Barcelona’s procurement pilot catches the eye of entrepreneurs

A new method for awarding lower-value city contracts, worth as little as €60,000, has entrepreneurs in the city of Barcelona humming.

Over the summer Barcelona’s €1 million open challenges programme, managed by the city council, solicited new solutions to some of the classic woes of urban living – from stolen bikes to potholes.

Interest in the six challenges was huge, said the designer of the scheme, Sascha Haselmayer, CEO of the electronic procurement services company Citymart. “In total we had around 50,000 visits to our website, 25,000 from within Spain and the rest overseas,” he said. “The benchmark for this kind of thing is usually 7,000.” 

The city received 117 official submissions. Quite a few were from companies which had specifically formed to answer one of the six challenges, said Haselmayer.

Here are the problems in search of an answer:

• Reducing bicycle thefts in the city: To encourage more bicycle use in the city, Barcelona is looking for a secure bike parking system.
• Systems to reduce social isolation: Barcelona wants to support families and healthcare professionals in the care of senior citizens to reduce isolation and loneliness.
• Monitoring pedestrian flows: Real-time data on distribution of pedestrians throughout the city is needed to enhance the management of public spaces.
• Tools for digitisation of museum and archive collections: Barcelona has rich archives of books, manuscripts, photographs and other documents. Digisation will enable this unique record of Catalan culture to be better shared with citizens.
• Automatic detection and alerts of damaged road surfaces: Responsive, efficient repairs will help ensure the city is citizen and business-friendly.
• Using technology to boost local retailers: Improving the competitiveness of small local retail businesses by increasing their online visibility.

The city council has announced finalists and will decide who gets the contracts in November or December. 

Turning procurement on its head

The novelty is that rather than laying out exactly what it wants to buy – for example, stronger bike locks, Barcelona council laid out six problems it wants to fix.

By comparison, traditional government procurement works by identifying a problem, for example, the waste management department needs new rubbish bins, and specifying the remedy in the purchase of 300 new 32-gallon bins.

“It’s turning procurement on its head,” said Haselmayer. His company, Citymart, helped Barcelona to be less prescriptive about what it tenders for and so be open to the ideas nobody knows are out there. The company’s task was to help define and frame the city’s problems in a way that sparks creative thinking.

An unintended consequence of typical lengthy and complex procurement procedures, is to create a barrier to entry for small companies. But for small business, public procurement represents a vital source of potential income, accounting for nearly a fifth of Europe’s overall GDP.

Traditional ways of procuring new technology and services have been driven by a “race to the bottom on price” says Haselmayer. The level of specificity in normal invitations to tender stifles innovation, because it restrains the inventiveness of companies which might bid on the work.

By adopting the open-ended challenge format, as Barcelona did, officials are in a position to find out about different solutions and settle on the one with the most quality and promise.

The open-ended scheme was designed to grow the pool of companies interested in doing business with local governments. Jordi Joly, Barcelona city council’s CEO of Economic Finance, Business & Employment, said, “We are absolutely convinced that we have an obligation to foster new ideas and creativity from public funding.”

Learning from others

There’s nothing in procurement laws to bar cities from organising these kinds of challenges, said Haselmayer. 

While Barcelona city council has run 18 challenges in three years, it remains to be seen whether these experiments will ever add up to a wholesale change in how all cities do business.

There are several exemplars other than Barcelona - Paris and Eindhoven have experimented with challenge-led procurement in the past too.

In 2005, Stockholm city council realised it needed to do more to aid its visually impaired citizens in safely navigating the city. The challenge to create a routing technology with synthetic speech functions was set and the result was e-Adept.

Further afield, Philadelphia announced a 12-week accelerator programme in October last year called FastFWD, which works with entrepreneurs to address public safety issues. The city put out calls for entrepreneurs to come forward with ideas  improving prisoner re-entry, substance abuse treatment and neighbourhood surveillance.

On a larger scale, the European Union is also trying to stimulate innovators into tackling pressing challenges. In July, the European Commission announced cash prizes for new prototypes that help to cut air pollution, reduce dependence on antibiotics for treating respiratory infections, allow people with food allergies to electronically scan foods before purchasing, enhance network sharing in a time of scarce online space and knock down barriers to fibre optic communication.