Cooperative Procurement Emerging Markets Initiative
Procurement organizations have limited resources and decide which procurement solutions to pursue that will bring the greatest benefit to their public sector customers. The Emerging Markets initiative solicits insights directly from the private sector, offering an opportunity to provide ideas that are innovative and forward thinking, to anticipate and proactively meet the needs of multiple governmental entities throughout the country.
The National Association of State Procurement Officials (NASPO) is comprised of the State Chief Procurement Officials of the United States (US), including the District of Columbia and the US Territories. NASPO ValuePoint (NVP), a division of NASPO, is the largest public procurement cooperative operating in the US. NVP establishes Master Agreements through a cooperative and collaborative Lead State Model. These Master Agreements are used throughout the US by state government, as well as by thousands of local public entities. In 2020 $17 Billion of public spend flowed through NVP contracts, and this figure is growing year over year.
In the past, ideas which led to NVP cooperative Master Agreements, came into existence primarily by considering collective spend data maintained by our state members. NVP would primarily measure the suitability of the idea by polling state membership.
The emerging markets initiative is an effort to anticipate the “global” needs of state and local governments, based on the insight of industry leaders in the supplier community.
At its core level, this initiative is designed to solicit input from the private sector for innovative contract solutions to meet present and anticipated government needs. The private sector invests significant resources toward research and development of future products and technologies. Therefore, the private sector is in a good position to share where they see the market headed. To tap into their research and strategy ideas, the emerging markets initiative encourages private sector input on which products, technologies and services should be pursued by NVP as a cooperative and explain how their solutions apply to the state and local government sector.
NVP’s objective is to broaden the pool of thought, beyond simply looking at current spend data within the states and capture innovative contracting ideas that will ultimately help governments reach greater levels of efficiencies.
Public and private sectors both benefit from this initiative, throughout the entire US. Public sector benefits because thousands of public entities gain access to nationally competitively bid contracts under a single solicitation, for innovative products, technology or services. The private sector benefits with a nationwide agreement that recognizes industry terms, and which will effectively open state and local government markets more fully. The initiative was broken into six phases:
Suppliers were asked to produce three primary pieces of information (1) Overview of the concept (2) Whitepaper describing the concept in fuller detail (3) Relevant market Information including references to existing contracts that address this concept. Organisers posted this announcement on their website.
Submissions were collected using a cloud-based interface called “form stack”.
Selected suppliers were afforded an opportunity to present to NVP and asked their views regarding the following:
• Current market demand for state and local government
• Market growth potential
• Anticipated resources needed to develop the idea into Cooperative Master Agreement(s)
Evaluations of submissions and presentations considered applicability of the solution to state and local government and focused on market growth and potential.
Requests for Information (RFI) were issued to gather a broader industry perspective and secure a deeper understanding of how each industry functions. Furthermore, NVP conducted a Survey of the States to assess potential need; and performed additional market and financial analytics to corroborate market potential.
Once all phases were complete, NVP submitted formal recommendations to the NVP Board, comprised of procurement representatives from multiple states, seeking approval for the development and release of a cooperative procurement.
What Makes Your Project Innovative?
This has proven to be an extremely valuable and innovative initiative on many levels.
First, it provides a unique opportunity for supplier innovation in the public sector on a national scale, with potential impact at all levels of government; as well as providing NVP with a broader perspective for concepts and ideas not previously contemplated.
Secondly, it takes advantage of corporate capital and produces a wealth of information on the inner workings and nuances of a particular industry. Understanding this element prior to solicitation development is vital for a healthy agreement as the most productive public contracts work for both public and private sectors.
Third, many potential beneficiaries in the private sector are small and medium size business enterprises (“SME”) which in of itself produces benefits. This initiative provides helpful insights for ways to reduce or eliminate the barriers this group faces when attempting to participate in public procurement.
What is the current status of your innovation?
NASPO received several ideas from the private sector and are in the process of solicitation and Master Agreement development for a portion of the submitted ideas. Projects include, Citizen Engagement Platforms, Enterprise Content Management, Online Marketplaces.
Citizen Engagement Platform involves the way governments interact with their citizens through engagement technologies. Includes technologies such as: identity management tools, digital wallets, referrals to additional services, reminders of upcoming deadlines, language assistance, artificial intelligence to improve customer service, and mobile access.
Enterprise Content Management focuses on strategies, methods, and tools to capture, manage, store, search, retrieve, preserve, archive, and deliver content and documents related to key organizational processes.
On-line Marketplace Per Gartner (Nov 2017), “By 2022, 75% of all B2B tail spend goods will be purchased in an online marketplace.”
Collaborations & Partnerships
Private sector companies, government officials, NVP collaborated.
Companies contributed by submitting the innovative idea and offering details on industry functions as well as legal, risk, and financial considerations.
Government Officials collaborated by responding to surveys, participating in organized discussions, and providing procurement personnel resources.
NVP contributed by building and releasing surveys & invitations for ideas, facilitating follow up presentations and meetings.
Users, Stakeholders & Beneficiaries
End users benefit as NVP leverages national buying power through a single solicitation based on best value and superior contract terms.
States benefit from the lower administrative costs of processing solicitations by leveraging the expertise of procurement professionals and subject matter experts across state boundaries.
Contractors benefit by avoiding significant bid preparation expenses, eliminating the need to prepare and submit bids on similar solicitations for multiple jurisdictions.
Results, Outcomes & Impacts
Initial results have been very positive.
First, the ideas submitted originally identified areas not contemplated previously and focused NVP’s attention on emerging market indicators as a basis to create innovative national cooperative contracts.
Secondly, the information received during the RFI period, for all ideas, provided very detailed information concerning the industries under consideration. Market size and growth rates were powerful indicators of how the market is evaluating the value and potential of those products and/or services being offered.
Third, each Request for Information (RFI) issued for the emerging markets has resulted in over 30 responses from the supplier community, and the first solicitation issued, Citizen Engagement Platforms, resulted in 39 bid submissions. The amount of supplier response is a key metric indicator signalling available corporate capital that will be allocated to promote cooperative Master Agreements once final awards are executed.
Challenges and Failures
Currently there have been no challenges or failures in the execution or the desired goals of this initiative. Perhaps time will reveal challenges or failures but as of now nothing to report.
Conditions for Success
Success of NVP contract portfolios is ultimately measured by adoption amongst their state members and by political subdivisions. Initial surveys indicate a very strong interest in all ideas being pursued.
Education and communication are key elements in encouraging government entities to adopt new innovative approaches. As with all contract portfolios, NASPO develop a comprehensive communication and education outreach plan. This includes empanelling key stakeholders and will include procurement officials, suppliers, IT and financial personnel to act as champions.
NVP has developed several tools to help suppliers maximize their efforts. Supplier Toolbox is an online library of information that includes management and marketing tools designed to aid suppliers in their planning efforts. Supplier Academy is their eLearning platform offering courses. NVP Mobile is a mobile app designed to enhance supplier knowledge on how to best work with the state and local government marketplace
This initiative can easily be used by other procurement organizations and should be considered. It provides an interactive forum to exchange ideas and produces synergy between private industry and the public sector.
Though they are based in the United States NASPO encourage companies from other countries to submit ideas. We live in a global economy and if good ideas can help their members than they can easily grant awards to companies outside their borders. E-marketplace providers, for example, can be headquartered anywhere so this initiative is not restricted to US.
There are several lessons learned:
First, it is important to keep an open mind and listen to suppliers as they do have valid perspectives, are close to customers, and have their fingers on the pulse of the industry and where it’s headed.
Second, focus on the market growth metric as this is an indicator of increased private sector capital flowing into those offerings which will render the solutions more robust over time.
Third, when issuing Requests for Information, attempt to identify and reach out to the corporate actors in that industry to encourage participation. Too many times procurement offices simply post opportunities on websites and expect the industry to find them.
Finally, multiple platforms where suppliers can submit ideas is a good idea. NASPO post links on their website (naspovaluepoint.org) and on their Mobile APP “NVP Mobile” as interface points to the private sector. They also included a discussion of the initiative in their Podcast series.