Let’s Change Government Tech Procurement

Over the past decade, HealthCare.gov has emerged as one of the American government’s most notorious tech disasters. When President Obama signed the Affordable Care Act into effect on March 23, 2010, the planned launch date for its website, HealthCare.gov, was set to be October 1, 2013. Three years later, over 250,000 users attempted to log in during the first 2 hours after the website’s launch, causing the site to crash. Problems mired the website throughout its first day, allowing just six users to complete the registration process.

The Healthcare.gov incident incited poor publicity and criticism of the government’s technological capabilities. This public backlash was justified: Despite three years of preparation, the website launch still failed spectacularly. However, much of the media coverage overlooked larger questions surrounding flaws in the government’s process of acquiring technology.

The government builds very little of its technology internally: An enormous portion of government tech is developed through external contractors and a procurement process. Government tech procurement is a big business: Over $7 trillion is spent annually on procurement-related projects. For any project, the procurement process begins with a Request for Proposal (RFP): When a government agency wishes to build software, it issues an RFP detailing the project to a public forum, then collect bids from private government contractors and other interested businesses. The contract goes to whichever contractor submits the lowest bid while demonstrating their ability to complete the project. From there, the contractor is responsible for delivering the project according to the timeline established in the contract.

While the process seems straightforward, it can lead to disasters like Healthcare.gov, which was largely brought on by a disorganized and inexperienced bureaucratic task force managing a procurement process with hundreds of moving parts. With that said, although today’s government tech procurement is riddled with flaws, it comes from a long historical precedent designed to promote transparency and competition in a process involving billions of taxpayer dollars. Since the principles underlying the procurement process remain valuable today, it doesn’t make sense to throw away the procurement process altogether and start anew. Instead, we need to explore why tech procurement has been failing more and more often in order to reform today’s flawed system from within.

Issues with Procurement Today

As Healthcare.gov and countless other recent cases demonstrate, the procurement process can cause contracts to go catastrophically over time and over budget. Most frequently, these issues boil down to the process’ extreme rigidity and lack of experienced oversight.

Agencies often pay hundreds of millions of dollars to reinvent the wheel, highlighting how the procurement process enables staggering inefficiency. For instance, the Department of Veteran Affairs wasted over $600 million in a contract with Lockheed Martin to build an automated phone system from scratch, even though viable solutions already existed.

Furthermore, the bidding process can get bogged down by specificity. Whenever the government identifies a problem, they gather opinions about how the solution should look, then write pages and pages of requirements. The resulting proposal ends up as specific as possible: Proposals generally request an exact number of engineers to work for an exact number of months. Although specificity can be beneficial, it restricts the creative freedom of the engineers who are forced to abide by all the proposal’s requirements. By reducing engineers’ flexibility, the procurement process sacrifices innovation, efficiency, and talent in order to minimize costs.

Finally, government bureaucracy often drags out the procurement process, preventing the government from keeping up with accelerating innovations in tech. Both the proposal process and subsequent project management suffer from the abuse of time. Traditionally, the proposal process happened entirely on paper, and filling out mountains of paperwork wasted hundred of hours. Many local city governments still lack the technology to speed up this process. For example, in Philadelphia, merely writing a proposal takes an average of 246 hours, and it’s estimated that the entire process takes over 2 ½ years to complete. This timeline can render proposed solutions obsolete, especially when they involve rapidly changing software technology. Furthermore, the government often bears extra costs incurred in the process: The contracts typically allow the contractors to receive cost reimbursements for the extra resources they consume because they are operating beyond the proposed timeline.

Clearly, the government tech procurement process has grave defects, often costing us hundreds of millions of taxpayer dollars. But government procurement was not always so convoluted and time-consuming. So how did we get here, and what principles historically underlie the procurement process?

Principles and Precedents of the Procurement Process

Today’s procurement process is founded on the core principle of ensuring transparency with public funds. Its origins date back to the aftermath of the Civil War, according to Professor Steven Kelman of the Harvard Kennedy School. At the end of the Reconstruction Period, widespread corruption plagued federal and state governments. This time came to be known as the “Gilded Age” — a phrase devised by Mark Twain to describe a society “glittering on the surface but corrupt underneath.” Politicians catered to the interests of businesses in exchange for wealth and political support. Many succumbed to bribery and graft, most notably Tammany Hall.

To combat pervasive corruption and the abuse of public funds, says Kelman, a movement began to inject more rationality into the process of making government decisions. The movement sought to safeguard funds from misappropriation. This process continued to gain layers of complexity into the 20th century, but the core tenets of today’s procurement process date back to the Gilded Age movement, highlighting transparency in government decisions about public funds.

In today’s tech environment, the government maintains transparency as a key value in the procurement process, but it has also developed an increasing wariness of the most cutting-edge technology. Most of the government’s tech must be tested thoroughly and used for years in the private sector before it’s approved for government use. By waiting to implement cutting-edge technology, the government avoids dangerous bugs and security vulnerabilities. This is especially important because much of the government’s software contains valuable data with national security implications. New tech, from Amazon’s Alexa to Apple’s FaceID, continuously collects more and more data, creating potential security threats. Thus, the government’s caution toward cutting-edge technology adds more restrictions to the procurement process.

The rigidity of the procurement process also serves a good purpose: It forces the government to only pursue the projects it truly needs. With such a structured process, agencies are more likely to behave impartially, make reasonable and informed decisions, and avoid corruption.

Solutions

The principles underlying the procurement process aim to ensure transparent, effective, and impartial procurements. But somewhere along the way, today’s procurement process has been failing, as evidenced by disasters like HealthCare.gov and by government tech contracts that run over time and over budget. Thus, it’s crucial to examine and rectify the shocking amount of glut in government tech spending. We believe that there are ways to enact substantial reforms in oversight, procedural semantics, and internal development culture while still maintaining the core tenets of the existing procurement process.

1. Decrease Barrier to Entry

It’s no secret that the procurement process favors corporations that already have strong relationships with the government. Lockheed Martin, the largest government contractor, was awarded over $46 million in contracts alone during Fiscal Year 2017. By the same source, the top 5 government contractors — Boeing, Raytheon, General Dynamics, and Northrop Grumman — make up over 20% of the government’s spending on contracts. As a result, the best contracts are monopolized by the largest corporations, since they have already mastered the proposal process. Moreover, the heavy cost of merely submitting a bid — up to $1.5 million — also favors the largest corporations with the largest budgets. While there are advantages to constantly hiring the same experienced contractors, this prevents new companies from getting into the public sector and introducing new practices and technology. It defeats the purpose of an economy built on competition. Therefore, the government should decrease the cost of bidding on proposals in order to increase competition.

2. Accelerate Timeline for Low-Budget Projects

The procurement process includes many loopholes allow projects to skip through the bureaucracy of RFPs, thus speeding up development. Currently, projects under $10,000 go through a heavily expedited process, in which agencies can more directly purchase technologies from vendors. If the government raises the threshold budget for bypassing RFPs, even more small and quick projects could be completed on an accelerated time scale. As a result, the government could make small improvements to its tech infrastructure more efficiently.

3. Incorporate Cultural Change

Agile software development has become a buzzword in the tech world over the past few years, dominating how startups and companies in the Silicon Valley boom develop new products. Agile software development is an iterative and incremental product development process in which incomplete versions of the product are continuously rolled out, then constantly evolve based on new user feedback. Conversely, according to Professor Kelman, the current development culture within government is to release one stable version that is treated as an end product. This approach can be dangerous, as products can be riddled with bugs on initial release. The disastrous launch of HealthCare.gov demonstrates this risk. Adapting the procurement process to incorporate the agile development mindset would likely reduce bugs, enable faster product evolution, and ultimately produce more effective products.

4. Bring in Talent

Government agencies and other civic tech organizations are already making increasing use of tech talent from Silicon Valley and the private sector, leading to well-executed projects with rapid turnaround times. Organizations like 18F, U.S. Digital Service, Presidential Innovation Fellows, and Defense Innovation Unit Experimental all create innovative products (from digitizing the immigration system’s review process to visualizing big data in government) within a timeline of one to two years. Talent flow into the civic digital sphere undoubtedly makes workplace culture more innovative and efficient. Attracting outside tech talent should become a more standard and widespread practice for government agencies.

What’s Next?

Although the government’s tech procurement process is seen as tired and faulty, it merits a second glance before we deem it hopelessly broken. There’s nothing inherently wrong with the principles underlying the procurement process; to the contrary, it’s important to have a culture of transparency when government bureaucrats wield potentially millions of dollars in spending power. Failures like the HealthCare.gov disaster are signs that it’s time to modernize government procurement. By infusing the procurement process with more innovation and flexibility, we may be able to nudge the civic digital sphere in the right direction.

Authors

Austin Hwang
Writer for the Harvard Technology Review
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