Each year, New York City procures tens of billions of dollars’ worth of goods, standard/professional services, and construction from private companies, nonprofit organizations and other institutions. The City relies on corporate and nonprofit partners alike in service of its almost nine million inhabitants across the five boroughs. While NYC is a valuable business partner, the complexities and regulatory environment to secure government contracts can be intricate, confusing and time-consuming. How can organizations be best prepared to enter the procurement process and maximize efficiency? On September 21, 2022, Capalino hosted a webinar in its Future of New York series on this subject moderated by Capalino President Travis Terry and featuring Michelle Jackson, Executive Director of Human Services Council of New York, as well as me, Principal on Capalino’s Business Strategy Team and the former Acting Deputy Commissioner for Citywide Procurement at the New York City Department of Citywide Administrative Services (DCAS) in the Adams Administration.
Below is a summary of that conversation, but we encourage you to watch the whole thing here.
The Current Procurement Process
Let’s start by clarifying that the City’s procurement system is set up to protect citizens and their tax dollars. It is constructed to preempt mistakes, prevent favoritism, and weed out bad actors, but this has sometimes made it esoteric, unfair, and unduly cumbersome. Knowing what to expect from this process is the key to successfully navigating it.
The process begins when the City identifies a need and chooses the funding source(s) and procurement method to be used. Next, it prepares a solicitation, which typically includes optional meetings and comment periods and, of course, a deadline for vendor submissions. Once it has reviewed all submissions, the City chooses a winner, who then may or may not have an opportunity to negotiate the contract’s terms and conditions. The City also performs a background check on the winner to ensure they are responsible enough to receive tax dollars. Finally, the contract must be registered by the New York City Comptroller in order to become legally binding, a process which takes up to 30 days. There is typically a narrow window between the release of a solicitation and its due date, so prospective vendors must be ready to mobilize and compile a submission in a short period of time.
What Are Some Best Practices?
The only way to influence a procurement is to make your voice heard. The best way to do so is to submit specific questions about the solicitation within the stated timeframe and attend pre-bid/proposal conferences, even when they are optional, which most are. If certain aspects of the specifications are incorrect, or the minimum qualifications are too onerous, or the marketplace won’t bear the terms and conditions contained in the contract, the City needs to hear from you. It’s critical to make sure you understand the terms of the contract. Some solicitations can reach thousands of pages and are written in the light most favorable to the City, so paying close attention to provisions such as price escalators, most favored nation clauses, intellectual property ownership, and payment specifics can be the difference between a successful and a disastrous relationship.
When making suggestions, it’s important to remember that one of the City’s primary goals in competitive procurements is to not favor one company over another. So, when you’re talking about changes to the language of a contract, it should be couched in a way that creates more competition, rather than just favoring your company (e.g., adjusting the parameters of a minimum experience qualification would allow many more companies to bid).
It’s important to attend as many City-sponsored events as possible. Introduce yourself and your company to City officials as well as potential partners in the business and nonprofit communities. These events are a wonderful forum to learn about current and upcoming procurements. All the stakeholders are in the same place at the same time, so you’re maximizing your exposure by being present.
Finally, to the greatest extent possible, you must clear up any responsibility issues before bidding or proposing. Failure to do so can lead to delays in the contracting process and could ultimately result in a non-responsibility finding. This can be extremely detrimental to your ability to do business with the City of New York and other states and municipalities around the country. Things such as unpaid taxes, liens and government violations are problematic when it comes to the City’s responsibility determination process. You must also be prepared to answer questions about unfavorable press or lawsuits involving your organization, as the City will surely inquire about them. If you have your explanations ready to go, you are way ahead of the game. Remember, the City is looking to work with good corporate citizens, so clearing up any negative aspects ahead of time and highlighting the good works you do in the community, is critical to receiving an award.
Why Is It Worth It to Work with NYC? What’s Waiting on the Other Side of This Red Tape?
For human services organizations, working with the City means being best situated to help the most vulnerable, whether that’s the homeless population or asylum seekers who recently arrived from thousands of miles away. Serving New York City’s inhabitants is a connection to some of the most important work happening in the public-sector.
Additionally, not to be cliché, but if you can make it in New York, you can make it anywhere. Once you establish a track record of stellar performance in New York City, other states and municipalities will be more willing to work with you. Securing a City contract today can snowball into expansive growth in the future.
If You Could Snap Your Fingers and Create an App or Tool That Assists with Procurement, What Would It Do?
It would be very helpful to have details on past procurements aggregated in a user-friendly way. This information is important to the vendor community, as a source of potential partnerships, and it provides valuable past pricing and contractual provision data. Currently, the only information easy to find is the winner of a procurement. Past contracts and information on companies who didn’t win are spread across dozens of different websites, available by Freedom of Information requests, or by in-person appointment at City agencies.
Can You Discuss the Context for MWBEs and Small Businesses?
The City has made great strides in rectifying hundreds of years of inequality in this area, and has an ambitious goal of rewarding 30% of all City procurements to MWBEs. Since Fiscal Year 2015, the City has awarded City-certified MWBEs approximately $21.4 billion in contracts. And with the discretionary threshold rising from $500,000 to $1,000,000 for MWBE purchases, it’s easier than ever for the City to do business with MWBEs. Getting yourself and your business introduced to the City is critical. Make sure you’re certified through the City’s MWBE program, enrolled in Passport (the City’s online procurement system), and have your capability statement ready to circulate as widely as possible. If you are unable to win contracts, you can develop relationships with prime contractors and work to become a subcontractor. To develop these relationships, attend networking events, ask the City for bid/proposal results, and scour all publicly available information for insights into who the City regularly hires.
In addition, advocating for the use of the best value method, which provides price or point preferences for MWBEs, is crucial to closing the disparity. At DCAS, we worked hard to find ways to turn regular bids into best value bids. This was one of our proudest accomplishments and led to a large award to a MWBE to provide electric vehicles to the City for years to come. This award that would not have been possible without the best value method.
Are There Any Innovative Approaches Out There That the City Should Consider?
Early in Mayor Adams’ and Comptroller Lander’s terms, they convened a task force to submit recommendations on how to improve the procurement process, which included:
- Automatic renewals and extensions for vendors without responsibility issues if a procurement action has yet to be initiated. This would reduce “at-risk” work, which prevents small businesses from being paid by the City in a timely manner, while also providing a proper legal framework.
- More transparency from the City regarding timelines. Often, the City is asking bidders/proposers to hold pricing for months on end. Having a better understanding of how long things are going to take would be of great benefit to the vendor community.
The City should also restructure its invoicing process. Including a provision in the procurement law regarding automatic prompt payment interest, rather than requiring vendors to apply for it through a complex process, would go a long way toward making whole those vendors who are late in being paid by the City.
Being more flexible in its standard terms and conditions would also attract a much larger vendor pool to the City. Of course, the City must protect the public legally through the contracting process, but it’s time to review some of the more burdensome provisions surrounding insurance, liability, most favored nation, intellectual property ownership, and payments in order to broaden the pool of companies willing to do business with the City. The more companies involved in the process, the better the pricing and product for the City.
Finally, it’s time for the City to work toward reversing the legal prohibition on furthering social policy through procurement. As it stands, the City is unable to require things that enhance the public good through procurement; for instance, the City is currently unable to mandate that items be manufactured in the United States, or even in the City. It cannot mandate working conditions or best corporate practices. The list goes on and on. With so much buying power, the City has the ability to drive real change in the marketplace, but is working with one hand tied behind its back. That needs to change.
How Can Community Members (End Users) Play More of a Role in City Procurement?
Government is supposed to be “of the people, by the people, and for the people,” but for that to happen, you must make your voice heard. Be persistent. Ask questions. Contact your elected officials and procurement officers. Attend public forums. Vote, both at the ballot box and with your dollars. As someone who has worked in government, I can assure you that feedback from the community is taken very seriously, but it can never be considered if it isn’t put forth.
Do you have more procurement questions? Contact Adam Buchanan at 212-616-5810 for more information.