What is Procurement?
Procurement is the process that governments acquire goods or services from the private sector. These can be physical supplies like cleaning products or more abstract services like grant writing, or project evaluation. The process of procurement varies somewhat from state to state and locality to locality, but the foundation is common: the goal is to protect the taxpayer from nepotism, fraud, and waste by ensuring the public purchaser receives a fair price for the goods acquired.
With the American Rescue Plan Act (ARPA) infusing a large number of resources into cities, towns, and villages to assist in the Country’s recovery from the COVID-19 pandemic, it is essential that local leaders re-familiarize themselves with their local procurement processes. By understanding the foundations of procurement, local leaders can be prepared to ask questions, investigate contracts, and understand tools they have at their disposal to ensure their taxpayers get a fair price for purchases and the dollars invested through the ARPA help to jumpstart our economy.
A Typical Procurement Cycle
While every government may have certain nuisances to their particular purchasing system, there is a basic procurement cycle that most every government follows.
Step One: Identifying the need. Successful procurement of a good or service relies on the organization having a clear understand of exactly what they are seeking to purchase. This is especially true in cases where services may be more abstract or intangible like consulting services, or programmatic services.
Step Two: Developing a Procurement Instrument. Depending on state and local requirements, cities can then develop a scope and select a procurement instrument. In many cases this will be a request for proposals (RFP) or a request for qualifications (RFQ). For construction procurement, the Federal guidelines say that a request for competitive sealed bids is preferred. In some cases, the local government may decide to utilize an existing contract or join a co-operating purchasing agreement. However, these mechanisms become more complicated when using federal funds due to federal requirements for competitive bidding of all federal dollars.
Step Three: Soliciting Bids. Vendor solicitation is a critical phase of the procurement process. There may be state or local requirements that mandate cities and towns to advertise bids in different ways – online vs print, a certain length of time, etc. Since vendors can only bid on solicitations that they know about, it is critical for cities to spend the necessary time and resources to spread the word about solicitations. Additionally, cities can achieve greater diversity among their contractors by advertising in a diverse range of publications and ensuring that the information is available in multiple languages. Fair advertisement is essential to a fair and ethical procurement process.
Step Four: Evaluating Vendors. Depending on the type of instrument used, the evaluation process may differ. For example, when utilizing an RFQ, the evaluation team will be examining whether firms have the requisite skills and experience as outlined in the scope. In an RFP, evaluators will be examining both the qualifications of the firm and the quality of the goods or services that have been proposed.
Step Five: Entering into A Contract. Once the city or town has selected a qualified vendor to provide a service, they begin a process of notification and negotiation with the chosen vendor. This process should be spelled out clearly in a written procurement policy, including what happens if vendors who were not chosen decide to challenge the process.
Step Six: Execution and Evaluation. As the contract is executed, there will likely be changes or amendments that need to be made. At each step of this process, the implementing department or official should engage with legal counsel, as well as city procurement staff. This is especially true when utilizing federal funds to execute a contract. Changes to the contract may be permissible depending on the size, scope and nature of the change. However, they may require pre-approval by a federal agency so it is essential to do homework before assuming that changes will not impact schedules or deadlines.
Step Seven: Project Close out and Documentation. Once the project has been executed, it is important to ensure that all obligations have been met by the vendor. Additionally, staff should ensure that all elements of completion have been properly documented and those documents have been supplied to the proper agencies.
Special Considerations for Federal Funds
As local governments utilize federal funds, either through a grant provided by a federal agency or direct allocation through ARPA, it is essential that they fully understand the requirements for that particular funding stream. In most cases, the federal funds can be administered using existing local procurement procedures as long as those procedures conform to the regulations of the agency administering the funds. Here are a few items to consider as you begin planning to implement programs that may utilize ARPA funds:
- Develop a procurement strategy as quickly as possible.
For some larger expenditures, the federal government recommends planning well in advance when utilizing federal funds for procured services. As you develop a roadmap for how you will utilize ARPA funds, move quickly to meet with procurement and legal staff to make sure you understand the timeline for purchasing goods or securing vendors.
- Spend some time thinking about what you really need, and make sure that’s what ends up the in your Request for Proposals/Qualifications or other solicitation.
Every successful procurement effort relies on having a very clear picture of the good or services needed. This may be rather obvious if you are purchasing office supplies, but it may become more difficult if you are hiring a vendor for your after-school program, a consultant to help redesign your transit system, or a vendor to produce a new website for your city. Think about what the essential components of the service are and do not include items that you don’t need since vendors will respond to all the requirements of the proposal. Unnecessary requirements will drive up the cost and cause some vendors to not bid if they don’t meet all your specifications. One tactical way to avoid this is to shy away from copy and pasting previous RFPs. While it does save time and can provide a helpful road map, the scope should be clearly rewritten each time to keep from “adding on top” of previous scopes.
- Thorough documentation will not only save time – it is essential to the process.
It can seem time consuming to document all meetings, discussions, and conversations – but it is essential to ensuring fairness in the process and, in most cases, compliance with federal procurement processes.
- Think about ways to innovate your local procurement system.
There are a number of different services available to local governments who are interested in improving their local purchasing system. These procurement companies provide a number of different services including marketing RFP’s to local businesses, helping to develop RFP, and provide greater transparency into the procurement process.1
- Be cautious when approached by vendors.
As a local leader, you will likely be approached by many consultants, business owners, and employee groups who want to supply the government with their services. It is important to approach these conversations cautiously. Many local governments and states have prohibitions against sharing any information that may give a particular business a leg up in the procurement process. The number of private sector entities seeking to leverage ARPA funds will surely increase, which could have a significant impact on the economy. However, it is incumbent on you and the staff in your city to ensure these vendors are qualified, trust-worthy providers of the service you require.
Additional Resources on Procurement
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