You Could Shop for Local Government Prospects: Idea File

DemandStar Corp. has an idea that some insurance agents could use to make money: Help vendors of goods and services “shop” for local government bidding opportunities.

The Seattle-based company has created a website, at DemandStar.com, that gives would-be suppliers a way to see local government agencies’ bidding opportunity notices.

Resources

The DemandStar website is available here.
The U.S. federal government’s System for Award Management website is available here.
An article about an insurance regulator group’s bidding process for long-term care insurance rate analysis assistance services is available here.

The United States had about 90,075 local governments in 2017, according to the Census Bureau.

DemandStar has relationships with about 600 of those local governments’ procurement teams.

Those procurement teams have 679 active bids on their website. Most of the requests for bids are for goods and services that have nothing to do with insurance, such as road paving services.

But some of the bids are for goods or services that typical financial professionals do offer, or could offer:

The city of Palm Beach Gardens, Florida, posted a request for bids for group health and group pharmacy coverage on DemandStar Oct. 18.
The Florida Virtual School posted a request for proposals for personal health account benefits administration services Oct. 21.
The Virginia Beach City Public Schools, for example, posted a request for bids for health care administration consulting services Oct. 30.

For now, posting requests for bids is free for local governments, and seeing the request summaries is free for would-be suppliers. DemandStar is financing its operations by charging would-be bidders a fee to see the full bid solicitation notices.

Most local government procurement teams are already supposed to search for bids for large contracts. Many post bidding opportunity notices in local newspapers or on local websites.

DemandStar is trying to open the local government market to a wider range of would-be suppliers, by offering easy access to bidding opportunities posted by hundreds of procurement teams.

In effect, the website is trying to do for the local government market what the U.S. federal government’s System for Award Management procurement website has been doing for the federal government market.

DemandStar estimates local government are spending about $1.5 trillion on contracts with private vendors.

The History

Ben Vaught, CEO of DemandStar, got his start by working in political and issue campaigns.

He served as a speechwriter for Gov. Christine Gregoire of Washington state in 2005 and 2006, moved to Xbox program management at Microsoft for six years, and then managed a successful U.S. House election campaign for Suzan DelBene in 2012. Then Vaught moved back to working for Washington state.

In 2016 and 2017, he was working as the director of government services at Onvia, a Seattle-based business information analysis firm. The firm set up the DemandStar procurement website in 1998. Vaught carved DemandStar out in 2018, when Deltek, a software company, was acquiring Onvia.

DemandStar recently raised $2 million in funding to expand its local government procurement website efforts.

The Thinking

Vaught said in a recent interview that he thinks there’s an obvious need for DemandStar.

“Governments are all trying to select bidders on their own,” he said. “It’s a very fractured marketplace.”

DemandStar managers have not yet analyzed what the system does to the prices local government users pay for goods and services. But one sign the website may increase market efficiency is that the winning bidder often charges less than the local government had originally expected, Vaught said.