Innovation at a 95-percent discount

In a recent conversation with a senior administration official, I was told about an accomplishment of a program started last August called the Presidential Innovation Fellows. This effort, run out of the office U.S. Chief Technology Officer Todd Park, brings about 20 smart people from the private sector to work in the government for a 6-month stint to jump-start a specific innovation initiative in cooperation with an agency. (FCW previously covered the program here.)

One of these innovation fellows, whose normal job involves website design, has been working on an initiative called RFP-EZ, which is an application to help companies who have never done business with the government before – especially startups with innovative solutions to government problems – walk step by step through the federal procurement process.

The idea to do this is itself a great one, and I will be following with interest as this is rolled out, to see if this helps improve access for small commercial companies in the federal marketplace. However, I bring this up in this post for a different reason – the Innovation Fellow’s work to develop the application itself. The idea for doing this predated the Innovation Fellows program, and this first-round fellow was brought in to help actually develop the application. As I understand it, the agency working on scoping out the project, based on their own past experience contracting for applications such as these, thought the application would cost north of a million dollars to develop. However, based on his own experience with web design, the Innovation Fellow estimated this would involve around $50,000 of time and could be done in a very short period  – and proceeded to do exactly that (he didn’t charge the government, since he was already a fellow).

This is an example of a phenomenon that one doesn’t run into all the time, but that happens often enough to be a source of real worry and of a need to dig more deeply to draw some lessons. It is not unheard of that situations arise where people from the commercial IT industry, outside the normal world of government contracting, either actually develop, or present a case after the fact for why it would have been possible to develop, applications meeting the same specs for a tiny, tiny fraction of what the government pays – not 10 percent less or even 20 percent less, but 95 percent less.

It is of course possible that in some of these cases, there are security or other issues that are not taken into account, and I feel relatively confident that these situations are the exception, not the rule. Nonetheless, I raised this issue with a group of contracting officers with whom I had coffee before Christmas, and one person told me that at his previous organization (in the intelligence community) they actually had a little office that looked at much lower-cost alternatives to approaches the agency was planning to use for developing applications, and that this office did at times find examples of ways to get applications developed for a fraction of what the government had been assuming it would be paying.

I think we need to try to peel the onion a bit on this. We do typically have competition on developing these applications, so there should be an incentive for a vendor to bid a much lower-cost solution. Is the problem that small commercial companies which might provide dramatically cheaper alternatives don’t want to get involved in the federal marketplace?  Or what?  Perhaps a good first step would be for the Innovation Fellow involved in RFP-EZ to come forth and, in a non-threatening way, explain the differences in assumptions or mindset or whatever between him and the government/contractor folks that produced this big gap in expectations of what it would take to develop this application.