Proposal [Non-Constitutional]: Establish the ArbitrumDAO Procurement Committee

[Immutablelawyer]

Abstract - The ArbitrumDAO Procurement Committee (ADPC) is tasked with facilitating & administering various procurement frameworks within the Arbitrum Ecosystem, creating new procurement frameworks for DAO Ratification & creating a proposal for security-service subsidies.

Motivation -
Implementing the ArbitrumDAO Procurement Committee (ADPC) and its associated frameworks is essential for the Arbitrum community as it ensures a transparent, efficient, and accountable approach to procurement, benefiting the ecosystem by securing high-quality service providers via a preemptive quality assurance mechanism which is the procurement framework.

Rationale - the ADPC will play a pivotal role in achieving further organization within the ArbitrumDAO. The mandate of the ADPC aims to create an optimal organizational framework for service procurement while also creating a marketplace for service providers that would have gone through preemptive quality assurance.

Steps to Implement - The AIP will move to Snapshot on the 20th of December 2023. Following the conclusion of the Snapshot vote, the AIP will then proceed to the on-chain voting stage so as to ratify the funding & process for the ADPC. Once the forecited steps are concluded the election process will commence.

Specifications & Timeline - Specifications & timeline can be found in the following sections.

Overall Cost - For a 6-month term, $8,000 per month (payable in ARB at the applicable conversion rate at the end of the respective month) & 1,000ARB per Multi-sig member [per month]

The Funding Request from the on-chain vote will be 200,000ARB (a buffer has been added so that, in the case of ARB depreciation, the ADPC Multi-sig is still able to satisfy payments to procurement committee members. Unutilized ARB will be returned to the ArbitrumDAO Treasury)

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Non-Constitutional

TL;DR

• The ADPC (ArbitrumDAO Procurement Committee) has the immediate mandate of overseeing the ‘Procurement Framework for Security Service Providers’ recently ratified by the ArbitrumDAO.

• The ADPC may add additional procurement frameworks that will be ratified through Snapshot.

• The committee will research and propose a subsidy fund for security-oriented services within the Arbitrum Ecosystem. A ‘Means Test’ will be implemented to determine project eligibility for security service-fee subsidies.

• The ADPC will establish procurement frameworks for various verticals and service types within the ArbitrumDAO.

• Three members will be elected to the ADPC through Snapshot’s weighted voting system.

• Eligibility criteria for members include experience, integrity, conflicts of interest disclosure, industry knowledge, analytical skills, financial acumen, communication skills, negotiation skills, project management abilities, ethical conduct, teamwork, technology proficiency, and decision-making skills.

• The election process involves application submission, KYC/KYB review, and member election via Snapshot.

• The ADPC’s term is 6 months, with a monthly stipend of 7,500ARB for elected members.

• Operational parameters include meeting minutes, monthly reports, bi-weekly calls, and a public dashboard.

• The ADPC’s Multi-Sig will be a 3/5 with signers receiving 1,000 ARB per month for their services. Signers cannot be Procurement Committee members.

• Streaming of funds and clawback capabilities are implemented for multisig accountability.

• The ADPC will be regulated via an Agreement with the Arbitrum Foundation.

• The Agreement will cover appointment, conflict of interest, mandate, record-keeping, duty of impartiality, recusal, self-dealing prohibition, and ethical trading standards for ADPC members.

Executive Summary

This proposal intends to formalize a structured group within the ArbitrumDAO (the ‘ArbitrumDAO Procurement Committee’ or ‘ADPC’) responsible for overseeing and managing Procurement Frameworks that are ratified by the ArbitrumDAO from time to time depending on the needs of the organization. The ADPC’s primary purpose is to ensure that procurement activities are conducted efficiently, transparently, and in compliance with the applicable framework/s.

Overview

The ADPC’s immediate mandate will be that of facilitating & administering the recently ratified ‘Procurement Framework for Security Service Providers’ [REF:Proposal [Non-Constitutional]: **Procurement Framework [Security Service Providers]** & Snapshot]. This mandate can be supplemented by virtue of a Snapshot vote whereby the ArbitrumDAO may add another procurement framework that the Procurement Committee will be responsible to administer & facilitate.

Composition of the ADPC [Mandate, Eligibility, Election Process, Funding, Operational Parameters]

[i] MANDATE

1. The primary mandate of the ArbitrumDAO Procurement Committee (ADPC) is to oversee and facilitate the recently ratified procurement framework for security-oriented service providers within the Arbitrum Ecosystem, as per the following reference: [Snapshot Proposal Link: Snapshot]. In this capacity, the ADPC bears the responsibility of diligently executing the steps essential to implement the aforementioned procurement framework in a manner characterized by transparency and efficiency.

2. The ADPC will be tasked with researching & drafting a proposal to the ArbitrumDAO to set up a subsidy-fund for security-oriented services that will be used to subsidize the costs for security-services for smaller projects within the Arbitrum Ecosystem.

3. The ADPC will be tasked with researching & implementing a framework that will establish a set of qualitative & quantitative metrics that will be utilized so as to assess a project’s eligibility for the ‘Subsidy Fund’ referred to in point [b] above. This ‘Means Test’ (as referred to in traditional administrative practices), will be bundled in with the proposal that will set up the subsidy fund referred to in [b]. The Means Test will be used to assess whether a project is eligible for security service-fee subsidies. Initially, this methodology will only be applied to security-oriented services. However, this does not preclude the application of this same concept to other verticals within the ArbitrumDAO.

4. The ADPC will be tasked with establishing procurement frameworks for a myriad of verticals/service-types that the ArbitrumDAO could need in the foreseeable future. This proactive approach towards procurement will naturally aid in ensuring that projects within the Arbitrum Ecosystem have immediate access to high-quality whitelisted service providers when the need arises. In this regard, all procurement frameworks developed by the ADPC will need to be ratified through a Snapshot vote by the ArbitrumDAO.

5. The ADPC will be tasked with creating & communicating guidance notes & circulars that will substantiate & provide additional detail in relation to any procurement framework that is ratified by the ArbitrumDAO from time to time. The aim of these guidance notes & circulars is to provide prospective applicants going through the procurement process with the necessary information that would enable them to satisfactorily complete the steps of the corresponding procurement framework.

Steps [2], [3] & [4] of the mandate will necessarily have to be coupled with a 14-day consultation period pre-structuring so that input is solicit from the ArbitrumDAO and other relevant third-parties. The input collated during the public consultation period will necessarily need to be made public.

The ADPC will be composed of three [3] members that will facilitate & administer procurement frameworks as ratified by the ArbitrumDAO from time to time. The appointment of ADPC members will be effected via an open election process via Snapshot’s weighted voting system; wherein the first three [3] ranked members in the vote will be elected to the ADPC. Albeit not legally binding, when voting for prospective members of the ADPC, delegates & token holders alike should prioritize the following eligibility criteria so as to properly equip the ADPC to carry out its mandate.

[ii] ELIGIBILITY CRITERIA

Albeit not being legally binding, prospective voters looking to assess election applicants should in-principle conduct their assessments in light of these criteria.

Experience

• A demonstrated knowledge of procurement principles & best practices;
• In-depth knowledge of procurement frameworks as ratified by the ArbitrumDAO from time to time;
• At least 3 years experience in Legal, Operations or Administrative role.

Integrity

• Disclosure of any involvement in ethical breaches, fraud, manipulation, or other forms of misconduct, whether in the past or present.
• Failure to provide accurate and complete disclosure of such information will result in the forfeiture of the applicant’s eligibility upon the discovery of this information.

Conflicts of Interest and Independence of Mind

• Disclosure is required for any actual or potential conflicts of interest that may emerge upon being selected for the role applied for.
• This includes any factors that may impair one’s ability to carry out decisions with sound, objective, and independent judgment.

Industry Knowledge

• A comprehensive grasp of industry-specific service procurement challenges, procurement frameworks, and prevailing best practices.
• Previous experience drafting governance proposals.

Analytical Skills for Service Contracts

• Robust analytical capabilities for evaluating and negotiating service contracts, including service-level agreements (SLAs) and performance metrics.
• The ability to identify and assess risks associated with service procurement decisions.

Financial Acumen (Service Costs)

• A firm grounding in financial aspects of service procurement, including budgeting, cost analysis, and financial implications.

Communication Skills

• Exceptional communication abilities, both oral and written, for interactions with service providers, stakeholders, and fellow committee members.
• The capacity to convey complex service procurement information clearly and effectively.

Negotiation

• A high degree of proficiency in negotiating service agreements and SLAs to secure favorable terms, pricing structures, and quality standards with service providers should the need arise.
• The ability to build and maintain positive relationships with service providers.

Project Management Abilities

• Proficiency in project management related to service procurement, including project planning, execution, and performance monitoring.
• The capability to manage timelines, resources, and deliverables effectively for service projects.

Ethical Conduct

• An unwavering commitment to ethical conduct in all service procurement activities, ensuring transparency and fairness in service provider whitelisting & facilitation.

Team Player

• The ability to function effectively as a team player within the committee and collaborate with other organizational departments, stakeholders, and service providers.
• Willingness to consider diverse perspectives and reach consensus on service procurement decisions.

Technology Proficiency

• Familiarity with service procurement software and tools for managing service procurement processes, data analysis, and reporting.
• Previous experience with Asana/Airtable.
• Previous experience with Multi-Sigs.

Decision-Making Skills

• Sound judgment and decision-making skills to make informed and strategic service procurement choices aligned with the organization’s service procurement strategy.

[iii] ELECTION PROCESS

We propose adapting section 4 of the ArbitrumDAO Constitution & optimizing it to apply to the election for ADPC Members [REF: The Amended Constitution of the Arbitrum DAO | Arbitrum DAO - Governance docs]. Hereunder, we propose an adapted model of Section 4 of the ArbitrumDAO Constitution to implement in the ADPC Elections.

The ADPC election process is scheduled to begin 3 business days from the ratification of the on-chain proposal that will secure the funding for the ADPC.

The date chosen for the first election will form the basis for all future elections. Every election should begin 6 months after the previous election has been finalized.

All ADPC committee members are expected to serve their term unless terminated by the ArbitrumDAO through Snapshot as stipulated in the Agreement regulating the ADPC [Further details below re. the Agreement & Defining provisions in the Checks & Balances section].

There will be one election with the first three [3] ranking members in the weighted voting Snapshot being elected to the ADPC.

[iv] PROCEDURE & ELECTION TIMELINE

1. Application Submission (T+7 business days):

Anyone may submit an application on a dedicated page on the ArbitrumDAO Forums in conformity with the application template stipulated hereunder;

2. KYB/KYC + Delegate Review Period (7 business day period following the end of Application Submission Period):

Applicants who would have validly submitted their applications in conformity with the application template will then be required to undergo KYC/KYB processes. All candidates will cooperate with the Arbitrum Foundation and complete the compliance process. The Arbitrum Foundation is responsible for removing any candidates who fail the compliance process. Only applicants who pass KYB/KYC will be eligible for the ADPC election.

3. Member election (7 business day period following the end of KYB/KYC + Delegate Review Period):

A Snapshot with weighted voting will be put up, including the list of all eligible candidates. The three [3] highest voted candidates will be elected to the Procurement Committee.

The ArbitrumDAO may approve and implement a Non-Constitutional AIP to change the rules governing future ADPC elections, but the AIP process may not be used to intervene in an ongoing election.

[v] ELECTION APPLICATION TEMPLATE

Applicant Information:

Name of Applicant & Applicant’s Representative [If Applicable]:

Email Address:

Telegram Handle (if applicable):

LinkedIn Profile (if applicable):

Primary languages spoken:

Disclosure of other time commitments:

Experience

[Refer to Eligibility Criteria] Please provide a brief overview of your experience in the digital asset industry and, more specifically, the Ethereum & Arbitrum Ecosystems. Include any relevant projects, contributions, or roles within the ArbitrumDAO, if applicable. (400 words max)

Objectives & Motivation

Explain how you envision contributing to the primary mandate of ADPC (300 words max)

Integrity

Disclose any past or present involvement in ethical breaches, fraud, manipulation, or other forms of misconduct. If you have no history of such activities, please explicitly state this. (300 words max)

Skills and Experience

[Refer to Eligibility Criteria] Provide details about your relevant skills and experience in Legal, Operations & Admin, including any previous work or contributions related to the mandate of the ADPC (300 words max)

Industry Knowledge

Explain your understanding of the specific industry or sector related to the services in which the ADPC will operate, especially in the context of procurement. (300 words max)

Financial Acumen (Service Costs)

Describe your experience and capabilities in budgeting, cost analysis, and understanding financial implications related to service procurement. (300 words max)

Negotiation

Highlight any previous experience in negotiating service agreements, securing favorable terms, pricing structures, and quality standards with service providers. (300 words max)

Project Management Abilities

Provide examples of your project management skills related to service procurement, including planning, execution, and performance monitoring. Include references to any relevant tools that you’ve utilized in this regard. (300 words max)

Technological Proficiency

Kindly detail your experience with service procurement software and tools, focusing on key insights gained from your prior use of platforms such as Asana/Airtable and Multi-Sigs. Additionally, list any other relevant software and tools that you might have utilized or consider pertinent in this domain. (300 words max)

SUMMARY

In summary, please highlight your key qualifications and what you believe you can bring to ADPC. (400 words max)

Feel free to attach any relevant documents, portfolios, or links to previous work or contributions.

[vi] FUNDING, TERM & OPERATIONAL PARAMETERS

FUNDING

Elected members of the ADPC will receive a comprehensive compensation package as part of their service during their 6-month term. This package includes a monthly stipend of $8,000 per month (payable in ARB at the applicable conversion rate at the end of the respective month) to support them in their roles and responsibilities within the ADPC.

TERM

The duration of the ADPC’s mandate will be of 182 days [6 months] from the moment the on-chain proposal that funds the ADPC is approved by the ArbitrumDAO.

OPERATIONAL PARAMETERS

• Meeting minutes will be taken for every meeting and published on a public Notion site for review by the ArbitrumDAO;
• Monthly report detailing performance of the ADPC;
• Bi-weekly calls with the community in relation to the ADPC;
• Public Asana/Airtable dashboard to be utilized by ADPC members to submit updates on specific tasks and sub-tasks and thus, keeping the ArbitrumDAO in the loop.

We believe this eliminates information asymmetry while allowing ADPC members to conduct their work in the most efficient possible manner. For token holders and the community, they can quickly go to these operational dashboards and see ADPC progress. These dashboard will also grant applicants going through the procurement process insight into internal timelines & progress, thus ensuring a high degree of transparency operationally.

ADPC [Multi-Sig]

The ADPC’s 3/5 multisig is being created. The funds in the multisig belong to the ArbitrumDAO and the signers act as Multi-Sig administrators on behalf of the ArbitrumDAO in coordination with the Arbitrum Foundation. Signers will receive 1,000 ARB per month for their contribution. Funds held in the multisig are explicitly banned from usage in ArbitrumDAO governance including delegation. The multisig includes:

• DisruptionJoe [Plularity Labs]
• @dk3 [Premia Finance]
• @limes
• @KlausBrave
• Dan [Vela]

The ADPC multisig includes two features to ensure accountability of signers and grantees:

The ADPC multisig includes two features to ensure accountability of signers and members elected:

• Streaming of funds to elected members through Hedgey on a monthly basis. The ArbitrumDAO will maintain control over this stream and have the ability to cut it off with an on-chain vote as the ArbitrumDAO will be made the Grant Admin on the Hedgey module.

• Clawback capability as explained hereunder.

The Multi-Sig will grant the ArbitrumDAO the function to clawback funds from the ADPC Multi-Sig via the Zodiac Governor Module via the created ArbitrumDAO ADPC.

In addition, after the ADPC Elections & thus, member appointment, the ADPC Multi-Sig members will utilise Hedgey to stream the respective funds to the elected members with the ArbitrumDAO being the Grant Admin thereof. The ArbitrumDAO’s Grant Admin role thus gives the DAO the ability to halt any streaming of funds to any member via governance.

CHECKS & BALANCES

The ADPC will be regulated via an Agreement entered into by all elected ADPC Members with the Arbitrum Foundation serving as a counterparty to the Agreement.

The Agreement will be made public & include, but will not be limited to the following provisions:

Appointment & Termination: ADPC Members will be appointed via the forecited election process in accordance with ArbitrumDAO Consent by the Arbitrum Community.

• Arbitrum Community will be defined as follows:

“Arbitrum Community” means those persons who have the right to propose and vote on proposals ergo, the token holders of the ARB token with the following contract address [0x912CE59144191C1204E64559FE8253a0e49E6548] from time to time visible at [$2.03 | Arbitrum (ARB) Token Tracker | Arbiscan].

• ArbitrumDAO Consent will be defined as follows:

“ArbitrumDAO Consent” means a vote of the ArbitrumDAO Community in favour of a proposal satisfying the minimum requirements set forth at The Amended Constitution of the Arbitrum DAO | Arbitrum DAO - Governance docs (as such minimum requirements set forth therein on the date hereof may be revised from time to time with ArbitrumDAO Consent) taken by any of the following means:

1. Snapshot (or any successor thereto); or

2. another mechanism, whether on or off a blockchain, that ensures only and all people voting hold or have been delegated blockchain-based tokens known as ARB.

Conflict of Interest Provision: ADPC Members will be bound to act in absolute good faith, utmost honesty, refraining from deriving unauthorized profits from their position & disclose conflicts of interest. ADPC members should always disclose any potential or actual conflicts of interests to other ADPC members who will then proceed to mitigate the respective ADPC Member’s involvement in the task in relation to which such ADPC Member is conflicted.

To sum up, all ADPC Members must declare the nature and extent of any interest, direct or indirect, which the ADPC Member is aware that she, he or it has in a proposed task at hand.

Mandate & Purpose of the ADPC: The ADPC members are pivotal in executing the purposes of the ADPC, ensuring that the activities thereof align with the ADPC Mandate objectives and the stipulations of ratified proposal.

Record-keeping and Reporting: Comprehensive and precise record-keeping is imperative. ADPC Members will be required to maintain detailed accounts and documentation of the ADPC’s internal operational workflow together with meeting minutes. Furthermore, periodic reporting is essential so as to keep the ArbitrumDAO updated re. Task-specific progress & internal ADPC Administration.

Duty of Impartiality: ADPC Members will have an obligation to act in an impartial manner in relation to their tasks & workflow, ensuring that the ADPC is not compromised by personal interests or external influences.

Obligation of Recusal: ADPC Members with a conflict of interest involving a service provider being reviewed by the ADPC should recuse themselves from participating in the evaluation, facilitation & administration of the applicable procurement process.

Prohibition of Self-Dealing: Participants should refrain from voting on sending funds to themselves or organizations where any portion of those funds is expected to flow to them, their other projects, or anyone they have a close personal or economic relationship with.

Ethical Trading: Members are required to follow ethical trading standards concerning ARB and any other relevant digital assets.

VOTING

• Option A: Fund the ArbitrumDAO Procurement Committee
• Option B: Do not Fund the ArbitrumDAO Procurement Committee
• Option C: Abstain

[jengajojo]

Thank you for opening this conversation @Immutablelawyer

General Feedback:

• Delegating the entire procurement process to a group with no term limitations seems like a strong centralisation vector.
• The skill requirement to be on this committiee is high, however the election process suggests that this is a position of trust. Mixing these two is not a good idea.
• It’s very difficult to find 3 people who have the necessary skills to be able to understand and implement this process for a ‘myriad of verticals/service-types’

@Immutablelawyer

The ADPC will be tasked with establishing procurement frameworks for a myriad of verticals/service-types that the ArbitrumDAO

The result will most likely be a group of experts which cover a few domains but definitely not all of them.

Alternative suggestion:

• The procurement committee to only votes on whether a domain should be included or excluded from going through the procurement process by the DAO
• If the committiee accepts any domain, then it will trigger a selection of an expert panel for that domain who will only decide the procurement for that specific domain according to a pre-defined procurement guideline which can be set by the procurement committiee.
• Finally, the panel does not make the final decision, but makes a review for each application and suggests which service provider or providers should be onboarded to the DAO and the DAO ultimately accepts or rejects this suggestion.

This not only ensures that there is a clear separation between positions of trust vs positions of skill, but also that people with skills are selected by those who are trusted to make these decisions and the DAO still has the final say.

[cp0x]

Thank you for the proposal and such a detailed description of the committee’s work. However, there are several questions:

1. I did not see an economic justification for the need to finance this activity (I am not saying that it is not needed). It states that 3 members and 5 multisig signers are required. Costs for 6 months will be equal to:
   7500 ARB * 6 months * 3 members + 1000 ARB * 6 months * 5 members = 165 000 ARB
   If procurement volume for ArbitrumDAO is required for a smaller amount, then this makes the costs of this activity ineffective by default.
2. I see that the result of the activities will be monthly reports and bi-weekly calls, but it is unclear what will be the criterion for a positive result of the committee’s work. If there is no such criterion, it is unclear on what basis members will be selected (besides their professional abilities) and how they can improve their performance in the future.

[Immutablelawyer]

Appreciate your feedback @jengajojo !

Will reply to your queries hereunder:

• The term of the Procurement Committee is actually 6-months (this is stated in the proposal). Hence, there is a term limitation;
• In my opinion, and following discussions with various delegates, the skill-level should be high as the aim is to create best-in class frameworks & perform best-in class administration & facilitation of such frameworks. The compensation naturally is a reflection of the required skill-set as it is important that we attract high-quality talent to this endeavour.
• Indeed, I do agree that this is a hurdle. However, for various verticals which are a standard industry-wide, I am confident that we will be able to acquire talent that meets the prerequisite needs. In addition, more-so than being aware of all verticals, it’s the awareness re. procurement principles & frameworks of facilitation that is of utmost importance for Committee members. Something that @dk3 & I actually discussed was (and this is forward thinking but nevertheless good to brainstorm) to set up sub-committees in the future should the work-load increase substantially, with each committee electing a subject-matter expert for ex. & utilising Hats Protocol to have checks & balances between different levels (these optimisations & more are already being thought about).

Re. the procedure cited, I want to discuss this in further detail as I want to get a clearer picture of what you mean - can you drop me a dm on TG @Immutablelawyer ?

Thanks for the feedback ser!

[Immutablelawyer]

Thanks for your comment @cp0x

Re. the Economic Justification, an assessment was carried out with various delegates re. ideal compensation amounts + also market research on current DAO-Wide compensation schemes. There are various modes of compensation [two that come to mind]:

• Responsibility with the role not being a very active one: Compensation is in the 2,000-3,000USDC Range (dYdX subDAOs as an example);

• Optimism Grants Committee Members: Compensation 35K OP for 4-Months for the Lead, 14k OP per member (circa 7k USD) [Optimism Introduces a Grants Council for Season 3 — Boardroom];

In light of the skill-set required and the actionable facets of the mandate that need to be effected, we think that a 7,500ARB p/m compensation is effective in fairly compensating contributors & also attracting the high quality contributors we do need. In addition, the standard compensation DAO-Wide for MS-Signers is 1,000ARB and thus we maintained this compensation level.

Re. Results

The results are not bi-weekly reports and calls. Those are mere operational parameters that are to be implemented so that we ensure transparency from an operational pov (there are various other operational parameters as well). The results of the Procurement Committee will be the execution & performance of the mandate itself.

[cp0x]

Thank you for respond, @Immutablelawyer.
If it’s not difficult for you, can you provide links to the research data?

I did not talk about how much the committee will spend on members - I see an adequate estimate.
I want to know what this committee would do from an economic point of view. I understand perfectly well that specially allocated funds will provide good efficiency, but without understanding the volume of work, it is unclear to understand how many people are required to complete it and whether they are required…

[Immutablelawyer]

Hi @cp0x !

The link re. the Optimism Grants is cited above, here is the link re. the dYdX Ops SubDAO (which I am a member of) - https://www.dydxopsdao.com/, Finance.

To answer your question, I’d like to refer you to the mandate & then proceed to elaborate. The mandate can be segregated into the following:

• Facilitating & adminsitering Security PF;
• Creating a subsidy fund for Security-Services;
• Creating a ‘Means Test’ for the point above;
• Establishing other Procurement Frameworks;
• Creation of supplementing documentation for all Procurement Frameworks; and
• Operational coordination, communication to ArbitrumDAO.

The above needs to be achieved within a 6-month period for the Procurement Committee to be deemed a success. In my opinion (and given previous experience forming part of departments where procurement processes were at play, albeit at a governmental level), a team of 3 qualified persons can get this done. The Subsidy-Fund + Means Test need quite a bit of RnD as this is an industry-first for DAOs. In my opinion, the above justifies a team of 3. In addition, most procurement committees are actually made up of 3 or 5 people (odd number in case there are internal decisions that need to be taken so that it doesn’t result in a stalemate). In my opinion, the work enlisted in the mandate would not justify a team of 5 skilled persons, but can easily be executed by a 3-person team during a 6-month period.

Feel free to reach out to me on Telegram should you have any additional queries @immutablelawyer - thanks for your queries sir!

[jengajojo]

@Immutablelawyer

The term of the Procurement Committee is actually 6-months (

I understand that the committiee has a limit of 6 months, however what I meant was a term limit for the members of the committiee, i.e. can members server perpetually as long as they are voted in? My suggestion is to limit this to max 2 terms i.e. 1 year.

@Immutablelawyer

Something that @dk3 & I actually discussed was (and this is forward thinking but nevertheless good to brainstorm) to set up sub-committees in the future should the work-load increase substantially, with each committee electing a subject-matter expert

Yeah that’s exactly what I proposed as well. Have a sub-committiee (not a solo expert) for each domain would make the process much more decentralized, but electing the sub-committiee members through the DAO will be a lot of beauty contests, which is why I suggest running the whole domain selection first and suggesting the sub-committiee’s decision as a recommendation to the DAO

[Immutablelawyer]

Thanks for the feedback @jengajojo !

This is a consideration that was being debated i.e. having a max term limit. It was not included in the proposal because we do not yet have oversight re. what interest this will garner from an applicant perspective & what skilled individuals it will attract. Keep in mind, these minor optimisations can naturally be made in the structuring of the extension (should this initial proposal pass), should the committee attract interest for other contributors to participate & should the committee merit an extension. This proposal is not the end all and be all for procurement committees.

The intention is that this proposal will give us a much needed springboard to finally see (in practice) what works optimally and what doesn’t (keeping in mind that this is apparently an industry-first to have a PC as part of a DAO). I am taking note of all these considerations so that we can have a toolkit available when structuring subsequent procurement-related proposals.

Thanks sir!

[karpatkey]

We appreciate the time and effort spent on all proposals regarding a structure for Arbitrum DAO to review and interact with proposals presented on the governance forum. It is a natural step to search for improvement, especially after the massive workload that the STIP brought to all DAO participants.

However, there are a few points that we want to highlight in some proposals presented so far, especially the ones trying to manage the relationship between the DAO and prospective service providers that, from our point of view, do not improve the process.

For context, this proposal was approved on Snapshot vote to create a Framework for security services providers to abide by their relationship with the Arbitrum DAO. It mentioned the creation of a Procurement Committee, which would oversee the process for security-related service providers.

On the current proposal, we see this text: “The ADPC will be tasked with establishing procurement frameworks for a myriad of verticals/service-types that the ArbitrumDAO could need in the foreseeable future”.

One Committee for All Verticals

The current proposal presents a mandate that extrapolates from the original, security-focused proposal, making the Committee the bureau that will propose procurement frameworks for all verticals within ArbitrumDAO.

While it is mentioned that the DAO must approve these proposals, and any DAO member is free to submit proposals, that is not the expectation. The proposal intends for the ADPC mandate to, “play a pivotal role in achieving further organization within the ArbitrumDAO”.

This is presented as a benefit for the DAO, but it is important to note that this Committee would have three members to oversee all the verticals and propose frameworks for them.

Although the benefit is streamlined decision-making, we do not feel that such a small authoritative body should be making decisions across all verticals.

Overlapping Proposals or Lack of Framework Clarity

Another concern is that the Arbitrum Research & Development Collective proposal which recently passed on Snapshot calls for the creation of a collective which mandate “will naturally aid in ‘Governance Optimization’ through research & development of tooling related to the ArbitrumDAO’s governance framework.” It also states that the “ARDC’s mandate will aid in future-proofing the ArbitrumDAO by virtue of its member-specific verticals re. Risk, Research & Security”.

Reading further, there is a clear overlap between both proposals:

@Immutablelawyer

The ARDC aims to possess unparalleled expertise by having an established dedicated team capable of executing this initiative. Ideally, all of the ARDC members would have made significant contributions to the ArbitrumDAO. The subject-matter areas that the ARDC Verticals aim to cater for include, but are not limited to:

• Governance Proposals;
• Research;
• Framework Development;

Both the ADPC and the ARDC ask in their proposals for a mandate to develop frameworks with the objective of enhancing the governance process.

Conflicting interests raise questions

Given the situation, it is natural to ask ourselves who will be responsible for developing a procurement framework, as both suggested structures seem to claim the responsibility for themselves. If the Committee of this proposal is the one responsible, which would be common sense, it also states that it is part of its mandate " […] creating a marketplace for service providers that would have gone through preemptive quality assurance."

Therefore, several questions arise from the current state of those proposals:

• How would be the relationship with the members of the Collective, if the Procurement Committee will create a whitelisted marketplace of service providers?
• If the Committee of this proposal will be responsible for creating all the procurement frameworks and support material, why is the Collective needed in its current form?
• Is it in the best interest of the DAO to have a Collective helping to shape/draft proposals and a Committee creating frameworks for procurement proposals?

In addition to that, the structure envisioned in the current proposal (the ADPC’s) will create a centralization point that surpass the original intent of creating a framework: a list of actions/requisites that guide the relationship between suppliers/clients.

As mentioned previously, it is important to notice that the number of service providers eligible for any proposal is nowhere close to the number of protocols applying for grants. For this reason, we need to exercise caution not to create a system of bureaucracy that is not required and does not tackle the real issues of the DAO.

There are good examples inside the Arbitrum DAO of Ad-hoc working groups, focused on specific tasks and delivering good results. These task-oriented initiatives (with a well-defined scope and a short list of deliverables) constantly present good results and should be used more often in our context.

[Immutablelawyer]

Hey @karpatkey !

Firstly, a brief on the difference between the Arbitrum Research & Development Collective Vs. the ArbitrumDAO Procurement Committee (here, I’d implore you to read both proposals fully & separately to get a good understanding as the below is merely a very high-level summary):

ARDC [TLDR]: The ARDC is meant to be a collective of DAO-Elected participants to provide well-needed assistance at the proposal stage of the governance process. The members will be DAOAdvocate, Risk, Security, Research. The seats can be taken up jointly by applicants via a joint application.

Procurement Committee: The ArbitrumDAO Procurement Committee is completely different from the ARDC. It aspires to facilitate ratified frameworks, substantiate ratified frameworks with guidances notes & circulars, establish a subsidy fund for security services, establish a means test for project subsidy eligibility & create other frameworks for different verticals (not an exclusive right). The intention is to create a marketplace for reputable service providers within the industry for multiple verticals so that projects within the Ecosystem have ease of access to reputable & whitelisted service providers.

The dual TL;DR aside, I will now delve into your queries below:

‘One Committee for All Verticals’

This will not be ‘one committee for all verticals’. Throughout various calls we’ve had in recent weeks (even on ArbitrumDAO day), we continuously voiced our intention that the ideal way forward is to have various committees for the different verticals in relation to which procurement frameworks are ratified. We have already started discussing ways of achieving this from an internal operational pov such as using Hats Protocol (who we already discussed with), to create a procurement structure for the ArbitrumDAO in the coming year & years for the different verticals and have subject-matter expert members for these verticals.

Additionally, also keep in mind that the Committee will naturally prioritise the verticals that are needed (refer to the ‘Needs Assessment’ step).

‘Overlapping Proposals or Lack of Framework Clarity’

There is actually no overlap between the ADPC & the ARDC (Refer to the TL;DR above). The ARDC is not tasked with developing frameworks (here, you are incorrect), but (as you quoted) with ‘Governance Optimization’ through research & development of tooling related to the ArbitrumDAO’s governance framework’. The ARDC has no involvement whatsoever in the procurement arm of the ArbitrumDAO (or ancillary matters) as its mandate is tied to the ArbitrumDAO Governance Framework (the ArbitrumDAO governance framework is not a procurement framework).

‘Conflicting interests raise questions’

For the first part, I think this is addressed via the above. The ARDC is not responsible for creating any frameworks (this is nowhere in the ARDC proposal).

• How would be the relationship with the members of the Collective, if the Procurement Committee will create a whitelisted marketplace of service providers?

The Procurement Committee has no relationship with members of the Collective.

• If the Committee of this proposal will be responsible for creating all the procurement frameworks and support material, why is the Collective needed in its current form?

As explained above, the ARDC mandate is separate, distinct & unique from the mandate of the ArbitrumDAO Procurement Committee. Hence, both are actually needed to cater for their respective areas as highlighted by their respective mandate.

• Is it in the best interest of the DAO to have a Collective helping to shape/draft proposals and a Committee creating frameworks for procurement proposals?

I’ll answer this question with another set of questions:

• Is it in the best interests of the DAO to have an arm of the DAO with elected members by the DAO itself serve as help to proposers should they require help with their proposals so as to cater for all the different corners their proposal has to tackle? I think yes (especially since these corners, if missing, would potentially make or break a proposal which, in its ideation, would be a value-add - we’ve seen time and time again where ideas are optimal, with execution thereof being the sub-set thereof).

• Is it in the best interests of the DAO to have a marketplace of quality assured service providers for existing & (especially) newer projects building or intending to build on Arbitrum? Here, again, I think yes (and this is also the general consensus after many conversations with a myriad of stakeholders).

Thanks for the valuable feedback ser!

[Pablo]

I just wanted to chime in here and say that I’ve been watching this discussion and I strongly support the initiative by @Immutablelawyer. It is long overdue for DAOs to establish sound procurement policies and frameworks.

It won’t be easy but it’s well worth it. By way of background, here is my own attempt to set out a basic framework for Sushiswap a little while ago that included some key principles required for what are effectively Public Goods procurements.

The timing wasn’t right for Sushiswap to develop the idea much further as the teams were in flux but the principles hold true. Far too many transactions by DAOs are opaque and miss out on the long-recognised benefits of proper tenders and panel agreements.

Sadly, I have yet to see many examples of a DAO using its leverage and buying power to negotiate better terms from service providers but there is no reason a DAO couldn’t do so. And there is very little downside in establishing a committee with experienced procurement specialists to put the framework together and run the procurements.

I do have some concerns about the structure of the committee (mainly the short term limits that will create havoc with any live procurement and long term planning). The budget is also a bit underbaked if the plan is to have the committee execute procurements - these things are labour intensive for both sides of the negotiation. However these are minor quibbles and easily remedied.

I’ve spent decades working on massive tech procurements so it’s great to see this knowledge finally making its way into this industry.

Happy to help in any way.

[Immutablelawyer]

Hello sir!

Firstly, I really appreciate your kind words in relation to our proposal - much appreciated!

To address your feedback re. term & funding & grant an explanation thereof, the term is set at a mere [6] months due to this being the first committee of its kind for Arbitrum. Hence, given the need for this infrastructure-piece to ‘prove itself’ delegates are more comfortable with a 6-month term (the same reasoning also applies to the funding side of things). Re. Funding, following the 6-month term; should we see that we need to create a better funding structure and/or increase funding, this can definitely be something to be discussed on the forums for implementation for the following term.

The members of the Procurement Committee will be elected via an Election Process as established in the proposal. Hence, I look forward to seeing your application should you want to contribute to this endeavour! I think your skill-set and past experience will definitely be something that is needed in this Committee.

Should you want to discuss further, please feel free to reach out to me via TG @immutablelawyer !

Kind regards,
Joseph
Axis Advisory

[Goodo]

Some things have to be done centrally, you choose people democratically, but you are right about the fact that it will be difficult to choose the right people.

[Immutablelawyer]

UPDATE ON THE PROPOSAL:

In the drafting and structuring of the applicable compensations in light of the skills required and work to be done, we established a compensation of 7,500 ARB due to the market value of ARB at the time.

In light of recent market upturn and so as to properly compensate in light of skills required and work to be done, should the Snapshot vote pass the compensation will be as follows:

“Elected members of the ADPC will receive a comprehensive compensation package as part of their service during their 6-month term. This package includes a monthly stipend of $8,000 per month (payable in ARB at the applicable conversion rate at the end of the respective month) to support them in their roles and responsibilities within the ADPC.”

The ADPC will still request 165,000ARB to ensure that there is an adequate buffer should there be a market downturn. Naturally though, unspent ARB at the end of the Term will be sent back to the ArbitrumDAO Treasury.

[Curia]

Thank you, @Immutablelawyer, for your diligent efforts in drafting the proposal to establish the ArbitrumDAO Procurement Committee (ADPC). I support this initiative, recognizing its critical role in structuring the procurement process within the Arbitrum ecosystem. The ADPC’s blend of expertise and balanced approach between efficiency and decentralized ethos is commendable. To address the potential for power capture and ensure accountability, I propose the implementation of a community rating system at the end of each program cycle, along with the use of Key Performance Indicators (KPIs) or benchmarks for the committee. These measures will not only ensure diverse and inclusive representation but also help in accurately measuring the performance of each committee member. This approach will provide valuable insights and feedback that will benefit future programs, enhancing the effectiveness and impact of the ADPC. With these considerations, I will vote in favor of establishing the ADPC, believing its advantages are significant.

[maxlomu]

gm all, I am very pleased to see this proposal move to Snapshot.
I am supporting it as procurement processes are a great area to delegate to specialized professionals in order to increase efficiency and effectiveness, in particular around security services where scale can optimize a lot of costs.

As the Karpatkey team mentioned, it will be important to ensure there is no overlapping with other working streams and there is no gate keeping activity. 6 months are a good timeframe to test and validate all of this.

[AbdullahUmar]

Below is the perspective of the Uniswap DAO’s Arbitrum governance team, composed of @juanbug and @AbdullahUmar:

@AbdullahUmar

Proposal [Non-Constitutional]: Establish the ArbitrumDAO Procurement Committee

Vote: Establish Procurement Committee

We are voting in favor of this proposal but have our reservations with the continuity of this program.

The ARDP and ARDC are both examples of how a DAO can become more sophisticated in terms of professionalizing its operations. Creating subcommittees is a good practice for effective decision making and proposal creation. But the introduction of numerous subcommittees can also create unnecessary overlap in jobs. In our eyes, the functions of the ARDP and ARDC have enough overlap to justify combining them to an extent in the long run. Either way, they’ll need to be in close communication. A natural point for something like the ARDP would be to create frameworks based on the interactions they have during their tenure, this way the frameworks are empirically designed. But that’s likely too much to ask for. To establish strong frameworks there should be a dedicated task force like the ARDP, but the current six month timeline, along with the corresponding compensation package, should be limited to 6 months and not subject to an automatic reelection period. Unlike the ARDC, which is more-so a continual program, the ARDP can likely accomplish its tasks within the 6 month period. The hard part about creating these frameworks is the initial stage. Afterwards, it’s about monitoring and revamping current frameworks. Therefore, this committee should be ascribed a passive role long-term. In its passive state, the ARDP should also begin resorting to the ARDC and the DAO for continual feedback. We believe it’s fine for the working group to be limited to 3 competent people, but during the passive lifetime of the ARDP after the initial 6 months, it may be a good idea to add more members to the team. Again, this later stage ARDP is mostly a monitoring committee.

[Immutablelawyer]

Appreciate the insight & feedback @Curia !

One of the operational parameters implemented is:

• Public Asana/Airtable dashboard to be utilized by ADPC members to submit updates on specific tasks and sub-tasks and thus, keeping the ArbitrumDAO in the loop.

In light of your feedback however, I will add further substance and detail to this point & also oblige the elected members to develop a kpi-based task & sub-task system to track progress. I think this is a very valuable addition that could add great value!

[Djinn]

Voted yes for this → very low hanging fruit and needs to be done for basic processes to kick up around procurement. Thanks for kicking this off guys.