Lessons Learned in Procurement Overhaul

The conversations surrounding procurement around the country usually begin and end with an emphasis on the need to “be more strategic” and “invest in leadership.” As the head of an agency that has been working toward systemic procurement improvements, I agree with those sentiments. But for me that’s only the beginning of the discussion. True procurement reform requires enormous political, technological, budgetary and human considerations to ensure its success.

New York City is in the midst of a procurement overhaul and has dealt with many challenges along the way. What we have found is the process for developing, implementing and managing the adoption of these significant changes requires careful attention to culture, perceptions and expectations.

Here are a few lessons learned:

Lesson 1: Be transparent in your estimates of the project length and cost at the outset—and don’t be afraid to talk about it.

Delivering responsive near-term results is important, but if you’re dealing, as we have been, with a large and complex system that has evolved over decades, it is not going to be transformed by a few technology geniuses pulling all-nighters. It is going to take time and significant resources. There is a natural tendency in government towards impatience. The diverse stakeholders involved want to see change implemented as rapidly as possible. While we can be aggressive with our timelines, phase our work to achieve fixes that relieve some pain as quickly as possible and build momentum for a comprehensive and sustainable overhaul, we need stakeholders to recognize and appreciate the enormous scope of the undertaking and the time-consuming nature of the work.

Lesson 2: Meaningfully engage the organizations that provide city services in the process and make them partners.

Procurement is a means to an end. It exists to deliver services that are critical to support families and communities, build infrastructure and secure the operation of city government. In New York, our largest procurement spending is with nonprofit organizations providing health and human services. So, we created the Nonprofit Resiliency Committee, made up of more than 100 organizations that share with us their most pressing procurement challenges and provide a venue for working together to address those concerns.

This partnership has been crucial in enabling us to identify and develop innovations, even as our work to complete our end-to-end technology platform is still underway. Because of this group, we’ve successfully spearheaded several reforms, including a new standardized process for calculating and paying for the indirect costs associated with a contract —which had never been done before; increased advance payments at the start of contracts; and created greater flexibility in adopting minor budget modifications. 

Lesson 3: Adopt a service-oriented mentality.

Serving the public sector workforce well requires not only technical skill and the right tools, but responsiveness, patience, determination and a positive, constructive attitude. In short, we are not merely creating a new technology platform, but also coaches committed to change and strong project management.

In New York City, the procurement workforce is comprised of more than 6,000 staff members, working across more than 40 city agencies. We value everyone’s experience and recognize they know their agencies best. As part of our process, we have spent significant amounts of time listening to procurement personnel—learning and understanding the challenges they face and providing encouragement and resources that help address issues and move forward. From there, we seek to collaborate on a vision for the future that they can visualize, see where they fit and describe why change is necessary. We also then encourage them to pay it forward and champion the change within their agencies.

Lesson 4: Evangelize procurement and elevate its practitioners.

City procurement officers are as frustrated with antiquated systems as anyone. They are on the front lines dealing with unhappy contractors directly. The lived experience of procurement officers—their expertise, insights and ideas—should be considered when developing city programs and initiatives.

Procurement professionals need to be part of the conversation from the beginning of an idea to delivery. Cities should elevate them to the C-Suite—and consider them as executives who have a strategic role. This happens in the private sector, but hasn’t been fully realized in the public sector. In New York City, we are actively advocating and working toward this in our agencies, because we know a program or service is only an idea without procurement—procurement is the mechanism for turning a concept into a tangible good or service for our communities. 

Lesson 5: Communicate, communicate, communicate.

The process of improving a massive procurement system is complex, long-term, nuanced and rarely sexy enough to make headlines. As such, internal and external communications are crucial and cannot be a one-time thing nor one-size-fits-all. Milestones, progress and the roadblocks need to be reported clearly and transparently.

In New York City, the procurement office has reached out directly to contractors, government officials and community thought leaders to have individual and small group meetings to discuss updates. We also know that communication is a two-way street and have created a channel for candid communication. We want to hear about issues and criticism, constructive or otherwise, directly and promptly.

Lesson 6: Stick to the mission.

In New York City, responsibility for re-engineering our procurement process rests with a separate agency—the Mayor’s Office of Contract Services, which I oversee. With its own director, staff and budget, we are able to be very clear about our priorities. Many of us have been fortunate to span administrations, providing continuity over time, staying focused on our core business function—procurement—and giving other agencies tools they can use to execute their own missions more efficiently.

Most people would agree that it’s worth spending, in New York City’s case, over $40 million to improve a process through which the city procures $20 billion in goods and services annually. But as clear and compelling as that goal may be, for those of us charged with accomplishing it, it means much more than building a new platform. It means being motivators, facilitators, mediators and communicators. We need to be leaders in the effort to change cultures within our local governments and show stakeholders that we are service-oriented and responsive. And we need the fortitude to maintain a high level of commitment in the face of pressure and scrutiny over the course of a multi-year—sometimes multi-administration—process. Living up to those expectations may be difficult, but in the final analysis, will have a tremendous impact on the governmental entities and communities we serve.