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City contracts, Google and Facebook

What does awarding a City contract have to do with Google and Facebook?

At first glance, it’s hard to see a connection. But if we take a closer look, perhaps we can learn from the way the internet giants process data and make decisions about the information they show us.

Consider this: when you enter a search word on Google, the search engine runs an equation that’s rumored to consider more than 200 factors before it decides which web pages to show you. It’s the same for Facebook. When you open Facebook on your computer or phone, the company runs an equation that includes hundreds of factors before populating your customized news feed.

Both companies have gotten good at showing us relevant information.

Now, compare Google and Facebook’s “hundreds of factors” to how City Council typically awards contracts for construction and services. We use one factor – price. Now, before the lambasting begins, I agree – price should be a huge factor. But should it be the only one?

Take a minute and run your internal purchasing equation. Is price the only factor you consider when you make spending decisions? I doubt it. If I run my equation, it includes price, quality, locality, brand preferences, personal relationships and past experiences. And those are just the obvious factors.

What’s my point? For a person, purchasing decisions aren’t simple, and they’re rarely one-factor.

I bring it up because those of us on City Council just had a conversation about the City’s purchasing practices. We kept it high level; our focus was whether we should favor a local contractor over an out-of-town, but lower price contractor. But make no mistake about it, we were discussing our purchasing equation and the factors we should consider.

Now, the Council’s ‘buy local’ discussion probably spilled over into your coffee conversations. Mr. Sasser, the Editor of the Minot Daily, even offered an editorial warning of the slippery slope that comes with considering a ‘local’ factor. Others have reached out to me expressing the same doubts. The concerns that City Council would get cozy with local contractors – thus corrupting the bid process – are valid and offer warning against repeating past mistakes.

And in Minot, where rumors of a ‘Minot Mafia’ are as resilient as flood memories, I think it’s wise for leaders to take heed and acknowledge the public’s reticence.

That said, I take past bad experiences as evidence that we shouldn’t return to the way we did things in the past. But I take nothing in those lessons to mean we shouldn’t make efforts to improve our future.

And in the case of awarding contracts, I think Google and Facebook are pointing us toward a possible solution. Perhaps we should develop a purchasing equation that includes the many factors we value.

I think it’s appropriate to value whether a contractor or business owner calls Minot home. To a lesser degree, I think it’s appropriate to consider if a contractor is located in North Dakota. When companies are creating jobs in Minot, paying property tax in Minot, and paying income tax in North Dakota, I think those are factors Council should consider. But we need a way to do it objectively and consistently.

I also think it’s appropriate to value past performance. We need carrots for good performers and sticks for bad performers. Perhaps our equation would work like this: good performers earn a percent bid discount; bad performers earn a percent bid penalty. But to do it, we need a data set that allows us to defend our contractor ratings.

Why do I think all of this is important?

Here’s my hunch: if we can build an equation that values our purchasing dispositions, and we’re transparent about how we value our factors, maybe we can get better results out of the dollars we’re spending on City contracts.

In other words, I’m not convinced that lowest price always returns the best value for taxpayer dollars. And perhaps a ‘return on investment’ algorithm would lead to better spending outcomes.

Is it a worthwhile effort or am I off my rocker? Got thoughts on other factors that should be included? Find a way to get in touch.

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