5 ms·

Open Source Micro-purchasing: An experiment in federal acquisition

62 points by molecule 11y ago

zacharycohn 11y ago
I'm from 18F and will be paying attention to this thread throughout the day. Feel free to ask any questions - we'll do our best to answer them!
- Jtsummers 11y ago
  I'm trying to make the math on this make sense. The scale of the projects being assigned, if they actually take two full-time weeks for one developer, means a company would receive $43.75/hour in compensation. That's a lot less than most companies bill for developer/tester time, though it is comparable to the salary of a corporate developer/tester. Are you expecting most companies applying to this to actually be small shops? Are the scale of projects going to generally be designed/selected to take much less than the allotted 10 business days?
  - zacharycohn 11y ago
    The project doesn't need to take two full-time weeks for one developer. It could take a day. Or an hour. But we give people 10 days because asking someone to turn something around in a day or two seems unreasonable.
- ch4s3 11y ago
  This seems interesting, but how are you judging success or failure of the project as a whole?
- fweespeech 11y ago
  In line with what Jtsummers said, it looks like this is priced for freelancers/contractors working as individuals [i.e. corporate developers who freelance for extra money] but seems to be locked in to a limited pool of companies: > For the first iteration of this experiment, we’ve made a decision to limit eligibility to companies that are registered on SAM.gov at the time of bid. I think for this experiment to work in the long run it needs to be handled in a way that makes it clear: A) You don't need to be a registered LLC/Corp/etc. B) You don't need to invest in any kind of liability insurance for your contribution. C) It can be staged in a way that it could be ~60 hours/month with multiple "purchases" for longer projects.
  - deleted 11y ago
    [deleted]
- bicknergseng 11y ago
  Pretty awesome experiment, but I feel like this just falls into the same ol' "lowest bidder to meet the absolute minimum" trap. Is there any thoughts on introducing some notion of quality? It seems to me like "lowest price" is not really what you want, but rather "best quality while staying within budget."
  - tssva 11y ago
    When bidding out work and using micro-payments lowest cost is the only criteria allowed without additional justification and accompanying paperwork which would usually negate any benefits of using micro-payments.
- tssva 11y ago
  The post seems to indicate that you will be using micro-payments to address individual issues on a single code base (CALC). This would appear to be bid splitting to avoid acquisition requirements.
reilly3000 11y ago
Why is $3500 the magic number?
- zacharycohn 11y ago
  Above $3500, and it falls into a category with more regulations and requirements about competition, sourcing, bidding, etc. Under $3500, and it does not. :)
- fweespeech 11y ago
  Purchase authority in the federal government is structured by price ceilings, basically. So if they stay below $3500, they can ignore all the red tape because it goes into the "We don't care" bucket.
- Jtsummers 11y ago
  https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%202_1.html https://www.acquisition.gov/sites/default/files/current/far/... Micro-purchases exist to allow agencies/offices to make purchases of more common things without going through normal acquisitions procedures. This might be a software license or office supplies or a new projector for the conference room. Here, they're using it for software development time. It's a faster way to spend money than when purchasing anything over $3500, which means you (usually) get the product/service faster as well.
- ourmandave 11y ago
  So $3500 is considered "pay for it out of petty cash".
  - protomyth 11y ago
    Yep. Reading the federal rules on the difference between equipment and supplies is a good way to understand some of the "fun" in federal budgets.
sputknick 11y ago
Former federal employee. I really really hope this works, I think it's a great idea and a great "hack" on the procurement system. I think they will ultimately get shut down, there are too many people in the "chain" that want to have control over procurement. Not just management on the federal side, but also procurement on the federal side, and management on the contracting side. Too many people have too many processes in place for the traditional procurement system to allow this to continue.
laurencerowe 11y ago
(Reposting with additions from duplicate https://news.ycombinator.com/item?id=10384792 https://news.ycombinator.com/item?id=10384792) It'll be interesting to see if this works. I rarely found it worth my while engaging in a job with a new client if it billed under 10-15 days. $3500 is only a few days work, so they'll have to ensure the administrative overhead in bidding and billing is minimised. > Whoever has the lowest bid at the closing time will have 10 working days to ship the code necessary to satisfy the criteria. If the criteria are met, the vendor gets paid. It's that easy. If the criteria aren't met, the next lowest bidder gets 10 working days to ship the code. In order to make this work, we will provide acceptance criteria, instead of requirements. This limits the possibility of misinterpretation and ensures the quality of delivery. I fear that the focus on tight acceptance criteria may encourage gaming the system. There's no incentive for the contractor to do more than the bare minimum. Even if you gain a reputation with the procuring team of being reliable they still have to go with the lowest bidder for the next job. For contractors, the optimum strategy would seem to be bid without spending any time coming up with an implementation strategy, then drop any jobs you win that don't seem worthwhile after a few hours working out how to implement it. Ultimately this becomes a test of how well the jobs can be specified. For this to be efficient they have to include the time spent internally preparing and assessing the result vs working over a longer periods with people with whom they can build a trusting working relationship. It might be more efficient to rely less on price competition and more on reputation. That would make it a low overhead system for engaging trusted contractors on individual tickets. There'd be far less preparation required in defining very tight acceptance criteria.
- ATsch 11y ago
  Absolutely. I could imagine a system where the job goes to the lowest price * reputation, with lower (which in this case means better) reputation causing you to win the bid even if other companies bid lower. Assigning reputation in a system with financial incentives is a challenge in itself too. If reputation is decided in a non-transparent process, such as members of 18F deciding, the system is ripe for bias, e.g. towards companies with ex-collegues, friends or aquaintances. Any public form of online voting is subject to manipulation, closed voting of the companies involved would leat to a conflict of interest as companies have no incentive to distribute reputation fairly, and raising and lowering reputation depending on if the job was done or not allows companies to do the contract with the lowest effort possible, leading to the problem the above poster described.
emmab 11y ago
Why are you making rate directly dependent on having a degree?
dlightman 11y ago
This will be fun to watch, but the reverse auction will not work. It will get bid to $0.01, by someone looking to get a "foot in the door" with the government. Watch this space, with enough marketing, you are about to see all the 1000s of companies constructed with no real skill, only certifications (Veteran-owned, HUBZone, Woman-owned, Alaskan, Minority, etc), flood the market with unrealistic bids. The critical path issue with government procurement of information technology is not cost alone... it's with the insistence of the customer to require a custom solution, and the inability to describe the requirement, and thus, technical acceptability. What this project will do, is show that even when boiled down to very micro, unscalable size, "lowest price, technically acceptable" (LPTA) is an inappropriate purchasing pattern for non-commodity information technology, or more any non-commodity, really.

62 points by molecule 11y ago

I'm from 18F and will be paying attention to this thread throughout the day. Feel free to ask any questions - we'll do our best to answer them!

Jtsummers 11y ago
I'm trying to make the math on this make sense. The scale of the projects being assigned, if they actually take two full-time weeks for one developer, means a company would receive $43.75/hour in compensation. That's a lot less than most companies bill for developer/tester time, though it is comparable to the salary of a corporate developer/tester. Are you expecting most companies applying to this to actually be small shops? Are the scale of projects going to generally be designed/selected to take much less than the allotted 10 business days?
- zacharycohn 11y ago
  The project doesn't need to take two full-time weeks for one developer. It could take a day. Or an hour. But we give people 10 days because asking someone to turn something around in a day or two seems unreasonable.
ch4s3 11y ago
This seems interesting, but how are you judging success or failure of the project as a whole?
fweespeech 11y ago
In line with what Jtsummers said, it looks like this is priced for freelancers/contractors working as individuals [i.e. corporate developers who freelance for extra money] but seems to be locked in to a limited pool of companies: > For the first iteration of this experiment, we’ve made a decision to limit eligibility to companies that are registered on SAM.gov at the time of bid. I think for this experiment to work in the long run it needs to be handled in a way that makes it clear: A) You don't need to be a registered LLC/Corp/etc. B) You don't need to invest in any kind of liability insurance for your contribution. C) It can be staged in a way that it could be ~60 hours/month with multiple "purchases" for longer projects.
- deleted 11y ago
  [deleted]
bicknergseng 11y ago
Pretty awesome experiment, but I feel like this just falls into the same ol' "lowest bidder to meet the absolute minimum" trap. Is there any thoughts on introducing some notion of quality? It seems to me like "lowest price" is not really what you want, but rather "best quality while staying within budget."
- tssva 11y ago
  When bidding out work and using micro-payments lowest cost is the only criteria allowed without additional justification and accompanying paperwork which would usually negate any benefits of using micro-payments.
tssva 11y ago
The post seems to indicate that you will be using micro-payments to address individual issues on a single code base (CALC). This would appear to be bid splitting to avoid acquisition requirements.

reilly3000 11y ago

Why is $3500 the magic number?

zacharycohn 11y ago
Above $3500, and it falls into a category with more regulations and requirements about competition, sourcing, bidding, etc. Under $3500, and it does not. :)
fweespeech 11y ago
Purchase authority in the federal government is structured by price ceilings, basically. So if they stay below $3500, they can ignore all the red tape because it goes into the "We don't care" bucket.
Jtsummers 11y ago
https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%202_1.html https://www.acquisition.gov/sites/default/files/current/far/... Micro-purchases exist to allow agencies/offices to make purchases of more common things without going through normal acquisitions procedures. This might be a software license or office supplies or a new projector for the conference room. Here, they're using it for software development time. It's a faster way to spend money than when purchasing anything over $3500, which means you (usually) get the product/service faster as well.
ourmandave 11y ago
So $3500 is considered "pay for it out of petty cash".
- protomyth 11y ago
  Yep. Reading the federal rules on the difference between equipment and supplies is a good way to understand some of the "fun" in federal budgets.

sputknick 11y ago

Former federal employee. I really really hope this works, I think it's a great idea and a great "hack" on the procurement system. I think they will ultimately get shut down, there are too many people in the "chain" that want to have control over procurement. Not just management on the federal side, but also procurement on the federal side, and management on the contracting side. Too many people have too many processes in place for the traditional procurement system to allow this to continue.

laurencerowe 11y ago

(Reposting with additions from duplicate https://news.ycombinator.com/item?id=10384792 https://news.ycombinator.com/item?id=10384792) It'll be interesting to see if this works. I rarely found it worth my while engaging in a job with a new client if it billed under 10-15 days. $3500 is only a few days work, so they'll have to ensure the administrative overhead in bidding and billing is minimised. > Whoever has the lowest bid at the closing time will have 10 working days to ship the code necessary to satisfy the criteria. If the criteria are met, the vendor gets paid. It's that easy. If the criteria aren't met, the next lowest bidder gets 10 working days to ship the code. In order to make this work, we will provide acceptance criteria, instead of requirements. This limits the possibility of misinterpretation and ensures the quality of delivery. I fear that the focus on tight acceptance criteria may encourage gaming the system. There's no incentive for the contractor to do more than the bare minimum. Even if you gain a reputation with the procuring team of being reliable they still have to go with the lowest bidder for the next job. For contractors, the optimum strategy would seem to be bid without spending any time coming up with an implementation strategy, then drop any jobs you win that don't seem worthwhile after a few hours working out how to implement it. Ultimately this becomes a test of how well the jobs can be specified. For this to be efficient they have to include the time spent internally preparing and assessing the result vs working over a longer periods with people with whom they can build a trusting working relationship. It might be more efficient to rely less on price competition and more on reputation. That would make it a low overhead system for engaging trusted contractors on individual tickets. There'd be far less preparation required in defining very tight acceptance criteria.

ATsch 11y ago
Absolutely. I could imagine a system where the job goes to the lowest price * reputation, with lower (which in this case means better) reputation causing you to win the bid even if other companies bid lower. Assigning reputation in a system with financial incentives is a challenge in itself too. If reputation is decided in a non-transparent process, such as members of 18F deciding, the system is ripe for bias, e.g. towards companies with ex-collegues, friends or aquaintances. Any public form of online voting is subject to manipulation, closed voting of the companies involved would leat to a conflict of interest as companies have no incentive to distribute reputation fairly, and raising and lowering reputation depending on if the job was done or not allows companies to do the contract with the lowest effort possible, leading to the problem the above poster described.

emmab 11y ago

Why are you making rate directly dependent on having a degree?

dlightman 11y ago

This will be fun to watch, but the reverse auction will not work. It will get bid to $0.01, by someone looking to get a "foot in the door" with the government. Watch this space, with enough marketing, you are about to see all the 1000s of companies constructed with no real skill, only certifications (Veteran-owned, HUBZone, Woman-owned, Alaskan, Minority, etc), flood the market with unrealistic bids. The critical path issue with government procurement of information technology is not cost alone... it's with the insistence of the customer to require a custom solution, and the inability to describe the requirement, and thus, technical acceptability. What this project will do, is show that even when boiled down to very micro, unscalable size, "lowest price, technically acceptable" (LPTA) is an inappropriate purchasing pattern for non-commodity information technology, or more any non-commodity, really.