How does local public purchasing work?

Brian Alexander
Jun 12, 2019 · 4 min read
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Public purchasing is big business: governments spend 1 of every 3 taxpayer dollars buying something. With such large sums of money at stake, there’s obvious risk of abuse and corruption. Purchasing rules and regulations evolved with good intentions: to safeguard taxpayer dollars against corruption and help allocate government resources in ways that are ethical, fair and competitive, and accountable to the public.

So how does public purchasing work today? In general, most U.S. governments have a tiered system that imposes additional process steps as the value of the purchase increases. While the dollar amounts and specific approvals of these tiers can vary significantly from jurisdiction to jurisdiction, in local government purchasing generally falls into three categories, or “purchasing thresholds:”

Below threshold

Informal bidding

There is also significant variation in the number of quotes required to move forward, the types of businesses that governments must contact, and the ways in which the quotes must be submitted. For instance, in Portland, Oregon, any purchases between $10,000 and $50,000 can be made after three oral quotes are received. In Austin, Texas, purchasers must provide evidence that they reached out to at least two (MWBEs).

In the informal bidding range, governments tend to have some level of discretion in selecting a supplier, both because purchasers have the ability to choose which suppliers are contacted about the opportunity and because there may be more latitude to justify utilizing a supplier other than the one with the lowest-price submission. Savvy businesses often target the informal bidding threshold to avoid the lengthy formal competitive bidding process. Many suppliers will aim to strategically price their product at the very top of this range. For suppliers and administrators alike, this informal bid range can also be fertile territory for initiating pilots or trying a new or innovative product.

Whatever the particulars of the jurisdiction, informal bid procedures are in place to ensure some level of diligence in purchasing without overly reducing the speed of the process.

Formal competitive bidding

  • Conducting market research;
  • Writing the formal bid solicitation;
  • Publishing the bid solicitation and formally responding to questions from suppliers;
  • Evaluating and scoring bid responses;
  • Making an award decision, issuing a notice to award a contract, and responding to any protests from suppliers about the process;
  • Negotiating a contract with the selected supplier and getting the contract approved.

Each of these stages may have specific requirements, depending on the jurisdiction, related both to how the process is conducted and which stakeholders must approve the contract. For instance, some regulations prescribe the length of time an opportunity must be advertised, the way in which proposals should be evaluated, and the documentation necessary to approve a purchase. Running a formal competitive bidding process typically takes 4–24 months, and is costly for both government buyers as well as suppliers. Strict policies give purchasers little discretion when making a purchase of considerable size, which contributes to the perception that procurement is a rigid and conservative process.

Rules may also dictate who can approve purchases of a certain magnitude. In some cases, a department director, Chief Procurement Officer, or City Manager can approve a purchase, while other purchases require city council or even mayoral approval. Approval structures add an additional layer of complication and can inject a greater degree of politics into purchasing.

Since about 80% of total local government spend falls into the formal competitive bidding, or “above threshold” purchase category, it’s important to understand how the competitive bidding process works, how governments collaborate on competitive bidding, and the policy goals that shape purchasing decisions.

About CoProcure: CoProcure is an early stage venture-backed startup optimizing local public procurement by helping local governments share contracts. Competitively-bid contracts in our marketplace can be reused by government buyers, saving time and taxpayer dollars and reducing the cost of selling to governments for businesses.

About the author: Brian Alexander recently completed his Master of Public Policy from UC Berkeley’s Goldman School of Public Policy and a public policy internship with CoProcure. Previously, he served as a Senior Policy Analyst at the Maryland Governor’s Office for Children with a focus on reducing the impact of parental incarceration on children and families. He also helped expand the use of federal nutrition programs in Maryland with Share Our Strength, a national nonprofit working to end childhood hunger in America.

CoProcure

Public purchasing collaboration, made easy.

Brian Alexander

Written by

Student of public policy and believer in the potential of local government

CoProcure

CoProcure

CoProcure makes it easy for local governments to save time and money by collaborating on purchasing — for free! Say 👋: hello@coprocure.us

Brian Alexander

Written by

Student of public policy and believer in the potential of local government

CoProcure

CoProcure

CoProcure makes it easy for local governments to save time and money by collaborating on purchasing — for free! Say 👋: hello@coprocure.us

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