You Get What You Pay For: Reforming Procurement in Naperville, Illinois

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City hall meeting in Naperville, Illinois

Intro

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.

Learning Objectives

Analyze the benefits and drawbacks of distributive and interest-based, integrative negotiation in the city government context.

Examine the role of process changes in shaping negotiation outcomes.

This case can be used on its own or as part of a set. For more information on the rest of the materials in the set, click here.