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By Steve Kelman

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A story that makes federal IT look good

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(Image: Shutterstock)

A recent issue of BloombergBusinessWeek had a cover story on problems at IBM. The story as a whole was an interesting one, but what caught my eye, and the reason I discuss it here, was the story's leadoff, which featured the contest between IBM and Amazon for the big CIA cloud computing contract. (A story, incidentally, that was first broken by FCW.)

Basically, the first three paragraphs of the BusinessWeek story were filled with praise and recognition for federal IT. The author made two relevant points. The first was that winning the CIA contract would give the winner major bragging rights: "Whoever won…could boast that its technology met the highest standards, with the tightest security, at the most competitive prices, at a time when customers of all kinds were beginning to spend more on data and analytics."

The second was that the CIA did not make the easy choice, but really seemed to care about best value. IBM "would have been a logical, even obvious, choice. Big Blue had a decades-long history of contracting with the federal government, and many of the breakthroughs in distributed computing can be traced to its labs." Amazon was actually more expensive than IBM, but the government was not convinced that IBM's solution would work, calling it "uncompetitive."

Let me draw some larger points from the article. The first is that the government, I think, tends to underestimate its clout in the marketplace -- a point I made in a different context last week. The story notes that winning this CIA contract would help a commercial IT firm in the commercial marketplace. Obviously, not all agencies are the CIA, and (no offense intended) a victory on an analogous contract for the Department of Agriculture would not give the winner the same boost. But there are niche commercial markets where even less-prestigious government agencies may have cachet.

The government needs to be more sensitive than it is to the influence its contract award and contract management decisions can have in the commercial marketplace. (The flip side, of course, is that when commercial firms are working on government contracts that go badly south, this will often produce negative media that will hurt the firm's image in the commercial marketplace.) I think that agencies are often not demanding enough of their contractors, and that understanding government's marketplace clout is important to improving the government's backbone, especially during contract performance.

One implication of this line of argument is that it is another reason for government to prefer vendors with a significant presence in the commercial marketplace over those that focus primarily or exclusively on government-unique. This source of government clout applies most strongly to firms competing in the commercial marketplace, where reputation plays a stronger role than in government procurement. (As a technical matter of the procurement rules, if the government wants to give some evaluation preference to vendors with significant commercial marketplace presence, it needs to state this in the RFP, and explain why this preference has a reasonable basis.)

The second point I got out of the BloombergBusinessweek kudos was that the government did not take the easy, cautious way out; CIA contracting officers actually used their judgment. There are lots of incentives for caution in government, and certainly (too many) cautious procurement source-selection decisions, but this behavior by the CIA -- like the GSA's decision to look for a radically different way to use the government's building assets that I discussed last week -- is more common than cynics believe. It should be cherished.

Posted on Jun 13, 2014 at 9:29 AM


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