Why we need a new standard for how cities buy innovation – by Leigh-Ann Buchanan, President & CEO of the Miami-Dade Innovation Authority

The single greatest bottleneck to public innovation isn’t funding. It’s procurement.

Government systems built to minimize risk are now actively preventing us from solving society’s most urgent problems. From AI and environmental adaptation to transportation equity and waste-to-energy conversion, our public needs have outpaced the purchasing tools designed to meet them.

The Request for Proposal (RFP) — the dominant mechanism for procuring public services — is no longer sufficient. It’s time for a new procurement standard: pilot-based open innovation challenges.

Why the traditional RFP model is failing

The RFP model works well for clearly defined, commodity purchases. But most of today’s civic problems — especially those involving emerging technology — are not predefined or simple.

Here’s why RFPs are no longer enough:

• Rigid scoping: RFPs require governments to pre-specify solutions, which locks out early-stage innovation and limits creativity.
• Lagging timelines: Procurement cycles typically stretch from 18 to 24 months. By then, the problem has evolved — and the proposed solution may already be outdated.
• Exclusionary processes: Compliance-heavy bids favor incumbents. Startups, mission-driven enterprises, and small businesses are often left out.

RFP’s narrowly defined, inflexible parameters, and limited product scoping are often ineffective in procuring innovative solutions. This is because the rate of technological advancement and investment in innovation research and development in the private sector often outpaces local government’s internal resources. The result is a substantial gap in the government’s capacity and breadth of awareness to sufficiently define the best end state solution as required by the RFP process.

What’s more, the disclosure of detailed or hyper specific requirements for technology solutions sought may, in some cases, exploit vulnerabilities designed to protect sensitive public data and increase cybersecurity risks.

The result is a system where:

• Less than 5% of public procurement dollars reach small enterprises or emerging firms.
• Over 18% of startups fail because they can’t navigate bureaucratic procurement.
• U.S. governments miss out on $100B+ annually in unrealized savings by not deploying innovative solutions more quickly.

Miami-Dade: a case study in practice

As we’ve learned at MDIA — through our Public Innovation Challenge program — pilot-based open innovation is a tool for efficacy, efficiency, and better outcomes. When done right, it delivers rigor without rigidity.

In less than two years, MDIA has validated this model in practice. Specifically, it has:

• Launched five (5) Public Innovation Challenges in partnership with public agencies representing $95BN+ in annual economic activity.
• Sourced more than 443 unique and innovative technology based solutions by attracting startup companies, hailing from 40 different countries and 19 different states.
• Recruited a prospective vendor network of applicant companies that boasts a cumulative economic impact of $6.5 billion in revenue, $2 billion fundraised, and over 44,000 employees.
• Refined existing procurement processes in less than 90 days to fast track pilot demonstration by improving interdepartmental coordination and developing form pilot vendor agreements.
• Leading 14 high-value technology pilots in sectors from aviation to seaport logistics to waste management.
• Reduced procurement cycle time to pilot by over 67%, from an average of 18 months to 6 months or less

A better procurement model: pilot-based open innovation challenges

Challenge-based procurement flips the equation: it starts with problems, not products. Governments articulate a pressing challenge and invite the private sector — especially startups and nontraditional vendors — to propose and pilot new approaches.

This model enables:

• Faster procurement through pilot-first pathways
• Broader vendor participation, especially from local, small, and tech-enabled firms
• Real-world validation, as agencies test solutions before making long-term commitments

Substance over form yields measurable outcomes

Most RFP processes require an evaluation committee to review proposals based on predefined criteria, which may include qualifications, experience, methodology, and understanding of the project. Pilot-based open innovation challenges are similarly competitive and equally robust.

Notably, under MDIA’s Public Innovation Challenge program, before a company is selected to receive a pilot or product demonstration opportunity, it must undergo a rigorous due diligence evaluation, which includes at least five stages:

1. Compliance Screening: initial screening of company applicant pool
2. Substantive Review: review of solutions by selection panel composed of County department, subject matter experts, investors and other stakeholders
3. Finalist Qualification: selection of 10 -15 finalist companies
4. Interview: due diligence interviews of at least 90 minutes per company
5. Evaluation: independent due diligence and evaluation of top 10 companies, including supplemental submission of proposed product demonstration pilot plan

The evaluation criteria includes: innovation/ originality, existing traction or market fit, product differentiation, pilot feasibility and readiness, technical capabilities and unique challenge needs. MDIA also identifies selection panel members based on their expertise, impartiality, and familiarity with the problem. Indeed MDIA’s due diligence process is often more rigorous than a traditional municipal RFP selection practice.

A new policy framework for challenge-based procurement

To scale this model, we propose a replicable innovation policy framework that cities, counties, and states can adopt through amendments to existing procurement procedures that incorporate several key elements.

A public agency operating under the appropriate delegated authority may enter into a noncompetitive contract award that arises from an open innovation challenge process that meets the following standard:

1. It publicly solicits and sources solutions to defined problem, need, or priority pursuant to an open innovation challenge, which may be facilitated by the agency or an external vendor.
2. The challenge selection process includes the following key selection activities: (i) publicly advertised solicitation, (ii) external due diligence evaluation, which may include subject matter experts and a technical feasibility assessment, and (iii) panel interview of finalists.
3. The open innovation challenge process results in the selection of one or more companies for a pilot opportunity.
4. It conducts a pilot test or product demonstration in accordance with existing pilot regulations, which may include retaining data ownership and expenses borne by the vendor company.
5. It sufficiently evaluates and documents the pilot proof-of-value of the solution to address an agency need or priority such that the public agency or department desires to procure the solution.

This policy maintains competitive integrity while reducing duplicative processes, saving time, and improving vendor diversity. It also formalizes an uninterrupted contract pathway for open innovation challenge derived solutions. This improves both the efficacy and efficiency of the procurement processes ability to meet the needs of small business, while retaining the integrity, transparency, and fairness that competitive solicitations provide.

Comparative landscape: how cities are approaching open innovation challenges

In many jurisdictions, pilots are not sourced through a competitive process. In others, where challenge based procurement is a nascent practice, successful companies must still undergo two competitive selection processes; first to win the opportunity to pilot, and second, after demonstrating proof of value to secure a contract award. This procedure is overly complex, creates an unnecessary and undue burden on small business vendors, and further increases procurement administrative costs and timelines.

Cities and states are experimenting — but the landscape remains fragmented. Here’s how current efforts stack up:

To date, none of these jurisdictions have yet adopted a codified post-pilot contracting policy — a critical missing link that the proposed framework resolves. As a fix, many municipalities use ad hoc sole source procurement awards, which draw objections as being susceptible to special interests and undermine competitiveness.

What’s at stake: innovation lost to lag

We cannot afford to let outdated procurement structures block innovation. Consider:

• 94% of large government IT projects procured through traditional models fail to meet their cost or schedule goals.
• 70%+ of civic tech solutions originate in startups or small businesses, but procurement delays, which rarely dip below 18–24 months, effectively squeeze profitability margins and limit their ability to fully contribute to the local economy.
• Every extra month of procurement delay in transit, housing, or energy projects translates to real-world impacts — longer commutes, higher emissions, and missed climate targets.

These aren’t just inefficiencies. They are lost opportunities to make government work better for everyone and, more importantly, to improve quality of life in our communities.

Why this model works

Challenge-based procurement aligns with the speed and flexibility needed for public innovation. It:

• Reduces procurement cycle time, which in Miami-Dade County, MDIA has helped drive a 67% or more reduction in time to pilot
• De-risks spending by validating solutions through pilots
• Expands access for startups, small businesses, and underrepresented vendors, particularly in cities with Purpose Driven Procurement mandates to adopt operating procedures that create greater economic opportunities for and prioritize small businesses participation.
• Drives economic growth by creating new pathways into public markets

It also supports broader public goals — equity, sustainability, resilience — by enabling more agile, transparent, and inclusive procurement.

Avoid gatekeeping policy innovation to fast track public innovation

At MDIA, we’ve helped design, operationalize, and evaluate a new approach and model for fastr tracking innovation procurement in practice. As Miami-Dade County Director of Strategic Procurement affirmed recently, “For me, it’s like a dream come true. They’re able to make it happen faster.”

Challenge-based procurement is not a pilot idea. It’s a policy solution — and a national imperative. We believe that cities that adopt this framework will not only solve problems faster, they will build public trust, catalyze economic mobility, and shape a more responsive public sector. Cities benefit when impactful models scale, instead of remaining siloed locally.

However, we recognize that the standardization en mass of the policy proposed here requires a intentional adaptation. That’s why we’re eager to partner with other governments across the country to share best practices of what works and replicate what’s needed. Together, we can build a better procurement pathway for public innovation.

Get in contact with MDIA to share your experience and to learn more about MDIA’s approach.

This article was originally published by the MDIA on 15 May 2025.