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By Steve Kelman

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Meet the new face of government IT contractors (part 2)

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Last week, my blog discussed a letter that eight winners of the Department of Homeland Security's now-cancelled FLASH agile software development contract wrote commending DHS for its innovative approach to the procurement. I am using their letter as an occasion to get to know some of the new faces of government IT contractors, and to give readers an opportunity to hear their voices.

Last time, I talked about a firm called Navitas. This time I will discuss a company founded in 2014 that has since grown to 100 employees, called Ad Hoc, which specializes in developing consumer-facing Internet applications, "anywhere the government is offering a service to people."

The company's CEO, Greg Gershman, grew up in Montgomery County, and went to work as a software engineer after college. When the startup he was working for laid him off during the dot.com bust, he took the first job he could find, with a large government IT contractor. It was not a good experience, and he left after 10 months.

He then started a company called Blogdigger, a search engine for blog content. After selling that, he worked for almost a decade as an independent consultant, mostly to startups. Then in 2010, Gershman said, "I was trying to get a new startup off the ground, and got connected to Jay Virdy, a Washington-area entrepreneur who had just sold a company to Twitter, and had a background in building search engines."

Gershman was hoping to get Virdy involved in his startup. Jay didn't like his idea, but "pitched me instead on coming to work with him on a project at [the General Services Administration] to build a search engine for government websites. I was skeptical, but the opportunity to work with someone like Jay, a veteran of startups, and on what sounded like a very cool project won me over, despite my past bad experiences in government contracting."

GSA was a pleasant surprise for Gershman. The project was very meaningful for him, because it was working on getting government to serve people better. And he was amazed that GSA was using a tool called Rails, a popular web development framework. Rails came out of the startup world and was focused on making it quicker, easier and simpler to build web applications. At the time, it was very rare in government, even though it was then the framework of choice among startups.

"To see a government project using Rails in 2010 was almost unheard of, and was interesting to me," Gershman said. (He hastened to add, however, that ‘I don't want to make Rails sound like a panacea. It's a specific toolset that works well in some situations.) Rails has grown significantly since my time at GSA, he noted. "I think its growth is a testament to the efforts made over the past several years to get more commercial-sector developers involved with government work."

The GSA experience convinced Gershman to apply be a Presidential Innovation Fellow, to allow him to mix his engineering passion with his passion for meaningful work to help people. While an innovation fellow, he was deployed in late 2013 to the Healthcare.gov rescue team.

The next year he concluded his fellowship and founded Ad Hoc with Paul Smith, an internet entrepreneur who had worked as CTO of the Democratic National Committee. "He was working on another startup when I met him," Gershman said. "We met outside the West Wing when we went to rescue Healthcare.gov."

The name Ad Hoc, Gershman said, came from the HealthCare.gov effort: "We wanted to convey that we were a team of people who were put together specifically to help Healthcare.gov succeed, and that we were there to help only for a short period of time."

The experience as an innovation fellow got Ad Hoc on a glide path to its first government contract, a federal baptism far easier than most new contractors confront. People at CMS liked Gershman and Smith's work on the rescue, and gave them the a project as a subcontractor to Aquilent.

How does Gershman see Ad Hoc as being different from a traditional government IT contractor? One is the presence of what he calls an "engineering culture." The culture at the company, he explained, "is focused on excellence in engineering. Google, Facebook, and other consumer Internet startups are places where engineers are valued for their work, challenged, supported, and nurtured. There's a career path set up to help them progress and grow in their skills and take on new challenges. You don't find this as much in government, and it's understandable. Government is focused on different things, as it should be."

But his experience working at a large government contractor was that "there was no engineering culture" there either. "Engineers were dropped onto projects, weren't assigned mentors, there was no clear career path or a path to grow and learn," he said. "As an engineer, it felt like I was wandering aimlessly through my work."

"My sense was that these companies think of engineering as an afterthought," Gershman said. "They are government contractors, in that their core skill is getting government contracts." By contrast, he said, "we are first and foremost a development and engineering company. … It makes a huge difference. Building a strong engineering culture enables us to get the best people, and deliver consistently for our customers."

Most of Gershman's new hires come from the private sector, not from existing government contractors.

The second difference with traditional government IT contractors is that they tend to use what he calls enterprise software development methods, even for consumer-facing work.

"Enterprise software development tends to focus on maximum flexibility," Gershman said. "There is a big focus on building in architectural support for changes down the road. Most of these things add a lot of time and cost to the process of building something, and are very often never used -- all the pre-optimization for problems that you think you may possibly have in the future distracts you from doing what you need to do right now to serve your users."

Consumer internet companies, by contrast, tend to focus more on what are the most immediate ways to help users their goals, he said. "Your system architecture evolves over time, and may change, but is always focused on what your users need." In that sense, the philosophy is similar to agile software development.

Not all government agencies welcome the new approach, but for some it is a reason to choose Ad Hoc. "All our current customers selected us for our approach to software development." Gershman said. "We do write this in proposals as well as demonstrate it when possible via tech demos." Thus are the new IT contractors bringing new approaches to the government.

Ad Hoc's business is all for government. "I wasn't dissatisfied with my career in the commercial sector," Gershman said. "I found it challenging and exciting. But once I started working in government, and found that I could use the same skills to create systems efficiently and help people at the same time, it became hard to go back to commercial work. "

Gershman said he would encourage any new contractor to start as a sub, as a way to learn more about the government marketplace. But he is concerned that a non-traditional firm such as his must be careful not to let their culture be swallowed and transformed by the big IT contractors, so he decided early on he would try eventually to become a prime.

An opportunity arose with Veterans.gov, a website that was being competed as a small-business set-aside. In May 2016 Ad Hoc was awarded its first prime contract, as part of a team of small firms. Since then, the company has won a number of prime contracts, which now comprise 80 percent of its work.

"There's many adjustments that we had to make to be a prime," Gershman said. "Invoicing the government is a more complex process than invoicing other companies. We had to plan better, and the increased size of our team meant we had to manage our money more carefully. We've also had to do things for GSA Schedule 70 like sales reporting."

He said he hasn't had a bad experience bidding for government work, though he definitely prefers tech demo procurements such as FLASH that don't require a lengthy written proposal. Ad Hoc still has no dedicated proposal writers, using regular staff instead.

The firm's use of Schedule 70 also is increasing. "All our work with CMS as a prime is through 70, and we will continue to use 70 in the future," he said. "We've been very happy with 70. It's the easiest way to get on a vehicle that any agency can use. It can be a bit scary, having to give GSA your lowest rates, and having that information be publicly available, but it's definitely worth it. We've responded to bids on IT 70 both from agencies and customers we've worked with in the past, as well as completely new agencies that we've never spoken to before."

Ad Hoc was the only FLASH signatory I had contacted who had tried Challenge.gov – once – but the firm didn't win. "We still look at it, but it's a lower priority right now," Gershman said. "My hope was that responding to challenges would help us introduce ourselves to new agencies and customers, but so far that hasn't really worked out."

"I get the sense that agencies do challenges for other reasons, not to meet new vendors," he continued. "We would definitely do more challenges, especially if they are interesting, as it's a nice change of pace for our team … and hopefully has some downstream benefits for the company."

I will conclude by saying that it has been absolutely fascinating for me to talk with these new faces of government contracting. I have been hanging around this space for many years, but each of the contractors I've spoken with in connection with the FLASH winners' letter has taught me something about how government contracting works or could work.

I may try to write a third blog post featuring another of these signatories, if I can get equally interesting information. Meanwhile, I am extraordinarily encouraged by the breath of fresh air these new voices represent.

Posted by Steve Kelman on Aug 09, 2017 at 6:50 AM


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