Innovation and Acquisition

CESG2017At CES Government in Las Vegas this year, I had the privilege of speaking as part of a panel focused on the topic of “Innovation and Acquisition: the Disabling Disconnect.” The central theme was that the federal government continues to struggle with how to get out of its own way in gaining access to the best available technology products and services the industry has to offer.

The perception is that the rules government needs to follow, as expressed primarily in the Federal Acquisition Regulation (FAR – just click the link to see the magnitude of the rules then come back, don’t try reading them unless you are having trouble sleeping) largely prevent federal buyers from efficiently accessing those innovations. The panel’s charter was to address whether or not that’s true, and if it is, how to fix the problem.

It was a high powered panel – to be honest, I hardly felt like I belonged – but my job was to represent small businesses in the important discussion. My fellow panelists included:

  • Alan Balutis, Distinguished Fellow at Cisco
  • James Geurts, Acquisition Executive at U.S. Special Operations Command (SOCOM)
  • Michael Palmer, U.S. Digital Service with DHS and The White House
  • Mark Papermaster, CTO of Advanced Micro Devices (AMD)
  • Stan Soloway, President and CEO of Celero Strategies and past president of the Professional Services Council
  • Hon. Robert S. Walker, Exec. Chairman of Wexler-Walker and former U.S. Congressman from PA for 17-years

The panel was led by Steve O’Keefe of 300 Media and Meritalk and Doug Wagoner, President of SAIC. So like I said, I felt like the least of these people, but was honored to be there. While this was the first such panel for which I have personally sat at the table, I have attended panels and presentations on this popular topic several times now in the past couple of years at events sponsored by ACT-IAC, AFCEA, and other government-industry organizations – but it turns out it’s not such a new area of concern. Yet there is objectively no better forum for discussing it than at CES Government among the incomparable collection of government and industry executive problem-solvers gathered there.

Mr. Balutis pointed out that in the past 30 years, more than 200 federal studies have been prepared to tackle how government can improve acquisition. Sadly, he noted not much has changed during that time. So an underlying issue is not just how to solve the perceived problems, but just as importantly how to move from talk to action.

Mr. Geurts noted that SOCOM has taken action on its own, and finds they are usually able to access what they need while operating procurements within the FAR. Granted, SOCOM has more leeway than many other parts of the government to side-step the FAR when necessary for their missions, but he stated that 70% or more of their buying still goes through the FAR. It’s important for contracting offices to really understand the FAR and they’ll see it has more flexibility than it’s given credit for. My take-away from his comments was that where there’s a will, there’s a way, at least in SOCOM’s experience.

Mr. Wagoner raised some figures from industry that highlighted reasons why we shouldn’t look at acquisition reform as an insurmountable challenge. He pointed out that large corporations don’t have a FAR, but still manage to procure hundreds of billions of dollars of products and services each year – two specific examples he cited were Wal-Mart and General Motors.

There was also discussion specifically around the federal government gaining better access to the innovations and expertise in technology hotbeds like Silicon Valley. Mr. Palmer described a number of initiatives undertaken by USDS to apply Silicon Valley approaches – and in some cases Silicon Valley people – to government problems, usually with success.

Not surprisingly, the industry veterans and politicians had the most to say on the panel with good reason. For my part, I made a few observations:

1. The discussion around acquisition reform needs to be grounded in the reality that government and industry are different. Applying one standard to the other is not feasible. For example, when Wal-Mart wants to buy something, they focus on buying it. When the government wants to buy something, they need to do things like follow a process that ensures a level playing field among qualified competing providers, address socio-economic issues through set-aside programs (fact: many government contracts are made available only to firms that are minority-owned, Veteran-owned, etc.), enforce laws such as environmental laws (fact: many federal contracts include clauses requiring the contractor to print any documents needed in the performance of the contract using the two-sided printing setting on their printers) and personal safety (fact: many federal contracts include clauses requiring the contractor to ensure its employees on the contract wear their seat belts) among many other stipulations.

2. Industry demonstrates a willingness to pay for innovations at a level that reflects the value of those innovations. Government, on the other hand, has a bad habit of focusing on comparing vendors’ bottom line prices instead of the total value of their offers.

3. Along those lines, I don’t think Silicon Valley has an exclusive lock on the best and brightest people. In fact, I know contractors already doing work for the federal government who have people with the same level of skills. The reason I know this is that many of those companies also do work for commercial organizations where they deliver the kind of innovations the government says it wants. The difference is, the commercial side recognizes the value and pays for it, and they don’t impose the significant hurdles and long procurement timelines that the government does.

4. Finally, reforms that would make it easier to work with the government need to recognize – again – that the government is not the same as private industry, and there is value in the many hoops federal contractors have gone through in order to position themselves to serve the government market. We’ve obtained GSA Schedule contracts in order to offer our services; we’ve endured the long, costly cycle necessary to join IDIQ purchasing vehicles; we’ve obtained facility clearances; and in many cases we’ve paid people to sit idle for months waiting for the government to process clearances. It’s not about whining, it’s about pointing out we have followed the rules and thereby demonstrated a level of commitment to the government and its mission that start-ups in California have not. So it seems to me one of the main avenues government could use to gain access to “non-traditional” contractors is to encourage partnering with firms who already know the ropes. [Update 3/9/2017: a recent opinion piece in The Hill penned by Bobbie Kilberg of the Northern Virginia Technology Council makes this point with a louder megaphone than mine.]

I’m biased, of course, but I think this was the best discussion of acquisition reform I’ve heard. Did we move the ball? I don’t know about that. As with the 200 past studies referenced by Mr. Balutis, I don’t know that we came away with a plan to move from talk to action. But we clearly worked out that while it’s important to acknowledge the salient differences between government and industry, we have some good examples – and even more good ideas – for improving the federal government’s access to the best technology innovations available. As Mr. Geurts illustrated, where there’s a will there’s a way.

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