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By Steve Kelman

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Procurement contests: A bright idea?

On a number of occasions -- most recently in a Federal Computer Week column on five ideas for improving the procurement system -- I have argued that the government should make greater use of contests as a procurement technique. It leads to spending lots of money on innovative ideas. Contests are one of those things so old they become new again.

The development of an instrument to measure longitude, a problem that long baffled the sailing world, grew out of an English government contest in the 17th century, as did the Wright brothers' development of the airplane. The government established a performance objective and offered some sum of money to whomever met the performance criteria first. The idea has since largely disappeared from the repertoire of the contracting community, except for the Defense Advanced Research Projects Agency, which has successfully used it in a number of contexts. Government ought to be looking actively for opportunities to use contests as an alternative to conventional procurement.
I was pleased to see in The New York Times recently an article called, "A Bright Idea: Build a Better Bulb, Win $10 Million." The article describes a contest being conducted by the Department of Energy to develop an incandescent light bulb (which produces a quality of light that many find preferable to fluorescent bulbs) that gives off the light of a 60 watt bulb but uses only 10 watts of power, and that lasts 25,000 hours (compared with 1,000 hours for a standard incandescent bulb). The winner will receive a $10 million prize, plus an undefined (at least in the article) leg up on contracts for supplying government office buildings. Although there seems to be no cost constraint on the bulb, the Energy Department has enlisted 27 utility companies to work with it on creating a market for an eventual bulb that could make it more affordable by, among other things, increasing the size of the market and hence production quantities.
The idea has elicited efforts from many firms; it looks as if Philips Lighting (one of the largest bulb companies in the world) may be the first to meet the specs and win the prize.
Nice to see that another government agency is pursuing this approach. Contracting colleagues, let's not leave it at two.  Can we look for opportunities for where this might make sense in other government contexts -- including information technology applications? New OFPP Administrator, please take note.

Posted by Steve Kelman on Oct 02, 2009 at 12:08 PM

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Reader comments

Tue, Oct 6, 2009

Hey guys, of course contests aren't appropriate for all procurements, or even most. My concern, though, is the opposite -- that not enough contracting professionals have this tool in their toolkits as one technique that under some circumstances can do a super job delivering best value for the government. Instead of naysaying, we should be encouraging procurement professionals to be thinking about this as one alternative. (BTW, thanks for the headsup about the Wright Brothers -- lemme try to check!)

Mon, Oct 5, 2009 David Bodner

I agree with Emma on the usefulness of contests. Longitude and light bulbs are simple problems to define (albeit with very difficult solutions). Most of our IT problems are much more complicated, even if their solutions don't require a technological revolution. And I'm thinking you might be off-base on the Wright Brothers. I don't think they were responding to a contest as much as they were replying to a "wired" RFP.

Mon, Oct 5, 2009 Emma Antunes

Contests have to be very specific, with very clear goals. They don't work for everything. As a way to drive technological innovation, I think they're great. As a way to do procurements; not so much. The FAR should be updated to make it easier to run contests, where appropriate.

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