Boosting Innovation by Rethinking Government Procurement

Philadelphia launched a new 12-week accelerator program called FastFWD that will select 10 entrepreneurs to develop innovative projects around public safety challenges. 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 request for proposal (RFP) process -- with its long timelines, complex rules and tight guidelines around liability -- tends to scare off some of the information technology industry's most innovative companies, said Dugan Petty, former Oregon chief information officer 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.” 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 2013, 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.