By Quincy Midthun, Mayors Innovation Project
A recent report from the Institute for Local Self-Reliance (ILSR) found that municipalities have increased their spending with Amazon nearly fourfold since 2016. From standard office supplies like pens and paper to tools and parts for repairing municipal vehicles, corporate giants like Amazon have quietly become a default purchasing marketplace for many local governments. The report notes that while large corporations claim to be the cheap and easy option for consumers, municipalities are often tricked into spending more for their items through algorithms known as “dynamic pricing”. In one example from the report, “one city bought a 12-pack of Sharpie markers for $8.99, while a nearby school district paid $28.63 for the identical pack that same day.”
Buying from corporate giants diverts public funds that could be spent at local businesses. When cities invest public dollars locally, that money is more likely to be kept in the community. In this Good Ideas for Cities, we share five tips outlined in the report that can help you to make better use of public funds and support local entrepreneurs and your community today.
- Stop buying major corporate gift cards for city staff or the public. Oftentimes, gift cards are a popular reward or incentives for filling out community surveys or attending events. Instead, consider giving gift certificates for local businesses.
- Complete an inventory of your city’s major corporate purchase history and compare it to your neighboring municipalities. ILSR has instructions on how to do this, but essentially this entails requesting purchase data from city departments, city purchase card statements, and employee reimbursement requests from a specific time frame. After collecting the data, note what items are purchased from corporate giants like Amazon and how frequently they’re purchased. Once you have analyzed your city’s purchasing data, request information from other municipalities in your region from the same time frame. Some questions to consider during this process include:
- Is your city spending more or less per capita with corporate giants compared to neighboring municipalities?
- What items does your city purchase frequently that could be bought at a local business?
- Beware of signing group purchasing contracts with large corporations. Oftentimes municipalities sign these contracts with the impression that doing so will give them the best prices. ILSR’s report reveals that that is rarely the case. The Institute provides tips for investigating and refuting claims made by the company.
- Make city purchasing data readily available to the public. Some local governments such as Tempe, AZ provide transparent reports of purchases made by the city, including the date, amount, and the item that was purchased.
- Adopt a procurement policy that prioritizes locally owned businesses. Cities are accomplishing this in a variety of ways: Richmond, VA does not allow purchasing from Amazon on city p-cards, the St. Louis County Board in Minnesota passed a resolution emphasizing that county employees should prioritize buying local, and the City of Tempe blocks the purchase of locally available supplies on its Amazon Business dashboard.