Procurement: City’s Pre-Procurement Pathway

(Part of a series of articles prepared by Barbara Thornton for the Smart Cities Council.  The articles are intended to provide an overview to city, private, nonprofit and community based stakeholders who hope to move city operations into the 21st century but run into 19th and early 20th century procurement processes.  These are the processes that govern how cities can acquire new technology.)

What happens in a city prior to the release of an RFP for digitally related goods and services?  Who are the influencers within the city government and in the community that are likely to have a hand in the stages leading up to an RFP?  What are the key “pre-procurement” stages?  Who are the stakeholders that are most likely to move a project from the stab of pain to the spark of an idea to the final RFP?  Are there opportunities for “smart city” technology companies to be in touch with influencers and stakeholders in these “pre-procurement” stages?  The goal of this report is to enhance the understanding of city officials’ roles and motivations in order to make a long term change in cities’ procurement of ICT and IoT products.

EU countries are much more advanced in their understanding of ICT procurement.  In the USA cities are just beginning to appreciate the hurdles their traditional procurement policies present in the path to becoming a “smart city”.  According to Code for America, a non-profit organization that works at the grass roots level with city governments, “The series of rules and regulations behind procurement were created to promote fairness, prevent unethical behavior, and ensure accountability. But over time, these policies have begun to work against the very values they were put in place to preserve. The result is that too often, procurement actually prevents governments from engaging with new companies offering modern technology products and services, missing opportunities for cost savings and innovation.”

Nearly 60 percent of senior-level government IT officials, in a survey from Government Technology, cited the public procurement process as a significant barrier to innovation.

While even the smallest US cities may want, at minimum, to move from paper processing to digital processing, they, alone, don’t offer the scope of work suitable for “smart city” technology  companies.

Number of municipalities in USA:  19,492;
with populations over 100,000:  295;
with populations over 250,000:   81;
with populations over 500,000:   34. https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population

“Smart city” technology  companies may choose to focus on only the 34 individual cities with populations over 500,000.  They may choose to search for projects of significant scope in smaller cities and leave the smaller projects to newer, civic tech start-up companies.  Alternatively they may choose to explore collaborative agreements arranged to bundle smaller cities into access to one larger digital solution package.  State governments, through the pooled procurement opportunities they negotiate for their cities and also through the laws and rules they develop to shape and limit the city procurement processes are key actors in the pre-procurement pathway story.  The National Association of State Procurement Officials (NASPO) does an annual survey of their members looking at policy and operational issues.

A report on NASPO’s top 10 priorities for 2015 is included here.   At least four of the ten priorities are directly related to changes in ICT procurement.

Whatever option the vendors select, cities of all sizes in the USA are seeking ways to understand and move into the smart city ecosystem.  They are thinking about all the various ways their current procurement procedures thwart their ability to find digital solutions to their problems.  This paper looks at all the moving parts in the pre-procurement pathway, the processes, stakeholders and experiences in cities, considering :

Problem Identification

Policy Development and

Solution Processing

It is the intention of this article, to take a close look at these elements and identify opportunities for city “change agents” within government, within nonprofits, as well as“smart city” technology companies to see a range of stages and stakeholders that they can work with to improve the efficiency of procurement for 21st century cities.

No doubt.  This is still early in the American cities’ process of modernizing procurement.  But the patterns are evident and the opportunities for influence are in place.

PROBLEM IDENTIFICATION

Going way back on the evolutionary chain leading to the identification of problems that may be amenable to digital solutions, there are three general stages:

  1. City Culture, the “Origin Story”

This stage includes the city’s basic DNA.  In the Boston example, the city came into the 20th century with a power struggle between the yankees and the immigrants.  The immigrants won.  City Hall, with its prerogatives of power, have, under a Mayoral form of government, been under the control of the Irish and Italian immigrant faction, almost exclusively, for over 100 years.  It is part of the culture of the city to thank the citizens for their votes.  That takes shape in today’s technology culture by a drive toward citizen engagement, and citizen responsive apps.  The city technologists emphasize software that addresses the interests of citizens, citizens as users of the city’s services.

  1. Digital Spark

Something happens, an event, a change in the culture, a strong personality, a new legal mandate, a nudge from a local institution or an idea from a vendor, that ignites interest among city officials in a further exploration of ICT.  In Kansas City MO Google’s offer to lay fiber along the main traffic line of the city lead to meetings, brainstorming and civic enthusiasm that resulted in a new digital ecosystem of matrixed organizations imagining, cheerleading and clearing the path for acquiring new digital solutions.  Oracle played an early, but post Google, role in fanning this enthusiasm and helping build the matrix of organizations.

  1. Early Stage Idea Generation for Software

Once the path was cleared to the metaphorical suggestion box and people believed their ideas would be heard, the enthusiasm grew more.  Smart software suggestions came in from citizens who recognized how they used city services (these services are more often invisible, taken for granted), from philanthropic organizations , from the non-profit service network, from the entrepreneurial business community, from the corporate business community and from the academic community.  Ideas reinforce each other.  Some off a “twofer” opportunity:  arrange to buy software from the local tech start up community and help the tech start up community grow and add more local jobs, tech jobs, to the local economy.  Philadelphia likes to encourage its tech entrepreneurs through streamlining the bidding process for them  Kansas City MO has weekly open meetings inviting potential bidders to learn what tech problems the city sees ahead that will need fixing.

The role of Influencers  (the capacity or power of persons or things to be a compelling force on or produce effects on the actions, behavior, opinions, etc., of others) can be strong In the Problem Identification phase of the Pre-Procurement Pathway. In this bubble of enthusiasm and exploration, people with good ideas can make a case for a problem to be digitally solved or for an existing process hurdle to be overcome.  Ideas could come from a university city planning field project on studying how fiber might affect economic development in the city.  It could come from the announcement of a new national policy and grant program supporting “smart cities” that gets adopted locally through the influence of a city council member.   It could come from a hackathon for community health care where judges drawn from both the tech community and the health care community begin to get acquainted.  Influencers don’t necessarily have a stake in procurement process.  They can act as “guardian angels” to get the process started.

The role of Stakeholders  (a person or group that has an investment, share, or interest in something, as a business or industry) is critical in moving an ICT project along the pre-procurement pathway.  This role includes gatekeepers, enablers and investors.  Gatekeepers can open or close the gateway to the new project idea going forward.  They can open the gateway by establishing new procedures to simplify and modernize the procurement process.  As enablers they can convene the actors necessary to design new procedures or to expand the pool of bidders.  As investors, their time spent in the change process will have a clear return.  They may create a new department and lead it, win new contracts from the city or gain political capital in advance of an important election.

Stakeholders and are essential in moving the “smart cities” evolution forward.  Where can they be found?

In the early stage of idea generation for software there is a wide variety, listed below, of places to look for these folks who can flame the digital spark. There are some patterns in cities now across the USA that suggest where to look.  Look at departments and services where cities are generating large amounts of data, where they have traditional used paper processing to manage this data, where they are moving to adopt software that replicates the paper processing and, having seen the power of data accumulating, they are inspired to wonder how all this data might make them more proactive on addressing this particular city service.  Specifically, look at cities in the process of adopting “311” programs,  facilities maintenance programs, automated inspectional services programs, integrated school health and Medicaid programs and upgraded emergency services dispatch programs.  Also look at cities in the process of developing a master plans or major multi-year strategy plans  for “Green/ Sustainable Cities”,  for IT master plans creating a multi-year plan for the intention to solve problems through ICT acquisitions and the criteria for selecting software, and for traditional master plans building on the new GIS tools to get a new vision of the land use, planning and zoning needs of the city.

Assuming it would be more efficient to “batch process” an approach to all these different actors, where might they be found in groups?  The stakeholders include faculty from business, software engineering, public administration and city planning programs;  local corporate leaders who are members of the city’s equivalent of a Chamber of Commerce;  local start-up companies tied to accelerator or incubator programs and affiliated with local Code for America brigades and civic tech related Meet Up groups; philanthropic organizations that convene conferences to discuss social and economic policy issues; newspaper editors and columnists that cover the tech community and related issues and, of course, city officials in executive, planning and finance roles.

While each of these stakeholders is likely to congregate in a state or regional group, many of them roll up into national organizations.  For developing relationships with city officials in executive roles, consider:

Alliance for Innovation
ICMA
National Association of Schools of Public Affairs and Administration (NASPAA)
National League of Cities
U.S. Conference of Mayors

For developing relationships with city officials in subject matter specific roles, like department heads or departmental staff, consider

American Association of School Administrators
American City Planning Directors’ Council
American Library Association
American Planning Association
American Public Health Association
American Public Transportation Association
American Public Works Association
American Society for Public Administration
Association of Government Accountants
Association of Metropolitan Planning Organizations
Association of Metropolitan Sewerage Agencies
Association of Metropolitan Water Agencies
California Society of Municipal Officers (CSMFO)
International Association of Assessing Officers
International Association of Chiefs of Police
International Association of Fire Chiefs
International Institute of Municipal Clerks
International Municipal Lawyers Association
National Association of County and City Health Officials
National Fire Protection Association

,

For developing relationships with city officials in finance, including capital budgeting, roles, consider:

Government Finance Officers Association
Governmental Accounting Standards Board (GASB)

For developing relationships with public officials specifically involved in procurement issues at local, state and federal levels, consider:

Federal Acquisition Institute
National Association of State Procurement Officials
National Institue of Standards and Technology
National Institute of Governmental Purchasing
National Institute of Procurement
National Procurement Institute
Universal Public Procurement Collaborative

For developing relationships with officials involved in national organizations potentially looking at ICT and IoT issues in subject matter areas in local governments, consider:

American Association of State Colleges and Universities
American Bar Association
American Public Power Association
American Society of Civil Engineers
American Water Works Association
Center for Internet Security
Center for Neighborhood Technology
Code for America
Congress for the New Urbanism
Institute of Transportation Engineers
National Association of State Chief Information Officers (NASCIO)
National Association of Telecommunications Officers and Advisors
Solid Waste Association of North America
The Urban Institute
Urban Land Institute

Although every city’s experience, transforming itself into a digitally enhanced operation, will be different, some basic patterns apply.  The city will go through a PROBLEM IDENTIFICATION phase that includes three stages.  First is the basic city culture or “origin” story that shapes the viewpoint and the opportunities for city leadership.  This origin story can make the city disproportionately sensitive to income race and class disparities, to economic development opportunities, to infrastructure investment, to citizen engagement, etc. Second,  something like an event, personality, institution, etc. will, alone or in combination, create a “digital spark”.  This spark, if fed, will continue to create enthusiasm, additional ideas and new visions for what the city could accomplish if it were to go digital.  This explosion of ideas leads to a third stage, the last in the PROBLEM IDENTIFICATION phase.  This “Early Stage Idea Generation” starts by generating ideas of where digital technology can be useful.  Usually this means how can existing paper processes by transformed into digital forms with information that can be stored on a computer.  With the recognition of big data and opportunities to crosswalk data between city departments, deeper discussions begin about how to use the data, opportunities for interdepartmental projects, criteria for interoperability among departments and software platforms and ideas about adding digital enhancements to traditional city infrastructure like roads, sewers and streetlights.

While the PROBLEM IDENTIFICATION phase is focused on city government, suggestions may come from the business community (corporate and entrepreneurial), universities, philanthropies, including non-profit sector and community organizations, local newspapers and industry vendors from both the ICT industries and from industries that typically sell into cities and recognize the potential of digitally enhanced products.

These stages, cultural roots, digital spark and idea generation, are nudged along by INFLUENCERS and by STAKEHOLDERS.  Each of these comes to the city decision maker with a different kind of authority and is greeted with a varying level of trust.

POLICY DEVELOPMENT

The Policy Development phase of the pre-procurement pathway includes two stages, the discovery and exploration of PRIORITY CONCERNS and of a LEGAL, REGULATORY & POLICY FRAMEWORK.

During the PRIORITY CONCERNS phase, stakeholders and, to a lesser extent, influencers, explore the challenges, threats, road blocks, criteria for success and other issues that they may not have thought of when the “smart cities” image first emerged.  Many cities still use mainframe computers.  Must these be replaced before new software can be added to the city’s system?  Some legacy software systems that hold vital data and transaction history may be hard to replace since the city contracted for the software but not the source code or, in some circumstances, not even the digital records.  Does the city have, or can it arrange to borrow, the digital understanding necessary to evaluate its own readiness to move forward?  Who will think through policies and criteria on issues such as data privacy and security, interoperability, open data vs open standards, API compatibility, ability to extract and export data.  Will future users be involved in the design or be able to test the product at a beta stage before final purchase? What payment structure makes more sense:  capital purchase or annual lease?  What additional costs are involved:  project managers to support the internal cultural change, training on new software and equipment, additional purchases of hand held devices, tablets, etc.  These are some of the questions that are typically raised during the PRIORITY CONCERNS phase.  It is important for the city to be able to raise issues, clarify their concerns and consider alternatives in order to move ahead down the pathway to procurement.

The Legal, Regulatory & Policy Framework phase emerges as the Priority Concerns are addressed.  Federal and state rules and suggested best practices on procurement provide a baseline for a new city policy to facilitate the acquisition of ICT and IoT products.  Funding sources are considered.  National associations with knowledge of how other cities approach such a policy framework are consulted.  If the city has on staff a strong cheerleader for trying digital products, the city might sponsor a hackathon for some specific problems.  As the city learns the rules and roadblocks for IT procurement, governmental exemptions or waivers might be explored.  Different states http://survey.naspo.org/surveytool/Documents/Final_2015_SurveySummaryReport_9-2-15.pdf have different regulations and sponsor different opportunities.  Outreach through trusted venues like state leagues and national associations will take place to learn about the experience of other cities.

One issue that comes up frequently at this point is the management of the bidder pool.  For many cities a wide bidder pool may be a high priority.  For some, low cost bidders are a priority.  For others, a known and trusted vendor is a priority.  Cities may, like Philadelphia’s early development of a posting system to GitHub, soliciting IT bidders, develop innovative approaches to growing the pool by using a type of crowdsourcing to attract a new class of bidders.  Others, like Kansas City MO’s weekly open meetings, may use transparency and information to attract more bidders.  One city official described this as the choice between Oracle and Austin.

Many cities look to redesigning the overall procurement process.  They focus on fixing the traditionally long, confusing and time consuming application process for registering as a bidder.  Boston has cut this down substantially.  Aiming for a one page statement of qualifications is common.  Turning to home grown or existing exchanges is another.  Software like Demandstar, a state’s approved list of IT contractors and national purchasing  cooperatives are used. As this movement toward simplifying IT procurement grows, cities may form cooperatives to bid for similar software.

A city’s priority concerns can be shaped by a desire for transparency and citizen engagement, by priorities like social justice or by popular initiatives like “green/ sustainable” facilities and operations. Its policy framework is shaped by the existing legal and regulatory structure, by techniques discovered to modify this structure and improve its efficiency and by specific stakeholders, whether elected officials, administrators, departmental staff or vendors, that perceive one policy framework shape is better than another for their interests.

SOLUTION PROCESSING

When the “digital spark” excitement has morphed into a framework, a vehicle that can carry these digital ideas forward, the city enters the third phase, SOLUTION PROCESSING.  This phase involves designing and building organizational structures for managing the processes required to implement the smart cities goals.  New staff, new departments, departmental reorganization, citizen advisory committees, public meetings, IT strategic plans, checklists for screening the right solution, new contract forms, new bidder forms, departmental “readiness” assessments, process reviews on capital budgeting, human resources hiring and training, internal skills capacity, processes and criteria for nominating, assessing and selecting digital processes to move forward…. all of these tasks are part of SOLUTION PROCESSING.  One of the biggest challenges is managing the cultural change within departments both as business is done differently and as new skills and approaches are required of existing staff.  Another challenge is maintaining parity in digital sophistication between city departments.

Determining the importance of interdepartmental parity as well as the speed for rolling out digital solutions, the depth of digital understanding, the capacity required prior to roll them out and the reorganization of addition of new departments ultimately falls to the city’s chief executive.  In the US this is generally either a Mayor or a City Manager.  Done well, revisions require a long term vision of the future operational structure of the city government.

Some Mayor’s, elected for four year terms, are focused on shorter term accomplishments but, like Mayor Menino in Boston, may set up a “cabinet level” group of managers, like the New Urban Mechanics, who can focus on building the organizational structure necessary to support a smart cities evolution. In a Mayoral form of government, look for staff members operating “without portfolio” in offices near the Mayor.  This is often where major new changes in policy and operations are hatched.  Since these senior staffers operate outside of the existing departmental structure, they require great diplomatic skills to recruit new apostles to the Smart Cities creed.

In a City Manager form of government, the lines between policy change and operating departments are much more direct.  The department heads and the city manager are more likely to share a long term perspective on the managerial operations of the city.  Unlike with an elected Mayor, department heads view the city manager as a fellow colleague in the business of management.  There are less likely to be sudden changes in direction and new policies with fast implementation schedules in a city manager form of government.  The apostles to carry forward the Smart Cities creed will, most likely, be found among the existing department heads looking to expand their current portfolio.

A Technology Office with a departmental head on the level of other administrative offices like Planning and Finance is a clear indication that the city is moving forward on the Smart Cities path.  Prior to establishing a separate department, evidence of this path can be found as existing departments assign staff to “beta test” new capacities.  The city planning department has staff with experience in GIS and in long range planning.  The finance department has staff with experience in budgeting, bonding and capital planning.  Less likely, but possibly, “smart cities champions” can be found in the purchasing department with staff experienced in procurement and frustrated by its traditional inefficiencies. Some cities may run into problems down the road by anointing a staffer or a department head who has the term “IT” associated with his title.  This person may be well versed in updating licensing, loading new software on computers and overseeing the installation of new telephone systems, but, if they’ve been doing this for over 15 years, is not likely to have the ability to accommodate the vision of innovation, culture change and a broad understanding of technology required.

No matter what department or cabinet the city’s chief executive decides on as the base for a smart cities initiative, the initiative, to be successful, will still need a matrix of stakeholders to sustain the “digital spark”.  Emergencies will arise that need attention.  In Boston the push digital capacity in the Inspectional Services Department became critical when a college student in an “illegal” overcrowded and under inspected apartment was trapped in her bedroom with no exit and died in a fire.  A new department head, working closely with the Technology Office’s project managers is transitioning that department to hand held devices for field inspectors and trying to reduce the backload of inspections.  These project managers, many recruited from graduate school programs in public administration, business, law and city planning, are creating new staffing roles for the city and also instilling a new culture of data gathering, digital problem solving among the regular departmental staff.  They are changing the city’s culture.

As the federal government broadcasts the intention to provide new money to city governments who embrace “smart cities” methodologies, stakeholders in the city government will want to enhance their career by bringing the money back to the city.  Neighborhood organizations with a special interest in traffic, transportation, health services, school construction, etc. will look at how this new federal money may help their causes.

As the technology office evolves, it will find and work with the procurement office, where ever it may be located.

A new operational framework with a new set of policies will require a new matrix of communication.  Task Forces will be organized by topic (Green/ Sustainability, Big Data and Citizen Privacy, Traffic Management, 311 Management Reports, etc.).  They will include interdepartmental city staff; community subject experts drawn from the business, non-profit and university sectors; and elected officials.  The side benefit of such Task Forces is that they will begin to educate horizontally, through other city departments, and other civic organizations, about the benefits accruing to the “smart cities” model.  These Task Forces, in turn, will yield forecasts of problems, proactive recommendations to solve these problems and strategic plans to sequence, finance and implement solutions. Ultimately these plans should convert to a series of long term, coordinated ICT and IoT purchases over time.

TARGETS OF OPPORTUNITY

  1. Consider whether this framework of phases, stages and actors is a useful framework for understanding how pre-procurement pathways are evolving to accommodate ICT in cities around the USA.
  2. Identify and work with national organizations that are trusted advisors to Mayors and City Managers.
  3. Identify and work with national associations that have relevant subject matter expertise but may not be tuned in to the “smart cities” movement. These can include organizations serving police chiefs, finance directors, transportation directors, public works directors, etc.
  4. Select some key initiatives, good ideas that would be useful and not hard for cities to put in place. These could include a
    1. “checklist” for all capital projects to make sure they are screened for opportunities to add sensors, wifi connectivity or other IoT devices before they are approved in the budget and put out to bid;
    2. 3 year interdepartmental Master Plan for ICT
  5. Work with vendor sales teams to help them understand the “city ecosystem” that shapes the final sale. This is a long “education” sale, not a short term “direct” sale.
  6. Develop a working definition that will help city executives distinguish between their “old school” IT department and staff vs. the “smart cities” IT department and staff
  7. Explore opportunities for bundling projects through a comprehensive bid process that makes the project available to larger groups of cities, including smaller cities. This could happen through national procurement cooperatives, state procurement agreements or cooperation among municipalities to bid for a solution on a specifically defined problem.
  8. Develop procurement models that anticipate the need for cities to have users involved in the solution design and have the project phased so, as in agile design, a sample solution can be developed and tested quickly, in concert with city users, before being fully specified, designed and built.
  9. Develop a simple curriculum on ICT project design to inform city officials of the design stages, information requirements, risks and skill sets involved. The goal is to make the city official a more educated buyer of ICT products.
  10. Develop a simple curriculum on software capabilities to inform city officals of the potential for owning tools that can anticipate the city’s and citizens’ future needs based on algorithms and analysis of the accumulation of past data. The goal is to help make the city official a more sophisticated buyer of ICT products and not just seek out products that replicate the existing paper data collection forms.
  11. Consider how to relate to the growing number of smaller, entrepreneurial software companies designed to work specifically to solve city government needs.

************

Prepared by Barbara Thornton, on behalf of the Smart Cities Council, 2016

Contact: bthornton@assetstewardship.com
Follow Barbara Thornton 
@AssetStewards and LinkedIn
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see Procurement series:

https://assetstewardship.com/2017/07/03/procurement-citys-pre-procurement-pathway/
https://assetstewardship.com/2017/07/03/procurement-boston-story/
https://assetstewardship.com/2017/07/03/procurement-philadelphia-pa-story/
https://assetstewardship.com/2017/07/03/procurement-kansas-city-mo-story/
https://assetstewardship.com/2017/07/03/procurement-town-of-arlington-ma-story/

see also:
https://assetstewardship.com/category/asset-type/cities-technology/
https://assetstewardship.com/category/asset-type/energy/
https://assetstewardship.com/category/jurisdictional-level/national-level/
https://assetstewardship.com/category/asset-type/public-buildings-facilities/
https://assetstewardship.com/category/asset-type/water/
https://assetstewardship.com/category/jurisdictional-level/international/

and, of course:

https://assetstewardship.com/2015/09/30/infrastructure-john-oliver-explains-it-all-hbo/

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