Supporting public entities during the COVID-19 panedmic
In the “wild, wild West” of personal protective equipment (PPE) purchasing, we’ve seen that effective supplier diligence requires better collaboration. Over the last few weeks, Pavilion and Project N95 have iterated on approaches for diligencing new suppliers; now, we’re working together to verify and publish PPE providers. Here’s what we’ve learned:
When Pavilion started receiving requests for help finding PPE from our local government users, we started with what we knew: working with trusted, pre-qualified suppliers.
Our core product is a free search tool that helps governments find and buy from suppliers available on shareable contracts (also known as cooperative contracts or piggyback contracts). These are contracts created by one government through a competitive solicitation process that other governments can compliantly purchase from, too. During non-emergency situations, governments must purchase from competitively solicited contracts. Since creating new contracts typically takes 4 months to 2 years, buying from a supplier already on contract is a legal best practice that saves time, reduces administrative costs, and helps smaller governments achieve more favorable pricing.
At the request of one of our government users, Pavilion put together a list of PPE suppliers available on cooperative contracts and published this list. Governments wanted to purchase from these suppliers because they trusted these suppliers. These suppliers had already completed the standardized government procurement diligence process to win the shareable contract and had long lists of customer references.
Due to the spike in demand from the COVID-19 crisis, many of these established suppliers quickly ran out of inventory or restricted limited supply to existing customers only. Our team realized: if we want to help, we’ll not only need to work with known suppliers; we also have to source new ones.
For both Project N95 and Pavilion, and buyers in general, conducting supplier diligence is extremely challenging. More demand for PPE products means more risk for buyers, too. Governments, healthcare providers, and private companies are competing to purchase PPE products in a “global free-for-all” that has been described by CA Governor Gavin Newsom as “the wild, wild West.” We’ve seen price gouging, counterfeit goods, and scams in the headlines: the 39M masks that never arrived in California, the man who tried to sell $750M in nonexistent masks. The big numbers grab the headlines, but PPE fraud is happening at all levels.
Still, the need for PPE is urgent. In this sellers’ market, buyers face tradeoffs between diligence steps that will de-risk their purchase and the speed required to secure supply. Many suppliers require at least partial payment up-front, large minimum order sizes, and/or very quick response times. The time and resources involved to complete diligence steps that, in a non-emergency scenario would be typical, like sending an agent of the buyer to inspect the supplier’s manufacturer, reviewing product samples, or carefully cross-checking credentials risk losing the deal.
Though Project N95 and Pavilion started out with different approaches to supplier diligence, our teams have converged on utilizing buyer references as a way to qualify suppliers.
Project N95 established an initial process that relied on verifying supplier credentials, including the manufacturing partner of the supplier and product-level certifications, plus “proof of life:” timestamped videos or photos of the products the suppliers wanted to list.
Pavilion originally solicited interest from new suppliers and shared “verified” and “unverified” supplier lists. “Verified” suppliers were available on cooperative contracts; “unverified” suppliers simply applied to be listed. After learning from Project N95 that of the nearly 2,000 suppliers that had applied to be listed on their page, Project N95 had only been able to verify 30, we removed our “unverified” supplier listings. Our organizations have recently started requiring buyer references from suppliers. Once we have confirmed the reference, we add the suppliers to our lists and recommend them to our partners. Of course, this approach isn’t foolproof, but we have thus far found it to be an appropriate compromise between speed and risk. We’re also excited about the new suppliers we’ve been able to add to our list through these references like Clear-Vu, a lighting company that started producing face masks to serve New York State and Sugar House, a Utah-based company that repurposed its manufacturing capabilities to make PPE.
In working separately to source and diligence new suppliers, Project N95 and Pavilion have learned similar lessons. Now, we’re starting to figure out how to share our learnings real-time and coordinate our efforts. We invite you to do the same:
