Philadelphia has spent nearly $700,000 to make doing
business with the city more efficient. It's dropping its antiquated paper
procedures for an electronic system, and adding processes that the city's new
Chief Administrative Officer says will make it easier for small, minority- and
women-owned businesses to get a shot at the $3 billion the city spends on goods
and services each year.
For years, vendors interested in jobs ranging from
supplying the city with toilet paper to managing a construction project had to
open their bids in person and submit hundreds of pages of documents to support
their figures.
"Some of where we are today, you might think, 'Oh my
God, that’s where the city is today,'" said Chief Administrative Officer
Rebecca Rhynhart, admitting Philadelphia is behind-the-times, especially when
compared with the private sector. "But we need to acknowledge that in
order to tackle that and that’s how we’re proactively changing the city."
For what may likely be the first time in city history,
all purchasing functions fall under one person – Rhynhart. Mayor Jim Kenney
selected the former budget director for the newly created post to sniff out
inefficiencies in spending and ensure the city delivers services at the lowest
possible cost to taxpayers.
"So either I’m going to improve it or you all can
blame me," Rhynhart said.
Staff from Rhynhart's office had discussions with
internal departments, the Greater Philadelphia Chamber of Commerce, the African
American Chamber of Commerce and other business leaders to find out what issues
needed to be addressed. Then they used data analysis to determine the best
course of action.
Barriers to entry – like the ability to navigate multiple
websites to find bid opportunities, or the financial and administrative costs
of submitting the extensive paperwork required for a bid – was one of several
concerns addressed by the Administrative Office in its first big initiative.
"It actually does truly change the business
environment," she said.
Last week, a new eProcurement system launched. It cost
$600,000 to implement and another approximately $233,000 will be spent annually
on it, according to Trevor Day, Philadelphia's procurement commissioner.
Businesses interested in supplying the city with supplies
and equipment – from pencils to firetrucks, or managing a public works project,
can now register on ContractsPHL.
About 1,400 vendors who have already done business with
the city have been migrated by the city to ContractsPHL, however Rhynhart says
they should still ensure they are registered in the system. Any business that
has yet to work with the city can also register.
Next month, city departments will start posting their
procurement requests on the ContractsPHL site and in November, registered vendors
will be able to bid electronically on it, explained Christine Derenick-Lopez,
first deputy chief administrative officer.
Eventually the eProcurement system, which comes from
Austin, Texas-based Periscope Holdings, will allow administrators to abandon
the current, public process of selecting the best bid for the job.
"It happens at a moment of time in [the Municipal
Services Building] in a room and the prices are read out loud and that makes no
sense in today's era," Day said.
Rhynhart anticipates eProcurement could allow the city to
make the different bids available to the public within 24 hours after the final
submission deadline.
"We feel like we need to be transparent in order to
solve the problems," she said.
Suppliers for "some of the more plain vanilla
purchases" will now use a reverse auction system, she said.
The city pays a fee to Erie, Pennsylvania-based Procurex
for each reverse auction it runs, calculated as a percentage of the bid.
Multiple sellers, in real-time, will compete with one
another for the work, Day said.
"They can’t necessarily see each others' bid price,
but they see where they fall," he said, explaining that if they adjust the
price, they would see themselves move, for instance, from 3rd place to 2nd and
so forth.
"It feels like a reverse eBay system,"
Derenick-Lopez added.
On the professional services side – meaning attorneys or
other consultants the city may hire, DocuSign has been rolled out within the
Office of Innovation & Technology.
The San Francisco-based DocuSign service comes at a cost
of no more than $50,000 per year, according to city officials, and allows any
vendor working with the city to sign off on request for proposals (RFPs)
online.
OIT was already using DocuSign internally, so it was a
natural choice for the initial implementation, Derenick-Lopez said.
The Department of Human Services is next. Then the
Commerce Department.
Both work with a lot of nonprofits, which can complicate
the contract approval process.
"They need their boards to sign off on these
contracts. So the fact that DHS will no longer need for a nonprofit to convene
their board to get everybody to sign, and now it can be electronically sent to
all their board members, we see a lot of efficiencies there," she said.
A final piece of this overhaul is Contracts Hub, a
one-stop-shop for anyone interested in doing business with the city.
Supported by the Bloomberg Philanthropies grant,
Philadelphia-based Jarvus created Contracts Hub to allow vendors to search for
all bid opportunities with the city, regardless of type or size.
"Right now we have six different websites so if
you’re a vendor... you would need to know if it was an RFP or supplies to
decide what website to go to," Derenick-Lopez said. "Contracts Hub is
essentially going to scrape all those different websites and under one site you
can see every single contractual opportunity in the City of Philadelphia."
For those already comfortable navigating the original six
sites, they can continue to do so since those will remain live and functional.
All of these steps were taken to up the number of bidders
the city receives on each project, and hopefully, make it easier to obtain work
with the city for businesses owners who felt overwhelmed or shut out by the
existing structure.
"There is actually a list of bids that only got one
response," Chief Administrative Officer Rhynhart said. "For the
taxpayers that doesn't say efficiency, right? We need to change that."
A city review of fiscal year 2016 and 2015 data showed
that professional service contracts averaged no fewer than 6.5 bids for
contracts of all sizes – less than $32,000 to as much as $5 million.
For supplies and equipment, however, the average number
of bids was less than 3 for any contract under $500,000, according to data
supplied by the city.
"It is like you have a 50 percent chance of getting
a contract if you bid in those price points and obviously we don't think that’s
getting the best price for the city," Derenick-Lopez said.
Officials from Atlanta, Rhynhart said, told her they get
between eight to 10 responses for each project.
"It would be great to get 6 [bids]," she said.
"It would be even greater to get eight or 10."
With more bids, Rhynhart said, the city's contracts will
cost taxpayers less. The paperless process also brings other benefits to
Philadelphia.
"If we can get more local minority, women-owned
businesses to be able to do business with us, that could just spur the local
economy as well," she said.
While the city can't put an exact figure on the amount of
savings they expect from switching over to an electronic system, they said they
expect to save anywhere from $1 to $2 million in the first year on the reverse
auction system alone.
"Sometimes it is hard when everyone is focused on
the day to day operations," Rhynhart said. "You need the strategic
thinkers, that’s what we are trying to do. If we spend $500,000 up front, but
save $2 million a year ongoing – that makes a lot of sense."
"We're really looking at this great opportunity to
move the city forward."
Source: Philadelphia
Business Journal
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