This article is written by Gavin Hayman, executive director, Open Contracting Partnership, and Oscar Hernandez, Latin America program manager

As rumours began to circulate in the spring of 2019 that Mexico City would soon renew its bike-share program, it caught the attention of many local companies. It would be an important contract generating more than $1.3 million in income yearly.

In the past, city contractors would often leverage their political connections and, forgive the pun, 'peddle' influence to win the contract. This time, though, things were different. Contacts were met with a simple message from the city:

  • Join our public event
  • Visit our public website
  • Respond to our open request for information for vendors

This was not business as usual. After awarding the contract to the same vendor for more than ten years, and following an election that brought a new, transparency-minded administration into power, the city was ready to openly engage vendors across the entire procurement cycle to revamp the service while being accountable to the public.

Many governments struggle to foster competition in their solicitation processes. Contracts are often renewed year after year and awarded to the same pool of contractors, without assessing needs, goals or recent innovations in the marketplace.

Lack of innovation and competition in public procurement markets can often be traced back to poor communication between government agencies and the vendor community. The tendering process tends to over-emphasise proposal format and appearance while creating barriers to easy proposal submission. Procurement documents tie applicants’ hands by being overly prescriptive and limiting the resources they can use.

Instead, governments can engage vendors to improve contract outcomes by making improvements in three key areas:

  • Sharing data that enables vendor participation
  • Communicating with the vendor community to find innovative solutions to service delivery
  • Lowering the costs associated with bid submission

Fair access to key planning data

Pro-actively sharing data during the planning and tender stages of the procurement process helps level the playing field between market entrants and incumbents. Vendors need early access to procurement plans to anticipate how competitive they would be in upcoming solicitations, better position themselves, and find opportunities for strategic alliances or subcontracting opportunities.

The key is hosting events in a fair and open manner, to encourage competition and generate better contract results

Mexico City’s official announcement of its bike-share system renewal was accompanied by the launch of a dedicated microsite for all interested parties. The site contained all information and relevant dates for the upcoming solicitation, allowing vendors to improve their planning processes. The city also shared key program data relating to service levels, service areas and financial information, with the goal of enabling better strategic and financial planning from the vendor community.

In their interactions with vendors, government officials tend to place an outsized emphasis on procedures. Instead, vendor conferences and pre-bid meetings allow buyers to share their goals and expected service delivery outcomes. The key is hosting events in a fair and open manner to encourage competition and generate better contract results.

Mexico City hosted a public conference where it shared the program goals for its new bike-share system. The event was headed by the city’s secretary of transportation and the head of the city’s digital agency.

The forum was open to the public and enjoyed strong participation from the largest firms in the industry, civil society organisations, and media outlets.

In addition to sharing priorities for the contracting process and desired outcomes for the new system, the city leveraged this opportunity to explain the multiple innovations being introduced to the process to encourage competition and community participation. This helped neutralise the uncertainty of abandoning old practices and embracing openness.

Governments should engage service providers to collect feedback and understand their needs

The conference was structured as a presentation from the city without a dedicated space for questions and answers. Instead, the city opened a digital channel to obtain feedback from vendors and held separate press conferences to answer these questions. The event was also streamed and recorded for everyone to watch. As such, it set the right tone for the upcoming process. The city would engage vendors while preventing opportunities for undue influence.

Consult the marketplace

Before drafting any solicitation documents, governments should engage service providers to collect feedback and understand their needs. Communicating with the vendor community helps match citizen needs with marketplace capabilities. Collecting this information is critical to find different ways to innovate that may not have been considered before.

Vendor conferences and pre-bid meetings enhance the vendor experience and allow governments to set expectations about policy objectives. But innovation in service delivery often requires additional mechanisms to collect feedback from the marketplace.

Mexico City issued a request for information (RFI) to collect alternative business and operational models from the vendor community. The response to this new way of doing business was positive, with the city receiving seven replies from nine companies from around the world with state-of-the-art proposals in bike-share schemes.

By publishing key and aggregated findings from the vendor responses, the city shared how the consultation process was informing the design of the new service model with the public and the vendor community. The city intentionally released data on key variables that would help all vendors refine their proposals.

The report also sought to increase public trust in the process by providing data to hold government officials accountable on the decisions made about the design of the new bike-share system.

Easy submission

Vendors spend significant resources finding opportunities and submitting proposals. For some businesses, spending time on cumbersome vendor portals, paying to access requests for proposals (RFPs), or submitting bids in person can make it cost-prohibitive to participate in a solicitation process.

A fair and open public contracting process is key to developing long-term relationships with suppliers that are built on trust

A survey by the procurement innovation firm Citymart found that 40% of municipal governments in the US still use platforms that seek to generate revenue from business users in the form of upsells or mandatory fees to access vital public information to participate in the bidding, such as paying $50-150 to download a scope of works or paying a $100-1,000 monthly subscription fee to access information or receive notifications.

Bid submission costs disproportionally affect small businesses, limiting a government’s ability to promote the diversity of its vendor pool or engage innovative start-ups.

Governments can do a lot to facilitate vendor participation in solicitation processes. Vendor portals should allow potential opportunities to be easily identified and tracked until advertised. Establishing electronic bid submissions that allow vendors to customise their proposals, makes it easier and less resource-intensive to submit proposals.

As a final step in their journey to establish sustainable and participatory processes, Mexico City is developing an open contracting platform to carry out the entire procurement process electronically and share all relevant information throughout the process.

Replicating and scaling up innovations

A fair and open public contracting process is key to developing long-term relationships with suppliers that are built on trust. That, in turn, is key to providing better services and purchasing goods at the right price and the right time. As the example from Mexico City shows, this process needs to start before kicking-off the tendering process, with transparent and fair market engagement.

This is an ongoing process, and not a box to be checked. In Mexico City, it’s still too early to say which of the competing companies will eventually win the contract. The city is currently getting ready to issue the new terms of reference using insights from their market engagement practices. Success in the tender and award process will depend on sustaining open contracting and vendor engagement practices at the next stages in the procurement process.

By building the process on a foundation of fair, open and transparent market engagement, Mexico City has proved that they are able and willing to plot a new course. In doing so, they lead the way for other cities around the world to follow in their footsteps. — Gavin Hayman and Oscar Hernandez

(Picture Credit: Unsplash)