Budget cuts and innovation may seem like strange bedfellows, but for agencies one may lead to the other.

“We are at a pressure point and we need to look to technology to provide efficiencies, high quality services and save money,” said Dave McClure, associate administrator in the office of citizen services and IT for the General Services Administration. “We are entering an opportunistic period for technology to shine bright and get more bang for the buck.”

McClure, who spoke Thursday during a panel discussion hosted by the Congressional Smart Contracting Caucus, said the tight budgets will force agencies to consider how to be innovative, and therefore take more risks.

He said the federal government can look toward state and local governments for a lesson or two.

“They have gotten very creative in shared services, and in innovative contracting vehicles because you have to come up with an alternative,” he said. “That is what I mean by the positive piece of the pressure point on agencies.”

Taking risk and managing risk

State and local governments have experienced tight budgets for the last 5-to-7 years, and have found ways to improve how they deliver services.

“We are in a difficult period and have to ask tough questions about how we can save money and meet the needs of citizens,” he said.

McClure and other panel members say agencies have to get used to taking risks and managing how much risk they take.

Too often, agencies are risk averse and that inhibits innovation, said Stan Soloway, president of the Professional Services Council, an industry association.

“Agencies need to understand what they are buying,” Soloway said. “We are seeing the government buying based on low price, technically acceptable. They have an adequate and cheap mentality. The government has got to make sure it’s not a fight to the bottom for cost.”

He added that approach hampers innovation because vendors know they are just competing on price and innovations that sometimes costs more up front, but have long term savings.

Uncertainty around the budget also is both a curse and a benefit for agencies and vendors when it comes to innovation and taking risks.

He said agencies are unable to plan because they don’t know what their budgets will be until late in the year, and that challenge flows down from to vendors.

But it also can open up an opportunity for contract types such as share in savings or where vendors provide a service and collect fees as payment.

Innovation as culture change

McClure said for agencies to take on risk, there must be a culture that both accepts failure and promotes innovation.

He said at GSA, Administrator Martha Johnson encourages employees to try something that may not work.

“I have a platform for actually pursuing innovative and creative solution sets. I wouldn’t have that platform if that wasn’t the message coming from the top,” McClure said. “She does a very good job creating air space that says be creative and show me what you’ve done. It’s not micro-managing. We have to learn more about creating that space for innovation to occur and still being accountable for the results.”

He said agencies also should consider best practices and outside expertise when trying to be innovative and therefore taking risks. By understanding what has and what hasn’t worked before and how those lessons learned could be applied, agencies slowly will become more comfortable in taking risks.

McClure said if agencies are not totally sure what they want or what the end result may look like, challenges and other types of competitions are beneficial.

The other big barrier to innovation and taking risks is Congress.

Too often agencies are called on the carpet for trying something new or different that may not work as planned.

Take the recent example of the Office of Personnel Management’s decision to take a risk and bring the USAJobs.gov site back in house. When things didn’t go well, lawmakers were up in arms over the problems that decision generated.

A chilling effect on taking risks

Rep. Gerry Connolly (D-Va.) said too often his colleagues’ instinct is to punish risk.

“Unfortunately, that has a chilling effect on the willingness of people to take risks,” he said. “We could develop more tolerance and try to resist more often the temptation to exploit them for short term political gain at long term risk averse consequences in the federal family.”

Rep. Rob Wittman (R-Va.), a member of the Armed Services Committee and the co-chairman of the caucus, said Congress must do more to spur innovation otherwise agencies will end up paying more for services.

Wittman said the Defense Department has more room to be innovative and take risks than civilian agencies.

“What we want to be able to find out is how do those agencies make sure that risk is managed,” he said. “We don’t want risk to be taken that is foolish risk. You want reasonable risk. You want to be able to manage risk. Failures must be timely. They can’t be years down the road after we spent a lot of dollars.”

DoD is starting to understand how to manage risk.

Wittman points to the F-35 fighter as an example in which DoD slowed down its development once it saw the costs were outweighing the benefits.

“There’s been a willingness to say, ‘we’ve messed up there.’ We have to make sure we take that lessons learned and apply it,” he said. “And when we are making subsequent decisions in compressed time frames, we have to make sure decision making takes place in a much more compartmentalized way so that in steps in the process we know where problems are created, and then you can say we are either stopping, sidetracking or pausing.”

More training needed

The other key piece is encouraging innovation and risk is the acquisition workforce needs to be better trained.

Connolly said the differences in skills between the civilian and DoD acquisition workforce is extreme.

He introduced a bill to improve the Federal Acquisition Institute and bring it more on par with the Defense Acquisition University.

Soloway said contracting officers need to be taught more than just government contracting, but have business skills. He said in the civilian workforce that is overlooked too often.

Connolly said he would try to get his FAI improvement bill through the committee next Congress and believes it’s a bipartisan issue because the better trained contracting officers, the more money could be saved.

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