What is Innovation in Federal Acquisition? By Stacy Stacks Director, Policies/Procedures Management Systems International | A Tetra Tech Company

The “blended federal workforce” is comprised of roughly 2 million federal employees, 3.7 million contractors, nearly 1.6 million grant employees, 1.3 million active-duty military members, and 492,000 postal workers, signaling that the role and work of PSC member companies is vital to ensuring government agencies run smoothly and efficiently day-to-day, both domestically and overseas.

But there are many factors that impact innovative approaches to acquisition and that prompt workforce limitations. In President Trump’s first few days in office, he implemented a widespread hiring freeze. Buyouts and early retirement offers have also impacted federal employee workforce figures. On the government services side, contracting officers are in high demand but short supply, and often limited on hiring more peers to meet the demands. And often, contractors are adverse to selling to the government due to the long, onerous and costly federal acquisition process.

As federal agencies aim to meet expanding citizen demands, reduce costs and identify more efficient ways of operating, even incremental improvements can make a significant impact. Perhaps this is why federal agencies look to innovation as a means to deliver public service for the future. 

So, what’s the problem?

The dedicated federal procurement workforce is trapped in a culture that, for years, has made requirements around cost and acquisition schedules the primary considerations for evaluating contract awards. Such a process fails to include an examination of innovative and best-value approaches to meet mission requirements for departments and agencies. Additionally, the ongoing failure by contracting officers, project managers and acquisition professionals to implement full and open competition in federal procurement — as required by law, regulation and policy — harms agencies’ ability to leverage market-driven innovations and cut costs. 



“It is time we take huge, but calculated risks,” one executive said in a 2017 Deloitte survey on federal career senior leadership. “Ask tons of curious questions of, rather than just directing staff. Find better, smarter ways to do things easier and simpler. Increase risk appetite and don’t punish people for trying something novel.” 
Only forty-four percent of federal managers say that they innovate to improve mission delivery.  But what about the other 56 percent?  Are we perpetuating a federal procurement culture that, in turn, limits workforce efficiency and productivity? In fact, PSC has recommended that people be rewarded for trying something new – even if it fails. And that’s where agency innovation labs come in, as one solution to help build federal workforces to meet government missions. 

Innovation Labs
In March 2016, the Obama White House announced a new initiative to accelerate the establishment of Acquisition Innovation Labs in Federal agencies, to provide a pathway to test and implement more innovative approaches to acquisitions. Innovation labs are trying to provide different approaches and tools beyond traditional contracting. The labs would also help agencies successfully adopt emerging acquisition best practices to more effectively deliver services to the American people. The White House guidance required that all federal agencies create innovation labs by May 2016. As a part of this initiative, all 24 major “CFO” agencies were expected to:

• Appoint acquisition innovation advocates (AIAs) to promote testing of new ideas and better ways of executing existing practices in their agencies through managed risk-taking;
• Ensure they have innovation labs, or similar mechanisms, to promote meaningful collaboration through an integrated product team; and
• Participate in a new council to maximize collaboration across the government and to share best practices and lessons learned.

The greatest catalyst for innovation is each agency’s willingness to embrace a culture that continuously encourages new ideas and finds better applications of existing practices. Establishing Acquisition Innovation Labs government-wide was intended to play an increasingly important role in empowering and equipping agency employees to implement their promising ideas and foster a culture of innovation that leverages proven government and private sector practices.   

Innovation must be measurable.

In the context of federal acquisition, space for creative approaches to solving acquisition problems should be required at every stage by every agency, demanded by external sources (customers and taxpayers, for example), and participatory with Industry and commercial partners. In fact, there is no need for legislative or regulatory authorization for innovation in federal acquisition.

To be clear, “innovation” is not a synonym for “information technology.” There are multiple access points for government to create new pathways to innovation in the acquisition cycle, which PSC notes will improve each agency’s challenges for solutions. The application of innovative technologies, solutions, processes and business models can provide the government with game-changing opportunities during these challenging times, and there are a plethora of current examples of exciting new pathways in federal acquisition.

One example of successful leadership at the executive level is at the Department of Homeland Security, where the agency is recognizing employees who are innovative. Its program awards “digi-badges” to those employees who are putting into practice what they are learning about using innovative acquisition techniques to improve DHS’ mission. Other efforts are succeeding at USAID, the Department of Health and Human Services, and elsewhere. [See Sidebar]

PSC as the Liaison for Innovation 
PSC leadership and member companies are actively involved with advocacy in innovation-forward movement, including continued support of the Modernizing Government Technology Act and providing a platform for agencies and the federal government to discuss critical legislation and policy. 
The biennial PSC flagship Acquisition Survey in 2016, which is the only comprehensive survey of federal of acquisition professionals, dedicated one of the five core topics to innovation, and should be a guidepost for areas where PSC member companies can influence and impact change within their companies and for their federal customers. 

PSC recommends that every agency have a Procurement Innovation Lab that looks beyond information technology and includes industry. Innovation is applying technology, tools, or processes in a new or different way that helps perform the mission better, cheaper, or faster. That is, it saves resources, time or money, or enables the user to perform their mission better. This implies that innovation is relative to the government in two ways: innovation is an idea that helps the specific agency and is new to that agency, but may not be new to the market.  

Tim Cooke, CEO and owner of ASI Government LLC, and a PSC board member, said it best in an article on innovation by and for the government: "…we need to ask how to start harvesting and using the value of these important initiatives across the landscape of invention, taking advantage of vital lessons, leveraging efforts in similar areas, enhancing communications and achieving greater returns on government investments in realizing the benefits of bringing innovative new companies and capabilities to achieve government’s missions and goals."   

PSC and its members will be evaluating the progress—and the remaining barriers to success—of these Innovation Labs. Agencies are welcome to join in that assessment.
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Here are a few examples of how government agencies are moving full steam ahead with Innovation Labs:

Department of Veterans Affairs – Center for Innovation
“Identifies, tests, and evaluates new approaches to efficiently and effectively meet the current and future needs of Veterans through innovations rooted in data, design-thinking, and agile development.” 

Office of Personnel Management – Lab @ OPM
Focuses on building design capacity to implement innovation across the federal government. This includes user experience design, service design, product design, program design, policy design, design strategy, and design research. 

DARPA – DARPA Small Business Programs Office
DARPA, the Defense Advanced Research Projects Agency, seeks partnerships with small businesses through their Small Business Programs Office. The program seeks to develop breakthrough technologies for national security, working with industry, academia, and individuals. 

Department of Defense – DIUx
The Defense Innovation Unit Experimental (DIUx) is a “fast-moving government entity that provides non-dilutive capital to companies to solve national defense problems.” DIUx acts like a Silicon Valley incubator, investing in solutions ranging from autonomy to artificial intelligence to human systems, information technology, and space, in order to solve defense problems. 

Cross Agency and Partner Learning in the Acquisition Space
With the ever-changing regulatory environment and a pathway for efficiency, workforces from both Government and Industry should take a close look at how to use and improve the Acquisition Innovation Hub & Gateway: a workspace for acquisition professionals and federal buyers to connect with resources, tools and each other to improve acquisition government-wide.

•  https://www.accenture.com/t20150707T195237Z__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_11/Accenture-Three-Must-Haves-For-Federal-Government-Innovation-2.pdf#zoom=50
• https://fedtechmagazine.com/article/2017/05/federal-procurement-modernization-requires-cultural-change
• https://1yxsm73j7aop3quc9y5ifaw3-wpengine.netdna-ssl.com/wp-content/uploads/2017/10/75616-State-of-SES-Findings_v6-EMBARGOED-UNTIL-OCTOBER-4-2017.pdf 
• Accenture and the Government Business Council; “Is Government Making Inroads On Innovation? A Candid Survey of Federal Managers;” December 2014; http://www.accenture.com/us-en/Pages/insight-government-making-inroads-innovation-impacting-government.aspx 
• https://obamawhitehouse.archives.gov/blog/2016/03/09/fostering-culture-innovation-across-government-through-acquisition-innovation-labs 
• http://www.pscouncil.org/a/News_Releases/2017/PSC_Applauds_Senate_Passage_of_MGT_Act_9_18_17.aspx 
    David Kriegman, Z2B-LLC
• http://www.govexec.com/excellence/promising-practices/2017/10/innovation-and-government/141433/?oref=river