How to Fix Government IV: Real Time Procurement

The Information Diet concludes around this theme: “Washington isn’t the land of vast, radical changes, it’s a battleship waiting to be nudged in the right direction. Let the legions of information-obese fight on the front lines, and join me in nudging the small nuts and bolts that hold the ship together.” This week, I’m writing a post a day talking about those nuts and bolts. I hope you’ll join the discussion.

To me, the most interesting undercurrent of the Obama administration is how we’ve had a bunch of very left-of-center campaign staffers go and work for the administration in some shape or another (I know mostly federal agency New Media Directors) and come out of their experience being a little more libertarian. The same thing happened to me as director of Sunlight Labs. While conservatives might argue that Obama is pushing America too far to the left, he’s driving a lot of his progressive staff towards what I’d call traditional republican ideas.

Here’s how it happens: So imagine you’ve worked for a couple years in politics and really made a difference, and then get recruited to work on a presidential campaign. You’ve got to keep up with the opposition and keep innovating technically, and you’ve just been placed in charge of mobile strategy. You’re given a budget of $300,000 and you’re told: make something happen. Quick. So you go out, you find a programmer and a designer and say “hey, do you want a contract with a presidential campaign” and you get things kicked off within a week.

Then your candidate wins, and you get appointed Director of New Media at the U.S. Department of Miscellany. On your first day on the job, you take a look at your website and go “crap, we gotta fix this.” So you go to your boss and say “look, we need to fix misc.gov. I spoke to my two buddies who did stuff like this for me on the campaign. They said it’ll take them 3 months to do it with all the compliance stuff we need to do, and it’ll cost $250k.”

Your boss, a federal bureaucrat for 30 years, says “not so fast, we’ve got to go to the procurement people.” So the procurement people say to you “ok, write an RFP, we’ll put it on FedBizOpps.gov for the required 90 days, at which time we’ll give you the qualifying solicitations and we can go through them together. Then there will be a contest period of 2-3 weeks for other vendors to protest the decision. You should be able to get started on the website in 6 months after we’ve selected a vendor if we hurry.”

Reader, I won’t lengthen this painfully true story out for you any longer. The punchline is, what was a $250,000, 3 month project from your buddies on the campaign turned into a $5 Million 18 month long project with people who aren’t nearly as competent or as hard working as the people you’re used to working with. And so you start saying to yourself “man, regulations suck.” This is how Recovery.gov ended up costing upwards of ten million dollars in its first 18 months.

This problem – governments inability to acquire technology cheaply enough or affordably enough, is a dangerous and scary problem and it ought to be at the forefront of your mind. While industry and the private sector reap the benefits of Moore’s law, government has a systems-designed inefficiency in it that prevents it from attaching itself to the same exponential curve. So while we may see technology double in function or halve itself in cost every 18 months, government tends to always be a cycle or two behind on Moore’s curve.

More scary is that Moore’s curve is exponential. This means the gap between any two points on the line doubles with every cycle. Today you see this problem manifest itself in government offices with the two computer problem. Government workers have one machine on their desks that government provides for them. It’s about 4 years old. Then they have another machine on their desk that’s newer, and that’s the one that they use to do their job. But as that gap grows, how long is it before we are driving flying cars while government is chasing us around in Buicks?

I think the solution to this problem is really quite simple, and we can start with the web. Let’s make it so that campaign staffer cum government worker can hire their buddies from the campaign. Ask yourself this as a taxpayer: would you rather have $250,000 your tax dollars go towards “lining the pockets of campaign cronies” or $5,000,000 of your tax dollars go to lining the pockets of established government contractors.

There’s going to be fraud in both systems, but at least the former is fraud for the little guy!

I think we need to come up with a smart, real-time procurement system for federal IT purchases that allows government to use technology to be more efficient, and it ought to be at the top of the list for any political party. It’s a cross-spectrum problem and it needs to get resolved. A real-time procurement policy has the following characteristics:

Inclusive

Real time procurement is inclusive. If you have a Domestic Tax ID number, a bank account, are incorporated in the United States, and can accept credit cards, you’re eligible to do business with Real Time Procurement. There are no needs to apply to get on any “GSA Schedules” or Contractor List. The only businesses you can’t do business with are ones that have been deemed ineligible or penalized by the system. Make the default market an open one.

Performance Based

Work should be performance based, standardized and audited by a third party reviewer also inside government. If a contractor gets several poor reviews in a row based on negotiated contract-bound criteria, by either the person the contractor is serving, or a third party reviewer, then they’re either penalized in the system (ineligible for a certain period of time) or banned forever. Eligibility requirements should be tied not just to the Tax ID of the organization, but by the names and social security numbers of the directors of the organization to prevent poor performers from simply reincorporating.

Electronic

All deals in real-time procurement are done electronically. There are no checks to be written. Instead, payments are made by credit card or wire transfer.

Real-Time Disclosure

All deals in real time procurement are disclosed in real-time, online. When a deal is made, it’s reported online. The disclosure says what the deal is, what the total cost is, shows the payments made, and shows the rating of the final product. This disclosure website should also display the top ten recipients of money from real time procurement, and the greatest earners in 30, 60, and 90 days. You should also be able to see who those earners are, what projects they worked on, and how they were rated. Updates should happen instantly: when a payment is made to a contractor, it is updated on the website in reasonable real-time (minutes, not days).

Limited

At first, this system should be limited to information technology buys, and be capped at $250,000. This cap can be adjusted over time based on the success or failure of the program.

Patrolled, Monitored & Tested

The system I’m describing here is not fraud proof. It’s not designed to be. Rather, let’s design an experimental procurement system that expects fraud and finds new ways to catch it rather than designing system like we have now: one that tries so hard to prevent fraud that it only ensures it. While citizen watchdogging ought to be encouraged, it shouldn’t be relied upon. Employ a couple of people whose job it is to monitor the system for fraud – taking advantage of some of the same kinds of fraud detection technologies used by services like PayPal to root out bad players and send them to jail.

This is a starting point, not an endpoint. It’s a loose framework for a procurement system that could help government acquire new technology. Annually there ought to be a survey of the system to see if it’s being used and having the desired outcomes: saving taxpayer money and increasing efficiency. Also: this is how government could really stimulate the economy. By making it easy for small business job creators to do good work for their community.

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