Another new face of government IT contractors

Steve Kelman talks with the CEO of a public benefit corporation focused on federal work.

government industry dialog

As some blog readers may know, I am quite active on Facebook and have been so for a number of years. However, I never joined LinkedIn, assuming it was just for people looking for jobs (which I’m not).

But after getting a number of requests to “connect” and seeing that the site also had features allowing sharing news and information, I finally joined a few months ago. Then just recently my decision was rewarded when I received a request to connect from Rohan Bhobe, CEO of Nava.

Nava is a startup in the government marketplace that began as a group of mostly Silicon Valley tech folks who began working for the HealthCare.gov rescue in 2013 and morphed into a company in 2015. Bhobe had a history at a number of consumer-facing tech startups, and then quit one he was working at (set up to develop a social network that would connect people anonymously based on shared life experiences) when they changed their strategy. Shortly thereafter, he got a call from a Silicon Valley friend who was going to work on the Healthcare.gov rescue and, having long had an amateur passion for public service, decided to sign up.

The founders of Nava include six who had some experience as tech founders outside the government space. Nava now has 61 employees, and all its business is with the government, with three contracts so far. Those contracts include continuing work for Healthcare.gov, work with the Department of Veterans Affairs to work on re-imagining (this seems to be the new phrase for what in my day would have been called re-inventing) benefits appeals processing, and work with Medicare on a new quality payment program that will change how Medicare reimburses doctors.

I have written two earlier blogs on the new face of government IT contractors, on firms called Navitas and Ad HocOf the new contractors I have spoken with, Nava is definitely the most upfront about its public service mission, though the attractiveness of working on missions that help people was definitely on the mind of Greg Gershman at Ad Hoc.

This aspect is especially front and center for Nava, however. The firm is organized as a something called a “public benefit corporation,” which is actually a legally recognized corporate form with “a social mission written into the founding charter that has as much weight as a corporation’s fiduciary responsibility to its shareholders.” 

As the company writes, “being a public benefit corporation isn’t too different on the surface from being an average corporation. We’re a profitable company and give generous options regardless of role so that everyone can have equity in Nava. Past, present, and future employees are the shareholders of Nava. As shareholders, we all have a voice in Nava’s future. If, somehow, Nava were to ever stray from our focus on improving government services, Nava’s shareholders — even if the shareholders were no longer at the company — would have a legal path to hold Nava accountable for its stated mission.”

Nava’s first contract after Healthcare.gov was for improving the VA appeals process in terms of speed and accuracy. Two aspects of Nava getting this work from the VA are revealing about positive developments in federal IT, in terms of the behavior of both government folks and of traditional IT contractors.

On the government’s end, the source selection process involved bidders needing to present to the agency a tech demo -- a new source selection approach I have discussed previously -- of a mobile-friendly system, developed in 72 hours, for sending payments from user to user through a bank.

When Bhobe told me about this, my initial reaction was confusion: what in the world did a source selection for redesigning VA benefits processing have to do with sending payments from user through a bank? In fact, the VA’s approach was brilliant.

First, bidders had to demonstrate, Bhobe said, “not just technology but how technology can be brought together to create a modern service.” In that sense, this told the government more about the company’s capabilities than many other tech demos, which are often more like a hackathon to develop a standalone app.

The second way the VA’s approach was brilliant is that the agency realized that if the tech demo involved appeals processing, traditional contractors who were experts on the ins and outs of VA’s existing processes would have a leg up. Doing work in an area outside the specifics of the task was, consciously, a way to give more opportunity for new players to be successful.

(Compare this with RFPs that give a lot of evaluation weight to knowledge of the agency’s processes, classically a signal that the agency doesn’t want new talent.)

The source selection also shows changes among traditional government IT contractors. The work was competed as a task order under an existing IDIQ, with Nava competing as a sub. Tales are legion out there of new firms sending primes endless unanswered emails and knocking on doors where nobody is home. In this case, several of the primes expressed interest in having Nava as a sub.

“We are seeing a trend in government that people want to think more about the user experience and also to look at the root causes of problems." Bhobe said. "Some primes recognize that our approach has the potential to be higher value added – and like an opportunity to work with firms like ours.”

Some firms newly entering the government market worry that if they are subs to traditional primes, they risk losing their own culture and becoming a body shop. Nava's leaders, with the luxury of choice, were careful to choose a prime that was supportive of the role they wanted to play, giving them key responsibility for engineering and design.

In addition, they got the prime contractor (and the government) to accept labor rates that were higher than typical for government contractors, to allow them to recruit better talent. This, they argued, provides the best value for the agency because great teams are adept at moving quickly and tackling complexity, while larger teams of less experienced personnel, though cheaper on an hourly basis, are more likely to produce complex systems that drive up long-term costs for the government. (It is harder to develop simple than complicated software, Bhobe notes without irony.)

So Nava’s experience as a sub does not track the worries about subcontractors being subjugated by primes that are out there.

I asked Bhobe to talk about specific examples of how his company’s approach to the work they do is different from traditional IT contractors. He gave me two examples from the VA benefits appeals process work.

One involved the firm's efforts to increase the transparency of information about an appeal that the agency provides the veteran. He said that, first, the company worked with the VA on defining results and goals, and then used cross-functional teams tasked to think through how big-picture goals could play out in small design and engineering decisions. With transparency as one of the big-picture goals, teams were able to not just fulfill requirements but uncover deeper opportunities to improve the overall process. 

(I was not fully convinced, however, that these attributes were so outside the swim lane of traditional contractors, especially certainly the first. Perhaps empirically it may be true that many traditional contractors are weak on vision and/or on an overarching strategy for designing a business process, but I suspect it would not be rocket science for many of them to make these changes as the spread, say, of user-centered design proceeds in government and in the government’s contractor base.)

Similarly, Bhobe gave an example of an ancient form that Veterans Benefits Administration employees needed to fill out as part of the appeals process. Originally asked to simply digitize the form, as a traditional contractor might try to do, Nava’s collaboration with the VA Digital Service involved stakeholders from different units and enabled the team to discover the form was not really needed at all; it could be generated automatically so that it was available for record keeping, and save employee time. (Again, I wasn’t convinced that such an insight would be beyond the ken of a traditional contractor, especially one facing competitive pressure to be more strategic and collaborative.)

In any case, Nava is moving onward and upward. The firm recently won its first prime contract, with the Medicare side of CMS. This was a full and open competition against a field of 19 bidders.

Interestingly, Bhobe said the biggest challenge of moving from sub to prime is not the invoicing or other compliance requirements that are often discussed, but maintaining the company’s collaborative and public-service oriented culture as it grows. He does say that learning how to write a government proposal was hard, a very frequent barrier to entry that new entrants cite. “It was definitely a challenge. There is a very particular way that RFP’s are formulated, evaluated, and awarded," he said. "I agree that it is a big barrier for new entrants, took us about a year to learn, and Nava would support any efforts to make the process more effective.”

Nava also is about to get a GSA schedule 70 contract. He likes the speed of the new FastLane process GSA has introduced for new contractors (as well as GSA’s elimination of a requirement for two years of sales, though his company had three years when they applied) and says providing pricing information about rates and labor categories was not overly burdensome.

The conventional wisdom is that new firms struggle mightily to enter the federal marketplace. Nava offers a happier story, about how the government and some contractors are adapting to or even welcoming such new participation.

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