City services are a vital aspect of city government. But it is often the case that city employees aren’t able to provide every service the city needs. For the procurement of such services, cities often use private contractors. The transaction between a company and the city is codified in a contract.
But, many times, Chicago’s system for contracting city projects and services lacks transparency and clarity for how tax dollars are being spent and how city services are being provided.
City Council, in passing ordinances, specifies the services the city must provide. When contractors are used, the Department of Procurement Services is in charge of issuing and managing contracts for city services.
The process undertaken by Procurement Services depends on the type of required service and the funding given by City Hall. In all cases, Procurement Services must produce a specification—a detailed statement of the services required by City Hall. This specification is then distributed by several different methods, based on the category of service that is being sought:
- Formal Competitive Procurement—for contracts valued at more than $100,000, the specification formulated by Procurement Services must be publicly advertised. Any company considered financially responsible can submit a proposal on the fulfillment of the specification.
- Informal Competitive Procurement —for contracts valued below $100,000, the specification is distributed by mail, web posting and other means, but without public advertisement. Again, any financially responsible company can bid on the contract.
- Non-competitive Procurement—some of the services required by City Hall are not agreeable to bidding for reasons of specialization, patenting or expertise. For these needs, Procurement Services is allowed to distribute their specification to certain firms, without advertisement or bidding.
- Emergency Procurement—for contracts valued below $250,000 that meet an emergency need of City Hall, Procurement Services can distribute the specification privately, without advertisement or bidding.
In the case of formal competitive and informal competitive procurement, proposals are collected and evaluated. The Department of Procurement Services lists several factors involved in their evaluations, including expertise (professional qualifications, experience, specialization, etc.), cost and estimated time to fulfillment.
Procurement Services may also prioritize minority, women, disadvantaged, veteran and locally owned businesses. Once a proposal is chosen, the winning company is awarded a contract codifying the services required, payment details, the deadline for the contract’s fulfillment, and all other relevant information.
Certain parts of the current contracting process have a solid foundation in ensuring open procurement for Chicago, yet more must be done. One needs only to browse local news to find examples of contract corruption throughout Chicago—numerous instances of contracting fraud exist, while even legitimate contracts often reward the corrupt and well connected at the expense of efficiency and cost.
Greater oversight must be put into the contracting process. Mandating that Procurement Services publish a justification of its decisions, including exact estimates of cost and time-to-completion, will leave less room for political clout to play a role in contract procurement, and will give the public greater insight into decisions made with taxpayer money.
While Chicago technically allows for competitive bidding, it is not clear how companies are evaluated. This leaves the public in the dark about the decisions made at taxpayer expense and creates a procurement system that is open to fraud and corruption. Unless more is done to create greater public insight into the contracting process, Chicago can look forward to paying higher prices for lower-quality services.