Innovation in Procurement – why public procurement is doing headstands in Barcelona

We came across a very interesting article in Citylab on public procurement being turned upside down by the city of Barcelona. We found it intriguing that far from the traditional approaches to buying goods or services, Barcelona city council has decided to provide potential solution providers with problems it is facing in the city, like monitoring pedestria
n flows, automating detection and alerts of damaged road surfaces or even reducing bicycle theft, and letting providers come up with ways of fixing the problem.

It’s genius – essentially getting providers to bid to solve urban and social challenges to transform the city’s public services. In a sense, it is an extension of the “contracting for outcomes” idea which we have seen used before, for instance, by the UK’s Department for Work and Pensions in their welfare to work schemes delivered by the private sector. However, Barcelona is taking that further through the broad and high-level nature of those outcomes and the considerable freedom being offered to bidders in terms of the potential solutions.

While responses can involve buying goods, they might also involve implementing new services, or suggesting regulatory changes - or bidders can basically come up with any means so long as it solves the problem. And, it’s open to anyone, anywhere, individuals and companies - regardless of size or reputation. The reward for innovation is not a prize but a genuine city contract.

The Barcelona Open Challenge has been engineered by Citymart which connects cities with innovation solutions providers, businesses, social enterprises and universities around the globe. It has had plenty of success before with a number of other cities, but for Barcelona the results have been unprecedented. It reached out to about 1,200 organisations around the world and Barcelona also advertised and used social media to promote Open Challenge as truly ‘open.’ Three weeks after publishing the tender online, Citymart says it had been viewed 50,000 times. This methodology is encouraging innovation, entrepreneurship and the growth of small and medium-size enterprises.

Barcelona city council has committed to selecting six winning solutions. (It has an innovation fund of €1 million to support winning bidders with a business package for growth). It will also validate projects with references to strengthen their credentials when entering new markets. It’s a fantastic opportunity for bidders – with nothing to lose and all to gain.

According to Citymart: “Today, more than 557,000 local governments and city councils spend approximately €3.5 trillion per year … Over the last five years in cities around the world, SMEs have won 98 percent of the Calls published on Citymart.com. By opening procurement and finding new approaches cities stand to save from 5% to 10% of operating budgets (Source: McKinsey Global Research). More competition reduces costs, creates local jobs and increases entrepreneurship."

A very appropriate comment that puts this nicely into context was given by Sascha Haselmayer, co-founder of Citymart:

“City governments need to get out of procuring by specifying the solution they want. They can’t possibly have enough knowledge to do that well. What they should do is specify the problem they want to solve and show metrics on what success looks like. And then allow the market to inspire them to find the best solutions.”

With the deadline for submissions just closed, we will be looking with interest at the winning “innovators” and how this method of “upside down procurement” might take off throughout the world.

 

If you’d like to read the full article – you can find it here.

Discuss this:

Your email address will not be published. Required fields are marked *