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The Case for 18F: Why Federal IT Procurement, Contracting Need to Change

Former GSA Administrator Dan Tangherlini discusses the forces working against innovation — and why they should fail.

Only a couple years old now and the federal digital consultancy 18F has a lot to deal with.

The innovation group, which helps agencies build, buy and share modern tech, is under fire from sources within and outside of government. Externally 18F is defending itself from IT lobbyists, representing companies like IBM, Deloitte, Cisco Systems and others, that allege 18F is hindering revenues as a competing government tech provider — a message they shared at a recent hearing evaluating 18F's effectiveness. Internally the group has met resistance from CIOs unsure of its private-sector development practices, and within the General Services Administration (GSA), 18F's parent agency, insiders say that the Federal Acquisition Service (FAS) that funds 18F is actively working to terminate the group.

The sources report that 18F’s procurement work to break down IT contracts into smaller pieces has compelled FAS to act. They allege that FAS leadership fears shorter-term IT contracts at more competitive prices would decrease the revenues the organization receives from agencies via contract service fees and other FAS procurement vehicles.

Asked for comment, the two IT lobbying groups at the IT Alliance for Public Sector (ITAPS) and the Software and Information Industry Association (SIIA) have yet to respond. Similarly, last week FAS Commissioner Thomas Sharpe declined an interview on the issue. GSA instead submitted a broad statement of FAS' relationship with the Technology Transformation Service (TTS) that houses 18F in the GSA.

One person who was willing to speak on the matter is Dan Tangherlini, the administrator of GSA from 2012 to 2015. 18F was founded during his administration, and in an exclusive interview with Government Technology, he outlined his thoughts on 18F's current struggles. Tangherlini now serves as president of federal services at the digital document startup SeamlessDocs. In his interview, he offered his support for the fledgling venture while at the same time calling for federal groups and private-sector interests to come together.

Tangherlini said 18F, one of the contributors responsible for saving, should be allowed to innovate, especially considering the federal government’s nearly $90 billion in IT spending, 75 percent of which is spent on outdated technology, according to a recent 18F oversight report by the Government Accountability Office.

Here is Tangherlini's commentary on 18F.

Government Technology: What are your thoughts on the current state of 18F?

I think it's interesting. Gerry Connolly, who is the congressman quoted in the article [IT Showdown: Tech Giants Face Off Against 18F], he represents the part of Virginia that houses a lot of these [government IT] companies. While I know him personally to be a very thoughtful and innovative guy, it's an interesting example where there's the politics of constituency that sometimes drive political positions [Connolly is a House representative overseeing 18F's hearing]. That was an interesting point I think that the article drove home.

I also think it drives home the fact that there's maybe recognition in the industry that the federal government isn't actually being as savvy a consumer as it could or should be, and people are getting a little nervous as it builds the chops to be a better advocate for itself and for the agencies. That could mean that it's a little harder to get the kind of work that they've been getting in the way they've been getting it.

I think that the federal government in particular is the last place — and really the last big place in the economy — where you have the 10- or 15-year-old approach to IT acquisition: a system with these very, very structured requirements, waterfall development deliveries on these big, massive, multi-year contracts. People love to win them, but that's not the best way for the federal government to acquire technology.

This is not an era of static technology anymore. This is an era where the only thing static is change. That's the only constant. So the idea of buying single, proprietary bespoke systems for agencies is also giving way to an era of software-as-a-service, power by the hour, cloud provisioning. That's really shaking the business models of a lot of the companies.

Sources inside 18F have said that the GSA’s Federal Acquisition Service has tried to defund the program, while a few federal CIOs called for more transparency from 18F. What are your thoughts on all this?

I'm willing to say on the record, as the former administrator of GSA, and the person who launched 18F, that there was, shall we say, constructive tension, between the Federal Acquisition Service and 18F, entirely because 18F was being funded out of the FAS. Another mission to be funded out of the same amount of resources is always going to be an imposition. That's how FAS frankly always felt about 18F, as a bit of an imposition. I think as 18F has grown, and commanded, and frankly demanded, more resources, that sense of imposition has probably grown with it. That's a natural, logical kind of antibody reaction of any organization — which doesn't necessarily mean it's correct. That's why people in leadership positions and people in oversight positions need to separate their real complaints from, frankly, people working the referees, if you know what I mean.

Do you think 18F should try to find a different source of funding, other than FAS?

No, I actually think that 18F is funded in the right way. I mean in the end, the ultimate source of funding for 18F — just as it is ultimate source of funding for FAS — are the agencies that get the benefit of their services. 18F should continue to refine and improve and enhance their cost recovery model, but the fact is that those services are being demanded by dozens of agencies and agency components. They have over 100 different individual projects that they're working on.

As for return on investment, what are your observations about how 18F’s work has been received in agencies?

 People are deeply satisfied with the work that 18F is doing, and while they have not yet broken even, and certainly not turned a profit, this is an internal government agency and we're talking about a federal government that spends from $60 billion to $90 billion a year on IT. That's spending out the door on IT. What's at issue here is whether 18F has recovered one-one-thousandth of that from the agencies [it contracts its services with]. I think if you really put it in perspective, and you really match the scale, at some level this is more of an intramural fight that's leveraging oversight authorities rather than a real meaningful discussion of IT policy.

18F is working to define how its services are saving agencies money and producing value. As an outsider looking in, any program might find this difficult just because of the inherent ambiguity in such a process. For example, you might have a large project like that 18F saves from failure, but how does 18F prove and quantify this to oversight committees?

Tangherlini: I think the savings are hard to quantify. That doesn't mean that they should get a pass on trying to quantify them. I do think that what you have is an instance where you're trying to prove the dispositive, as they say. This was a big issue at Treasury, where we had the similar predicament with financing anti-terrorism initiatives. There was a group that focused entirely on the financing of anti-terrorism organizations. We spent a lot of time with the chief performance officer and Treasury trying to figure out what performance metrics we could use. If you're looking for outcomes, you have to ask yourself what are positive metrics? What's the number? Is it zero terrorism attacks? Or is it one attack? More? And if it's one attack, does that mean that organizations didn't prevent another five? That's the big thing when you're dealing with issues like this, where you're trying to develop the intelligence, the assessment skills, and you're trying to develop the capabilities. Frankly, with regard to the federal government's technology buying capacity, it’s difficult to measure that instantly.

I think the primary goal is for the federal government to be better at delivering technology investments over time. There's 18F combined with USDS, combined with a really strong CIO and CTO presence in the federal government, combined with digital accountability platforms like [a reporting site for federal IT spending]. All of those muscle movements together really represent an effort on the part of the current administration to turn the ship around in terms of the ability of the federal government to buy and deliver information technology. While the ship isn't 100 percent turned around, I think you would — by every meaningful indicator — be able to demonstrate that the federal government is a much, much better buyer of information technology now than ever. Fewer and fewer of these big IT projects are failing the way they used to as a routine prior to the efforts of this administration. Further, I was really pleased to hear how at least the Clinton campaign has endorsed the continuation of USDS, 18F and this broader effort on the part of the administration, the executive branch, to dramatically improve the way the federal government buys information technology.

Why do you think the IT lobby, with organizations like SIIA and ITAPS, are coming forward at this time with their allegations and concerns about 18F?

Tangherlini: There are really two reasons. One is effectiveness. No one would bother if 18F wasn’t actually succeeding. Two, if you're trying to nip something in the bud, there's no better time to do it than during a presidential transition. You've got an election coming up, you've got a lot of people changing titles, there are some big cracks opening up in which you can push things down. I think the timing is smart if you wanted to stop something.

What are your thoughts on the future of 18F?

Tangherlini: I really think the issue with sustainability is that it comes down to whether they're able to continue to attract the absolutely world-class people that they've been able to bring in over the last several years of their existence.

I think the real measure of that will be whether the government bureaucratic antibodies are unleashed on it to a degree that people who came to try to dramatically improve the federal government's effectiveness in information technology buying and delivery are scared off, and that word goes out that what was fun is now something that just stinks. That's the real big challenge for the federal government — to create a base for innovation, for experimentation and for change. Because it is so big, and there is such an ecosystem of companies and solvent industries that surround it, that any kind of change is going to be deeply resisted by those who have a serious investment in the status quo.

That having been said, step back and look at the outcomes the government has been delivering in these areas, and I don't know if there's anyone who can make a clear, evidence-backed argument that there is no need for reform and change. While I think everyone agrees that the status quo is terrible, and this is something I've found often, that the only thing worse than that status quo is change. Because it means altering someone's expectation from day to day.

Yet, while I'm worried about the sustainability of 18F, I'm not worried about whether there's demand or interest or need. I’m really concerned about whether the powers that oppose innovation and experimentation, that are deeply rooted in the oversight bureaucracy of government, are the ones that make it not fun or interesting or exciting for people to sacrifice some part of their careers to go and provide public service. I think that that would be a massive disservice.

This argument that the tech lobby is trying to present that 18F has a conflict of interest, that it gives advice and consulting support on procurement, but also contracts or bids, is there any validity to that?

Tangherlini: I think that that's an overly clever argument, this notion that there's somehow some conflict of interest. I frankly think that if 18F can show an agency that they have the capabilities in house, or within teams that exist within the federal government, they can get this work done faster and cheaper — I think that's a great solution. But there's this real strange line that's drawn between what you build and what you buy, and any organization that's really thoughtful about what it does, and delivers, and is trying to accomplish more, is constantly debating the buy-build kind of paradox. I think a capability within government that knows how to build stuff is actually going to make the government a much better buyer.

Plus, the simple fact is 18F’s 185 people at GSA are not going to be able to replace the tens of thousands of people in the private-sector IT service provision environment. I don't think 18F will ever get that big, nor should it get that big. I don't think it's a well-thought-out concern. I don't think it's one that recognizes scale. I think it's a threat that is overstated, and frankly shouldn't be so concerning to a set of entities that are doing, by every measure, quite well in terms of their ability to attract resources through federal procurement.

Further, I think the tech lobby has to make sure that it doesn't become big old tech and small new tech, and I think that they should be really lobbying — if they are really focusing on outcomes — on the best interests of agencies, and then ultimately, the American people. What they should be really lobbying for is the sustainability, the support and the expansion of 18F and USDS. That may mean disruption of the traditional model, but I don't think you could buy anyone in the tech lobby a beer and have them defend the existing model on its merits. Because I don't think it has been producing results commensurate with the input for a long time. I think that they know that collectively, and as an industry, we can serve the federal government better.

This story first appeared in Government Technology and