On Thursday, Mayor Rahm Emanuel and Chief Procurement Officer Jamie Rhee announced various reforms to improve the transparency, accountability and cost-effectiveness of the city’s contracting process. The reforms will affect the competitive bidding process, establishing an eBay-like Reserve Auction to save the city possibly millions in taxpayer dollars.
“In order to advance Chicago as the most business-friendly city in the nation, we must take innovative steps to ensure competitive, accountable and open bidding, all of which foster trust and efficiency in contracting,” said Mayor Emanuel. “These reforms will ensure city contracts save taxpayer dollars, attract new businesses and deliver better services to the people of Chicago.”
Before, vendors could bid only once, but with the Reverse Auction initiative vendors will be able to compete against each other in real time. Vendors can bid multiple times, and in doing so will drive down prices.
At the same time, the city is working to improve the transparency in non-competitive contracting. The city will post non-competitive contract applications—also known as sole-source applications—online early in order to allow for public feedback before the Non-Competitive Review Board makes its decision. The Office of Procurement is also seeking to ensure that non-competitive contracts are awarded only because they are essential, federally mandated or an emergency case.
The city is making these changes based off of successful Reverse Auctions already implemented in local and state governments, the federal government, and even Cook County. Local and state governments include Los Angeles, CA, Norton, OH, and the state of Nebraska. Los Angeles, for instance, has saved $700,000 on two auctions since implementing the platform just over six months ago for a savings of roughly 18.28 percent.
As for the federal government, the Obama administration achieved $19 billion in savings in 2009 and hopes to save $40 billion in contracting costs from the federal government each year. Cook County began using the system a little over a year ago. After 14 auctions for items ranging from armored cars to furniture, toner cartridges to unarmed security guards, the County has saved 21 percent on average, or roughly $500,000.
The city’s Procurement Department will continue to work to establish reforms that maximize efficiency and savings. The Procurement Department will be reorganized in order to streamline business processes. The IT system will also be upgraded, and the Department will work on improving cost-effectiveness and applying strategic sourcing to save money.