Smart City, Smart Procurement Strategy

By Melanie Nutter and Sarah Isabel Moe

Melanie Nutter is the Principal of Nutter Consulting, a San Francisco based firm that provides urban sustainability and smart cities strategy for cities, companies and foundations. Nutter is the former Director of the San Francisco Department of the Environment and the former Deputy Director for U.S. House of Representatives Speaker Nancy Pelosi.

Sarah Isabel Moe is a Senior Consultant at DNV-GL.

Mar 28, 2019 | Governance, Technology | 5 comments

One of the most popular conversations at smart and sustainable city conferences, with good reason, is procurement. This dry but vitally important topic comes up again and again. For years, vendors and city practitioners have been on a quest to better understand and define how their interactions can be more successful and nimble. Tackling the procurement conundrum is key to enabling cities to achieve their environmental, economic development and equity goals using new tools.

Rigid procurement rules, outdated mandates, and inapplicable thresholds have been known to stall or completely upend many a smart city project. There are too many examples of frustrated smart cities vendors and exasperated city procurement officers who have spent countless hours trying to find ways to partner.

To help city practitioners and potential vendors make sense of the space, we set out to investigate what strategies work (and do not work) between cities and vendors. Nutter Consulting and DNV-GL, partnered with the Urban Sustainability Directors Network (USDN), to create the USDN Smart City Vendor Engagement Framework. This Framework was designed as a guide for cities and vendors to develop more productive ways to solidify and launch smart cities projects. Based on interviews of over 20 stakeholders from the public and private sector, as well as in-depth case study research, we characterized the most effective options for different sectors to collaborate on deployment of clean energy and building technologies, with the least amount of pain.

 

The Vendor Engagement Framework Summary

In our city survey, we found that procurement arrangements fall into three main categories (see graphic below):

  1. Traditional procurement
  2. Partnerships
  3. Innovative procurement

 

 

Diverse partnerships are essential for smart city activities to thrive.

“Partnership” is another buzzword that has gained traction in the last decade. It can encompass nearly every interaction between different sectors, bringing together folks from municipal government, private sector, academia, utilities and community organizations.

How does this translate into productive and innovative technology procurement?

In procurement processes, partnerships take these primary forms:

  • Public-private partnerships
  • Districts
  • Utility partnerships
  • Intergovernmental partnerships

Innovation on traditional partnership formats has elicited a broader range of partners, from clean technology, start-ups, entrepreneurs, venture capital, and bioenergy. Leveraging partnership models gives cities more options for projects to choose from and can provide staff with more information before procurement.

Some partnership models can leapfrog the procurement process altogether. Established partners can pitch pilot project ideas, allowing them to test their technology at no cost to the city.

 

District Scale Partnerships: EcoInnovation District in Pittsburgh, PA

The City of Pittsburgh created an Ecoinnovation District and targeted three primary areas for improvement within the area:

  1. Buildings and energy
  2. Microgrid technologies
  3. Fleet management and fuel conservation

Before launching the program, the City established benchmarks for these target areas to evaluate future pilot projects and focus the attention of vendors on the City’s goals.

To attract new partners for their new district, Pittsburgh employed an Inclusive Innovation Platform to engage with target vendors in the community. As ideas come in, the City scores projects and allows selected companies to pilot their technologies in the Ecoinnovation District. With no cost to the City, companies get a chance to create a use case for deployment and Pittsburgh maintains mutually beneficial partners for future ventures.

 

Data Exchange Partnerships: Burlington Electric Department in Burlington, VT

Energy is a focal part of any city’s smart city or sustainability plan. However, goals and strategies can become convoluted if energy services aren’t centralized, or third-party providers are handed energy goals. By looping utility providers into the process earlier, cities can overcome silos and develop a more comprehensive approach to tackling their climate and energy goals.

 

 

Burlington is embracing this opportunity by partnering with its utility counterpart, Burlington Electric Department (BED).

BED had huge success in the past by achieving a 90% adoption rate of smart meters. However, they were struggling with the influx of data and navigating how to best leverage it.

At the same time, the City’s newly appointed Chief Innovation Officer was working to tackle the task of promoting data-driven governance, while juggling separate data platforms within the City and its associated agencies.  Realizing the lost potential with isolated data sets, Burlington is exploring opportunities to leverage the electric utility’s data on a larger scale, allowing the City to coordinate smart cities work across telecom, water, electric and the public works street work.

Innovation isn’t limited to unique partnership opportunities.

 

 

Traditional Procurement

Cities have primarily relied on traditional procurement methods because of the ability to effectively evaluate vendor requirements – and well, they’re familiar. However, this method is ill-adapted to the rapid innovation in smart cities technology, and can leave the city with outdated technologies, considering the inflexibility of some traditional procurement processes.

To overcome this challenge, some cities are incorporating new tools into their traditional processes to accommodate the changing vendor landscape.

 

Sole Source Contract Case Study: Columbus, OH

The City of Columbus launched a GreenSpot program to engage the community in creating a more sustainable city. JadeTrack, a software provider, saw this as an opportunity to work with the City, and encourage people to reduce their environmental footprints.

They took the time to work with the City, understanding the goals for the GreenSpot program, and pitched a software solution that can help the City effectively engage the community. The software creates personalized dashboards that show citizens how changed behaviors provide energy/natural resource and carbon savings with measurable impacts in their community.

The key to success in this partnership was simple – clear communication. The City laid out the goals for GreenSpot, and JadeTrack was able to match these to solutions they could actually provide. By being upfront with abilities and expectations, the two entities established a scope for the work before advancing to a pilot with potential for wide-scale deployment. By taking these intermediate steps with collaboration, vendors can be nimble and tailor solutions more closely to the community they are serving.

There are creative ways for cities to engage stakeholders that push beyond traditional procurement.

 

Innovative Procurements

On the other end of the spectrum, cities are employing completely new ways of engaging with vendors, borrowing ideas from the private sector to spur creativity and economic development.

 

City Facilitated Entrepreneurship Programs Case Study: San Francisco, CA

With Silicon Valley nearby and a wealth of startup technology companies in the city, San Francisco began the Startup in Residence (STiR) program in 2014. In a 16-week program, city partners are paired with startups to co-create technology solutions to address an existing municipal challenge.

STiR facilitates the right match before city officials and startup representatives even meet. The STiR staff elicits scoping documents from cities, outlining a key issue they hope to address. Then, startups can apply to participate and the best-fitting applicants are paired to a project.

Throughout the collaborative program, both parties are expected to clearly communicate and work together to reach to 16-week date.

With impressive success in its first 4 Bay Area locations, STiR has partnered with SF’s Nasdaq Entrepreneurial Center to work toward building a global network of 100 cities. In August 2018, STiR has announced its 2019 cohort has grown to include 31 government agencies, including its first state Pennsylvania. For this year, STiR selected 40 startups out of a network of 700 to help their cohort of cities find smarter solutions.

 

Platform Partnerships Case Study: Berkeley, CA

Third-party organizations can also facilitate potential partnerships between cities and technical experts in the private sector. The Rockefeller Foundation’s 100 Resilient Cities (100RC) Platform connected the City of Berkeley to a wealth of knowledge and opportunities.

The Chief Resilience Officer has leveraged vendor partners on the 100RC platform to advance smart city objectives. Experts at Microsoft advised the City in the development of a cybersecurity framework and Cisco helped to identify opportunities for the “internet of things” in Berkeley.

By joining networks like 100RC, cities connect technical expertise from the private sector to staff and more effectively address challenges. Platforms can familiarize cities with potential tools and solutions that they may not otherwise be aware of, and build relationships with private entities that can provide them.

More and more cities are interested in developing an ecosystem of partners. Through third-party entities like Cleantech San Diego or other business organizations, cities can reap the benefits of a new technology or new uses of data without having to directly procure from a vendor if the vendor works with another third party.

For cities to become smarter, every step of the process should adapt to the opportunities in the field. By innovating the way they engage with vendors, cities can find best-fit solutions for their smart cities needs. Check out WEHO’s Smart City Streetlights. There are so many cross departmental benefits to these technologies; it is clear that cities no longer need to buy and own all the technologies from which they draw value.

 

Discussion

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5 Comments

  1. THIS IS GREAT AND RELATED TO MY NEXT BOOK:
    Sustainable Mega Cities (and communities) which may
    become a series with handbooks, guidelines, technologies
    and especially “Circular Economics” in action.
    Contract Woody at:
    Woodrow W Clark, II, MA3, PhD
    Qualitative Economist
    wwclark13@gmail.com

    Reply
  2. I am working on a GHG reduction – based Purchasing Policy that will lay out a process for more clearly delineating how purchasing can specifically be utilized to meet CAP and climate related objectives. It may a concrete implementation of some of the things you lay out in your article. Thanks for talking about this important topic and opportunity.,

    Reply
  3. Excellent information on a timely topic. Unfortunately the vast majority of jusirdictions (cities, counties, school districts…etc.) do not have a procurement department that can implement these approaches. After decades of cutbacks the state and local procurement staffs have suffered massive losses of experienced talent and lack the budget to replace them. Many of the smaller jurisdictions never had the budget or staff to begin with!

    We must begin to promote ‘smart regions’ so that solutions procured by cities like San Francisco can be enjoyed by all the communities in the Bay Area and programs like the one in Pittsburg can be shared with all of western Pennsylvania. The resulting larger procurements should produce more savings for everyone involved, including the host city.

    Reply
  4. Important comment John and so true however I have to ask how so many municipalities are still finding pretty significant budgets to prepare their Climate Action Plans which is a key driver for sustainable purchasing. Not questioning your assertion but do find it curious. I have seen some jurisdictions include smart purchasing strategies in their CAPs and this can be an effective way to help advance sustainable purchasing training and implementation.

    That said, I think the regional approach can also be effective. We need both, and all! Whatever are the most supported vehicles for “Climate-meaningful” Purchasing strategies and tactics need to be accessed and asap.

    Reply
  5. I agree- all of the above! However the larger (and more progressive) cities are leaving the smaller and more remote places behind. There are thousands of cities and counties in the US yet we tend to focus our commercial attention, understandably, on the larger ones.

    I am advocsting regional cooperative purchasing agreements that allows all the jusrisdictions to participate if they so choose. Some are not that small or remote, just growing and understaffed. Understandably, they tend to hire first responders before contracting officers. This is not just for environmental issues but all public procurements that could have regional impact.

    Reply

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