Are procurement contests just another way for government to pass the innovation buck to a preferred outside vendor?

Posted on August 30, 2011

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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.

from the Contracting Education Academy at Georgia Tech August 15th, 2011 article Procurement contests pooh-poohed by an unlikely source

Inspiration comes in many, many forms.

Having just concluded this past week, the incredibly popular Dangerous Supply Chain Myths Series, I must admit that I once again found myself wondering about what I would write next.  It didn’t take long as a new debate is rising on the supply chain horizon that is centered on purchasing contests.

No, I am not talking about a game show with an Alex Trebek-type host testing purchasing professionals’ knowledge with such titillating answers such as scrapped after 7 years and $650 million.  The question to which said answer belongs for those who are for the first time reading a Procurement Insights Blog post is, what are the Veterans Health Administration’s failed Oracle and J.D. Edwards e-procurement initiatives.  Although, and from a public awareness standpoint, making a simple reference to the Bay Pines facility in Florida and the subsequent congressional hearings may be a more readily remembered question.

What I am talking about is a way for the government to pass on R&D costs to vendors in a quest to solve a particular problem without having to adhere to the existing core procurement procedures associated with the Federal Acquisition Regulation (FAR), and agency procurement processes.  This is also it is worth noting, the red flag that detractors of the contest approach to public sector innovation are waving.

Of course the Contracting Education Academy at Georgia Tech to whom I had made reference in the opening paragraph of today’s post, is not the only one covering this story, as a wellspring of articles have come forth from multiple sources including a August 26th, 2011 post in Washington Technology by Stan Soloway.

Aptly titled Let’s argue procurement. It’s healthy Soloway,who at times gushes about the friendly but spirited combatants Steve Kelman and Alan Chvotkin in the for and against debate regarding procurement contests, still manages to raise a salient point regarding the importance of balance in terms of practical application.

As you know I have always maintained that the broad application of any strategy or technology driven approach across all areas of an organization’s spend is a recipe for disaster.  You merely have to consider the VHA misstep as well as the countless other failed government initiatives to quantify the veracity of this position.

That being said I am an advocate for procurement contests on many levels, and for many reasons, subject to a clarification of key elements of the process including who ultimately owns the intellectual property of the developed innovation.

Of the countless reasons for my endorsement (if you could call it that) it is the propitiation of what I believe is the myth of having to create a level playing field in the government tendering process that has, in my humble opinion, led to increased costs for diminished value.  I am not alone in my thinking here as demonstrated by a 90 minute roundtable discussion I hosted from the 3rd Annual Business of Government conference in Washington back in April 2010.

Featuring a guest panel that included the former CIO for the Federal Government under the Bush Administration Karen Evans, IACCM’s CEO Tim Cummins, 30 plus year UK public sector purchasing expert Colin Cram and expert author Judy Bradt, who has helped more than 6,000 clients win in excess of $300 million in contracts over the years, the discussion on transparency in the government procurement process was both interesting as well as for some perhaps a little surprising.  By the way, here is the link to the on-demand broadcast What is Transparency in Government?

What I found most compelling about the roundtable session was the fact that there was a prevailing belief that the very processes that Chvotkin stressed should not be inappropriately ignored or sidestepped as they are the basic tenets of federal procurement, are in reality the artificially induced standards that often times lead to unimaginative and ultimately ineffective purchasing decisions.  A just following orders mindset is what I recall Colin Cram as saying, that provides nothing more than an excuse for less ambitious purchasing professionals to push paper rather than roll up their sleeves and drive taxpayer value.

Over the balance of this week I will examine the procurement contest concept in greater detail citing actual case study examples such as the one involving Denver, Colorado-based Alpine Energy Group which spent four years and I am certain a great deal of money to walk away empty handed from a government incineration project right here in my own backyard.

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