Seeking cheaper widgets, NYC to share procurement data
(Reuters) - When New York's Rockland County needed to buy two new asphalt rollers for highway construction projects this summer, it saved $38,000 by looking halfway across the country - in Texas.
Another county there was getting a better deal on rollers made in Wisconsin. So Rockland piggybacked on the existing public contract in Texas, saving $19,000 per roller - a 24 percent reduction from the original $79,000 bid it had received.
Rockland, north of New York City and financially distressed despite its wealthy tax base, found the vendor for the lumbering yellow machine in a special procurement database, which shares information on public contract prices among subscribers.
On Tuesday, the biggest city in the United States said it will also join that database. New York City will follow Florida, Virginia, Miami, San Diego County, Fort Lauderdale and about 2,200 other cities, states, counties, school districts and federal agencies who are already using the database's website.
Called SmartProcure, governments share data about the goods and services they buy, allowing them to get better deals and broaden their network of vendors.
Since the recession, states and cities have sought to save money as revenues have remained sluggish and fixed costs, like pension benefits and healthcare obligations, have swelled.
"Counties, especially in New York, are struggling," said Paul Brennan, Rockland's director of purchasing. "Any tool that we can get to help us save money is an important tool to use, especially when it's at no cost to us."
New York City's "buying power is probably greater than half the states in the country. It's a very important development to have all their data in there," Brennan said.
The Big Apple, which has a $70 billion annual budget, would save more than $100 million annually if it can use the service to cut procurement costs by just 1 percent, New York City Comptroller John Liu said in a statement.
The city is on track to spend $11.3 billion this fiscal year on contracts, up from $6.2 billion in fiscal 2003, Liu's office said.
"Knowing exactly what prices vendors offer other governments will help city agencies negotiate the best possible deals for taxpayers," Liu said.
The service by SmartProcure is free for governments. The database is supported financially by businesses, who must pay to subscribe.
There are about 85,000 state, local and federal agencies in the United States, which spend about $20 billion a year on procurement altogether, said SmartProcure's Chief Executive Officer Jeffrey D. Rubenstein. The company, based in Deerfield Beach, Florida, launched in 2011.
"Every city is buying similar items; they're going through the same process. We knew there had to be a tool to help these government agencies do what they do," he said.
Rockland, with a population of more than 315,000, has a credit rating of Baa3 - one notch above junk and lower than all other New York counties - by Moody's Investors Service.
The county is now using SmartProcure to benchmark pricing for smaller purchases that aren't subject to competitive bidding. It's also using the database to get better prices from low bidders.
"It gives you negotiating power," Brennan said. "It's going to be a major important tool."
(Reporting by Hilary Russ; Editing by Tiziana Barghini)
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