This is the second installment of the four-part series Unlocking Innovation Through Challenge-Based Procurement by Tim Rosener, Mayor of Sherwood City, Oregon, and Civic Marketplace Strategic Advisor.
Welcome back to the second part of the series. In the first piece, I discussed how government agencies must first focus on finding the right problem for challenge-based procurement (ChPB) to be successful. If you have the wrong target, then it doesn’t matter how great the solution is.
With the challenge clearly defined, the next step is to bring innovative solutions to life through ChBP.
So, what is it exactly? ChBP is the process where governments share the outcomes they want to achieve and invite vendors to propose innovative ways to reach them. This is different from the traditional RFP process that asks for a specific solution.
ChPB has many benefits, including:
- Encouraging innovation by focusing on outcomes, not predefined solutions
- More opportunities for non-traditional vendors like startups and small businesses
- Solving real problems by aligning procurement with actual user needs
- Fostering collaboration between government and vendors
- Reducing risk by testing solutions before implementation
- Increasing transparency in how solutions are selected and evaluated
Challenge-based procurement unfolds in three phases.
Three Key Stages of Challenge-Based Procurement
Step 1: The Pitch – Inviting Innovation
For Agencies: At this stage, governments issue a challenge statement that defines the problem and desired outcomes without specifying how the solution should look. This phase allows governments to tap into a wide range of perspectives and innovative ideas.
For Vendors: Instead of responding to a standard RFP, suppliers have the opportunity to present creative pitches that outline potential solutions. This gives them more room to showcase their expertise, explore different approaches, and think outside the box.
Step 2: Feasibility Project - Testing and Refining Solutions
For Agencies: After evaluating the pitches, the most promising ideas are selected for a feasibility phase. During this stage, agencies collaborate with vendors to make prototypes or proof-of-concept projects. This iterative approach ensures that the solution aligns with the intended outcomes and addresses real-world constraints prior to full-scale adoption of the solution.
(Civic Marketplace streamlines this process by helping agencies conduct "bake-offs," where they can compare vendor offerings and ensure they select the best fit for their needs.)
For Vendors: This stage allows suppliers to work closely with government partners, refining their ideas and proving their effectiveness. It also reduces the risk of wasted effort by ensuring that a solution truly meets the needs before full implementation.
Step 3: Scaling – Implementing Solutions at a Broader Level
For Agencies: Once a solution proves successful in the feasibility phase, it is scaled up for broader implementation. Governments and vendors work together to refine the solution, ensuring it can be effectively deployed at scale while meeting key performance indicators (KPIs).
For Vendors: This is the opportunity to transition from a pilot project to a long-term partnership. Vendors refine their approach based on feedback and scale their solution.
Challenge-based procurement gives governments a structured way to invite fresh thinking, test real-world solutions, and scale what works. By focusing on outcomes instead of prescriptions, agencies can leverage more effective partnerships and deliver greater public value.
Be sure to tune in for part three, where I will share real-world examples of challenge-based procurement in action.
Want to explore how ChBP can work for your agency? Email me directly at tim@civicmarketplace.com to learn more.
About Tim Rosener
Tim is a seasoned gov-tech leader and mayor of Sherwood, Oregon, who advocates for broadband access and innovation in local government. He serves on the FCC’s Intergovernmental Advisory Committee, Oregon Broadband Advisory Council, and the National League of Cities’ AI Advisory Committee, shaping policy for next-generation services. At Civic Marketplace, he guides strategic initiatives that modernize procurement, bridging public-sector innovation with real-world solutions that benefit communities nationwide.
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