The federal government’s outdated bid process doesn’t fit modern digital reality

The U.S. government has a long and proud history with technology — what could be more laudatory than helping invent the backbone of the internet? Where is the spirit of those innovations in the sluggish and obtuse processes today?

High-stakes projects, like the Affordable Care Act (ACA) rollout of 2013, hit embarrassing public hiccups; conversations about regulatory systems in the innovative fields of Artificial Intelligence (AI) and Machine Learning (ML) are always playing catch-up, only to see priorities shift when administrations change.

If federal agencies hope to once again play a major role in developing our biggest technological projects, critical thinking to revamp the age-old request-for-proposal process is required.

{mosads}The RFP process: tedious and slow

From municipalities to the state and federal levels, governments look to businesses to help them deliver services to their constituents. The primary vehicle for procurements is the request for proposal process. When a government provides a new service or needs a systems upgrade, it issues an RFP. Interested businesses submit their proposals, the government picks a few finalists, and the best bid wins the contract. It’s simple, fair, and efficient — at least in theory.

In practice, however, the RFP process can be excruciatingly tedious. Often beginning with a preliminary request for information (RFI) that leads to the eventual construction of the RFP, the process becomes riddled with vague objectives, ancillary questions, and excessive information. Agencies spend weeks translating RFIs into RFPs, then months capturing, collating, and summarizing the data. The passage of time, in addition to the extensive use of employee and contractor resources, cost the agencies tremendously.

Then comes the harshest reality: everything has taken so long that the needs, scope, and details of the project have changed entirely.

An outdated process

If the whole process sounds discombobulated, that’s because it was designed for another era. The concept of RFP dates back to the early days of the Industrial Revolution, when new tools and means of production created the need to purchase and track goods in specific sectors, like mining and timber.

The concept only developed throughout the nineteenth century. From railroad companies in the 1880s through the FDR administration, businesses and government partnered in locales throughout the country.

While the RFP process may work for building new power plants or public utilities, hundreds of RFPs are issued for much more lightweight acquisitions, such as software and technology solutions. The digital age requires an updated approach; moreover, engaging the next generation of public sector employees requires a change in thinking.

From growth hacking to proof-of-value

Growth in private sector technology is inextricably tied to open-source technology. The availability of free-to-use licensed software cuts a significant amount from a new project’s budget. With readily available public cloud technology, pay-for-use software and hardware, and an agile approach to developing new solutions, technologists can get “minimum viable product” versions of applications up and running in days.

These innovative solutions providers could help solve government’s greatest technology challenges. But they’re rarely able to invest the time and energy, especially with little hope of return against large, incumbent government vendors. In a government agency, however, the agile “do it yourself” data engineer, stymied by the RFP process, has no incentive to build a working solution quickly, and is unable to leverage modern platforms and solutions at all.

Recognizing the requirement for both supplier and purchaser to invest in a common solution, modern digital firms have adopted a “proof-of-value” (PoV) approach. Different from a “proof-of-concept,” where the costs are borne entirely by the vendor, the blind “show us what you’ve got” PoV scenario can be the way forward for public and private sector solutions alike.

Proof-of-value: A way forward?

In a PoV, the purchasing agency would define the requirements in a similar way to an RFP. Then they would work through the process with one vendor — leveraging the same resources to deeply explain use cases, experiment with a solution, and build a full-working model with which agency staff could then immediately interact.

A fraction of the cost of an RFP process, the PoV offers the potential for agencies to have a viable solution running in weeks. Presuming the goal of finding a quality supplier at a low price, then compressing from a year-long process of review, bids, and quotes could mean substantial savings. If the difference between the highest and winning bids for a solution is 20 percent (lowest price wins), for a $500,000 project that $100,000 difference is easily absorbed with a few months’ return on investment.

This isn’t a call for government to abandon fastidiousness in the name of speed and efficiency; it’s about making contract jobs a partnership that mimics the unique blend of creativity and critical analysis that flourishes in the private sector. It’s about seeing another, better option for procurements than the confusing, protracted, archaic RFP process.

Michael Hiskey is the head of strategy at Semarchy, a data management firm headquartered in Menlo Park, California.