Improving Purchasing By Empowering Public Servants

All right, TGIF. It is Friday, time for In Case You Missed It, GovTech's weekly news roundup, where we're gonna break down some of the latest trends in the market, but also bring you some special guests. Joe and I were just in DC last week. It seemed like it was just yesterday for our Beyond the Beltway 2023 event. And I thought in the spirit of talking about purchasing, I know, Joe, you unveiled some highly sought-after data about what government is anticipated to spend on technology this year. Break it down for us.

Sure. I mean, you look at the market, I mean, overall we're projecting anywhere between, on the modest end, 3% growth, but as high as 5% growth in the overall IT spend. When you look at the IT procurements, we're trending up and in the right direction. So we're real close to getting back to those pre-pandemic volumes of IT solicitations through the competitive purchasing process. But there's a lot of reasons to be optimistic about what we're seeing in the market right now, right? Still seeing some strength in the overall state and local budget picture that's translating into solid IT opportunities and states and localities, including education, have a lot of pent-up demand around federal funding, whether that's through leveraging the ARPA funds to, you know, just getting started on all of those IIJA-created opportunities.

Yeah, what a wild time. And we know there's a lot of conversation about market recession and other things, but it's great to see the resilience of this market as always. But the underlying tenet of all of this numbers talk is around purchasing and procurement. And so today we're talking about improving purchasing by empowering public servants. So I'm really excited to have someone that's been in the market for a long time that has really been kind of a disruptive innovator in this space, Marielle Reed, CEO of Pavilion, that's going to come on and break down what they're doing to empower public servants with purchasing. So let's bring her on from backstage. Thanks so much for carving some time out to join us.

Yeah, excited to have this conversation. I'm a proud public procurement nerd, so it's exciting to get the Exciting to get the word out.

We love public procurement nerds. So let's talk about your background. You know, tell us a little bit about your journey. I know, you know, you started and kind of founded CoProcure, which is now Pavilion. Tell us a little bit about that journey.

Yeah, I've definitely had a winding professional path, but I think one of the guiding themes is I've always been interested in impact at scale. So I started actually working in philanthropy, health, and education internationally. And I actually moved from a few years living and working in mainland China to join a then small startup, now a public company that was mission-driven, Coursera. And so that was in the edtech space. And that's really where I cut my teeth in the technology sector and loved being part of like a mission-driven organization. But I wanted more. I saw this opportunity to have even more impact. And so made a hard shift into local government, joined the City and County of San Francisco. And it was during my time in the public sector that I really saw an opportunity to make procurement work better, not just for the City and County of San Francisco, but actually across the country using technology. And I basically got so excited about that, what felt like a pretty crazy idea at the time, that I left. I decided to start a company. Eventually. And I'm sure we can talk more about that, but it has been this really exciting and somewhat unexpected journey to try to marry these 2 passions of like, and drawing on the experience of like building products at scale and the technology side, but also the impact and the social upside, social impact upside of public sector work. So yeah, that's been a bit about my journey so far.

And maybe you could spend a little bit more time kind of digging into that motivation. You talked about that local government path took you to San Francisco, and then you were looking at the size and scope of the problems, and then ultimately decided to make the leap to join the tech industry. So maybe you could share a little bit more on that, your overall motivations around— Totally.

Yeah, totally. I think, look, I think I started, you know, as I said, my career as an expat living and working in mainland China. So I had this experience of Being like, rah, rah, go America, in my early career and representing my country internationally. And when I moved to the Bay Area and joined Coursera, that exciting aspect of being kind of at the heart of Silicon Valley and building products that have international scale was also really energizing. But I think a lot of folks who live in major metropolitan areas in the country, and especially those of us who have worked or are working in the tech sector, there's this really intense contrast between, you know, the— and certainly for me working at Coursera, like the mission orientation and feeling good about building products for folks internationally. And then, you know, going home or into your community in the evening and kind of just looking around and being like, well, what am I doing to actually participate in making my own community better? And And for me, it was like this weighty thing of like, oh man, I've been saying how great America is for so long. And looking around, I would love to see that version that I've been evangelizing of our country actually exist here in my own community and backyard. So I kind of was like a lot of people, I think, in tech and with more of a mission orientation, looking for an opportunity to kind of leverage the skills that I had and that I felt were so abundant, the skills and the capital so abundant in the tech sector to have more of an impact. And part of what was influencing my decision to join local government too was this transition that was happening as Coursera, a mission-driven and still is mission-driven company, was beginning to scale and drive revenue. And while I looked around and I was like, man, there's a lot of really interesting mission-oriented tech, I really wanted to be serving fundamentally people that can't afford to pay. And so more and more I was turning to government and looking and saying, wow, government really has the mission, the mandate, and the scale, the resources to help people where there is no obvious business model. So how do we stretch the value of taxpayer dollars? How do I leverage these abundant resources kind of in terms of capital and talent in the tech sector? And again, really kind of marry them in service of making government work better to make Americans, like American lives better.

So that's such an inspiring story. So as you think about how to improve government, as a local government, former public servant myself, there's so many ways to tackle that. And you picked procurement, which is sometimes like, The most challenging, complicated, complex thing that's there. So tell us a little bit about like why procurement?

Come on, Dustin, as a former public servant, it's not your favorite topic. Yeah, I know. I think, you know, my husband had to kind of elbow me a few times and be like, stop trying to talk about procurement. Like people are starting to fall asleep. And I was like, no, no, no, it's actually so fascinating. So yeah, I think Maybe to give a little bit of context, I really came to see the importance of procurement working in the public sector. And in particular, I was working in the mayor's office and the office had— the team that I was working on really was working on 2 different programs. One was around talent and recruiting different types of talent to the city and county of San Francisco. And the other was really around procurement and tech procurement. And these are really two sides of the same challenge, by the way, right? Like, how do we get talented folks full-time working in government? And how do we get access in the public sector to the products and services that we need, like an extended talent network through contracting? And during this time, I really got to see how procurement directly determines the speed and the quality of public services that, you know, we as public servants are able to deliver. So One particular instance or case study comes to mind. The team had worked with the Health and Human Services in San Francisco on the foster care parent application process because it was taking over 300 days to get potential foster care parents through that pretty paper-driven process. And we were able to pair a startup, Binti, which had a product for the private adoption space with the Health and Human Services Agency. And together they co-developed this totally new technology and it dramatically shortened the processing time, enabled these social workers who were having to spend all this time on paperwork to work more efficiently and increase the number of applications for folks that wanted to even become foster parents. So that was a really concrete example of like, oh, this seemingly back-office boring process to connect private sector needs— sorry, public sector needs and private sector companies actually drives things that I and so many other public servants care deeply about, right? How are we as public servants working more efficiently? How are we rewarding our business community for problem solving on behalf of the public? And ultimately, how are we delivering better vast, high-quality public services to taxpayers that can really improve lives. And I love that example because I think oftentimes government can feel kind of indirect, but that instance, you can really understand the impact on children, on families, and on our broader community of making what seems like a kind of paperwork boring process actually work. much better. So my experience was really kind of looking at a few of those examples, working on this team that was touching a few procurements a year, a few hundred thousand dollars of spend, and thinking, how do you take what is successful or has worked about that experience and scale it? And I was like, hell, if there's a way that I could even make the experience of buying and selling in the public sector a little bit more efficient and impactful, man, that is worth dedicating a few decades of my life on this planet to do because the potential for social impact upside again is just so vast.

Yeah, that's great. And I think as someone who's spent a bit of time in the IT procurement space, when you start getting into procurement, you realize how critical it is, right? I mean, states and localities, they spend over $3 trillion a year on goods and services. And I still think like the average person doesn't consider procurement to be the most interesting subject in the world. But you've taken it even a step further than that. You've said, hey, government procurement may be the sexiest problem that government has to deal with. What exactly did you mean by that?

Yeah, I've joked like, you know, it's been there in glasses and a chunky sweater the whole time. But yeah, I think so many of the folks, including the ones, you know, that we partner with and have joined our team, are really looking for 2 things. They're looking for, can I have a meaningful kind of impact and at scale? And can I like build a big meaningful business? And I think procurement and the way we're tackling, addressing some of the challenges in the public procurement space is so exciting because the opportunity to combine both of those things is so rare. Procurement for me is just, is really sexy because direct massive impact, like procurement determines the quality and speed of public services, period. And it's also, as you said, you know, Joe, 10% of US GDP. So it's like this vastly underserved market. So if you like big problems with big impact, public procurement is just really, really sexy.

Love it. So let's talk about that. sexy landscape today in government. What are some of the hurdles that you're seeing public servants kind of encounter as they're navigating the procurement process? And, you know, why should this really matter to kind of the everyday people that are out there as well?

Totally. I love this question. And part of the reason we actually changed our name is, is we think of ourselves as wanting to build a big tent. Like, procurement should not be a scary word. It's such a critical process. And the people doing the work, need the participation and buy-in from the public servants who they're, you know, the end users within their departments that they're working with, and also the business community. And like one of the biggest challenges is just getting, you know, 10% of US GDP, and yet the space when it comes to kind of competitiveness and the number of businesses participating in the ecosystem is pretty anemic. And this is one of the other pieces of my inspiration for working on this problem. I remember going around and talking to folks that were building at some of these very well-known startups. And I would ask them, hey, does your company plan to, are you building anything for the public sector? And they basically just kind of laugh at me. And I was like, oh, what a tragedy. Every business should be thinking about how we serve the public sector. The market is so huge. The need is so great. And yet there aren't enough people actually joining in kind of this mission. So we see ourselves as trying to build a big tent of folks participating in public sector problem solving through procurement. Specifically to answer your question about the challenges. So I'm gonna simplify this for the sake of time, but if you're a public servant, you can't just go onto Google or Amazon and buy. You have to purchase, and I'm sure you're both familiar with this intimately, you're required to purchase above a certain dollar threshold off of contracts that that have been created through a formal competitive process. And the challenge is running that process typically takes anywhere from 4 to 24 months. And so it's slow, it deters a lot, but both the time and the expense of participating can deter a lot of businesses from participating. And every single time as a supplier that you wanna win business from government, generally you're looking at responding to those RFPs, those bids, And so the cost doesn't really significantly come down over time either. The alternative in government to creating your own contract yourself is you can actually oftentimes leverage a contract that someone else in the public sector has already used. So this is called cooperative procurement, and it's, you know, a legal best practice. It's not some hacky workaround. And so the more we, you know, I was talking to folks and I was like, yeah, you know, we'd love if we could do that first RFP process faster. But actually, we also acknowledge there's all this work that's already been done across the country at every single level of government, and we wish we could use that work more. But, you know, the only way that we're really finding the work that's already been done is like basically using '90s tech, right? It's like, hey, we're calling each other, we're sending emails to each other, we're visiting kind of one-off websites and running searches, you know, the state of California, you know, like these national purchasing cooperatives, GSA. So we really narrowed in on that problem where it's like, hey, there's all this work that's already been done. There are these contracts and actually these suppliers that many of them don't even realize they've essentially been prequalified to sell into the public sector. And the big barrier is having the information infrastructure to be able to connect the high-intent buyers, the need coming from the public sector, with suppliers that have already been through this process. So that's really where Pavilion comes into play. We're building a search-based marketplace to connect buyers who have a need with suppliers that have been prequalified. And the big picture goal is like, let's bring down the speed and the time to purchase. Let's lower the cost of buying and selling overall. So if you're a vendor thinking about selling into procurement, let's have the calculation be, oh, I need to go through this RFP process, but if I do, There's a path to actually seeing the cost to sell decline over time. Let's get all those folks that have actually been already awarded contracts, like visible and discoverable. And that's so exciting. I think we're seeing a whole bunch of local suppliers in different categories kind of come online, which is awesome. And let's help governments actually share. We're all taking risks. We're onboarding these new vendors, just like the example of San Francisco and Binti. How do we actually disseminate innovation faster? Well, having access to the procurement infrastructure, those contracts, is a really important way. So, you know, I think the main problem that we're really tackling and that we see is kind of access to that information and the speed at which you can kind of share as a key driver to bring down costs of buying and selling overall and dramatically widen participation. And ultimately, you know, like the big prize is like, let's improve the quality and speed of government across the country for all Americans, period.

That's, that's so, so great. You know, we kicked off today's, uh, show talking about our outlook, at least at a high level, for, for IT-related spending. But one of the things when you look across the country is you've got massive amounts of public works projects kicking off, you've got IT projects, and they're all challenged right now from maybe from a lack of capacity or workforce.

Yeah.

What role do you think procurement can have in being a force multiplier for addressing that challenge or other challenges that public sector organizations are facing today?

Yeah. Huge challenges. I mean, I think we see even procurement teams too, you know, like a lot of retirements happening, workforce access to workforce and training, you know, of folks being a huge challenge as well. So look, I think the idea is how do we work, you know, smarter and not harder? And I think that's where we really kind of lean into, like, there's a lot that we can You know, if our time is limited, let's spend that limited time adding value in a strategic way rather than recreating or reproducing work that's already been done, sometimes even within our own agency. So, so I think again, like having the access, having access to the experience of public servants more broadly, especially if you have workforce challenges or, you know, a diminished team because you've had retirements and you haven't been able to necessarily to backfill or hire in is just incredibly valuable. We are also seeing demand. You know, we get to watch, it's so cool. Government, as you both know, is such an industry of industries and the demand for things like staffing and, you know, more consulting services has been rising. So we've seen that, like the folks that are able to provide kind of like temporary staffing or kind of like outsourced teams, we've seen demand for that kind of service increase as well. So I think governments are also starting to handle these challenges in different ways.

Yeah, totally agree. So one of the things that we're also seeing kind of pop up are agencies that are really focused on diversity, equity, and inclusion, right? And kind of moving it away from just like, you know, something on a poster to something that they're really looking at tactically. How do we implement and embed this into the fabric of our organization? And so I know that your company recently announced diversity filters in January, but would Love to hear a little bit more about kind of how you're thinking about it and how you see, you know, this type of technology helping agencies incorporate DEI into the procurement process.

Yeah, it's a great question. And I think in our world, you know, there's this tension, like cooperative purchasing and cooperative contracting has oftentimes been appealing because it means like a faster path to procure, you know, faster timelines and a streamlined process. but not necessarily a more open and inclusive process. And I think one of the key hypotheses, one of the key aspects about what we're building is to say, no, the speed, the sort of convenience of leveraging a contract that already exists can actually go hand in hand and be part of the strategy of how you implement an equity in contracting program. And so, We're working on this in a few different ways. First is we've made it easier than ever to find diverse and local businesses on Pavilion. That diversity filters launch that you just shared was interesting. Like, we, for a long time, were allowing vendors to sort of tell us about their self-certifications, which, you know, the more we learned about the way that public procurement professionals what they need to see and how they need to be compliant, we're realizing, oh, that's kind of so broad, that information, that it's not actually meeting the needs of the people implementing these programs. So we, we've started aggregating all this information about how businesses are certified, which today lives in very many different places, and personalizing what users on Pavilion are seeing based on what we know is important to their agency from a compliance perspective. So taking that burden off the business who has been certified to make sure that it's not on them to say, oh, you need this credential, not this one, like, or here are the 20 that I have, please take your pick, you know, and let me know which one works best for you, but actually to already have all of that data in one place, that information in one place, be able to surface that information. So allowing public servants to really quickly find vendors that are available on cooperative contract, take advantage of the sort of time savings, cost savings of leveraging a contract that already exists, but still get to work with and meet their DEI goals. The second thing, and really exciting, is we're also onboarding all of these new suppliers to Pavilion that have not heard of cooperative contracting or been aware of cooperative contracting in the past. And part of that dynamic is I think when we say cooperatives, we've actually started using a different word. We talk about it as shareable contracts because 'Cause people sort of have cooperatives as, you know, these big national purchasing cooperative organization contracts. And then they talk about piggybacking, like, hey, I'm using my neighbor's contract. So we're like, okay, it's shareable. But what we're seeing is we're unlocking more local data. So data coming from states, data coming from local agencies, is there are already so many more diverse, you know, more local businesses And in categories that have not been available on cooperative contract previously because they're hyperlocal. So things like tree trimming or, you know, like janitorial services, those kinds of things that are really local or region-specific coming online and being available from these businesses. And those are always really fun conversations because, you know, you call the vendor and you're like, hey, do you want to do some business? You know, we have someone who wants to purchase from you. They're really excited about working with you. And they're sort of like, what? Like, what are you even talking about? Like, I can sell to someone that way? Like, are you inviting me to participate in an RFP? And it's like, no, you've already been qualified. You can already sell. And that's just really, really exciting. And there's a great local economic development angle there too. So high level, it's like these things are not mutually exclusive. And in fact, we're finding really cool ways to put them together.

You know, I love the surfacing of that personalized information and the acceleration of the procurement process. Are there other procurement use cases that you're solving today that you can share? And then the second part is, who's the ideal customer that you're going after?

Yeah, it's a great question. So I would say like one of the most fun and controversial in the tech world things about the business that we're building is we haven't narrowed down to any particular category. So I know you all were talking earlier about sort of the IT landscape. That's certainly a big area of cooperative procurement, but we actually cover every category. And we do that because oftentimes we know that the public procurement professionals that are using us regularly are responsible not only for buying IT, some, some are more focused, but many of them are buying, you know, if you're, if you're sitting in a school district, you might be buying, you know, IT one day and like school food Even within the same day. So we feel it's really important to cover all those needs that public procurement professionals have. And like I said, it's a fun reminder of the just breadth of government, the sort of industry of industries that is government. So fundamentally, we serve public sector buyers. So whether you're an official public procurement professional or you're someone who's in a department, maybe you don't have a public procurement team, Because you're a pretty small agency. And the foundational thing that we allow you to do is in a few seconds with Pavilion, type in what you need in plain human language and pull up all of the options. And again, we're getting really good, like our bread and butter is the personalization of that search. All of the things that, all of the contracts, all the suppliers that you can, we think it's likely that you're able to use right away. And then increasingly we're helping you walk through the next steps in that diligence process and actually go from, oh, I found something that's interesting. It's like, oh, I actually could use that contract and work with that supplier. And one of the key things which I neglected to mention is we're totally free and always want to be free for public entities as well. So I think one of my big motivating factors is like, as an older millennial who's using tech all the time to do way less important stuff, Like public servants should have access to technology that is just as kind of user-friendly and intuitive as Google, as Amazon, as all the stuff we use in our private lives. And it should be free. And that was a bit risky at the beginning of our business. It was like, will governments even use a free product? If we're not pitching you, hey, we'll help you with your procurement needs, please procure us. If that's not our pitch, can we actually get into the workflow? and serve local agencies. And we're fortunate that the answer to that question has been a resounding yes. So.

Yeah, that's amazing. So now as you kind of put your futurist hat on and you look to all the changes that are happening kind of in our landscape, you know, what do you think the future of procurement looks like for government?

Yeah, I think, you know, it's a really fascinating time to be in public procurement. And I think the conversation about the role of procurement is shifting. There are some important tailwinds. I think you already mentioned one of them, you know, like the retirements that are happening, leaner teams. So needing to kind of do more with less and looking to procurement for help, not just kind of executing on the stuff that needs to be purchased, but really thinking strategically like, hey, we have these challenges, how do we actually, you know, solve them? I think COVID-19 also, and I'm sure you all have talked about this a lot, but accelerated the pace of tech adoption within government. So I think that's been really exciting and that trend continues. I think the expectation now of like being able to hop on a Zoom or use all these different technologies, it's been really cool to see how quickly that has changed in only a few years where it's like become the norm now and you're behind if you're not more tech enabled. And then I think there's this like spiritual change, I think, that's also happening where like public procurement, I know I've said this a lot, but like is sexy, is cool. The people going into procurement are thinking like, I wanna be having impact at scale. I wanna be responsible for matching sort of like in a strategic way, like how governments are innovating, how we're serving, you know, our end users who rely on public services and how we're engaging our business community. in a more strategic way. So I'm really excited about the overall elevation of the function. I feel like in the tech world, I think of roles that are super important that a decade ago didn't get that much love. Customer success maybe is one. And now you look at companies like Gainsight or others where it's like customer success rocks. There's a whole discipline around it and it's perceived to be cool. And I think we're starting, maybe I'm overly optimistic, but I think we're starting to see that at least the folks that we get to work with. kind of have that attitude as well, where they're like, the work that we're doing is so important and it's strategic. And we really wanna have different kinds of conversations. You know, we're, we're not your kind of paper pushers. Like procurement has a seat at the table and is a critical function.

No, you're spot on. I think that the role of everyone in procurement was elevated throughout the course of the pandemic. And I know in our data, we've certainly seen the pace of procurements pick up rapidly. From 2019 to where we find ourselves today. So as everyone is doing more and doing more at a faster pace, where can they go to keep up to speed with everything that's happening at Pavilion?

Yeah, you can find it right there. Thank you. We're just www.withpavilion.com. If you misspell it, don't worry, we have the 2L.com domain as well, which will redirect you. But yeah, we're just at withpavilion.com and we're working on creating more content. We know there's a huge gap, especially on the supplier community around like, how do I know if I've been awarded a contract I can use? You know, how can I sell using, you know, cooperative procurement or these shareable contracts? So expect to see more content and examples coming from us soon as well.

Well, Muriel, thanks so much for taking time out of your day and joining Dustin and I. on this week's episode of In Case You Missed It.

Yeah, thank you so much for having me and really enjoyed the conversation.

Thank you. And join us next week. Dustin and I will be talking with Dan Lorman and we'll be talking about governments banning TikTok. So until then, have a nice weekend.