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Boosting Innovation by Rethinking Government Procurement

October 28, 2013 By

Earlier this month, Philadelphia announced a new 12-week accelerator program called FastFWD that will soon select 10 entrepreneurs to develop innovative projects around public safety challenges. One end goal is that the city will award contracts to several of the projects developed during the program.

FastFWD comes on the heels of a newly launched innovation center by North Carolina that will let the state test technologies before purchasing them. Both initiatives are attempts to ease frustration with government procurement processes that tend to discourage innovation and limit flexibility.

The traditional government RFP process -- with its long timelines, complex rules and tight guidelines around liability -- tends to scare off some of the IT industry's most innovative companies, said Dugan Petty, former Oregon CIO and procurement director.

“You have this situation which is still going on today, where in many states there’s an effort to transfer all of the liability to the contractor,” Petty said. “And that’s got a cost that makes it exorbitant.”

In addition, traditional RFPs can rob both vendors and customers of the ability to adjust projects as new needs are discovered. Jurisdictions may not fully understand their business requirements when an RFP is drawn up, Petty said, but contractors often can't deviate from the scope of the RFP once the contract is awarded. 

North Carolina Opens Innovation Center

To help rethink some of these restrictions and find better ways to procure technology, North Carolina plans to test products before purchasing them in the state’s new innovation center.

In April, an audit revealed that 84 state projects were collectively $356 million over budget, a situation that state CIO Chris Estes said stems primarily from how the state procures technology. The state will use the innovation center to pilot technologies before committing to large-scale, expensive purchases.

“The idea behind innovation center is changing our RFP processes in the future where we will take a test drive to make sure that the vendors’ solutions meet the business requirements that they are intended to solve,” Estes said.

So far, vendors are supportive of the new process and are currently working with the state to test products, Estes said. For instance, North Carolina currently is piloting hardware and software associated with virtual desktop technology in the innovation center.

Philadelphia FastFWD

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