Procurement Makeovers that Build Better Government

Brought to you by Barrett and Greene

In 2022, the Jackson, Mississippi City Council began to hear more and more complaints from vendors that were owed money by the city. The lingering issue, ultimately involving more than $10 million of payment delays presented a host of challenges to the city’s projects, goals and finances.

“Vendors talk to each other and they complain about slow payment times.  You really can harm the trust between a city and the vendor community,” says Elena Hoffnagle, who oversees the Procurement Excellence Network (PEN), an initiative of Partners for Public Good, an organization that was incubated at the Harvard Kennedy School Government Performance Lab (GPL).

The result of a loss of trust on the part of vendors has lots of ramifications. “When vendors feel like they will not get paid timely, they will stop bidding on certain work, and when they stop bidding, you’re limiting competition,” says Fidelis Malembeka, who joined the City of Jackson as its first Chief Finance Officer in October 2021.

In 2023, Brent Westergren, a former GPL staffer, stepped in to help solve the city’s delayed payment problems. It started with a diagnosis of what was going wrong, along with intense data gathering, a process mapping exercise, and on-site help from Westergren to whittle down the more than $10 million in overdue bills to about $100,000 in a year’s time. Westergren and his colleagues also provided vigorous employee training along with workshops that involved city workers who would never have thought of themselves as having a role in procurement.

A key step in preventing a recurrence of the problem moved Jackson to a new centralized payment system that required vendors to submit invoices electronically and gave them the ability to track their invoices.

The result? A delayed payment problem has not recurred. Additionally, the city benefitted with an increase in finance-department communication, better vendor relations, an elimination of large penalty interest payments; greater ability to keep projects on target, and the establishment of a far more centralized and coordinated financial management culture.

The changing perception of procurement
Beyond the tangible benefits from procurement reforms, broader lessons emerge about the role of procurement in making government strategies and initiatives work well.

The goal of the Procurement Excellence Network is to eradicate old-style perceptions of procurement as a “back office administrative function,” says Hoffnagle.  “What we like to do in our work with state and local governments is really think about repositioning procurement as this strategic lever that can collaborate effectively and add strategic value to any purchasing process.”

This goal is shared by procurement scholars and practitioners who have struggled over the years to build appreciation of procurement’s importance. “I’m sometimes surprised at how few people really understand what procurement does,” says David Gragan, who has served as chief procurement officer in Texas, Indiana and the District of Columbia, and was Chief Strategic Operations Officer at the National Association of State Procurement Officials until recently. “It’s very hard for procurement, in general, to get attention.”

For Hoffnagle, an intense focus on this discipline developed over time. It was nurtured by her passion for working with cities, acquired during four years as a staff member at the National League of Cities and later, working as a government innovation fellow in the City of Los Angeles and years spent providing technical assistance to cities in improving their procurement practices while at the Harvard Kennedy School Government Performance Lab.

In Los Angeles, her attention focused squarely on the ways that procurement problems could endanger the smooth running of programs and the strategic goals of a city. “If you think about a city like Los Angeles, every single one of its major priorities rests at some point on procurement being done successfully. . . And so, I'm really on a mission to make sure that procurement can go well, so that residents can get the results that they're expecting of their government.”

Beyond solving problems
Beyond impacting government operations, procurement tactics can help governments to drive strategy.

In San Antonio, a pilot program implemented by the city’s workforce development office is the first step in a plan to ask vendors who are awarded a city contract to agree to lend their support to the city’s key initiatives. It links the procurement process to San Antonio Ready to Work – a well-funded workforce development effort that is a key objective of the Mayor, City Council and city leadership.

The pilot was launched as part of a Request for Proposal for the remodeling of an Animal Care Hospital. Though that project doesn’t directly relate to workforce development, the solicitation includes incentives especially for respondents who have historically participated and supported the San Antonio Ready to Work Program. Those incentives will benefit a vendor’s chance of getting the contract. In addition, the solicitation will include a requirement for the awardee to make good faith efforts to work to hire San Antonio Ready to Work graduates. 

Partners for Public Good helped with strategy and design of the pilot program, which included implementation, developing, drafting, and building out contract language and the development of guides and resources used in pre-bid and kickoff meetings with vendors. The RFP closed on August 1st, and the pledges made during the bid process are just the first step. “We will guide them on how they can meet and implement (the pledges) so they can be a very reliable partner for us moving forward,” says Michael Sindon, workforce administrator in San Antonio.

Next steps will come with the evaluation of the pilot to make sure the idea is working as intended, that it was properly set up and that the additional workforce-related components did not frustrate or over-burden vendors. If all goes well, the effort will start to be scaled up with a targeted set of new solicitations incorporating this approach each year.

Steps to success
The Procurement Excellence Network (PEN) has grown to 2,700 members with Hoffnagle and others fully committed to continuing to follow the path that it has mapped out for achieving success.

As she outlined them, PEN, through its free tools, resources, and trainings, enables governments to take the following steps:

• Diagnose how procurement-related bottlenecks may be blocking what a city wants to achieve.
• Use supportive data to back up anecdotal evidence of potential problems.
• Communicate to elected officials both the negative and positive affect that procurement can have on the government meeting its goals.
• Consider how to involve procurement teams at the beginning of projects.
• Draw attention to ways that city vendors can be partners to the city’s strategic objectives.
• Build strong vendor relationships through regular meetings that track vendor and city objectives.
• Create contract management plan templates and tools, which dissect the contract and delineate the elements that the vendor has agreed to.
• Before project management begins, make sure to understand the roles and responsibilities of each party.