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Using Public Procurement for Innovative Solutions to Urban Challenges

Written by Amanda Maher

It sometimes gets a bad rap, but there’s real value associated with traditional public procurement processes. The process is intended to limit corruption in government contracting, to streamline applications and to promote opportunities for underrepresented groups.

But the traditional process does not always leave room for innovation.

“Government has a very prescribed way of thinking about problems,” said Alan Greenberger, former Deputy Mayor of Philadelphia. “See a problem, come up with what we think is the solution, and then we go procure the solution… But is the solution good?”

Under the traditional procurement model, municipalities narrowly define the goods and services it wants a vendor to provide. For instance, a city struggling with bicycle thieves might issue a request for proposals (RFP) for new bike lockers. Any company that provides bike lockers would then submit. This high level of specificity drives away companies that may otherwise have inventive products or creative solutions to bicycle theft.

“City governments need to get out of procuring by specifying the solution they want,” said Sascha Haselmayer, co-founder of Citymart, a consulting agency. “What they should do is specify the problem they want to solve and show metrics on what success looks like. And then allow the market to inspire them to find the best solutions.”

“Hack-a-thons” and other events have helped cities identify software-based solutions to civic challenges, but these solutions have been difficult to bring to scale. These solutions have proven difficult to implement and embed in the civic fabric.

What’s more, technology is evolving so rapidly that the solution proposed and selected by a municipality today may not be the best solution tomorrow. Faster, cheaper solutions might emerge, but the vendor will be tied to what’s suddenly considered outdated technology.

That’s why a growing number of cities are rethinking how to shape public procurement to allow for more innovation.

Barcelona, for example, asked companies and entrepreneurs to put forth their most creative products, services and other ideas for solving six of the city’s most pressing challenges – bicycle theft included. Solutions could even entail regulatory changes; nothing was off limits. The BCN | Open Challenge reached out to hundreds of companies from around the world, particularly companies that wouldn’t typically bid on public contracts. Winning companies qualified for the implementation of their proposal in Barcelona through the contracting of the proposed solution. They also received business mentorship, acceleration services and access to physical space while they developed their ideas.

Similarly, through its FastFWD program, profiled in a recent What Works Case Study, the City of Philadelphia issued an open request for proposals that would improve public safety. During two FastFWD cycles, startup companies were able to pitch local officials on an array of ideas to prevent crime, reduce recidivism and increase community engagement. After a comparable incubation phase, companies pitched their ideas to the City. For instance, one idea, Edovo, provides a self-driven education curriculum to Philadelphia inmates through its tablet technology.

Change won’t happen overnight. But the iterative process that Barcelona and Philadelphia have experimented with are helping to create new opportunities for small, innovative companies to pitch for contract.

By reducing red tape and providing flexibility in how contracts are worded, cities might just well address their most complicated social challenges in the process.

Read more about Philadelphia’s FastFWD program.

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