With limited resources and little room for failure, choosing the right procurement strategy has been crucial for U.S. cities to stay ahead of the innovation curve. Standard procurement processes are restrictive. They take time and lack the flexibility required to change and adapt specifications to the reality of the problem they are trying to solve. Searching for the right partner through a competitive RFP process may not even make sense when looking for a solution that does not exist yet. As a result, some cities end up purchasing technologies that are out-of-date or out-of-scope.

On their end, innovators willing to work with local governments know that talent and motivation are not the only keys to success. Patience and persistence also are required to crack the procurement process. This is even more accurate for early-stage startups that lack the experience and references often required to participate in a competitive bidding process. They’re dealing with the same problem job seekers face when searching for their first job in a market that values experience. Who’s willing to take the risk and give them a first chance?

The necessity to provide a flawless framework to attract startups and test technologies in a low-risk environment before moving to full scale (through RFP, for instance) has encouraged innovative cities to think differently. A solution has emerged with modularity. By breaking down the procurement process into pieces, local governments have been able to dedicate more attention to the first and most critical stage of the procurement process: the selection of a relevant technology.

By breaking down the procurement process into pieces, local governments can dedicate more attention to the most critical stage of the procurement process: selection of a relevant technology.

By calling on vendors to test and demonstrate their solutions at a small scale before moving to RFI or RFP, cities have been able to gain flexibility and agility, identify failures earlier and make the whole experience of working with local governments much smoother. For the innovators, small-scale experiments (a.k.a. "pilots") are an opportunity to demonstrate their ability to solve real-world problems with real-world solutions. It allows them to collaborate closely with the cities in creating the specifications for a future product or solution.

A forerunner of this approach is Kansas City, Missouri. Through its Innovation Partnership Program, Kansas City has created a sandbox environment to enable innovators to showcase their solutions before embarking on the long and uncertain procurement journey. For the city, the advantage is two-fold. It minimizes the risks associated with the adoption of new solutions, and it also gives the city access to new technologies at no cost. In return, Kansas City grants access to the city data and infrastructure to the IPP’s participants.

"Kansas City has a strong entrepreneurship history," recalls Bob Bennett, Kansas City’s CIO. "Our Innovation Partnership Program (IPP) is a city tool that allows us to continue this tradition. We welcome companies into City Hall to validate an entrepreneur’s business plan or product. When it works well, as it did with Xaqt and RFP 365, the technologies make an immediate impact on Kansas City and rapidly expand to other communities."

Urban labs and innovation programs are a great way to minimize the risks associated with the traditional contracting process.

Urban labs and innovation programs are a great way to minimize the risks associated with the traditional contracting process. It’s also a good way to attract innovative vendors to small communities who have limited access to innovative startups and huge problems to solve. With a population of almost 80,000 and a very extended network of 500 miles of roads and streets, the city of Palm Coast, Florida is turning to the private sector to bring innovative solutions to problems related to pedestrian safety and to general walkability, through testing and experiments.

Modularity is only solving part of the problem. The city of Pittsburgh, which has been at the edge of public-private partnership for innovation through its urban lab called the PGH Lab, wants to go a step further. Its leadership wants to bring data into the picture to evaluate proposals next to each other and inform the decision process. To achieve this objective, PGH Lab entered a partnership with UrbanLeap, a Palo Alto-based company leader in innovation management, to plan, track and evaluate the selected pilots. Through its cloud-based platform, UrbanLeap offers a collaborative space to Pittsburgh and the vendors to engage and collect strategic data.

For Annia Aleman, city innovation specialist for the city of Pittsburgh and manager of PGH Lab, "the platform is playing a major role in bringing transparency to the process, helping the city track and measure the progress of the pilots in real time."

Cities are not the only local governments to encourage experiments as a first step to purchase innovative solutions. San Mateo County in the San Francisco Bay Area has created its own urban lab — SMC Labs — which aims at addressing complex regional issues that span across cities. But the county is facing another type of challenge. Strategically located at the heart of Silicon Valley, the county is overwhelmed with a flow of unsolicited proposals. To handle the situation, the county is also using UrbanLeap’s Opportunity Management toolkit to structure and improve the process of collecting, reviewing and evaluating the proposals.

While more and more U.S. cities are competing for the title of Smart City, adapting the procurement process to today’s challenges is key. But calling on startups to demonstrate their solutions is not enough. It also requires structured workflows and data-driven solutions to successfully test and evaluate the solutions of tomorrow.