Procurement jujitsu at HHS

Steve Kelman applauds the IDEA Lab experiments -- and explains what it will take to make real changes stick.

FAR image GSA

Bryan Sivak is the chief technology officer at the Department of Health and Human Services, and the kind of manager of whom government needs more -- interested in experimenting with new ways to deliver better value from government. He has established an HHS IDEA Lab, which is home to efforts like HHS Ignite, which actually provides $5000 of seed money (plus some coaching) to internal HHS entrepreneurs to develop new startup-type ideas for the agency. After three months, HHS decides whether the idea is worth continued work. It's a tiny version of an internal HHS venture capital operation.

I came across Sivak because another part of the IDEA Lab is called the HHS Buyers Club, which wants to try out innovative procurement techniques. A while back, FCW ran an article about Sivak called Teaching Feds not to fear the FAR. "Fear the FAR" was an interesting phrase -- the point was that the FAR provides more flexibility than many folks assume, and that people need to learn to take advantage of the flexibilities.

Now the HHS Buyers Club has finished the contracting stage for its first big effort: to choose a vendor to modernize the platform and infrastructure for the HHS Office of the Assistant Secretary for Planning and Evaluation's websites, databases, and software development environments, along with a redesign of its public website and development of a content management system. These are, incidentally, exactly the kind of definable, moderate-scale jobs where there are lots of small and nimble (and often inexpensive) firms that fear entering the federal marketplace.

There were two unusual features of the HHS solicitation. The first was the use of a two-stage downselect process. Any interested bidders were invited to send in some very simple material, on the basis of which HHS said they would choose five finalists. (24 firms participated in this first stage.) So it was easy to express interest and easy to find if one was a serious candidate without spending a lot of proposal money. The second unusual feature was that the five downselected finalists were then each given $10,000 by HHS to develop a prototype for the first task they were being asked to do. HHS looked at the quality of these five submissions in determining a final winner.

On September 30, six weeks after publication of the RFP and with five prototypes in hand, HHS announced a winner.

What is noteworthy about these two unusual features of the Buyers Club procurement was that both fit the "don't fear the FAR" theme. HHS used jujitsu -- taking advantage of the existing system to defeat the system's problems. The downselect process was specifically authorized in 1997 when the Federal Acquisition Regulation was revised (it's at FAR 15.202 if you'd like to check out the text). However, it has been used only occasionally by agencies. The idea of paying more than one vendor to develop a prototype actually first appeared, in a weapons system context, in -- believe it or not -- 1976! When I was in government in the 1990s, the Federal Aviation Administration successfully used this method to buy a tower-to-air communications system, where two versions were actually field tested by different groups of air traffic controllers. Other examples, however, are few and far between.

I would be the last to claim the procurement system creates no problems for government customers and vendors. I suspect that for agencies, the most frustrating problem is delays from reviews and re-reviews of documents, which are not required by the regulations (although one could fairly argue that the reviews test, at least partly, for compliance with unnecessary regulatory provisions). For contractors, the biggest complaint is likely the many unique-to-government provisions that are required to do business -- and grow out of laws and executive orders for which few procurement people have much sympathy.

Still, I agree with Sivak that the government could do much better if we taught ourselves not to fear the FAR, and started actually using flexibilities the government already has.

Incidentally, the HHS contract was awarded to Akira Technologies (congratulations!). They are a small business 8(a), which is good. Yet I fear that a new way of doing business for these kinds of procurement will not be fully established until small businesses that have been unwilling to deal with the federal marketplace start bidding on and winning some of these contracts.

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