Ex-Harrisburg official raises $10M for ‘Yelp for government’ review service
“It just struck me as insane that I could learn more by Googling a cheesesteak place at 9th and Passyunk than I could about a supplier the Commonwealth will pay $10 million a year to.”
A former Pennsylvania chief procurement officer has raised $10 million in venture capital to expand Procurated, his online government-vendor review platform, which asks state and local agency staff to rate the services they buy from private contractors.
“It’s really easy for a supplier with a shoddy track record” to hide behind a few glowing testimonials, said David Yarkin, who spent the 15 years since he left the Rendell administration starting and running his Washington consulting firm, Government Sourcing Solutions.
Procurated “exposes all the negative experiences” governments may have suffered at the hands of a contractor, Yarkin added. “So you can make a choice with your eyes open.”
On Procurated, “our buyers can learn about suppliers, not only from their peers in Pennsylvania, but from those across the country,” said Curt Topper, secretary of Pennsylvania’s Department of General Services, which oversees state construction projects and was Procurated’s first user.
Procurated offers a “safe platform whereby employees can feel comfortable responding to and providing reviews,” said Jaime C. Schorr, the lawyer and MBA who heads Maine’s procurement office. She is also incoming president of the National Association of State Procurement Officials. Massachusetts started using the service last year, said Gary Lambert, the state’s assistant secretary for operational services.
States and towns use the basic service free; contractors fund it by purchasing ads — which Yarkin says doesn’t affect ratings. The name is pronounced “PRO-cyoo-rated.”
The new financing — which will be used to hire sales, service, and engineering staff — was led by New York-based Greycroft, headed by veteran tech investor Alan Patricof, along with Tribeca Venture Partners, Maryland-based TDF Ventures, and Chicago’s Limerick Hill LLC, which led earlier financing rounds totaling $5 million since Procurated’s founding two years ago.
Why is such a service even useful, in a presumably competitive economy where governments are bound by years of hiring rules that are supposed to attract high-quality, efficient applicants?
It’s a sign of “market failure,” where local and state government buyers can’t always afford good information about those applicants, said Yarkin.
“Procurement officers are super-overworked, underpaid, they don’t have time or wherewithal to do all the research,” he said, acknowledging that uch complaints don’t get much sympathy from taxpayers.
Yarkin figured that the Internet should make it as easy to check out contractors with their clients as, say, Yelp makes it easy to check restaurants with patrons: “It just struck me as insane that I could learn more by Googling a cheesesteak place at Ninth and Passyunk than I could about a supplier the commonwealth will pay $10 million a year to.”
With 25 staff working mostly remotely —including Harrisburg-based senior director of community engagement Ellen Sigl, formerly with CAI and LingaTech, software contractors to state of Pennsylvania — Procurated has solicited, and collected 10,000 contractor reviews in Pennsylvania, for a total of 34,000 across seven states that use the service.
To be sure, even without fancy rating systems, procurement officers naturally call each other around the country to share information about prices and past performance, Maine’s Schorr noted. But “Procurated offers an automated tool” to focus and speed the search.
Her office has used the service “to confirm reviews of technology vendors who are already contractually engaged with another state,” and followed up with officers who signed their Procurated reviews in their own names, which is voluntary. She said she gives the “friendly” platform her own rating of “five stars.”
Yarkin said contractors’ payments for ads don’t affect reviews, or the ratings and rankings Procurated builds from cumulative reviews.
But isn’t Procurated vulnerable to the same kind of insider praising or competitor flaming that has bedeviled consumer services such as Yelp?
Not so much, because Procurated limits the service to procurement people, Yarkin said. And the more reviews the platform collects, the harder for any contractor to corrupt the process: “Our goal is to become ubiquitous, as widely used as Dun & Bradstreet is to gauge credit-worthiness.”
Is he — or should the reviewers be — afraid of legal complaints by contractors who dispute bad reviews? “We are protected by Section 230 of the Internet code” (Communications Decency Act of 1996), which, somewhat controversially, shields online service operators from such complaints, Yarkin said.
He acknowledged that the company has not yet collected data showing that its findings have convinced procurement officers to hire high-rated vendors.
But he said at least Massachusetts is going beyond encouraging staffers to share reviews, and starting to distribute Procurated scores to its own vendors, as a way to goad them to improve the value they deliver, if they want to keep the public’s business.