Reverse auctions could do more than get the federal government the best price. They can also attract independent software developers who’ve never contracted with the government before.
The General Services Administration’s digital services agency 18F has been focusing on acquisition innovation at the “micro-purchase” level — transactions under $3,500. By bringing government contracting newcomers to the table, 18F has found software developers who have delivered programs for as little as $1.
“One of the rules in the Federal Acquisition Regulations (FAR) is that under the micro-purchase threshold, which is $3,500, you do not have to compete for the contracts. You can basically do an award to essentially anybody who has a product or service, and as long as you have the budget and they can deliver it, you can go forward,” David Zvenyach, the acquisitions management director at 18F, said on the Federal Drive with Tom Temin. “A lot of regulations that normally apply to acquisition activities don’t really apply below the micro-purchase threshold, which is a great place to sort of start experimenting and start learning how to do procurement. And so, we decided to see if we could do something innovative in the space of micro-purchasing, which is to say, could we apply what’s already a well-trod path of reverse auctions and apply that the the micro-purchase threshold and see if we could get custom software delivered?”
In experimenting with reverse auctions at the micro-purchase level, GSA first set its sights on GSA’s Contract Awarded Labor Category (CALC), a labor category and pricing research tool.
Missing from the CALC, however, was IT Schedule 70, which is the largest, most widely used acquisition vehicle in the federal government. To load that information into the CALC, 18F turned to a reverse auction for the solution.
“What we wanted to do was provide vendors with the Schedule 70 data and write a script that would let GSA quickly and easily load that data into the CALC tool. So we put together the auction, tried it the first go around, and I think we got 17 unique bidders — some remarkable number of people who had participated — and finally got delivered software for $1, which was unexpected by everybody. But it validated that the concept of getting open-source software delivered was something that was interesting to industry, and something that we should try again. And so we did,” Zvenyach said.
Alla Goldman Seiffert, an acquisitions consultant at 18F, said the bidding for these small contract awards has brought in more diversity.
“We continue to monitor the type of businesses, and it’s women-owned small businesses, sole proprietorships, a couple of small and medium-sized companies … but we can tell you a number of them have never contracted with the U.S. government before,” Seiffert said. “It’s one of the main reasons we’re using the GitHub platform, because we really want to make sure that we reach out to the open-source software developer community.”
And while the government has found a cost savings at the micro level, do developers really want to compete for $1 contracts?
“Since that $1 [bid], most of the bids have been in the several-hundred dollar range,” Zvenyach said. “So we’ve had, at this point, nine individual auctions, and they’ve ranged anywhere from around $250 up to $600 for most of the awards. The thing, I think, that’s really important for us to emphasize is that we’ve had no auctions where fewer than three unique bidders have been involved. So there are a lot of people who are engaged, a lot of people who are excited and we’re hoping for a continued interest. By having more auctions and more opportunities, we think that the prices will more likely normalize to what market rate would look like.”
Using this process, 18F has been able to find contractors to open up agency information into usable data sets. It recently reached out to vendors to convert that PDF acquisition glossary from the Federal Acquisition Institute into an open-data format.
“They’re a bunch of acronyms and abbreviations and things that inside the Beltway everybody knows, but to a lot of companies and frankly a lot of people at 18F, it’s a foreign language,” Zvenyach said.
While 18F has only just begun to experiment with micro-purchase reverse auctions, the team feels the process could one day be a regular part of acquisition at GSA or any other agencies.
“This is only going to work if we keep improving our processes and our platform, and also continue to engage with industry and with other parts of the government. This is not the sort of thing where we figure out all of the problems. In fact, we’ve learned a great deal just in the first few months of doing this. By doing this more and learning at each step of the way, and being really transparent about how we approach our problems,” Zvenyach said. “I think that’s be the way that will be the way that we get this to be sustainable. “