How US cities are supporting local economies through open contracting

Whether it’s repairing public buildings, maintaining playgrounds or cleaning crow excrement off sidewalks, state and local governments in the United States spend over $1 trillion on contracts each year. This makes public procurement a huge potential engine for local economic growth. 

Yet too often the same businesses compete and win contracts, limiting opportunities for emerging entrepreneurs. What’s more, some established government contractors are based outside local regions, which means taxpayer funds are leaving communities instead of strengthening them. 

With support through our Lift impact accelerator program, some U.S. cities are leveraging procurement data to promote stronger local economies. 

Boston: Better procurement planning 

The City of Boston has revamped its procurement planning process to help businesses prepare better for tenders and craft stronger bids.

Competition is essential to ensure the best business wins to make our cities work, but participation is notoriously low in local government — averaging somewhere between 2 and 3 bids per procurement. Advance notice of upcoming opportunities is especially important for smaller businesses since they have fewer resources to allocate and often have fewer or no back-office staff available to pull together bidding documents.

Comprehensive and public-facing annual buying plans, like the one Boston has introduced, can help provide this advance notice but are still not common in most U.S. cities.

Boston’s new annual forecast provides a list of goods and services that different departments expect to purchase in the future but have not advertised or published bid documents for yet. The City has also made the buying plan itself easier to understand and use, with higher quality data and searchable spreadsheets organized by UNSPSC code, amount, industry and other fields, so potential suppliers can see at a glance key details about what the city plans to procure. 

“The process of gathering information for the buying plan also helped improve coordination across the organization, and revealed process improvements for departments to think farther in advance about their needs,” commented Laura Melle, Director of Procurement Planning and Support Services at the City of Boston.   

The City’s spend dashboard enables additional analysis on where the money is going. 

Newark: Tackling late payments

For the first time, the City of Newark analyzed their payment data to better understand processing times and delays across city departments. 

For small businesses and start-ups, on-time payment can be critical for survival. These companies often have less of a cushion to cover ongoing expenses like payroll or rent, which makes late payment an existential threat. Government bodies can be notorious for slow or late payments, which can scare off local small suppliers from participating in public procurement.     

Newark used their findings to investigate why some departments can quickly process invoices, while others have longer payment times. For example, their paper-based invoicing system meant that departments within city hall could drop off their invoices faster, whereas departments in other areas of the city had greater delays.   

This analysis created greater awareness of the challenge and built buy-in to digitize procurement. The city is now moving away from a paper-based invoicing system to an electronic payment portal which will allow vendors to officially submit invoices electronically, as well as easily view past invoices and payments.

Portland: Increasing trust in contracting processes

The City of Portland has implemented multiple initiatives to increase trust in an effort to attract more suppliers and give residents more insight into how public funds are benefiting the community.

Trust can be a big barrier to participation for small local businesses. It’s a common perception that a city just wants to work with the same small vendor pool that they already know. If a business believes that the city is biased and they will be treated unfairly during the evaluation process, then the business won’t bother submitting a bid. 

Addressing deficits in trust requires a multifaceted approach, and better transparency and accountability is one important step.  

The City started by hosting more in-person opportunities to connect with potential vendors, such as their first-ever Procurement Day in 2023 and market outreach meetings. For a water meter project, over 45 companies came to the market outreach meeting, and the City redesigned two of their key request-for-proposal (RFP) templates to make requirements easier to understand. Now they are moving to openly share detailed contracting data. “This is so much easier for vendors to figure out,” says Gennie Nguyen, Procurement Data Analyst and Lift project lead at the City of Portland. “And it cuts down the time to create the RFP, evaluate the proposals, and award the contract.”

By publishing open data on its public procurement, everyone can see what the city is buying, for how much, and from whom. To connect the data that lives across multiple internal IT systems and share it publicly, Portland turned to the Open Contracting Data Standard (OCDS), which is the only recognized international open data standard for procurement-related data. 

The City of Portland has become the first city in the U.S. to implement the OCDS, linking data from solicitation to payment. In addition to sharing procurement information publicly through OCDS, the City has designed business intelligence dashboards based on OCDS to make it simple to understand how Portland is measuring against important contracting targets. So, for example, under Portland’s new data platform, they won’t just provide the amount of contract awards but individual purchase orders and transactions within those awards. 

The new system will also include performance metrics for suppliers, so residents can see for themselves whether the city’s spending seems to be having the intended effect. And citizens will be provided new insight into the use of sub-contractors, so the trajectory that local funds take to local businesses is crystal clear, too. 

“The more vendors, the lower the prices, the better the quality, and the better for taxpayers,” sums it up Nguyen. 

Learn more how Portland is shining a flashlight on a billion-dollar behemoth thanks to our Lift impact accelerator that aimed at changing the way the city manages bids, contracts, and vendors.