A Pulse for Cities: What Makes Open Contracting Essential to Modernizing City Governments

By |2024-01-03T16:53:15+01:00August 6th 2019|Finance, Good Governance|

Contracting is an unacknowledged superpower that cities have at their disposal to ensure high-quality service delivery to their citizens. Kathrin Frauscher explains how to go about it.

Cities are growing rapidly. How can city governments accommodate their new residents and build thriving communities that enjoy a high quality of life?

Public contracting is the heartbeat of city life. It can create economic opportunities for local businesses, elevate public services, and help city officials to work at their best. City governments all over the world hire companies or non-profits for essential services such as waste collection, school lunches, road construction, park maintenance, and IT infrastructure.

Contracting: An Unused Superpower

Yet too often city governments don’t harness contracting as the superpower that it could be. Instead of being an open, competitive, performance-driven process, procurement becomes a box-ticking compliance exercise. Low-quality goods, works or services get delivered by the same underperforming companies with no incentives for government officials to innovate and use contracting as a tool to deliver better outcomes for citizens. Information about public contracting is often shrouded in secrecy, locked away in filing cabinets, and siloed into different databases across agencies. Even city officials often don’t know what they are buying, from whom, or for what price.

Open contracting can help solve these challenges by making sure procurement is systematically driven by a focus on solving concrete problems and providing results for citizens. Combined with open, accessible and timely contracting data to drive performance, as well as systemic engagement and user-centred design across the whole procurement process, open contracting can super-charge procurement.

It’s also a tested approach that can help modernize how cities do business. Over the past few years, cities who embrace open contracting have seen tremendous results. In Bogotá, Colombia, the city’s education secretary and the national public procurement ministry worked together to transform the provision of over 700,000 school meals delivered each day, breaking up a US$22 million price-fixing scheme for fruit. They also significantly increased the number of providers from 12 to 55 in the first year and started working with 14 suppliers that had never done business with the city before.

So what are some of the successful strategies that city governments can implement to create business opportunities and serve residents better?

Play 1: Have a goal – and track progress

Be clear about the goal that you have for your contracting reform and your contracting processes. Take parks, the green lungs of cities: Through interviews with departmental staff and vendors, the Harvard Government Performance Lab helped the city of Santiago in Chile develop objectives and quantifiable performance indicators for public park maintenance. They included indicators like park cleanliness and safety. By introducing results-oriented contracting, the city was able to save 24 per cent of total contract value and maintain parks better for communities.

Play 2: Be open for business

Make it attractive and easy for companies to participate in city contracting. Engage the market when formulating the contract and let businesses know about opportunities. Have the tender processes open for 30 days so that incumbent companies have time to prepare their bids. Keep contracts easy to understand and pay vendors on time. Ideally, have a digital one-stop-shop for vendors from business registration to participating in tenders. Mexico City, for example, just made business registration much easier. CityMart helps cities around the world attract new and more diverse vendors and get better results.

Play 3: Empower citizens with data to track city spending from budget to delivery

In Ciudad del Este in Paraguay, students compared budget and contract data to monitor the allocation of money going to school renovations in the city. With consistent community pressure, there has been a dramatic improvement in how funds for school facilities are allocated. More than 80 per cent of the schools most in need now receive funding, compared to fewer than 20 per cent in 2015.

In Albania, the non-profit Albanian Institute of Science opened up municipal-level data on procurement and exposed cases of fraud involving the building of a new tourist centre. With pressure from the media, the contract was eventually cancelled.

In Kosovo, a civil society-driven platform helped identify the regional spread of buyers, suppliers, general spending trends, and potential corruption risks in procurement. The Municipality of Gjakova used this data to boost local economic development and create an environment for innovation.

Play 4: Ask for feedback & respond

In Ukraine, including in cities like Kiev, citizens can report violations across the procurement cycle through the online platform DoZorro. More than 133,000 citizens have visited DoZorro and recorded 14,000 feedback reports since 2016. So far, around 50 percent of these cases have been resolved, including over 1,200 cases where vendors were changed as a result of feedback. Twenty-two criminal charges and 79 sanctions have been issued. The increase in responsiveness is also notable in the organisation’s ranking of Ukraine’s 100 largest cities. But creating functioning feedback loops starts at the beginning: The city of Philadelphia in the US partnered with Sunlight Foundation and the Open Contracting Partnership to integrate citizens’ voices in the city’s food procurement and just launched its first value-based procurement process for fresh fruit and vegetables.

These are some of the many strategies that can not only help to modernize city government but stimulate a vibrant business community and improve livelihoods for residents. With these plays in hand, contracting can become a steady pulse for a city to prosper and grow.

Kathrin Frauscher