Opening City Hall’s Wallets to Innovation

Tina Rosenberg at the New York Times: “Six years ago, the city of San Francisco decided to upgrade its streetlights. This is its story: O.K., stop. This is a parody, right? Government procurement is surely too nerdy even for Fixes. Procurement is a clerical task that cities do on autopilot: Decide what you need. Write a mind-numbing couple of dozen pages of specifications. Collect a few bids from the usual suspects. Yep, that’s procurement.But it doesn’t have to be. Instead of a rote purchasing exercise, what if procurement could be a way for cities to find new approaches to their problems?….

“Instead of saying to the marketplace ‘here’s the solution we want,’ we said ‘here’s the challenge, here’s the problem we’re having’,” said Barbara Hale, assistant general manager of the city’s Public Utilities Commission. “That opened us up to what other people thought the solution to the problem was, rather than us in our own little world deciding we knew the answer.”

The city got 59 different ideas from businesses in numerous countries. A Swiss company called Paradox won an agreement to do a 12-streetlight pilot test.

So — a happy ending for the scrappy and innovative Paradox? No. Paradox’s system worked, but the city could not award a contract for 18,500 streetlights that way. It held another competition for just the control systems, and tried out three of them. Last year the city issued a traditional R.F.P., using what it learned from the pilots. The contract has not yet been awarded.

Dozens of cities around the world are using problem-based procurement.   Barcelona has posed six challenges that it will spend a million euros on, and Moscow announced last year that five percent of city spending would be set aside for innovative procurement. But in the vast majority of cities, as in San Francisco, problem-based procurement is still just for small pilot projects — a novelty.

It will grow, however. This is largely because of the efforts ofCityMart, a company based in New York and Barcelona that has almost single-handedly taken the concept from a neat idea to something cities all over want to figure out how to do.

The concept is new enough that there’s not yet a lot of evidence about its effects. There’s plenty of proof, however, of the deficiencies of business-as-usual.

With the typical R.F.P., a city uses a consultant, working with local officials, to design what to ask for. Then city engineers and lawyers write the specifications, and the R.F.P. goes out for bids.

“If it’s a road safety issue it’s likely it will be the traffic engineers who will be asked to tell you what you can do, what you should invest in,” said Sascha Haselmayer, CityMart’s chief executive. “They tend to come up with things like traffic lights. They do not know there’s a world of entrepreneurs who work on educating drivers better, or that have a different design approach to public space — things that may not fit into the professional profile of the consultant.”

Such a process is guaranteed to be innovation-free. Innovation is far more likely when expertise from one discipline is applied to another. If you want the most creative solution to a traffic problem, ask people who aren’t traffic engineers.

The R.F.P. process itself was designed to give anyone a shot at a contract, but in reality, the winners almost always come from a small group of businesses with the required financial stability, legal know-how to negotiate the bureaucracy, and connections. Put those together, and cities get to consider only a tiny spectrum of the possible solutions to their problems.

Problem-based procurement can provide them with a whole rainbow. But to do that, the process needs clearinghouses — eBays or Craigslists for urban ideas….(More)”