Agencies know they can’t skirt the Federal Acquisition Regulation and deliver innovation with the flip of a switch. But government can position itself as an incubator — or entrepreneurial gateway — for innovative startups.

Rather than pushing Silicon Valley startups and nontraditional companies to pursue formal government contracts, some industry and agency experts suggest using broad agency announcements and prizes and challenges to drive the companies who have a good idea, but don’t regularly visit FedBiz Opps and might not have the resources to compete for a government contract.

“They don’t have a CAGE code or a DUNS number, they’re not interested in a contract,” Adam Tarsi, chief of staff of the Combating Terrorism Technical Support Office at the Defense Department, said at the Professional Services Council’s government innovation event in Arlington Oct. 29. “They just want to do neat things. How do I tap into that neat thing? Some way, it’s talent scouting, sometimes in product acquisition. I’m just trying illuminate something cool out there for my customers.”

Agencies can pay for a company’s individual idea —or pay for the startup to partner with another large, more traditional contractor to develop and deliver the idea.

“They do fit within the FAR,” Tarsi said. “They do allow me to go out and reach people I wouldn’t be able to reach otherwise. I don’t think of it as necessarily going around it, [but] as using the tools that the FAR gives me in a more effective manner.”

Translating a company’s idea to a procurement contract is the most difficult challenge agencies face, Tarsi said.

“I have tons of customers that think, if I give you $10 million, tomorrow a FedEx box full of innovation is going to show up,” he said. “We’re trying to encourage them to think differently to widen their aperture on who can provide solutions, where they can come from, how you can absorb them, but at the same time I don’t want them to just wildly accept risk because that’s where there’s return. So we’re trying to manage it and provide opportunities for a larger risk acceptance, without just changing the whole model.”

But scoring an official contract doesn’t always need to be an agency’s number one goal, said Jonathan Aberman, managing director and founder of TandemNSI. 

“If we can combine getting them engaged and getting them the money to start to build products, I don’t believe we want to make them into government contractors,” he said. “What we want to do is help them get to the point where they create a product, and then we have companies like Booz [Allen] and others that have the expertise, that know how to deliver a product to the government.”

Silicon Valley isn’t the only option

Agencies are eager to demonstrate they aren’t only interested in the large, traditional contracting companies.

Defense Secretary Ash Carter has made it clear he wants to develop tighter bonds with Silicon Valley and adopt some of the best practices the tech industry is using.

But as individual agencies plan visits to that region, the industry is confused by the government’s “shortsighted approach” to Silicon Valley, said Matthew Strottman, COO of In-Q-Tel.

“[Those Silicon Valley companies ] don’t want to meet with a fifth agency this week as far as what their initiative is and what they think they’re going to do for their agency, especially when they don’t know the difference between the Intelligence Community, DoD and DHS,” he said. “Generally speaking, they look at that as the whole national intelligence apparatus in the government in general. They’re not necessarily that interested in the nuances.”

Strottman suggested agencies look to other nontraditional companies outside of the Silicon Valley region as a potential source for innovation.

Aberman compared government’s fascination with Silicon Valley to that of a “shiny penny.” Instead, he said agencies are missing out on the partnerships they can develop with innovators in places like Maryland, Virginia, Boston, Massachusetts and Huntsville, Alabama.

“Where’s Ash Carter? Where’s Reggie Brothers?” Aberman said. “They’re in Silicon Valley, the one place in the country that doesn’t care about them. That doesn’t mean they shouldn’t go, but let’s be clear. We should go, in the first instance, to build bridges where we have ready people who are hungry to work with the feds. Start there.”

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