How Cities Can Get Strategic About Procurement
Louisville is pioneering an approach that aims to make purchasing and contracting a key ingredient in successfully delivering services.
The Louisville, Ky., Free Public Library needs its security guards to do more than simply monitor the entrances to its buildings. "They have to respond to medical emergencies, address disruptive behavior and make sure no one is using drugs in the bathrooms or hiding under the stairwells at closing," says Belinda Catman, the library's executive administrator for operations. The toughest part of the job, she says, is dealing with "a diverse population that includes children, elderly, individuals who are homeless, use substances or are mentally ill." Too often, security guards assigned to the library have been unable or unwilling to fulfill key aspects of the job, leading to excessive turnover.
In trying to fix this problem, Catman uncovered a mechanism driving the mismatch: Security guards were not being hired by the library directly. Instead, the library had tacked on to a $6.5 million Facilities Management Department contract with a private security firm without updating the scope and qualifications requirements. "Unlike at the library, the security-guard job at Facilities involves little interaction with people beyond greeting visitors at the door and asking them to sign in," explains Catman.
Louisville was treating contracting as a rubber-stamping activity rather than a crucial ingredient to the success of city services. The procurement system was highly compliance-oriented and siloed between departments, which became a particular pain point when departments shared products or services. Louisville is not alone: Cities across the country are falling short of achieving key objectives due to their rote approach to contracting. But the good news is that many of them are ready to get out of the contracting rut and reinvent how they partner with the private sector.
Nothing short of reinvention was on the mind of Joel Neaveill, Louisville's director of purchasing. "I wanted the city's departments to recognize procurement's value as a strategic partner, trying to help them achieve their goals and get things done rather than pose another obstacle," he says. Through Bloomberg Philanthropies' What Works Cities initiative, Louisville received technical assistance from the Harvard Kennedy School's Government Performance Lab to pilot a strategic procurement system. Such systems can help cities prioritize critical contracts as well as more effectively structure, evaluate and manage them. They encourage dialogue and collaboration among departments, beneficiaries and vendor communities.
The new system needed to be centralized enough to coordinate performance-focused activities while also accommodating the reality that departments often control their own procurements and contracts. Louisville's solution was to launch an Executive Procurement Committee consisting of department leaders from across the city. They would initially help structure the strategic procurement system and then convene once a quarter to determine which procurements and contracts most needed extra attention. Over the course of four to six weeks, special teams of city employees appointed by the committee would examine contracts, pinpoint shortcomings and opportunities, and sometimes conduct interviews with vendors, residents and other relevant players.
On one team, staff from the Purchasing Division, the library and Facilities Management collaborated on identifying ways to improve the city's security-guard contract. They proposed revising the RFP's qualifications section to reflect the needs of both user departments, inviting firms to bid on one or both types of positions, and shifting the approval and reporting for the library's guards to library personnel. They also put forth creative ideas such as awarding bonus points during the selection process to vendors that increase security guards' pay based on tenure to boost retention of qualified guards.
While the strategic procurement system spotlights only a few high-priority contracts at a time, it has the potential to make a broader impact by raising the standards for what the full array of city contracts should deliver to residents. For instance, teams have pointed out that bureaucratic processes for submitting a bid and slow vendor payments limit the number of firms that want to do business with the city.
The strategic procurement system is also serving as a cross-functional platform for advancing mayoral priorities, such as improving the impact of city practices on diversity and racial equity. The Executive Procurement Committee is working with Louisville's chief performance officer and chief equity officer to improve data collection on contracts with minority- and women-owned businesses as well as to identify barriers to vendor diversity and develop strategies for removing them.
Establishing the strategic procurement system "has helped us elevate the importance of procurement, build trust and earn credibility," says Neaveill. Since the pilot, the city has dedicated a staff member to running the system and is preparing to accelerate progress by holding Executive Procurement Committee meetings on a monthly rather than quarterly basis.
The lessons Louisville is learning will help to inform a wider effort. Through Bloomberg Philanthropies' recent $42 million investment in What Works Cities, the Government Performance Lab will offer pro bono technical assistance to 16 additional cities to design, test and institutionalize strategic procurement systems. With these new systems, cities will be able take an outcomes-oriented and problem-solving approach to set their most critical, underperforming or complex contracts up for success.