One of the surest ways to crush innovation is to run it through the typical government procurement process. Government purchasers have to act faster.
There’s a huge amount of innovation occurring right now in the technology industry. Social media-driven collaboration, lightweight applications, cloud computing and other trends are radically changing the way organizations acquire and use technology. But while this new stuff is making private businesses more nimble and effective, a lot of it isn’t reaching government agencies -- and that’s a shame.
Governments typically aren’t the first to adopt brand-new technologies, and given their role as stewards of taxpayer dollars, that’s appropriate. But at some point, new technologies and concepts proving themselves in the private sector deserve a look in government. Unfortunately, one of the surest ways to crush innovation is to run it through the typical government procurement process.
Burned by bad technology deployments, agencies have tried to shift more and more project risk to vendors. They’ve added layers of review and upped liability requirements for companies doing government work. And that’s not a bad thing -- technology vendors need to be held accountable for their products and services. But taken too far, these provisions may do more harm than good. In the fast-moving technology world, they can delay projects for so long that they’re obsolete when finished. They also boost prices, as contractors factor in the length of time government jobs take to complete and the risk associated with them.
The tension between oversight and innovation is reflected in a poll of state and local government IT officials conducted last year by our sister publication Government Technology. Almost 60 percent of respondents called procurement a significant barrier to adopting cutting-edge technologies and reacting to changing requirements. Ultimately, the cost and complexity of winning public-sector business limits the pool of companies willing to bid. And it often scares off young, innovative firms that may have new ideas for solving government problems or meeting government needs.
The issue is starting to draw attention, and it’s spawning some interesting experiments.
The RFP EZ program, an experiment launched last year by the federal Office of Science and Technology Policy (OSTP), is designed to help small, high-growth technology companies do business with Uncle Sam. The RFP EZ online portal offers a simpler bidding process, which appears to be paying off. Over a five-month trial period, a handful of projects -- all relatively simple website development and database contracts -- were released on both RFP EZ and FedBizOps, the federal government’s standard contracting portal. On average, OSTP found that project bids received through RFP EZ were 30 percent cheaper. In addition, RFP EZ attracted almost 300 companies that hadn’t previously attempted to sell to government. The pilot wrapped up in May, but the federal government intends to expand the program.
States and localities are looking for ways to pull new blood into IT procurement, too. Some have carved out new purchasing guidelines, acknowledging that rules designed for buying asphalt or pencils don’t always work for technology acquisitions. Others have tried to make it easier for companies to break into the government market.
Notably, New York City launched an initiative a few years ago aimed at giving nimble new companies a crack at government contracts, particularly on small to medium-sized jobs. In addition, the city recently split its solicitation for systems integration work into two service classes -- one for big projects and one for smaller jobs -- to appeal to a broader range of vendors. The approach helped draw 300 firms to a recent conference to discuss the new contracts, according to the New York City Department of Information Technology & Telecommunications.
If you haven’t done so already, maybe it’s time to take another look at how you’re balancing procurement risk with the need for speed and innovation.
This column originally appeared in GOVERNING magazine.