E-PROCUREMENT IMPLEMENTATION IN THE

UNITED STATES: UNDERSTANDING PROGRESS IN

LOCAL GOVERNMENT

DANIEL BROMBERG
University of New Hampshire

AROON MANOHARAN
University of Massachusetts Boston

ABSTRACT

E-procurement is a rapidly growing area of e-government

implementation. Nevertheless, scholarly research on e-procurement
implementation is limited, especially at the municipal level. This study
presents empirical evidence on city level e-procurement in the United
States, based on a data set of the 191 largest cities. This study focuses
on two research questions – 1) Does e-procurement progress in a staged
manner as suggested about e-government by the stages theory? 2)
What factors contribute to the progression of e-procurement systems
through the stages? We find not only that e-procurement is more
prevalent in the information or cataloging stage than in the transaction
stage but that cities with both IT capacity and a council-manager form
of government are more likely to be in an advanced stage of e-
procurement development. By providing both descriptive statistics
along with statistical analysis, this study helps to explain the current
status of e-procurement implementation along with the factors that
might lead to further implementation.
PAQ FALL 2015 361

INTRODUCTION

Scholarly research on information and communication

technology (ICT) in government (often referred to as e-
government) has grown substantially over the past two decades.
While research may not keep pace with technology itself, it is
able to describe the current state of e-government
implementation and help the field gain a proper footing as it
moves into future technologies. E-government has the potential
to impact many aspects of government which may lead to greater
effectiveness and efficiency. According to Carter and Belanger
(2005), the major benefits of adopting e-government are
increased government accountability, transparency, and access to
information along with a more efficient and cost-effective
government. E-government also enables effective public
reporting and communication by government and public
organizations towards the citizenry.
Electronic procurement (e-procurement) is a rapidly
growing area of e-government implementation and it offers
many of the benefits highlighted. Today, there remains a lack of
general understanding about e-procurement implementation even
though local government procurement spending is a major
component of local budgets. State and local governments spent
about 1.7 trillion dollars on the purchase of goods and services in
2011 (Keating, 2012). E-procurement offers a mechanism to
make this process more efficient than is currently in practice;
yet, little is known about either the level of e-procurement
implementation in U.S. cities or which factors might lead to its
development.

FRAMING THE ISSUE

The adoption of e-government, as indicated by a 2011

international survey of global municipal websites, is increasing.
Among the 100 cities selected for the 2011 survey, 92 had
official websites, compared to 87 in 2009 and 81 in 2005. Based
on the findings, the overall average e-government score for
municipalities surveyed increased from 28.49 in 2003 to 33.76 in
2011, (Holzer & Manoharan, 2011) – indicating that
362 PAQ FALL 2015

municipalities, globally, are increasingly using technology to

improve effectiveness and efficiency. In the United States, all 50
states, as well as almost half of all cities with a population over
100,000 had developed official websites by the spring of 1997
(Stowers, 1999). Almost 16 years later, not only has the use of
technology in government increased substantially, but
governments have moved well beyond simple website
development to more interactive and service oriented
technologies. Such growth is particularly notable in e-
procurement.
E-procurement is the term applied to conducting
transactions between authorities and suppliers over the Internet.
E-procurement involves several stages such as preliminary
identification of a need, exchanging goods and legal tender and
contract management (Corsi et al., 2006). As Edmiston (2003)
points out, “if electronic government has taken hold anywhere, it
is in the area of government procurement, or electronic
purchasing” (p. 24). Scholarly research on the implementation of
e-procurement is limited. Thus far, research primarily focuses on
state level data (Coggburn, 2003; Moon, 2005; Reddick, 2004)
with limited research on cities (Edmiston, 2003; Reddick &
Frank, 2007). Outside the United States, e-procurement research
has gained more traction focusing on the European and Asian
experience. While such research adds greatly to the knowledge
base on e-procurement implementation, it does little to explore
the nature of e-procurement in U.S. cities. Bromberg et al.
(2012) compare the implementation in U.S. cities vs. European
cities, but their research can be broadened to provide a more
comprehensive understanding of municipal e-procurement. Our
research seeks to broaden and update these authors’ findings by
providing additional empirical evidence on the implementation
of e-procurement at the U.S. city level.
Because e-procurement involves several stages—from
preliminary identification of a need to exchange goods—stages
theory seems a viable theoretical framework for its analysis. We
test this viability by addressing two research questions: First, we
ask if e-procurement progresses in a staged manner as suggested
about e-government by the stages theory. Generally, stages
theory is applied to e-government as a complete phenomenon.
PAQ FALL 2015 363

Rarely, is it applied to individual e-government features such as

e-procurement. We examine if e-procurement, scrutinized as an
individual feature, presents similar stages to the overall e-
government phenomenon. If this is the case then managers
might find success in implementing individual features such as
e-procurement systems in a staged manner. Second, we seek to
determine the factors that contribute to the progression of e-
procurement systems from basic features to more advanced
features. Using a data set of the 191 largest cities in the United
States, collected through website analyses, this study shows a
specific picture of the current state of e-procurement
implementation among the larger cities in the United States. By
providing both descriptive statistics along with statistical
analysis, this study helps to explain the current state of e-
procurement implementation along with the factors that might
lead to more advanced implementation.
We hope that answering these research questions will
not only bolster practice but will also advance the theoretical
debate on e-government stages. While many scholars have
proposed a stage-wise development, some have dismissed these
e-government stages (Coursey & Norris, 2008). For example,
Coursey and Norris (2008, p.532) argue that such “predicted
movement is not happening, or if it is, the movement is glacial in
its speed.” However, Lee (2010) highlights the importance of
this stage development model because of the inability of e-
government to be incorporated and fully implemented in a single
step. Instead of aiming for large-scale success, those responsible
for e-government implementation should aim to produce
successful results at each and every stage of development. We
hypothesize that individual features of e-government likewise
occur in a staged manner.
This research provides a new perspective to examining
individual e-government features in terms of various stages.
While we know that e-procurement implementation takes place
at a later stage of e-government implementation, we should not
assume that e-procurement implementation takes place all at
once. E-procurement, in particular, requires large capital
investments, indicating that stepwise progress might be the best
option for cities. By understanding if it takes place in a stepwise
364 PAQ FALL 2015

manner and what factors might lead to e-procurement growth

mangers can direct appropriate investment towards pursuing a
comprehensive system. Lastly, e-procurement research focuses
heavily on state level e-procurement implementation. However,
the successful incorporation of e-government into local
governments has better potential to beneficially affect success on
the national stage (Sarikas & Weerakkody, 2007), and citizens
tend to access local government websites more than their state
websites for information and services. This research offers a
unique perspective on local level implementation, along with
introducing practical differences between local government and
state government.

BENEFITS OF E-PROCUREMENT

The benefits of e-procurement, which are similar to the

general benefits of e-government, include greater transparency
and greater efficiency (World Bank, 2003). Greater transparency
in the bidding process for public projects may reduce the
possibility of corruption. Greater efficiency results from a direct
channel between suppliers and customers, thus limiting the need
for middle agents. E-procurement can thus lead to substantial
savings in costs and supply functions in both the public and
private sectors. It also has the potential to improve the
relationship between buyers and suppliers by developing
informative websites to improve the channels of communication
(Purchase & Dooley, 2010). According to Moon (2005), e-
procurement “decentralizes procurement management, making
the procurement organization flatter and less hierarchical. The
system also saves time and reduces total costs by providing
comprehensive views of procurement decisions and multiple
procurement choices, (p.62).” The benefits, as noted by the
World Bank, are presented in Table 1 below.

Procurement 2003
Drawing on insights from the private sector, likewise,
suggests e-procurement improves quality and efficiencies.
Vaidyanathan and Devaraj (2008) find that utilizing technology
to work with vendors or suppliers increases quality and accuracy
PAQ FALL 2015 365

of procured goods. Primarily, a need to “exchange quality

information” is acknowledged to increase effectiveness which is
enhanced through the use of an e-procurement system
(Vaidyanathan and Devaraj, 2008, p. 420). Additional findings
suggest that the implementation of e-procurement systems not
only increases performance for the contracting agency but also
may increase performance for the vendor (Tai, Hob and Wu,
2010). This may in turn, “lead to better partnership between
buyers and suppliers,” (Tai et al., 2010, p. 5411). While benefits
of e-procurement are well documented it remains vague as to
how many cities are moving towards e-procurement
implementation.

Growth of E-Procurement
Studies show that a majority of state government
procurement offices are utilizing e-procurement (Moon, 2005;
Reddick, 2004). For example, a 2001 survey by the National
Association of State Procurement Officers (NASPO) shows that
43 of 47 state procurement offices had websites and utilized
some aspect of e-procurement (Moon, 2005). His research
demonstrated that about 90% of states post solicitations/bids and
contract award information online, and furthermore, use an
automated procurement system. While the findings are primarily
from the NASPO survey, Moon conducted email follow-ups to
the states that did not respond to the original survey. His
subsequent findings yielded higher results than the 2003 NASPO
survey results, which are reported by Reddick (2004). While
Reddick (2004) finds that the same number of states reported
having a central procurement website, only 82% of states
reported posting solicitations on the web. Moreover, Reddick
(2004) reported that only 64% of states post contract award
information on the web. About 30% of states have promulgated
procedures or have statutes governing Internet bidding and about
20% actually conduct bidding over the Internet.
366 PAQ FALL 2015

Table 1
Benefits of E-Procurement
Government Supplier Public
Transparency • Anti-corruption • Increased fairness • Access to public
• Increased number of and competition procurement
suppliers • Improved access information
• Better integration to the government • Monitor public
and interaction market expenditure
between • Open the information
governments government • “Have a say”
• Professional market to new • Government
procurement suppliers accountability
monitoring • Stimulation of
• Higher quality of SME participation
procurement • Improved access
decisions and to public
statistics procurement
• Political return from information
the public • Government
accountability
Efficiency • Lower prices • Lower transaction
• Redistribution of
Costs • Lower transaction costs fiscal expenditure
costs • Staff reduction
• Staff reduction • Improved cash
• Reduction in fiscal flow
expenditure
Time • Simplification/ • Simplification/ • Communication
elimination of elimination of anywhere/anytime
repetitive tasks repetitive tasks
• Communication • Communication
anywhere/anytime anywhere/anytime
• Shorter procurement • Shorter
cycle procurement cycle
Source: World Bank Draft Strategy: E-Government

The factors and trends in state e-government may not be

similar to those in municipal e-government. There are large
costs associated with any e-government initiative. Many of these
costs can be absorbed at the state level, which cannot be
absorbed in city or municipal budgets. Moreover, the past two
decades have seen significant investment by the federal and state
governments associated with a number of ICT initiatives. While
some of these have trickled down to local government,
investment has been much more variable (Dawes, 2008). Much
of the research indicates that initial investment leads to long-
term savings, but initial investment also serves as a roadblock at
the local level of government (Bromberg et al., 2012).
PAQ FALL 2015 367

It is much more difficult to identify e-procurement

practices at the local level within the United States. While some
research offers insight into local level e-procurement, it is not as
comprehensive as state level data. Edmiston (2003) reports
results from two surveys – one conducted by the International
City County Managers Association (ICMA) and the other by the
National Association of Counties (NACo). The NACo survey
was conducted in 2001 on county government while the ICMA
survey was conducted in 2000 on city governments. According
to the ICMA survey, about 48% of respondents offered
procurement online, whereas only 4.2% responded similarly to
the NACo survey. Furthermore, about 25% of the ICMA
respondents offered bids and proposals online, compared to only
6.7% percent of the NACo respondents answer in a similar
manner. The lack of specificity around the terms “procurement”
and “bids and proposals” makes it challenging to assess exactly
what is taking place in local and county governments, but these
findings provide a strong indication that a great deal of e-
procurement is, in fact, taking place. Compared to the states,
municipalities show lesser adoption rates of e-procurement,
based on the results of the U.S Municipalities E-Governance
Survey (Holzer et al., 2009). Among the 100 largest cities whose
official websites were evaluated by the survey, only 13 cities
enabled potential bidders to place bids online. However, about
half of all cities provide access to RFPs as well as the ability to
downloadable documents.
Reddick and Frank (2007) examined the impact of e-
government on local governments in Texas and Florida. While
their study is broader than e-procurement, and examines
perceptions of managers, it provides some evidence of the
remaining challenges. When asked if “Purchasing over the
Internet has broadened our vendor pool, increased quality, and
reduced costs,” about 60% of respondents answered positively
(either agree or strongly agree). However, when asked to
respond to the statement, “Traditional government procurement
practices have not hampered our ability to implement purchasing
over the Internet,” about 39% responded positively, whereas
27% were neutral and 34% disagreed. Many are still finding it a
368 PAQ FALL 2015

challenge to implement e-procurement based upon traditional

procurement practices and policies.
To date, a study that falls outside of the peer reviewed
literature E-Procurement Adoption in Local Governments of the
United States provides the most direct attempt to understand
U.S. local level adoption of e-procurement. The study is limited
by a 5% response rate to a survey sent to 2,000 local
procurement managers. Nevertheless, a brief overview of their
findings is helpful in gaining a sense of implementation. The
authors find that in 2006 about 51% of respondents implemented
some form of e-procurement (Prier & McCue, 2007). Within the
last three years, 36.5% of respondents had implemented this
system. The managers that had yet to implement an e-
procurement system expressed that they planned to do so within
the next three years. Those that had implemented e-procurement
expressed mixed levels of implementation. About 30%
responded that the system was integrated with financial and
other IT systems whereas the remainder expressed that their
systems were independent of other systems.

A FRAMEWORK FOR
E-PROCUREMENT ADOPTION

Stages Theory
Many scholars have proposed a model of e-government
occurring in various stages, beginning with the development of a
simple website progressing to fully integrating and involving all
departments, as well as citizen participation. Based on their
study of e-government, Layne and Lee (2001) proposed a stage
model that consists of (1) cataloging, (2) transaction, (3) vertical
integration and (4) horizontal integration. The ultimate goal of
staged-development is to attain a one-stop portal, from which
citizens can access any government agency from a single
location. Moon (2002) introduced a five-level model that
emphasized on the degree of technical sophistication and
interaction with users. According to Moon, e-government begins
with the posting of information online, followed by two-way
communication via email systems and data-transfer technologies.
The next level involves implementing financial transactions
PAQ FALL 2015 369

along with services such as license renewal and loan applications

through live database links. Next the site integrates public
services vertically (intergovernmental integration) and
horizontally (intra-governmental integration) to attain an
efficient, effective and responsive government. Finally, the fifth
level of e-government encourages online political participation
through online voting, online public forums, and online opinion
surveys
Similarly, Hiller and Belanger (2001) presented a four-
stage model of e-government that involves (1) information, (2)
two-way communication, (3) transaction, and (4) integration.
According to their model, e-government begins with
disseminating information online and ensuring that information
is reliable, up-to-date, and accessible on the official Website.
This is then followed by the two-way communication stage
involving public communication with the government through
email exchanges and requests. Such communication then
transforms into complete transactions with “Web-based self-
services completely replacing public servants” (p. 15). Finally,
all government services are integrated onto a single portal
through which citizens can access any service from any level of
government, which will be followed by the stage of
participation.
E-procurement emerges at more advanced stages of e-
government implementation. Most frequently, it occurs at the
transaction stage. It is not clear, however, if e-procurement (or
other individual e-government features) progresses in a similar
staged manner. That is, does a government post information
requests for proposals online prior to moving towards online
bidding or other more advanced components?
If e-government (broadly speaking) does move in a
staged manner then one would assume individual features
similarly move in a staged manner - this research tests that
assumption on e-procurement. Admittedly, two studies (Reddick,
2004; Moon, 2005) have already tested this assumption, but their
models are not specified in a manner that account for staged
progress. Rather, their models identify factors that are
associated with increased e-procurement adoption regardless of
whether the adoption has a specific order. Stages theory
370 PAQ FALL 2015

assumes that there is an order to progress. Therefore, we look to

their models to help identify predictors of adoption and test those
predictors in a manner that accounts for ordered progression. If
we can determine if e-procurement occurs in a staged manner
and we can determine what factors lead to progression through
those stages we can suggest actions for public managers to take
to increase e-procurement adoption.

Predictors of Adoption
E-government adoption is widely discussed in the
literature and provides a strong foundation on which to build a
theoretical framework. Many factors affect e-government
adoption including: form of government (Carrizales, 2008;
Moon, 2002), IT capacity (Carrizales, 2008; Norris & Kraemer,
1996; Reddick, 2004; Schwester, 2009; Teo & Tan, 1998),
budget size/fiscal characteristics (Ho & Smith, 2001; Reddick,
2004; Schwester, 2009) and population (Schwester, 2009).
Moon (2002) found that council-manager forms of
government are positively associated with e-government
adoption, similar to Carrizales’ (2008) exploration of e-
government adoption among New Jersey municipalities.
Carrizales (2008) not only found a positive association between
a council-manager form of government and e-government
adoption, but he also found a negative correlation between e-
government and a mayor-council form of government. Norris
and Kraemer (1996) identify this relationship with leading-edge
information technologies at the municipal level. Teo and Tan
(1998) find that a separate IT department increases the growth of
e-government. Schwester (2009) finds that the number of full
time IT employees is positively associated with a higher e-
government score. As the number of IT employees grows the e-
government score also increases. Therefore, IT capacity leads to
more advanced use of technology.
Ho and Smith (2001) identify budget as a factor in IT
planning and implementation in their study of Y2K readiness.
Schwester (2009) also finds that an increase in budget increases
a municipality’s e-government score. Reddick (2004) looks at
fiscal stress as a measure of e-procurement implementation in
state governments. He finds that the more “fiscally stressed”
PAQ FALL 2015 371

state governments are more likely states are to adopt e-

procurement. The last factor, related to budget and fiscal stress,
is population. Population is consistently shown to increase e-
government adoption in almost all of the studies cited above
(Moon, 2002; Schwester, 2009).
The above factors pertain largely to e-government as an
across-the-board phenomenon. However, little research has
moved beyond this trend to examine the determinants of specific
aspects of e-government, such as e-procurement, especially at
the municipal level. Reddick (2004) examined state level e-
procurement and found that both management capacity and IT
management capacity were correlated with state level e-
procurement adoption. He uses scores from the Government
Performance Project, to operationalize his variables which
cannot be replicated on the local level. Similar to broader
studies on e-government adoption Moon (2005) finds that,
“managerial innovation-orientation, increasing policy authority
of the central procurement office, and size are positively
associated with the extensiveness of procurement adoption” (p.
65).
In order to determine whether or not the factors
discussed above affect municipal e-procurement implementation,
this study evaluates the websites of the 191 largest cities within
the U.S. The analysis takes form in two steps – first, we utilize
a Mokken scale analysis to determine if there is order in e-
procurement progression; second, we fit the data in an ordered
logit model to determine what leads to e-procurement progress.
We present two primary hypotheses to test based upon the above
theory.
H1. Cities with higher levels of IT capacity are more likely to be
at advanced stages of e-government implementation than cities
with lower levels of IT capacity.
H2. Cities with a Council-Manager form of government are more
likely to be at advanced stages of e-government implementation
than other forms of government.
372 PAQ FALL 2015

DATA COLLECTION
AND RESEARCH METHODOLOGY

The research examines the official websites of the 191

largest cities by population in the United States. The cities were
identified from U.S. Census data and among the 200 cities
selected for the survey, 195 cities had official websites. Four
other cities were eliminated due to constraints on data collection.
The distribution of the cities among the 50 states is shown in
Appendix A. The largest cities in the U.S. offer a window into
municipal level adoption. As shown in the policy diffusion
literature when larger cities adopt policies the neighboring
communities are more likely to adopt that policy (Shipan &
Voldan, 2008). Hence, these cities are often leaders in
implementation and offer insight into future trends.

Dependent Variable
The research involves analyses of the official city
websites using a 7-point e-procurement index, shown in
Appendix B. The data captured in the index are similar to data
captured in the NASPO survey reported by Reddick (2004). The
index consists of a number of criteria evaluated based on a
dichotomous response of 0 or 1, based on the absence or
presence of each feature respectively. The criterion utilized
account for each stage proposed in the staged model of
progression - (1) information, (2) two-way communication, (3)
transaction, and (4) integration (Hiller & Belanger, 2001;See
Table 2)1. The dependent variable is then transformed to a 4
point scale based upon having the individual features within each
stage of e-government. A “1” is given if the city had at least one
criterion within the stage of e-government and a “0” is given if
no features are present.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1
Hiller and Belanger do not discuss e-procurement extensively rather they refer to
“Government to Business” interactions and the associated staged progress. As our terms
for e-procurement are more specific than their terms we try!to align the models
PAQ FALL 2015 373

Table 2
Stages of E-procurement
E-government E-procurement Feature
Stage
Stage 1 - • Post solicitations online
Information • Access requests for proposal online

Stage 2 - Two-way • Download requests for proposals

communication
Stage 3 - • Conducts online bidding
Transaction • Place bids online

Stage 4 - Integration • Digital signature laws

• Procedures or statutes governing
online bidding

We utilize Mokken scale analysis (MSA) on our data

(Mokken, 1971) to examine if there is any order to the e-
procurement features captured. Developed primarily for item
response theory (IRT), this analysis allows us to account for an
underlying order in a number of dichotomous responses. For
example, should one respond in the affirmative, that they can lift
180lbs we would assume that the same person would respond in
the affirmative that they can lift 170lbs., 160lbs., etc. (van
Schuur, 2011). In a similar manner, MSA allows us to analyze
our set of e-procurement features to determine if the theoretically
more advanced stages of e-procurement are more challenging to
adopt. Furthermore – we can determine if a city that has adopted
certain advanced features such as digital signature laws is more
likely to have had adopted a more basic feature such as posting
proposals online. We utilize the Loevinger H Statistic based on
Guttman errors for each item on the scale along with providing a
statistic for the entire scale. We discuss the results of this
analysis in the next section.
374 PAQ FALL 2015

Independent Variables
IT Capacity and Form of Government are the two
primary independent variables we test in this model. IT capacity
is operationalized as a dichotomous variable of 1 if a city has a
separate IT Department and a Central Procurement Website. A
score of “0” is given if no such department and website exist or
if it is embedded within a different department. For example, an
IT department may be part of a Personnel Office. Form of
Government is operationalized as a dichotomous variable as
well. A score of “1” was given if the city had a Council-Manager
form of government and a“0” was given if otherwise. Additional
control variables consist of socio-economic variables collected
from the U.S. Census Bureau data along with fiscal and
organizational data collected from the cities’ websites. These
include population, fiscal stress, and tax capacity. We utilize
population rather than budget because a high correlation existed
between budget and population and we capture fiscal measures
in the two other variables. Based on previous research it is
important that the study utilizes both a spending measure and a
population measure. Population and tax capacity are both taken
from census data2. Tax capacity is operationalized as the average
price of an owner occupied home in the city3. Lastly, fiscal stress
was operationalized based upon a city’s credit rating by Moody’s
rating agency4. To determine the relationship between the
dependent and the independent variables, an ordered logit model
was fitted with the data. Based upon the initial analysis of the
dependent variable utilizing MSA we were able to determine that
there was a clear order to the index.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2
Population data is taken from the most recent city level census data available at the time
of conducting the study – 2006.
3
According to Whiting (2000), “Tax capacity is a measure of the readily taxable
resources (the tax base) in a given locale,”(p.220). While average housing price may not
capture this entirely it provides a reasonable proxy for which data is available. A similar
measure, equalized assessed value of residential property, is used by Hendrick as a
component of tax capacity in her article Assessing and Measuring the Fiscal Heath of
Local Governments : Focus on Chicago Suburban Municipalities. Average home price
data is taken from the 2010 census.
4
Fiscal stress is measured in a number of different ways. Bond Rating is used by Nelson
and Nollenberger, 2011 to measure fiscal health. It is also used by Chaney, Copley and
Stone, 2002 as one indicator of fiscal stress.!!!
PAQ FALL 2015 375

ANALYSIS

The descriptive statistics of the dependent and

independent variables tell an interesting story about e-
procurement implementation among the largest cities in the
United States. The mean population of the cities in the sample is
384,000 people. The cities range in population from 107,000 to
over 8 million residents, with 49% having a population less than
200,000 and 3% of the cities having more than a million
residents. About a third of the cities have populations between
200,000 and 500,000 and 14% of the cities have populations
ranging from 500,000 to a million. Budget expenditures range
from 39 million dollars to 9.6 billion dollars. The mean
expenditures are about 885 million dollars and the median
expenditures are 459 million dollars.
Among the cities selected for the evaluation, 40% of the
cities were from the West, followed by South (37%), Midwest
(15%) and Northeast (8%). The average e-procurement score of
all cities was 3.46 with the median being 4.0. Some of the
prominent large cities that ranked high on the index were
Philadelphia PA, Columbus OH, Seattle WA, Baltimore MD,
Kansas City KS, Arlington TX, Greensboro NC, Columbia SC
and Lincoln NE (see Table 3). All of the cities that received
scores of seven (the maximum on the index) had populations less
than 500,000 residents other than Columbus, Ohio which has
less than 1 million residents.
376 PAQ FALL 2015

Table 3
Top 25 Cities by E-Procurement Score
City E-Procurement
Score
Columbus, OH 7
Henderson, NV 7
Long Beach, CA 7
New Haven, CT 7
Raleigh, NC 7
Riverside, CA 7
Sterling Heights, MI 7
Arlington, TX 6
Baltimore, MD 6
Bridgeport, CT 6
Cincinnati, OH 6
Columbia, SC 6
Greensboro, NC 6
Kansas City, KS 6
Laredo, TX 6
Lincoln, NE 6
Madison, WI 6
Mesa, AZ 6
Pasadena, CA 6
Philadelphia, PA 6
Savannah, GA 6
Seattle, WA 6
Tallahassee, FL 6
Los Angeles, CA 6

The percent distribution of e-procurement scores shows

that most cities e-procurement score fall within the range of 0-4
while very few cities reach a score of 5-7 (see Figure 1). This
indicates that most cities have not fully adopted a comprehensive
e-procurement system. Rather, they have adopted initial features
of e-procurement.
PAQ FALL 2015 377

Figure 1
E-Procurement Score Percent Distribution

2!
1! 10%!
5%! 3!
0! 20%!
10%!
7!
4%!
6!
9%!
4!
5! 28%!
14%!

Mokken Scale Analysis

The MSA helps us to determine the homogeneity, or
scalability, of the response items in our scale along with the scale
in its entirety. Similar to other probabilistic tests, MSA
compares observed values to expecting values (based on
Guttman errors) to produce both an overall H statistic for the
entire scale along with individual H statistics for each coefficient
of homogeneity. According to Mokken (1971), a test statistic of
0.3 is the lower boundary for scalability and is considered a
weak scale. A test statistic above 0.4 indicates a medium level
of scalability and above 0.6 indicates a strong level of scalability.
Our overall scale indicates a medium level of scalability and
each of our coefficients of homogeneity indicate stronger levels
of scalability.
Essential to MSA, is the idea of Guttman errors.
Guttman errors occur when an easier item on a scale – that is an
item in which answering in the affirmative occurs more
frequently than others – contains responses which do not follow
normal pattern. For example, our scale consists of four items –
Stage 1 (Information), Stage 2 (Communication), Stage 3
378 PAQ FALL 2015

(Transaction), and Stage 4 (Integration). Our first assumption is

that Stage 1 is easier for cities to attain and therefore will have
more positive responses. This sequence should follow for the
remainder of stages. This is indicated by the mean score of the
item in Table 4. Errors occur, for example, if one city answers in
the affirmative for stage 2, but in the negative for stage 1. This
would contradict our assumption.
The decrease in the mean score of the Mokken Scale
suggests that there is an order to the progression of e-
procurement. Our overall H value is .40, suggesting that there is
a medium level of scalability. Each item on the scale has an H
value above .4 and with some being closer to .7, suggesting
fewer errors (see Table 4).

Table 4
Mokken Scale Analysis Results
Item Mean Score H Value
Stage 1 Information .87 .53***
Stage 2 Communication .78 .68***
Stage 3 Transaction .57 .67***
Stage 4 Integration .27 .42***
Note: n = 191 *** Significant at the .001 level

Ordered Logistic Results

The results of the logistic regression indicate that both
IT capacity and form of government are statistically significant
in advancing through e-procurement in a staged manner (see
Table 5). For a unit increase in IT capacity the odds of having
more developed e-procurement system increase by a factor of
2.65.

! !
PAQ FALL 2015 379

Table 5
Ordered Logit Results E-Governance Stage
Variable Coefficient SE Odds Ratio
IT Capacity .975*** .288 2.65
Form of .716** .286 2.05
Government
Tax Capacity -.0000002 - .000002 1
Population -.00000006 .0000002 1
Fiscal Stress -.021 -.073 .98
Note: n = 191 ** Significant at the .05 level *** Significant at the
.001; likelihood ratio x2 = 18.63; model is significant at the 0.01 level;
McKelvey & Zavoina's R2 = 0.1

Similarly, the results of having a council-manager FOG

suggest a positive direction. The odds of having a more
developed e-procurement system increase by a factor of 2.05 in a
municipality with a council-manager FOG. These results
demonstrate that the probability of being at a more advanced
stage of e-government increases for those that have IT capacity
or a council-manager FOG. The probability that cities have
either one of these components and are at beginning stages of e-
procurement implementation is less than 5% (see Table 6). The
predicted probabilities demonstrate that it is more likely, if a city
has one of these components that they are at Stage 3 or Stage 4
in their e-procurement initiatives.

Table 6
Predicted Probability for Stage Progress
None Stage 1 Stage 2 Stage 3 Stage 4
Affirmative Prob. Prob. Prob. Prob. Prob.
Response
IT Capacity .04 .05 .14 .22 .54
Council .05 .06 .16 .23 .49
Manager
FOG

In cities that have both a council-manager FOG and IT capacity

the probability that they are at a more advanced stage of e-
government dramatically increases (see Table 7). Cities in which
both of these factors exist increase their probability of being at
380 PAQ FALL 2015

Stage 4 integration to .61.

Table 7
Probability of Stage 4 Integration
Council-Manager FOG
IT Capacity NO YES
NO .23 .37
YES .43 .61

Both of these factors are in line with previous research that

associates form of government and IT capacity with adoption of
e-government and innovation. Damanpour and Schnedier (2009)
find a significant negative relationship between the mayor
variable and innovation, while according to Krebs and Pelissero
(2010), the stronger the mayor, the lesser the possibility of
innovation. Carrizales (2008) finds a negative relationship
between e-government and a mayor-council form of government
among municipalities in New Jersey, while the link between
council-manager form of government and e-government
adoption was positive. The presence of an IT department will
help local governments adopt and implement e-government
successfully (Norris and Kraemer, 1996). Ho and Smith (2001)
find that the presence of an IT department indicated Y2K
readiness and Schwester (2009) finds that an increase in the
number of IT employees increases e-government adoption. Our
results add to these previous studies in that they demonstrate that
the presence of technology and a council-manager FOG increase
the likelihood of progressing through the development of an e-
procurement system.
Along with adopting new technology, cities need to
involve their purchasing employees in IT training and
development, to update their skills with current trends. Some of
the common significant features in e-government research, such
as fiscal measures and population, are insignificant in our model.
While it is difficult to draw precise conclusions from such results
this might suggest a difference in adoption of e-procurement and
progression through the stages of e-procurement.
PAQ FALL 2015 381

FURTHER DISCUSSION

We have selected five cities in the top 25 to discuss

some of the standard approaches regarding online procurement
policies. These descriptive findings provide more insight into the
development of a comprehensive e-procurement system. The
city of Seattle, WA initiated the e-procurement process that
allows potential bidders to email their bids through secure email
addresses. In turn, the city uses a secure mailbox to receive the
bids, and those bids are subsequently opened at a future specific
time/date. Using a rolling acceptance approach, the city still
accepts paper bid applications (traditional process), since the
goal for the city is to provide bidders with more flexibility and
enhance efficiency. It is Seattle’s hope that this will allow for
better competition and remove possible obstacles in the
submission process (“City Purchasing and Contracting
Services,” 2013).
The city of New Haven, CT employed a new and
innovative interactive purchasing website. The goal of this
unique site was to provide sufficient information to potential
bidders that would allow for the development of a collaborative
relationship between the city and the bidders. On the
procurement web portal, the side menu provides links to the
procurement policy, general information, department contacts,
FAQs and additional information. A key component of the site is
that potential bidders are able to register directly on the website,
which allows them to be apprised of current procurement
opportunities through email, as well as read the submission
results online. These components are free to the potential
bidders. The city website is clear to acknowledge the
contributions of the dedicated team of public and private
employees that make the site possible (“Bureau of Purchases:
Online Procurement”, 2013).
Similar to New Haven, the city of Columbia, SC also has
a team of dedicated professionals (public and private) that took
the archaic procurement process and transformed it into the
contemporary e-procurement program. Columbia’s primary goal
is to clarify the procurement process and create an effortless site,
yet at the same time they hope to make access available to
382 PAQ FALL 2015

potential bid opportunities. Moreover, the city strives to upgrade

the level of competition by maximizing the involvement of
bidders and contractors who aim to supply services to the city
residents (“Columbia’s Purchasing Division”, 2013).
In the case of Savannah, GA, a new e-procurement
system was developed to streamline the flow of information
between the municipal government, vendors, and resident users.
The new system facilitates the e-procurement process by
primarily enabling bidders to register online, receive bid
notifications, and submit bids and view bid results online. The e-
procurement website also offers an online question/answer
session and includes sealed bids with lock box and bid
encryption for safety and privacy concerns. The city places a
great deal of emphasis on maintaining privacy and safety
through the procurement process, which they argue enhances the
value of their resident’s tax dollars (“E-Procurement”, 2013).
The city of Columbus, OH has established the Columbus
Vendor Services, an e-government initiative that provides a one-
stop online portal for potential bidders and vendors through
which they can register and compete for the city bids. The
website provides all relevant information on the procurement
process and helps conduct business in an open environment that
will lead to better public trust. Moreover, the online process
results in numerous choices of suppliers, lower process costs,
improved quality and service delivery. The website is user
friendly with complete instructions listed throughout the entire
process and enables vendors to be notified of current openings,
submit and view bids online, and keep track of the company's
information such as goods, services provided and payment
invoices (“About Vendor Services”, 2013).
This narrative suggests that cities are working hard not
only to gain efficiencies and save money for tax payers, but
develop partnerships with vendors that establish clear protocols
in a user-friendly manner. Similar to the findings that high
performing private sector firms increase performance for both
buyers and suppliers (Vaidyanathan and Devaraj, 2008); it seems
high performing public organizations seek to accomplish a
similar goal.
PAQ FALL 2015 383

Implications and Limitations

Our study identifies two areas that are essential for the
growth of e-procurement: professional city management (as
measured by FOG) and IT capacity. As regards the first, despite
evidence that U.S. municipalities are becoming structurally more
similar (Nelson & Svara, 2010), our research suggests that
government structure is still important to innovation, especially
in terms of technological advancement. The presence of city
managers, who usually have a Master’s in Public Administration,
and tend to be more professionally qualified are receptive to the
use of innovative technologies. According to the most recent
ICMA survey, even though 59% of cities operate under a
council-manager FOG, 33% are governed by a mayor-council
FOG. Based on our findings, these figures suggest that there is
enormous potential for the growth of e-procurement if mayors
were to take leadership roles in its implementation. Admittedly,
mayors, like many other elected officials, may perceive rapid e-
government innovations rather negatively, considering them part
of a bureaucratic tendency to avoid legislative scrutiny by
“technicalizing” (Berman & Wang, 2000; Kettl, 1994). Such
concerns must be overcome, however, if cutting edge
technologies are to be introduced into governance.
In addition, our findings indicate IT capacity also plays
an important role in the successful adoption of technology. The
finding implies that simply adopting an e-procurement system
does not guarantee its development to full potential. Rather,
cities need the internal capacity to manage and advance such
systems in a stable manner, a capacity typically provided by IT
departments. The national average of “Computer and
Mathematical” occupations in government stands at 1.37 percent
according to the bureau of labor statistics (BLS) in 2012. This is
.05 percent more than it was five years prior. In comparison, the
BLS reports that national employment estimates for “Computer
and Information Systems Managers” in the private sector have
grown by about 17 percent in the same five year period. Our
findings indicate that investment in IT capacity is essential for e-
procurement growth, but the data suggests that local
governments are not building this capacity. At the same time,
the effective management of IT capacity is only possible with
384 PAQ FALL 2015

innovative leadership and support from top management.

Accordingly, as our results indicate, cities that have both IT
capacity and a council-manager FOG are significantly more
likely to be well advanced in their e-procurement development.
Our research findings also provide support for the stages
theory of e-government. Our MSA demonstrates that cities, in
their adoption of e-procurement, are following a progression
through the information, two-way communication, transaction,
and integration stages, scoring highest on the first and then
progressively lower on the latter three. Hence, unlike earlier
studies that dismissed stages theory based on overall observation
of e-government, our examination of e-procurement provides
clear evidence of staged development.
Our research indicates that most e-procurement
initiatives tend to be more active in the information or cataloging
stage than in the transaction stage. For instance, among the cities
evaluated, posting RFPs in HTML format is the most common
aspect of e-procurement adopted, while only 6% of the cities
have laws or statutes governing digital signatures. Hence, this
paper does not dismiss stages theory but rather suggests scholars
need to accurately examine individual features like e-
procurement in terms of staged development (e.g., progression
through the information, communication, transaction, and
integration phases). By taking this approach scholars and
practitioners will better understand a stepwise implementation.
In the case of e-procurement, it is clear that full integration,
operationalized as have the legal and statutory structure in place,
is much more challenging to achieve than simply implementing
basic computing functions. That said, moving from basic
computing functions such as posting RFPs in HTML format to
establishing legal and statutory structure is essential to create a
fully functional e-procurement system.
With all studies, this study has its limitations, not least
its reliance on an online analysis that can only collect the
information available on a city’s website. Such analysis,
however, has long been a staple in research on the status and
performance of e-government implementation because
government websites are important interfaces between
government and citizens (Holzer, Manoharan, & Van Ryzin,
PAQ FALL 2015 385

2010) and e-government functions rely heavily on web-based

provision of government information and services (Bauer &
Scharl, 2000; Huang, 2007). Nonetheless, the fact that such a
focus reflects only the supply-side perspective suggests a need
for future research to address the demand-side viewpoint
analyzing data (e.g., user surveys) that capture citizens and
businesses’ trust in and satisfaction with the e-government
functions available. Given the adoption by many local
governments of social media and Web 2.0 technologies, future
research might also move beyond website assessment to
incorporate measures related to government use of mobile
technologies and social media for e-procurement.
Overall, this study provides useful new evidence on city-
level e-procurement implementation in the U.S., demonstrating
that although a majority of the 191 most highly populated U.S.
cities have incorporated e-procurement into their official
websites; many are still in the experimental stages. In particular,
our MSA results indicate that, from the perspective of stage
theory, cities are facing hurdles in moving toward the transaction
and integration stages. Therefore, as municipalities’ dependence
on procurement increases, the use of information technology
could reduce barriers to both adoption and development while
ensuring a more efficient and transparent procurement process.
Our findings also suggest that, although e-procurement offers a
valuable opportunity to strengthen government performance and
accountability by streamlining procurement and increasing
transparency and accessibility, the development of an advanced
e-procurement system is gradual (not instantaneous) and heavily
reliant on management having the foresight to recognize its
potential benefits.
386 PAQ FALL 2015

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Appendix A
No. of
S. No State Cities
1 Alabama 4
2 Alaska 1
3 Arizona 9
4 Arkansas 1
5 California 42
6 Colorado 5
7 Connecticut 2
8 District of Columbia 1
9 Florida 12
10 Georgia 5
11 Hawaii 1
12 Idaho 1
13 Illinois 5
14 Indiana 3
15 Iowa 1
16 Kansas 3
17 Kentucky 3
18 Louisiana 4
19 Maryland 1
20 Massachusetts 3
21 Michigan 4
22 Minnesota 2
23 Mississippi 1
24 Missouri 3
25 Nebraska 2
26 Nevada 7
27 New Jersey 3
28 New Mexico 1
29 New York 5
30 North Carolina 7
392 PAQ FALL 2015

31 Ohio 6
32 Oklahoma 2
33 Oregon 3
34 Pennsylvania 2
35 Rhode Island 1
36 South Carolina 1
37 South Dakota 1
38 Tennessee 6
39 Texas 20
40 Utah 2
41 Virginia 8
42 Washington 4
43 Wisconsin 2
Total 200

Appendix B
Website Evaluation Index
Does the website allow potential
bidders to access RFPs (requests for
1
proposals) and status of procurement
online in html format?
Does the website allow potential
2 bidders to download RFPs (.doc or
.pdf)?
Does the website allow potential
3
bidders to place bids online?
Does the city central procurement office
4
conduct bids via the Internet?
Does the central procurement office
5
post solicitations on the Web?
Has the city enacted digital signature
6
laws?
Does the city central procurement office
7 develop procedures or have statutes
governing Internet bidding?
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