To upgrade government technology, build a better procurement toolkit

Mariel Reed served as an Innovation Strategist for the San Francisco Mayor’s Office of Civic Innovation, where she helped grow Startup in Residence into a national network connecting cities with startups. She recently founded CoProcure to help local governments find, buy, and share high-quality technology products from a more diverse group of vendors via streamlined, cooperative procurement. Contact her at @marielreed or via email.

 

If you’d told me four years ago that I’d become obsessed with improving public technology procurement, I would have laughed. (Actually, I probably would have returned a blank stare, thinking: “What is procurement?”) At that point, I wasn’t thinking about government; I was learning about technology. I’d just moved from Beijing to San Francisco to join an education technology startup I felt fired-up about.

But my excitement was quickly tempered by my experience living in San Francisco. The city is one of extreme contrasts. Its average earnings are nearly double the national average, but every night, thousands of residents sleep on the streets. In the same city that produced some of the world’s most powerful Internet businesses, 15 percent of public school students can’t get online at home.

Even though it’s especially visible in San Francisco, across the United States inequality is on the rise. Governments should have unprecedented access to talent and technologies to meet this challenge. But first, we have to work together to update public procurement.

Why procurement? Like many of my peers in government innovation roles, purchasing didn’t stand out to me as an immediately important or sexy challenge. But in my work with the San Francisco Mayor’s Office Startup in Residence (STIR) program, I saw that procurement is integral to providing city agencies basic  capabilities to do work, like improving the foster care parent application process or better serving our community’s homeless population.

From my experience in local government and founding a public procurement startup, here are three things I urge local governments to consider as we work to update public purchasing:

Create opportunities for co-development.

If we want a more robust, competitive ecosystem of government technology providers, we must make it easier for new types of vendors to learn about government needs and provide the time and space for them to build products with government staff. Many entrepreneurs don’t know what problems government employees face and have a hard time accessing these users, who have access to crucial workflows, and who can also provide access to the city residents who use government benefits. By sharing problem statements and visions that are solution- and technology-agnostic, and creating more structured opportunities for co-development, governments can engage vendors that may have more creative approaches.

Build efficient procurement pathways for new vendors.

While many new programs invite entrepreneurs to collaborate with government, few of these programs provide a clear procurement pathway if that collaboration is successful. Many new companies are so eager to do work with government that they’ll bend over backward just to do a proof of concept, without realizing that procurement will be a challenge down the line. Often government staff hasn’t fully thought a program through on their end, either. One procurement officer I spoke with lamented that “government staff thinks pilots are a procurement workaround, that if the pilot goes well we can avoid a competitive bidding process. It’s a rude awakening when they realize they still have to solicit bids.” Vendors who successfully convince government agencies to make a purchase often find themselves (in the words of one startup) in “procurement hell,” having to endure purchasing timelines of 6-18 months with no guarantee that they’ll ultimately win the project. As one vendor I spoke with shared: “by the time you’re done with the process, you find it wasn’t worth it.”

A handful of programs front-load the competitive bidding process to pave a way from pilot to procurement. At the federal level, the Department of Defense’s Defense Innovation Unit Experimental (DIUx) leverages “other transaction” (OT) authority to solicit solutions, award OT contracts for prototype projects, then award follow-on production contracts to scale-up the pilot without re-competing the work. At STIR, we treated the application as a competitive bidding process, which enabled city agencies and startups to enter into contract negotiations at the end of a successful residency period.

Explore cooperative purchasing.

Cooperative purchasing is, at its most basic, when governments buy things together. This purchasing method is already quite established, especially for commodities like road salt and fire trucks. A single government, regional association of governments, or national cooperative (like Sourcewell, U.S. Communities, or NASPO Value Point) can lead a solicitation, or use a contract that another public agency has already competitively bid. Cooperatives serve thousands of governments across the country, saving them the administrative burden of running their own procurement processes and aggregating demand to negotiate better pricing with vendors. For example, in California, Los Angeles County takes the lead on procuring aerial imagery for public agencies. The City of Los Angeles reduced its imagery procurement costs from approximately $1M to $750K by joining the program.

There are over 39,000 local governments in the United States facing similar challenges. Instead of procuring bespoke tools, local governments should work together to share expertise, test new tools, and coordinate purchases to create a stronger market.

Procurement can help government do more, do better, and be more efficient. But to tap into this potential, we need to change our approach. We need to untangle the process to create opportunities for businesses to understand and co-develop solutions to civic challenges. We need to help new vendors see the value of working with government. And we need to get better at sharing what’s working, faster.

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