Q3 Update: How friendly was your city/county government to small business so far in 2019?
Cities look to innovative solutions to face urgent issues like social cohesion, economic development, transportation and climate change. Mayors and city leaders have pledged to both innovate and buy more from small business, but are they walking the walk?
To answer this, Citymart has tracked procurements in 281 cities in the US, Canada, UK and Ireland to provide a comparative view on how accessible and open cities are to small business and their ideas. Our data cover procurements run by 510 government agencies.
In the US, we have gone one step further. We apply our “SBAS - Small Business Accessibility Score” to the 93 procurement portals used by 56 major US cities to establish how easy it is for small businesses to discover opportunities, highlight best practices and areas for improvement.
City Procurement: The Global Innovation Scan
We measure innovation in procurement because it speaks to both how governments are modernizing as well as the opportunities they create for more diverse vendors. We know that start-ups and small business prefer procurements that offer flexibility on how to deliver a service or encourage new ideas. So we looked at every procurement published by cities and counties in 2019 to count procurement opportunities that matched our “innovative” criteria (read more below).
Our data allows us, for the first time, to compare innovation activity in procurement across countries.
In absolute terms the US is leading with 470 innovative procurements making it by far the biggest market. Yet, adjusted to population size, the UK and Canada are twice as active, indicating a significantly more robust adoption of innovation in government.
These differences became even starker when we looked at the percentage of procurement transactions we deemed innovative in these countries - the UK is nearing 1% followed by Ireland at nearly 0.5%, Canada at 0.3% and the US at 0.2%.
Procurement innovation is a complex web of behaviors, policies and structures but a few differences strike us as possible causes for these differences:
The Canada, Ireland and the UK each have a single, national portal listing all public procurements. By contrast, in the US you need to enter 93 procurement portals to keep track of opportunities in just 56 cities. A single public portal makes it not just easier for vendors, but also for public servants to learn from peers, find state of the art examples and have their opportunities discovered by innovators to advance their game.
The UK appears to be reaping the dividends of its concerted national procurement reform effort around a shared vision and best practice. Today, every local government has a multi-year procurement strategy, and valuable new skills like “strategic commissioning” have become pervasive across the country.
Key Take Aways - Global Innovation Scan
New York City is the leading city in absolute terms, with 14 innovative procurements published in 2019, followed by Austin and Boston each with 12.
Innovation hotspots: South Lakeland District Council, Boston and Vancouver are the leading innovators adjusted to their population size.
UK first to reach 1% of public procurements that can now be categorized as innovative - compared to 0.5% in Ireland, 0.3% in Canada and 0.2% in the US.
US is the leading market with 470 innovative procurements in absolute terms, followed by the UK (127) and Canada (63).
Transportation drives the innovation game with 20% of innovative procurements, followed by energy, infrastructure and government operations at around 8% each.
Consolidation of innovation activities is much higher in the US where just 127 cities published innovative procurements. Adjusted to population size, we have found about three times as many local governments publish innovative procurements in the UK, Canada and Ireland.
What are they buying?
For the first time we are able to release data on what sectors these cities are pushing for innovation.
Transportation is the globally leading category for procurement innovation, making up 20% of all innovative transactions. Infrastructure, government and energy constitute about 8% of transactions each, followed by IT and Economic Development at 5%. We see significant growth in the public engagement sector, with a growing number of cities investing in new forms of citizen engagement and participation.
Smart Cities themed procurements may be on the rise, constituting 10% of innovation in Q3. Yet, over the course of 2019, this segment constituted just 3% of all innovative transactions.
Innovation & Small Business in US Cities
Our approach to benchmarking public procurement is designed to represent the perspective of a small business or start-up. Over the past 10 years, we found that discovering opportunities is a crucial first step for business owners to even consider government as a customer. To capture how discovery varies across cities, we developed the “Small Business Accessibility Score” (SBAS) and applied it to 56 leading US citie to measure how much effort is required in identifying and evaluating a cities’ opportunities.
We know that start-ups and small business prefer procurements that offer flexibility on how to deliver a service or encourage new ideas. So we looked at every procurement published by US cities governments to count procurement opportunities that matched our “innovative” criteria (read more below).
Key Take Aways
Boston still #1 when adjusted for size, outperforming second placed Austin by about 30%
Atlanta is now #1 on small business access, continuing it’s shake-up by providing the best discovery and decision-making experience for small business - good news for the recently recruited Chief procurement Officer David L Wilson II who took the city from 27th place to #1 in just 6 months.
New York City tops in absolute numbers of innovative procurements, followed by Austin and Boston - but ranks just 39th when adjusted for its size.
Only Clark County, NV did not issue any innovative RFPs out of the group of 56 major cities.
40% of governments continue use platforms that try to generate revenue from business users in the form of upsells or mandatory fees to access public documentation. We strongly believe that such practices are not helping small businesses participate in procurement.
— The Ranking —
Put the Small Business User First
City leaders should focus efforts to make public procurement truly attractive to small business, beginning with accessibility and innovation. Both categories feed off one another since innovation outcomes thrive on increased competition of ideas, which in turn are facilitated through making it easy for new actors to take part. Further, we found that procurements open to innovation attract diverse small business.
We found no evidence that this requires fancy e-procurement systems - our top cities on both accessibility and innovation use a variety of in-house and contracted platforms. In fact, cities achieved both excellent and poor results with almost any procurement platform on the market - or their proprietary systems. Atlanta leaped from 27th to 1st place in less than 9 months by offering a direct link to its bids on the city home page and migrating to a more accessible platform. Cities scored highly on accessibility by paying attention to the user journey from easy discovery of business opportunities to their decision to take bid.
This study continues to validate some fundamentals already known to many urban innovators: Cities are still far from publishing enough procurements with real opportunities for start-ups and new ideas. But, the fact that the number of cities who did not publish innovative procurements dropped to just two should give us hope that a trend is emerging.
Take New York City as an example: In the period of this study, the city published 1500 solicitations in the City Record, of which we identified fourteen as innovative. That is a mere 1% of transactions. Boston, on the other hand delivered innovation in 6.7% of the city’s procurements. It indicates a higher penetration of the city’s innovation agenda across its departments, but also a greater willingness to give vendors room to shape the scope.
What should your city do next?
Please get in touch with our friendly team to dig deeper into your results, and how to prioritize next steps. We have outlined two action areas below, to Improve Accessibility and Open Up to Innovation.
Is your city not listed here? Get in touch and we can include you in our coverage.
Action 1: Improve Accessibility
Increase participation of small business by making it easy to find your procurement opportunities. Check out atlantaga.gov for an excellent home page integration.
Don’t undermine your progress! Pittsburgh led nationally on accessibility until the city deployed a new procurement portal that relegated them to 25th place overnight because it is now so hard to get to the actual RFP documentation.
Remove any paywalls that force vendors to pay for access to opportunities or bid for RFPs, especially when you are not incurring costs by providing physical material!
Deploy procurement and listing platforms that require no registration, have no exclusionary practices and will not confuse vendors trying to upsell premium services.
Build a business case for marketing and communications of procurement opportunities to attract innovative and diverse businesses to consider business with your city.
Action 2: Open up to Innovation
Set goals for the number of procurement transactions in 2019-20 and 2029 that we would classify as open to innovation or small business, if you want your city to be innovative and open to start-ups
Create a business case for innovation in your procurement efforts and prioritize the actions that are going to get you the desired outcomes. We recently built a strong case for a 0.5% investment in procurement resources of a major urban regeneration project to drive more than 10% in cost savings, elevated quality outcomes and improved vendor diversity and civic engagement.
Build a culture and shared understanding around innovation not just as the risky pursuit of new technologies, but an opening to new or different ways of doing things that can help small business flourish in your city. Read here what startups want you to do!
Develop a holistic procurement strategy laying out your path to going from back-office function to driving change, participation and accountability through this critical government function.
The Small Print: More on how & what we measured
A first step to tracking what is innovative.
Data on US local procurement is deeply fragmented, held in dozens of platforms and aggregated poorly by commercial operators charging businesses hundreds to thousands of dollars to find opportunities. Like any small business, we wanted to rely on information that is publicly available. We tracked only those procurements above the city’s competitive threshold - i.e. those opportunities that are published.
What is innovation? It is important to note that we used our own judgement to identify a procurement as innovative. We looked for procurements that either explicitly referred to their interest in innovation, or provided an implicit opportunity to do things differently. For example, Los Angeles Airports RFP for guest satisfaction surveys is in, because it is open to new ways of collecting the data. If it had provided a fixed specification to repeat the same methods and tools used before, we would have not included it. Every judgement is prone to error, and more likely than not we have missed some good things. But, we believe that this approach is more aligned with the reality of many start-ups and innovators, who may work between traditional commodity codes or have their own smart ways of getting things done efficiently.
Since March 2019 we added an additional dimension: The number of days a procurement is open for submissions, after feedback from small businesses that they struggle with short opening times (read more here). We have heard their concerns and will now expect procurements to be open for at least 28 days to be considered or provide strong justification otherwise.
About the Small Business Accessibility Score
Citymart developed a scoring method that builds on the discovery journey of a small business that has not yet worked with government. It starts with the question of how easy it would be to discover procurement opportunities in your city, and the effort required to obtain sufficient information and the actual opportunity documentation - all needed to determine Go / No-Go. We measured seven features of the journey we know to be important. Our overall score is subject to a weighting of these individual measures to reflect their relative importance to a small business.
Elements of the Small Business Accessibility Score (SBAS)
# of procurement sites in city
Opportunities should be in one place. Some cities, like Austin (TX) list all opportunities in a single location, whilst others (like Jacksonville) have more than 5 pages on which opportunities are posted.
# of steps to access RFP document
Opportunities should be quick to assess. In Memphis you get to the RFP document with just 4 clicks from the city homepage, whilst New York City provides no identifiable path from nyc.gov to its solicitations page.
Sort / filter functionality
Opportunities should be easy to find. Pittsburgh lets you search and filter opportunities using keywords, dates and other criteria. In Tulsa no such feature exists.
Completeness of listing information
Quick decisions happen when the right information is available. San Jose provides users a complete overview of information about the opportunity like dates, contacts, plan holders. Milwaukee’s department of public works gives you barely more than a title, before your left to figure things out by reading a 50+ page RFP document.
Level of registration required to view RFP
Procurement opportunities should be open information and easy to access. Cities like Indianapolis let you have it all, whilst Lexington requires a W-9 and San Mateo County leaves it at the portal operator’s discretion (publicpurchase.com) to let you see RFPs (Citymart was denied access).
Most cities don’t charge you for RFPs. But almost a third of governments we reviewed use portals that aggressively upsell services or have mandatory charges, like Jacksonville’s public schools.
San Francisco’s Office of Contract Administration offers RSS feeds of their procurements. Others offer opt-ins for email or SMS notification. But 60% of cities, like Houston offer no notifications at all.
Many cities, regrettably, publish procurement opportunities on different websites. To assemble the score we assessed each procurement site in the city. The City’s SBAS is calculated as an average of these individual scores (contact us for your sub-scores).
Example: The Denver Score
2.4 Denver Public Schools
2.4 Denver City Procurement
2.0 Denver Airport Procurement
1.8 Denver Transport Procurement
1.9 Denver Water Procurement
2.1 Total Denver Score (AVG sub-scores)