Urban Innovation

Procurement as a Tool for an Equitable Recovery

November 30, 2020  • Center for Urban Innovation & Jennifer Bradley

This is a companion piece to two recently published reports from the Center for Urban Innovation, A Procurement Path to Equity‘ and ‘Diversity in “Urban Tech” Procurement.’

Local government purchasing, including how a jurisdiction decides what to buy, and how they decide who to buy from, makes a huge difference in how innovative and equitable that government will be.  

Since the pandemic upended local business and socked local government budgets, we’ve continued to ask how procurement can be harnessed to solve cities’ urgent challenges. Today with our colleagues at Open Contracting Partnership we’re releasing a report that provides some answers about how procurement can support a more equitable recovery from a pandemic and economic crisis that continue to disproportionately harm people of color. We’re also publishing some pre-pandemic research on how cities can use procurement to create more opportunities for BIPOC and female founders in the emerging urban tech industry.  

These two reports, written in very different contexts, share an overriding message: good procurement is equitable procurement, and, further, good procurement is good government. Changes to the procurement process that make it more accessible to BIPOC and female business owners also enhance transparency, competition, and innovation. Working with communities in an open and transparent process to define and prioritize problems yields better results than closed processes. Open data and open source will provide more flexibility and control than proprietary solutions. It’s better to ask for solutions than to request a particular tool or technology. Andas is always the casetechnology by itself won’t solve problems rooted in dysfunctional processes, poor communication, or a “we’ve always done it this way” mentality.   

More equitable, transparent, effective procurement processes should be a priority for the myriad actors who care about economic empowerment, closing the racial wealth gap, and urban innovation. Our report with OCP specifically asked what philanthropic funders could do to support more equitable procurement. One answer from Leslie Tsai of the Chandler Foundation

“With few funders focused on procurement as a sector, it’s important for those who do fund the space to draw upon the nexus between procurement and other sectors that philanthropy tends to support, for example, global health, diversity, ease of doing business, and so forth. In addition to providing financial resources and innovation capital to grantees, engaged philanthropists should try to grow the size of the pie of philanthropic capital in the governance and procurement sector, which is relatively limited.” 

If smart philanthropic investments ultimately shift an additional one percent of the more than $1 trillion in state and local procurement annual spending to BIPOC- owned businesses, that’s $10 billion in additional revenue, which can contribute to closing racial wealth gaps. Philanthropies can build on the foundation laid by Living Cities and Citi Foundation, the Surdna Foundation, and Bloomberg Philanthropies

As the report explains in more detail, our survey respondents identified a few specific ways philanthropy could help: 

  • Philanthropy can use its convening and connecting power to link city officials to experts at change management or other aspects of reforms, and to each other to share what works and what doesn’t.  
  • Funders can make procurement less of a wonky special interest and center it as part of democratic local government by supporting local dialogues on aligning procurement practices with community values.  
  • Related, philanthropy, which is already starting to invest in public media and local media, can support a local news ‘procurement beat’ or a network of procurement reporters to monitor transparency, increase public understanding of how tax dollars flow back into the community (or not), and how procurement supports or detracts from community goals.  
  • Finally, and most ambitiously, philanthropy can do in procurement what it has done in many other sectors, and support intermediaries that break down the barriers between governments and small businesses that might be a good fit for government contracts but either don’t know about the opportunities or are wary of their chances of success.  

I’ll add another recommendation, based on my experience and frustrations in this area: fund research into the costs of the status quo (both in procurement and other areas of government process). How much is the current system costing in terms of lost innovation, lost local business opportunities, lost efficiencies, and contracts that don’t quite deliver as promised? What could we gain if we rebalanced the need for compliance with the benefits of change?  

Twenty years ago, very few people were talking about open government data and evidence-based policy. It has taken steady philanthropic investment, relentless work of nonprofit organizations, and thoughtful risk-taking by local governments to advance those powerful and necessary ideas. Procurement must be next. Every dollar local governments spend matters more than ever.  

If you have ideas about how philanthropy can support more equitable procurement or where local governments are doing an especially good job making their procurement dollars match local values, please let us know on Twitter (@AspenUrbanInnov) or by emailing [email protected].