How Cities Can Improve Their Procurement of Goods & Services

The following is Chapter 4 from a Manhattan Institute report, “Retooling Metropolis: How Social Media, Markets, and Regulatory Innovation Can Make America’s Cities More Livable.”

Introduction

Nearly everything important that city governments do combines the efforts of city government employees with goods and services acquired from the private sector. This is true of building and maintaining roads. It’s true of transporting children to school. It’s true of collecting and recycling trash. It’s true of sheltering the homeless and providing job training to the unemployed. Even inherently governmental activities, such as licensing and inspections, require information technology systems purchased from the private sector.

Yet most cities treat procurement and contract management as back-office functions rather than as key strategic activities. Even simple procurements get tied up in red tape and can take months to accomplish. Many contracts are renewed at the last minute, without consideration of past performance. Contract management consists largely of processing invoices and change orders, with little attention paid to monitoring quality. Vendors are rarely challenged to improve outcomes.

Since 2011, the Harvard Kennedy School Government Performance Lab has been providing pro bono technical assistance to state and 38 Retooling Metropolis local governments in an effort to understand how governments can improve their contracting and procurement. As part of Bloomberg Philanthropies’ What Works Cities initiative, we are helping 20 cities across the country implement “results-driven contracting” strategies.

While our research is ongoing, we are now starting to identify common patterns across many cities in the most significant procurement challenges they are facing and in the solutions that are enabling them to improve results for their residents.

In the following pages, we describe the significant progress that can be made when cities treat procurement as a strategic priority, take advantage of information technology to track performance and manage vendor relationships in real time, and pursue a flexible approach to acquisition.

https://govlab.hks.harvard.edu/wp-content/uploads/2018/10/manhattan_institute_cities_procurement.pdf