Is the government market too tough to crack?

Bringing innovation to the government market is a familiar refrain in the current environment.

Several years of tight budgets have driven government customers to seek more efficient and effective solutions at a lower cost. Simultaneously, a plethora of new technologies from smartphones to the Internet of Things have exploded in the commercial market.

Government buyers see these new technologies and collectively say, "I want some of that, too."

But that is where the challenge lies: How can you attract companies with new, innovative technologies and processes to come to a government market that seems so alien to the outside world.

The Professional Services Council, the Northern Virginia Technology Council and TandemNSI took on that question at breakfast event dubbed: The Intersection of Government and Innovation. Panelists included PSC President Stan Soloway, Adam Tarsi, chief of staff at the Defense Department’s Combatting Terrorism Technical Support Office, Matthew Strottman, chief operating officer of In-Q-Tel, Sherry Altman, vice president at Booz Allen Hamilton, and Johnathan Aberman, managing director and founder of TandemNSI, an organization that connects startup companies with government agencies.

The government, particularly the Defense Department, has been active in trying to attract emerging tech companies to enter the government market. Sen. John McCain recently commented that innovation isn’t going to come from defense contractors, a sentiment that I know many would disagree with.

The panel discussed several barriers that newcomers to the federal market face, the biggest being the procurement process, but there also are worries about protecting intellectual property and the government’s aversion to risk.

But there are signs of progress such as the growing use of prizes and challenges to draw innovations into the market. GSA’s 18F group also has had success in fostering more flexible and agile development projects.

At Booz Allen, the company is trying to partner with more companies to bring innovative solutions. They also are investing more innovative solutions and showcasing the results to customers, Altman said.

I’ve heard of other companies taking similar approaches, as well.

Tarsi said that he likes to use prizes and challenges as a way of attracting newcomers to DOD. Often, he’ll connect the winner of a challenge with a larger integrator.

The advantage of a prize or challenge is that it draws the attention of companies that generally don’t follow announcements on FBO.gov or other traditional procurement avenues, he said.

If the government shifted toward more solution based acquisition, more innovation would come into the market, Altman said.

“But that’s not what we see. It is still mostly about buying bodies,” she said.

Whether it is through a challenge or a more traditional procurement such as a basic ordering agreement, Tarsi said his focus is on satisfying a mission, and “I have to do it in the most cost effective way.”

When it comes to the role of acquisitions and procurements, the issues are structural and cultural. What do regulations allow, and what are contracting officers comfortable with?

Tarsi spoke about the need for cover from agency leaders so that contracting officers feel like they can take a risk. That’s a culture and leadership issue, not a procurement rule issue.

There also is a lot of misunderstanding and poor information about what it means to bring an innovative solution to the government. It doesn’t mean that the government takes control of the intellectual property as many believe, Aberman said.

The same goes for working with large systems integrators who often are seen as extensions of the government.

“Most of these are small companies with a nice solution that still needs to be stitched together with other solutions,” Strottman said.

But working with a large integrator can be intimidating. “The system is set up to mitigate risk so it flows down to us and to our partners,” Altman said.

Partners need to supply references and certifications and meet insurance requirements. “There are a lot of things that small companies might not want to deal with,” she said.

Whether it is through In-Q-Tel or TandemNSI or other similar groups, a pathway needs that encourages innovative companies to participate in the government market, Aberman said.

The goal shouldn’t be to identify emerging tech companies and make them government contractors, but to create a pathway where they can bring their innovations to established contractors, Aberman said.

Silicon Valley has that because there are lot of connections between the startups and the large companies there, he said.

While Silicon Valley might provide a model, Aberman warned that the region of California is getting too much attention by the federal government as the font of innovation.

“It’s the latest shiny object,” he said.

But Silicon Valley companies don’t need the government market to be successful. “We need to go where people are anxious to do business with the government,” he said.

Soloway said he sees encouraging signs on Capitol Hill where congressional leaders are encouraging the Defense Department to be more innovative. If Congress is encouraging innovation, that might give agencies the cover they need to take more risks and bring more innovative technologies and practices to bear.

“Leadership is critical,” he said.