%0 Case %D 2020 %T You Get What You Pay for: Reforming Procurement in Naperville, Illinois %A Stefan Norgaard %A Elizabeth Patton %A Monica Giannone %A Brian Mandell %A Jorrit de Jong %A Guhan Subramanian %X

Stegan Norgaard, Elizabeth Patton, Monica Giannone, Brian Mandell, Jorrit de Jong, and Guhan Subramanian; May 2020

Naperville, Illinois is a suburb of approximately 150,000 people in the Chicago metropolitan area. Traditionally, the City focused on price for all procurement negotiations, but it often had few vendors applying for key contracts and struggled to negotiate on both price and quality.

Naperville’s original procurement process was called Quality-Adjusted Cost (QAC). This process sought to simplify a myriad of concerns and variables (including price, quality, timeline, and scope, among others) into a single metric, so that the City could easily and objectively evaluate bids. Although QAC attempted to incorporate quality into the evaluation, there were instances when it seemed the best vendor was not selected.

In an effort to improve the quality of City services, Naperville adopted a new procurement approach called “Cost as a Component.” This revamped process allowed the City to negotiate with vendors on more than just price for technology upgrades and aimed to ensure long-term partnerships with relevant firms, creating value for both vendors and the City. This case illustrates the trade-offs between QAC and “Cost as a Component” for Naperville and prompts participants to apply negotiation concepts to the broader process of city procurement.

Thanks to a gift from Bloomberg Philanthropies, no permission is required to teach with, download, or make copies of this case.

%G eng %U https://www.cityleadership.harvard.edu/cases/you-get-what-you-pay-for-reforming-procurement-in-naperville-illinois