Public procurement is one of the most exciting opportunities for impactful reform in U.S. cities today. Experts estimate government spending on public contracts of up to $1 trillion annually. This budget is spent on a variety of goods and services provided to serve the needs of citizens & residents – anything from new infrastructure, roads and traffic lights, to meals for those in need.
Concurrently, cities are home to a vast network of small locally-owned & operated businesses led by driven entrepreneurs looking to provide quality goods and services whilst enriching their local community.
City governments should recognize the value of these local enterprises, and take every opportunity to create an inclusive, diverse, and dynamic economy where small, local business owners can equally benefit from opportunities in the form of public contracts.
Why should cities shop local?
City procurement processes determine how cities contract with business vendors for services. These decisions on vendor choice and contract term, while perhaps seemingly innocuous, can have far-reaching impacts on residents’ quality of life. For example: hundreds of thousands of people living in cities may rely on the local government for food at any given time, from those experiencing homelessness to children having lunch at summer camp. When the quality and consistency of food provided by vendors falters, residents pay the price. That’s why it’s so critical for cities to work toward an open and inclusive procurement process.
Small and disadvantaged business enterprises (DBEs) are often eager to participate in City procurement – these contracts can be a lucrative stream of revenue for businesses facing an uneven economy and uncertain future. Unfortunately, these vendors can feel locked out of the opportunities in procurement, as they’re often unable to compete with larger corporations in the cost of goods and services to be provided. Additionally, having to navigate what can be a confusing and challenging process to submit proposals can be difficult for businesses working with limited staff and budget. Still, many of these locally-based enterprises have a vested interest in their City – providing services and creating jobs in communities. Working to prioritize the inclusion of these small, local and disadvantaged businesses in City procurement can build bridges between governments and residents, and help to keep jobs local, bolstering the economy in turn.
Residents stand to benefit as well. Building in more competition for bids can keep businesses accountable, ensuring vendors with long-standing contracts are continuing to offer services of high enough quality to be selected by the City. Cities can remain responsible stewards of taxpayer funds while maintaining the freedom to choose the best quality goods or services for their citizens.
Building better, more inclusive procurement
So what exactly can cities do to ensure their procurement processes are open and welcoming to small, local and underrepresented business enterprises?
- Best value procurement. Best Value procurement gives agencies leeway to consider factors other than cost when selecting a vendor. Quality, expertise, and certification as a Local Business Enterprise (LBE) are considerations that might weigh on a determination of the best value a vendor may offer. This key change in practice levels the playing field for smaller, local vendors who struggle to compete on cost alone.
- Open contracting data. Clear and usable open data on the contracting process is critical to keep businesses, officials, and other stakeholders apprised of upcoming and ongoing opportunities. Small businesses especially need access to robust contracting data to most effectively submit to City RFPs and bolster their chance to win bids. By opening up important contracting data in a standardized format, cities can transform how contracting helps them achieve value for their residents.
- Facilitating relationships between prime and subcontractors. Small businesses looking to enter the world of procurement may sometimes require the support of a larger prime contractor. But for many of these businesses, building these relationships can be a challenge. Cities can optionally incentivize the use of local subcontractors to their prime partners, or actively work to build a network of contractors within their community. Organizing events to bring together vendors seeking prime and sub partners could help facilitate the establishment of these relationships and a greater entrepreneurial community within the City.
Inclusive procurement is a key component of truly open and participatory governance. As cities continue to grapple with the acquisition of new and varying goods and services from private vendors, keeping an equitable & inclusive mindset is critical to ensure just and collaborative decision making on public spending.