City Council is considering a bill that would change the
Philadelphia City Charter so public works contracts would be awarded based on
"best value," instead of the current system where the lowest bidder
always wins.
The legislation is the latest piece to come out of the
Administrative Office that aims to bring the procurement process into the 21st
century.
"The rules of procurement haven’t been changed since
1951, since the charter was adopted," said Rebecca Rhynhart, who became the chief administrative
officer, a new position under the Kenney administration,
following five years as budget director. "So there are obvious
opportunities for modernization."
Rhynhart told the Philadelphia Business
Journal in September about her office's initiative to shift the
city to an electronic bidding process, and rid itself of the cumbersome and, at
times, convoluted paper system. Her goal in that move to modernize was to
streamline the bidding process and open the door for more small, minority- or
women-owned businesses to jockey for city contracts. In turn, competition
should go up and costs should go down.
Now the CAO is focused on public works projects that are
awarded to the lowest bidder but can often end up costing taxpayers much more
than the initial price.
"Right now for our procurement department, it has to
award to the lowest responsible bidder. The price is the determining
factor," she said in an exclusive interview. "This doesn’t make sense
in the modern world to conduct business this way. We need to be better. We need
to be more effective and more efficient."
Which is why her office has been working with City
Council members to put a best value-procurement system in place.
"What best value is," Rhynhart explained,
"it allows for other factors to be taken into consideration."
"How has this vendor performed? Not just did they do
a good job, but how did they perform against original budget, and original
timeline," she continued.
The final cost of a construction project can easily
exceed the original bid. Unexpected structural issues could arise. Asbestos
could be uncovered. Material prices could go up.
Costs related to those or other similar issues, however,
are not the city's concern.
Instead the bill aims to snuff out companies who submit
project changes after they already secured a city contract with the lowest bid
– slowly upping the final cost.
Under a best value-procurement system, other factors
aside from the initial bid are considered.
Implementing the subjective process to award city
contracts, however, raises the question: will certain firms – perhaps those run
by supporters of certain Council members – receive favorable treatment?
Rhynhart assures that will not be the case. The
procurement department decides which firm gets the contract, not City Council
members, she said, and that choice will be transparent to the public, as it has
been.
The procurement department will also establish guidelines
for the decision making process – like attributing a value to various aspects
of the bid, she said.
Different factors outlining the vendor's past performance
with the city (or with other entities if the firm never before worked with
Philadelphia agencies) – including meeting workforce diversity goals – will
each be given a certain weight.
Specifics on the percentage each factor will receive are
still being worked out.
No formal analysis has been completed to demonstrate best
value-procurement will save dollars, although Rhynhart suspects it will save
both time and money. She also points out it is considered a "best
practice" and has been adopted by municipalities from California to New
York and is also used by the federal government.
"There are a lot of really good companies out there
right now that aren’t getting our business because they don’t have the lowest
bid," she said.
If City Council passes the legislation, a question will
then appear on the ballot during the May primaries.
Source: Philadelphia
Business Journal
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