Small Cities Are Rethinking Effective Procurement

When cities contract with the private sector for goods and services, they tend to go with the lowest bidder—at least, that’s what they’ve done historically. But performance-based contracts, in which governments also look at how well a contractor delivers on their promises, can help ensure higher-quality contracts and a better value in the long run. Performance-based contracting has been widely accepted as a best practice for years, and it’s become standard practice in the nation’s biggest cities. Now the practice is spreading from big cities to mid-sized and small municipalities as well.

For example, Virginia Beach has embarked on a $2 million, 5 year effort to overhaul its purchasing processes. This new electronic procurement system uses more sophisticated data not just for tactical means, but also for strategic, decision-making functions. Using data for evidenced-based procurement dependent on performance is relatively new and uncommon, and smaller entities have been slow to embrace this approach. Adopting this approach is not always easy, as this often requires greater expertise among the staff, the possibility of driving away small, local businesses, and raises issues when a contractor fails to meet performance targets and the question of what must be done in response.

Overall, however, there is confidence that benefits will be had by smaller and medium sized entities that embrace this trend. Taylor Adams, Virginia Beach’s procurement officer, is confident that more sophisticated data will not only improve partnerships, but will help the City better engage with a larger variety of businesses by creating historical data points. Large cities such as New York, Los Angeles and Seattle all consider performance when awarding contracts, and this will be an interesting trend to continue to watch among other entities in the coming years.

Source: GovTech