Procurement that stresses solutions, not specs
- By Paul McCloskey
- Oct 28, 2015
The city of Long Beach, Calif., is about to launch a set of municipal projects for which it is requiring that few -- if any -- technical specifications or prerequisites for bidders be included in advance.
Instead the city is opting to pursue a new “problem-based” approach to procurement, which asks both city managers and potential vendors to shift their focus away from products and technologies the city needs to buy and instead focus first on the problem it needs to solve.
That tactic is the brainchild of Citymart, a Barcelona- and New York City-based firm that has claimed a string of successes with the new approach over the last few years in cities including San Francisco, Moscow and Madrid.
This fall Long Beach will launch the first two of five challenges using the Citymart method. The effort will be supported by a recent $50,000 grant from the Knight Foundation that Long Beach Mayor Robert Garcia was able to secure to support the project partnerships.
Garcia said he believes the project “not only has potential to save the city money, but is a great way to support innovation in the public and private sector.”
How it works
The Citymart business proposition is based on its belief that most city procurement proposals are so entangled with financial and legal red flags and other requirements that few bids survive the procurement process.
And those that do are rarely the most innovative or address the root cause of the problem, said Citymart CEO Sascha Haselmayer, who estimated most cities looking to launch a procurement are aware of only about 3 percent of solutions available to them.
“Instead of rapidly sharing the best solutions, our communities spend billions every year reinventing solutions, when they could be delivering the best possible services,” Haselmayer said. “Solutions that might arise in months instead take years, if they are discovered at all.”
In an effort to open up the bidding process to a larger community of innovators and to generate more proposals, the firm has been pioneering a technique that substitutes a simple problem statement or challenge for the specs found in more traditional requests for proposals.
Where a traditional procurement for streetlights might request for data on power consumption or liability, a problem-oriented procurement aims to generate dozens of proposals by soliciting responses to a more open-ended question such as, ’How can we make our city safer?’
The first challenge, designed to help make Long Beach more business friendly, has been given the moniker, “Launch, Do, Grow.” One aim of the project is to clear potential confusion surrounding the procurement process that often stands in the way of first-time entrepreneurs looking to bring their ideas to the city.
“The classic example is somebody who’s got a great idea for a business. They go out and reserve their commercial space and then come to city hall to get a business license,” said Rachael Tanner, a program analyst in the Long Beach city manager’s office. “And at that moment they learn there are a number of other things that need to happen before that space can be opened to the public -- that’s the worst case scenario.”
For Long Beach, challenge-based procurement is intended as “another tool in our toolbox,” said Tanner, an option to use when appropriate. “But if there’s a new method out there, we want to be able to be on the forefront and take that method and innovation and incorporate it so that we have the capacity to do it ourselves.”
A second challenge will be mounted around the theme of “sparking a culture of innovation,” Tanner said. With it, the city aims to gather people with experience building innovative organizations and identifying the city’s role in putting that together.
Haselmayer sees similar themes spreading around the world. “The essence of this is that we are asking cities to consider what they are set up to do in government -- which is essentially problem solving,” he said, noting that “currently in government, this process is fragmented.”
Since its launch in 2011, Citymart has completed more than 100 “problem challenges.” In Barcelona, the city launched six challenges spread over a $1.5 million budget, including a solution for how to reduce bicycle theft across the city. Other challenges focused on how best to tackle social isolation among the city’s elderly, including a request to apply social media and shared calendars to promote ‘permanent dialogue’ across the city.
The Barcelona competition drew 119 qualified bids, 12 of which were developed by companies expressly formed by citizens to respond to the challenge. In all, 55,000 citizens and entrepreneurs showed interest in the challenge.
“This was much better stuff than they would get from the usual five bidders,” said Haselmayer. “It was innovative. All six contracts were awarded 30 percent below budget. The whole turnaround of the RFP was 9 months, which was the ‘speed of light’ in our world,” he said.
To help guide the problem challenge, Citymart offers support to cities at various points in the procurement process, from launching a challenge, to holding face-to-face summits with vendors to winnowing incoming proposals.
“Most city governments initially don't have a grip on what problems they might have in the organization,” Haselmayer said. “So we help them surface problems by engaging employees and stakeholders and begin to develop a workflow on how they can select the right path to solve a problem.”
Ultimately the city and vendors start learning from each other, drawing from what has been successful in the past. “In some cases, you go into a procurement process, in others you might go into co-creation processes. In other cases you might pilot a new idea to get a better understanding of what a technology might be capable of.”
At that point, the city begins to learn a process that “becomes pretty normalized.”
Citymart also encourages sharing of proposal content. “Every problem we run has its own feed where we publish solutions as we’re finding them,” Haselmayer said.
This tends to serve as a catalyst for self-organizing groups that might circulate information about a new solution. In Barcelona, he said, individual citizens collaborated with commercial entrepreneurs to form 12 new bidding teams competing to be funded. “The other thing that happens is that some cities are running similar problems, and so they’re building on what one city has learned in solving its problems.”
An RFP for setting up streetlights in the San Francisco challenge, for instance, was built on top of an urban lighting project in the Netherlands, which in turn inspired a similar program in Christ Church, New Zealand. “So the cities are learning from each other, both about what the market offers and their experiences in solving the problem,” Haselmayer said.
The firm has learned a number of lessons in the past five years, according to Haselmayer. When Citymart first launched, he said, problem challenges tended to be engineering oriented, often a variation of “how do we automate urban services.”
“We’ve moved away from these engineering-focused solutions into looking at citizen value,” he explained. “Cities have moved toward challenges like how do we revitalize public spaces, how do we tackle health issues or independent living for the elderly using technology.
The firm also isn’t particularly focused on reforming the procurement process, he said. “If you say that procurement reform is about changing laws and regulations I think that certainly wouldn’t be our starting point -- that would take far too long in my view,” he said.
“It’s actually just making the best use of everything we have,” Haselmayer added. “Ultimately we want to see innovation and change embedded in everything we’re doing because it give us better solutions and better decisions.”