By Steve Kelman

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Procurement contests pooh-poohed by an unlikely source

In a contracting world in which the climate for innovation has been terrible for a decade, one bright spot on a dim horizon has been a surge in the use of contests as a procurement tool.

The basic idea of a procurement contest — sometimes called a prize or challenge — is to set out a performance requirement for a capability that needs development work and offer a prize, usually money, for the first or best entity to produce a product or capability meeting the requirement.

Contests engender a lot of effort, and you pay only for results. Keep in mind the caveat: if it is a risky undertaking that may well fail, you need to be willing to pay more than you would have for a level-of-effort traditional procurement. The push for greater use of contests as a procurement technique has gotten the official blessing of the Office of Management and Budget, which has doubtless helped things along. Interest in contests has grown in the private sector as well, with an entire company,, acting as a platform through which private firms can advertise contest opportunities. NASA and some other government agencies have been using Innocentive as well.
Well, I recently read something that threw cold water on the idea. Before I tell you the unlikely source of this icy blast, here is a sample:

Federal agencies…are increasingly tapping a parallel universe of what are known as "prizes and challenges" to bypass the [Federal Acquisition Regulation] and agency procurement processes and bring innovation to government.… [Agencies] have demonstrated some creative interpretations of existing statutory authorities to sponsor and award prizes for a wide range of requirements, in ways that push against the boundaries of the federal procurement system.… This approach is able to lead to rapid selections because it frees the agencies and the competitors from the complexities and costs of complying with the FAR rules, which are in place to protect taxpayers, even though the process employed is really a federal procurement. Applying innovative techniques to achieving federal missions should be supported.… But their use should be carefully monitored and tracked to ensure that agencies are also following core procurement procedures to properly obtain necessary goods and services.

So who said this? An inspector general somewhere? Notice that "creative" appears to have a negative connotation, and the speed of the process seems to be seen as a problem.

No, unfortunately the source of this quote is not a by-the-book IG or another kind of auditor. This passage comes from a column in the Washington Business Journal by Alan Chvotkin of the Professional Services Council, the main trade association representing high-end IT/consulting/professional services contractors.

I know and like Alan, and I also know he has always — at least since the 1980s — been somewhat conservative in procurement matters. But I really think this column was very unfortunate. The safest course for government contracting officials is to keep their heads down and not try anything new. The last thing contracting folks need to hear is naysaying about innovation from industry, which normally prides itself on encouraging the government to look for more sensible — may I say more business-like — ways to do business.

It is particularly unfortunate that the only example of a bad contest the column cites is a contest being sponsored by the Veterans Affairs Department to develop an Internet application that will encourage vets to use something called Blue Button, which allows their service-related medical records to be downloaded by nonmilitary healthcare providers. Blue Button is an effort led by Peter Levin, VA's smart and innovative chief technology officer, who brings a long background in the high-tech private sector to public service, and the early impression of the Blue Button effort is that it is a success story, developed under the leadership of exactly the kind of person often difficult to attract to federal service at a senior level.

The Professional Services Council should continue to encourage interesting procurement innovation in government, not dump on it.

Posted on Aug 10, 2011 at 12:09 PM


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