to the CfA Accelerator, indicating a new generation of civic entrepreneurs eager to supply governments with lightweight, modern technology that has the potential to transform the way government works.

With procurement improvement increasingly becoming a priority for local governments feeling the pressure to innovate, Code for America and the Sunlight Foundation will continue deeper dives into procurement sussing out current best practices in procurement data disclosure and creative, agile procurement practices that encourage innovation. Informed by a deeper understanding of the specific challenges facing local governments, we see an opportunity to support the development of more effective and transparent procurement systems and processes that better serve the public interest.

If you are a local government that would like to discuss how you can improve your procurement process, please get in touch: gov-staff [at] codeforamerica.org or local [at] sunlightfoundation.com

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