Giving e-procurement a civic twist

City and county governments often have been an afterthought in the e-procurement services market, forced to piggyback on state contracts or cobble together their own systems.

MunicipalNet Inc. is trying to change that. It groups local government purchasers into "clusters" that create sizable pools of buyers to attract suppliers, while promising governments that the process of buying through its Web-based purchasing system (www.municipalnet.com) will be a relatively painless affair.

"From our talks with government purchasers, that's what they wanted more than anything," said David Nute, chief executive officer of Boston-based MunicipalNet. "They wanted to keep all of their sealed bids, [request for proposals and request for quotations] processes in place, and essentially just duplicate them online."

That's made easier, he said, because local governments have more in common than their state counterparts. They tend to have the same kind of supplier base and, barring the requirements of state-specific laws, the same purchase process works everywhere.

"There is no state we are in now where we can't use the same process no matter which government we take on," Nute said.

{h3} Easy Doing

The MunicipalNet system also requires no investment in new technology by governments, just an up-to-date browser. In addition to registering government buyers, the company creates a pool of potential bidders. When a procurement comes up for bid, the company alerts those vendors by e-mail.

The city of Torrington, Conn., has seen a "tremendous increase" in bidders since it signed up for the MunicipalNet service, according to Charlene Antonelli, the city's purchasing agent. The greater number of suppliers bidding on a contract has had an eye-opening impact on prices.

"We put a request out for a multimedia projector that previously we had a best price on of around $3,700," Antonelli said. "Through the MunicipalNet service, we got a number of bids in at the $2,000 level."

Antonelli especially appreciates the simplicity of the system. Rather than requiring the city to entirely outsource its procurement services, "we can use the service as much or as little as we want to, and you end up doing a lot of the business yourself using the Web tools they provide."

MunicipalNet preserves the ability of governments to manage their own vendor lists, for example, as well as the capability for such things as issuing their own bid invitations.

Torrington will use the service more in the future, Antonelli predicted, particularly when the company develops the interface with the city's backend financial system so that it can also use MunicipalNet's online requisition process.

The city of Keene, N.H., is one of the more recent MunicipalNet recruits. The purchasing office there is "basically a one-man shop," said purchasing agent Jeffrey Titus, so the city has been looking for ways to streamline its procurements.

The system fits well with the city's way of doing business, yet it has sped the procurement process dramatically.

"We can all but eliminate the phone calls we have to make to vendors to keep them aware of the progress of their bids, and we have substantially reduced the number of e-mails we have had to send out," Titus said. "That all translates into a major reduction in costs, and an increase in the ease with which everyone buys and sells."

{h3} Thinking Local

Formed several years ago, MunicipalNet introduced its service in April and has deals with local governments in seven states, 22 in Connecticut alone.

But Nute acknowledged that its growth isn't assured. For one thing, government executives are wary of dealing with such private procurement services because of recent well-publicized failures of e-government projects. And some governments have already sunk time and money into developing their own online systems.

However, Nute believes the company has done well so far by seeking a geographical "trickle effect" — convincing the leading governments in a region to sign on with MunicipalNet first, with others falling in place after.

Nute said governments also have to realize it is in their best interest to participate.

"The fundamental message we are trying to get over is that companies like ours, if governments think they are useful, will not survive forever unless governments participate," he said.

Robinson is a freelance journalist based in Portland, Ore.