How eProcurement can help municipalities facing budget shortfalls
As recovery from COVID-19 begins to take shape, municipal governments will need to focus on ways in which they can shrink budget deficits, while also continuing to serve citizens. Like private sector organizations that were able to pivot product offerings and move to delivering services online, governments will need to also look for these types of opportunities within their departments to overcome a variety of challenges.
Municipalities are budgeted to the last dollar, using revenues from city services and fees to fund the programs and services they deliver. Since the global pandemic hit North America in March 2020, those revenues have been slashed. Experts estimated 10-20% city-level revenue loss as a direct result of the COVID-19 impact on transit fares, parking fees, bylaw fines, community offerings (e.g. swimming lessons, adult education, fitness centres) and venue rentals. Canadian municipalities are looking at $12B in shortfalls, and American municipalities at a whopping $400B, and that’s without considering the impact of additional lockdowns.
The most natural responses to municipal budget shortfalls are service cuts and tax increases. But another opportunity exists in finding efficiencies. Despite cost cuts, municipalities will continue spending tax dollars on goods, services and infrastructure projects. Switching to eProcurement can save agencies 20% of those total procurement costs, while also shaving up to 35% off the procurement cycle that could provide significant savings.
Administration & time savings
Handling and scanning paper proposals, updating tracking spreadsheets, managing vendor questions and addenda by phone, checking bid submissions for compliance, and other manual procurement processes can be time-consuming for municipal staff.
Switching to eProcurement eliminates most of these manual tasks, saving procurement teams an average of 60 minutes per bid submission. That can add up to hundreds of hours a year, which can be better spent managing projects, reviewing contracts, and building vendor relationships. eProcurement time savings ensures that even as responsibilities increase, small teams are able to manage.
For example, bids&tenders uses a compliance checker to ensure that all bids are checked for 100% compliance before they’re even submitted. This means staff don’t waste time reviewing and rejecting incomplete bids, and vendors can make corrections to bids before submitting to ensure the municipality has the most competitive bids available. One bids&tenders client estimates time savings from eProcurement at $20,000 per year.
Often municipalities look for the lowest cost when selecting a bid submission from a supplier. By only advertising opportunities in local newspapers or on their own site, municipalities may be limiting their bidder pool, and unintentionally paying more.
The more bidders available to bid on an opportunity, the more competitive prices will become. Posting through an eProcurement platform, particularly one with a notification system to alert a database of engaged vendors, can get municipalities 3X the number of competitive submissions.
Fairness and transparency
Taxpayers require accountability for how their dollars are being spent, and auditors are responsible for ensuring spending is fair and transparent. When procurement opportunities, evaluations and awards are completed manually, providing auditors with documentation on the process and selection is manual and time-consuming.
Along with wasting time, there are often costs associated with storing documentation, shipping it to auditors, and potential legal fees. By posting opportunities with an eProcurement platform, documentation on the bid submissions, evaluations and selection is all stored online and easily available to auditors.
Support community suppliers
Municipalities often recognize that supporting local and diverse businesses is part of their mandate. The traditional RFP process can often disadvantage smaller businesses, as designing, printing, transportation, and shipping costs for paper submissions can be prohibitive. In terms of budget shortfalls, supporting the local economy helps people and businesses within the community thrive, which in turn ensures citizens can continue to live in the municipality, pay property taxes, use transit or parking facilities that drive revenue, etc. A thriving local economy helps municipalities recover faster.
eProcurement platforms level the playing field. Businesses can get all the bid documents online, without driving to pick documents up in limited business hours. Submissions are also online, eliminating the costs of shipping large binders of documents to the venue. By setting up templates for data entry and questions, municipalities can easily compare every bid submission without being burdened by superfluous information and overdesigned proposals.
Neighboring municipalities don’t necessarily communicate on procurement, particularly when they are operating with different teams on different systems, but they should. By banding together, municipalities can combine opportunities to increase the scale of the procurements, and negotiate better rates and bulk discounts with suppliers.
eProcurement platforms make this easier, since municipalities on the same system will be able to post one bid opportunity to benefit multiple locations. Government agencies can use eProcurement for real-time visibility over spending, and aggregate opportunities to combine their buying power.
Some municipalities are concerned about the costs of new technology, but fail to calculate the return on investment for eProcurement. Even with platforms that charge a flat rate or annual subscription, municipalities can see 300% or more return on the cost of the platform in the first year.
bids&tenders offers a supplier-pay model for most municipalities. This means that the system can be implemented at no cost to the municipality. Suppliers interested in bidding on opportunities pay a low annual subscription rate, which entitles them to bid on any opportunity from any buyer within the bids&tenders system.
Recovering from budget shortfalls
There is no one solution to recovering from budget shortfalls, particularly in the precarious economic and health environment we are facing. Municipalities must consider all their options to maintain service delivery despite budget difficulties to effectively execute their responsibility to their citizens.
Don't Budge From The Budget: How eProcurement Can Help Municipal Budget Shortfalls
As recovery from COVID-19 begins to take shape, municipal governments will need to focus on ways in which they can shrink budget deficits, while also continuing to serve citizens.
This webinar will address how eProcurement can help public procurement officers work within these budget constraints and manage:
- Lost revenues
- Administrative strain
- Wasted time
- Low competition
- Taxpayer accountability
- Supplier diversity
- Cooperative purchasing
- Stimulus spending and incentives
Information from this webinar will give agencies actionable tips to navigate budget shortfalls and recovery.
Join us on Wednesday, February 24 at 11:00 AM ET for the live webinar! Can't attend live? Register anyway to receive the recording after the event.