Review of the City of Philadelphia Procurement Function

Audit Date: March 19, 2013
Audit Categories
  • Performance
Controller: Alan Butkovitz
Audit Tags
  • Inventory,
  • Procurement

Executive Summary

For Immediate Release:
March 19, 2013

Contact: Harvey Rice

Butkovitz Finds $12 Million Savings in City’s Procurement Process
City Controller recommends implementing eProcurement system

City of Philadelphia Procurement Function 2013

PHILADELPHIA – City Controller Alan Butkovitz today released an audit of the City’s Procurement Function that indicated nearly $12.2 million in annual savings could be achieved by implementing new technology and improving the method it contracts for services and equipment.

Of the total potential amount in annual savings, $7.4 million could be realized by replacing the City’s technology systems that are used for purchasing, maintaining inventory and procuring services. The current systems haven’t been upgraded in more than a decade and in fact are no longer supported for upgrades.

According to Butkovitz, replacing the current systems with a new eProcurement system would eliminate the requirement for manual, redundant, labor intensive and out-of-date business processes. An eProcurement system would also save an additional $750,000 through staffing reductions.

“Implementing an eProcurement system will save millions of dollars annually for the City,” said Butkovitz. “Delaying the replacement of the current technology is only stalling the City’s opportunity to realize these savings.”

Another $4 million in savings could be achieved by amending the City’s contract terms and conditions that would allow for multi-year agreements and result in greater vendor competition. Provisions imposed by the Home Rule Charter on city contracts to be one year with renewal does not allow true multi-year pricing opportunities and discourages businesses from bidding.

“The authors of the 1951 City Charter could not have anticipated the way business is conducted in the 21st Century,” said Butkovitz. The City should do what is necessary to take advantage of longer term pricing and other vendor offerings.”

According to Butkovitz, the savings that are generated by implementing these recommendations should be dispersed as temporary grant funds to City departments with repayment schedules to spur additional technology investments.

“The reinvestment in technology will provide a steady source of funding through economies gained to fund future initiatives,” said Butkovitz. “It would halt the wasteful cycle of spending monies to maintain the current archaic, undesirable and unsustainable manual processes.”

“To maintain a competitive advantage, the City must invest in the effective, efficient, and economic processes provided by modern technology,” said Butkovitz.