Is ‘Show, Don’t Tell’ the Future of Federal IT Procurement?

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By Sam Skolnik

Top Homeland Security Department officials opened themselves up to a potential firestorm of criticism when they scrapped a $1.5 billion software development contract in May.

Instead, contractors praised them for a procurement process that relied on live demonstrations rather than lengthy written proposals that often fail to reflect a company’s ability to do the work.

Losing the contract — and the tens of millions of dollars it could have meant for each of the smaller IT contractors that won — felt like a “punch in the gut,” they conceded in a July 26 letter to Soraya Correa, DHS’s chief procurement officer.

Yet several contractors that won the Flexible Agile Support for the Homeland (FLASH) procurement before it disintegrated said there are many benefits to using this method to choose contractors, and the drawbacks of the old system are equally clear.

‘Show, don’t tell’ procurements should be the way government agencies purchase many types of information technology services, a burgeoning alliance between industry and government has concluded.

“A lot of the problems that come out of federal IT come from the contracting process being very difficult, and the government not being able to get the kinds of companies they really need to execute on different projects,” Greg Gershman, CEO of the software engineering company Ad Hoc, told Bloomberg BNA. “We think that this is the wave of the future, and we hope that they’ll try again.”

Agile Development

DHS issued its request for proposal for FLASH as a small-business set-aside contract worth $1.54 billion. Eight to 12 indefinite-delivery, indefinite-quantity contracts were to be awarded for a one-year base period with two one-year options.

FLASH was designed specifically with “agile” software development in mind, a modern approach toward building websites and other software in which code-writing developers work closely with commercial and government clients as the software is being built, and after it’s finished, to tailor and revise it to their specific needs.

Agile development “focuses on embracing change and delivering small pieces of functionality very quickly,” Eric Hysen, former executive director of DHS Digital Service, wrote in a “ lessons learned” letter.

FLASH would have helped build everything from import control systems to online immigration applications, he wrote.

By the Aug. 2, 2016, closing date, 111 contractors had submitted initial proposals, according to a Government Accountability Office bid protest decision.

Live Demonstrations

Without doing a “down-select” to winnow the field to an initial round of finalists, DHS acquisition officials brought each of the hundred-plus companies in for a live demonstration of as long as four hours. The demo was followed by a 30-minute summary presentation and a question-and-answer round.

Contractors could bring up to 10 code writers, visual and “user experience” designers, project managers, and others to the two sites in Washington where the demonstrations took place.

As agency officials filtered in and out of the room, contractors communicated with two key officials: one who handled the demonstration’s logistics, and another who played the role of product owner — the final word on the types of software the teams should build, including the priorities for the agency, Gershman and Ben Morris, a partner with Solutions Technology Systems Inc. (STSI), told Bloomberg BNA.

Each team was asked to build an internal agency or company website to allow workers to give thanks or kudos to other workers for jobs well done.

DHS allowed the teams to build the code “scaffolding,” or infrastructure, in advance — but then, in the room, it was their job to ask the product owner questions to design a project that fit the agency’s aims.

The main question in play, Gershman said, was: What will the website’s users need to be able to do?

Gershman’s team prioritized a list of “user stories” DHS provided in advance. “They said ‘go,’ ” Gershman said, and he turned to the product owner and asked whether his list of priorities matched theirs, and if not, what needed to be changed.

‘Soul-Crushing’ RFPs

FLASH allowed contractors to show their decision-making processes and technical skills in person.

It was a radical departure from the types of procurements agencies have relied on for decades, in which RFPs can entail writing proposals of 100 pages or more — and the larger companies that can afford to hire and train dedicated proposal-writing teams can have a noted advantage.

Contractors often feel as though their written submissions are “scored, not read,” Morris said. In-the-room procurements like FLASH, with a written component of three pages or so, are “just not as soul-crushing or as burnout-prone” as standard RFPs can be, he said.

When Simon Woo’s company saw the FLASH RFP, “we knew it was one we had to go after,” Woo, the executive vice president of SimonComputing in Alexandria, Va., told Bloomberg BNA.

The FLASH procurement was ideal for SimonComputing President Danaiya Woo because it allowed her company to showcase its agile software development expertise, she said, adding that the experience her team gained from the demonstration will help it with future projects.

“I’d rather be spending money building my agile team than my proposal team,” she said.

Protest Time

DHS in November awarded contracts to 13 companies, including SimonComputing, Ad Hoc, and STSI. Several losing bidders filed protests, which caused the agency to conduct a re-evaluation to address the protesters’ concerns over technical and price-related issues.

DHS then made a second round of offers to 11 companies, each of which had been among the original 13.

Protesters lined up again — and this is where things got sticky for the agency.

Some of the documents supporting the agency’s decision had been altered after the decisions were made in March, at least one of the protesters said.

DHS told the GAO on May 1 that its price evaluation report included incorrect information, and that some of the information had been changed “after award,” including the creation of several memoranda regarding price methodologies and findings, according to a GAO bid protest report.

The agency took the rare step of canceling the procurement May 26, one day after the GAO issued a hearing notice to address the protesters’ issues.

‘Super Happy’ Hour

The cancellation spurred Morris to act. He contacted the 10 other winning FLASH bidders and proposed a late-afternoon gathering at his Arlington, Va., office, with beer and wine on hand — something akin to a wake, he said. Representatives from most, if not all, of the contractors showed up, Morris recalled.

Eight of the contractors signed the July 26 letter, including Ad Hoc, STSI, and SimonComputing. The contractors called FLASH “a grand experiment” and thanked Correa for “aggressively seeking a new path, instead of resigning to working within the status quo.”

“It ended in a way that obviously neither us nor DHS were super happy about,” Gershman said, referring to the cancellation. “But we didn’t want them to get discouraged. We didn’t want them to lose momentum.”

However, not everyone is touting the benefits of agile software development or FLASH-style procurements.

“We should not blame the contracts office, but should question the business case coming out of the (DHS Chief Technology Officer) shop that was promoting a build vs buy approach,” John Weiler, vice chairman of the IT Acquisition Advisory Council, a public-private partnership, wrote on his LinkedIn page after the FLASH cancellation.

Federal agencies shouldn’t be involved in agile software development because, although government needs to manage IT projects, agencies shouldn’t be in the code-writing business, Weiler said.

“Government is an IT consumer” and not a producer, he told Bloomberg BNA. “It should act like a consumer.”

Level of Confidence

DHS wasn’t the first agency to employ an in-the-room, ‘show, don’t tell’ strategy for an IT procurement. The General Services Administration unveiled its Agile Delivery Services Blanket Purchase Agreement (Agile BPA) procurement in 2015.

“We found that the Agile BPA and the nature of ‘show, don’t tell’ procurements allow for lower-cost, faster, and more positive evaluation of potential vendors,” Dave Zvenyach, assistant commissioner for acquisition at GSA’s Technology Transformation Service, told Bloomberg BNA in a written statement. “The evaluators and the eventual customer feel a greater level of confidence being able to see the work, not just read about it.”

FLASH-type procurements could lure more small businesses into the federal marketplace because they are more affordable and workable than the standard, proposal-driven RFP process, Steve Kelman, administrator of the Office of Federal Procurement Policy under President Bill Clinton, told Bloomberg BNA.

“This is a real departure,” he said.

‘A Far Better Way’

Valuable lessons should be gleaned from the FLASH procurement, Hysen wrote in his letter.

“While FLASH was flawed, it showed the tremendous potential of running a contracting process that rewards excellence at designing and building working software, rather than competence in writing proposals and navigating bureaucracy,” the former Google software engineer wrote. “The technical challenges, exhausting as they were to execute, were viewed by government and contract teams alike as a far better way for companies to demonstrate their skills.”

Correa, DHS’s procurement chief, declined to comment through an agency spokeswoman.

However, FLASH — minus the errors that led to its demise—may rise again before long, she said recently.

Soon, DHS is going to “start talking about FLASH 2.0, because I’m not willing to give up,” Correa said July 30 on the Government Matters television program. “We’re going to keep forging ahead, keep trying new things and see how we do.”

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bna.com

To contact the editor responsible for this story: Daniel Ennis at dennis@bna.com

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