ACQUISITION EXCELLENCE Acquisition Innovation in Action ChallengeBased Acquisition

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ACQUISITION EXCELLENCE Acquisition Innovation in Action Challenge-Based Acquisition and Acquisition Innovation in Incentive Prize

ACQUISITION EXCELLENCE Acquisition Innovation in Action Challenge-Based Acquisition and Acquisition Innovation in Incentive Prize Competitions Action March 12, 2019 March Grand Hyatt DC 2019 Grand Hyatt DC

Igniting Innovation Through Challenges and Prizes! Ryan M. Novak, Senior Acquisition Principal, The Center

Igniting Innovation Through Challenges and Prizes! Ryan M. Novak, Senior Acquisition Principal, The Center for Acquisition Management Sciences (CAMS), The MITRE Corporation Tammy White, Sr. Challenge. gov Analyst, General Services Administration (Contractor), Principal, Potomac Haven Inc.

Challenge-Based Acquisition (Ch. BA) Using challenges to communicate needed capability, encourage innovation in a

Challenge-Based Acquisition (Ch. BA) Using challenges to communicate needed capability, encourage innovation in a minimally prescriptive environment, assess candidate offerings, and purchase solutions. Ryan Novak, [email protected] org, 703. 983. 1819 The Center for Acquisition Management Sciences The MITRE Corporation https: //www. mitre. org/publications/technical-papers/challenge-based-acquisition-4 th-edition Approved for Public Release; Distribution Unlimited. Case Number 18 -4455 © 2018 The MITRE Corporation. ALL RIGHTS RESERVED.

Ch. BA requires the right team and mindset … The Federal Acquisition Regulations (FAR)

Ch. BA requires the right team and mindset … The Federal Acquisition Regulations (FAR) encourage approaches such as Ch. BA: “…absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority. Contracting officers should take the lead in encouraging business process innovations and ensuring that business decisions are sound…” FAR 1. 102 -4 Role of the Acquisition Team

Challenge-Based Acquisition Is the Bridge Crossing the Innovation and Acquisition Chasm Innovative Ideas •

Challenge-Based Acquisition Is the Bridge Crossing the Innovation and Acquisition Chasm Innovative Ideas • • Challenge-Based Acquisition Market Research Directs R&D Encourages Collaboration Prototyping • • Field Solution Upgrade Solution Maintain the Solution Procuring Quantity The Innovation and Acquisition Chasm … where good ideas fail to reach their full potential!

Traditional vs. Challenge-Based Acquisition Defined Solutions and Paper Promises or Proven Innovation Traditional §

Traditional vs. Challenge-Based Acquisition Defined Solutions and Paper Promises or Proven Innovation Traditional § “Get me a faster horse…” Challenge-Based § “Get me there faster…” Implies a solution type Requests a capability Limited to offering only horses Free to innovate Ask the sponsor what they want Distillation of sponsor needs “I’ll buy the fastest horse that competes in the race? ” “I’ll buy the capability that gets me there fastest? ” Asking the Question Differently …

Prizes vs. Challenge-Based Acquisition Market Research or Acquisition of Solution Prize Competitions § COMPETES

Prizes vs. Challenge-Based Acquisition Market Research or Acquisition of Solution Prize Competitions § COMPETES Act Challenge-Based § FAR and OTA Draws attention to excellence Innovative solutions identified Encourages vendor networking Verified in relevant environment Winner earns a “prize” Winner earns contract/agreement Market Research Products Acquired Gets Different Results …

So, what exactly is Ch. BA? • Ch. BA is based on the concept

So, what exactly is Ch. BA? • Ch. BA is based on the concept that Government agencies can best perform acquisitions if they present the solution to be acquired as a need (the challenge), which empowers potential providers to propose innovative solutions that fill the need. • Challenges are issued in terms of operational needs and are accompanied by mechanisms for evaluating proposed solutions and contractual terms for provider participation. • Typically, solutions take the form of simplified implementations, and evaluations assess how well a solution satisfies the need. • A well-crafted challenge, accompanied by clear, transparent, and effective assessment methodologies and appropriate contracting vehicles, leads to successful acquisitions. Ch. BA is a FAR- or OTA-based acquisition approach that communicates the needed capability, encourages innovation in a minimally prescriptive environment, assesses candidate offerings, and purchases solutions.

Potential Benefits of Ch. BA • FOCUS – Encourages understanding of sought capability gaps

Potential Benefits of Ch. BA • FOCUS – Encourages understanding of sought capability gaps • INNOVATION – Communicates needs without constraining solution space • RISK MANAGEMENT – Understand range of solutions without major commitment of resources • VERIFICATION – If you don’t see it you don’t buy it … not just paper “proposal” promises • SYNERGY – Incentivizes industry participation and engages user community • FAIRNESS – Levels the playing field for small, innovative companies • BUY PRODUCT – At the end, you can buy the sought capability!

Challenge-Based Acquisition Application • Ability to down-select and off-ramp vendors that are not viable

Challenge-Based Acquisition Application • Ability to down-select and off-ramp vendors that are not viable • Ability to sustain competition throughout the life of the contract • Ability to pay vendors to compete in the challenge event(s) • Ability to acquire testing, refinement, and operational products • Ability to execute challenges that are singular, iterative, or graduated

Challenge-Based Acquisition Application Culvert Challenge: JIDA in collaboration with ARL seeks innovative solutions for

Challenge-Based Acquisition Application Culvert Challenge: JIDA in collaboration with ARL seeks innovative solutions for inspection of culverts and detection and identification of objects in or around roadway culverts. Results: Multiple Award IDIQ, 20 vendors participated, 10 in each event, Refinement of Solutions, Running the Challenge Event again…no protests. Source: Challenge-Based Acquisition Handbook v 4 SOCOM’s All-Source Analytical Environment (ASAE) Challenge: SOCOM’s Distributed Common Ground Control System (DCGS) leveraged the challenge approach to acquire a COTS ASAE software tool using an integration challenge that took place on a Government-provided, commercially-hosted, virtual cloud environment “sandbox”. Results: Contract awarded to viable offeror with proven ability to integrate seamlessly, user approved solution…no protests. Source: Federal Business Opportunities (fbo. gov) Army Cyber Innovation Challenge: ASA(ALT), Army Cyber Command, Second Army, and TRADOC initiated a Cyber Innovation Challenge to investigate software-based prototype solutions. The Innovation Challenge requirements are released through an existing consortium community, utilizing OTA as the framework, allowing industry to engage with Government. Result: Limited quantity prototypes rapidly being evaluated and delivered. Source: Challenge-Based Acquisition Handbook v 4

So, what’s a prize competition? Prize competitions, challenges, hackathons, data jams, map-a-thons – all

So, what’s a prize competition? Prize competitions, challenges, hackathons, data jams, map-a-thons – all crowdsourcing methods with potential incentives. The most successful competitions: • Offer a discrete timeline • Provide a clear problem statement and parameters • Allow creative freedom • Are structured for faster response, multiple results • Have the potential to save time and money

Potential Benefits of Prize Competitions • Pay only for success and establish an ambitious

Potential Benefits of Prize Competitions • Pay only for success and establish an ambitious goal without having to predict which team or approach is most likely to succeed • Reach beyond the “usual suspects” to increase the number of minds tackling a problem • Bring out-of-discipline perspectives to bear • Increase cost effectiveness to maximize the return on taxpayer dollars • Inspire risk-taking by offering a level playing field through credible rules and robust judging mechanisms

Prize Competitions ITEM CONTRACTS & GRANTS CHALLENGES & PRIZES Target Technologies Available in commercial

Prize Competitions ITEM CONTRACTS & GRANTS CHALLENGES & PRIZES Target Technologies Available in commercial market or via contract/grant. Not available in market or by contract/grant. Selection Process “Crystal Ball” - Prejudges which competitor has best chance of success. “Darwinism” – All competitors compete until end of contest. Results One possible. Many possible. Delivery Depends on ability to select best competitor. Depends on ability to formulate achievable rules. Open to… Companies able to comply with contracting regulations. All U. S. citizens, non-Federal employees. Comparative Cost Rarely less, and often more than 100% of costs. A fraction of the total cost. Payment of Funds Most funding paid out before delivery of complete solution. Payment ONLY after successful demonstration of solution.

Prize Competitions Yes, They’re Legal • The America COMPETES Reauthorization Act grants broad prize

Prize Competitions Yes, They’re Legal • The America COMPETES Reauthorization Act grants broad prize authority to federal agencies to run prize competitions. • A small subset of agencies maintain their own authorities: – Space Act (NASA) – Direct Prize Authority (Defense, Energy, USAID) • Others use existing mechanisms to partner with industry, allow for rapid prototyping and advancement: – – Necessary Expense Doctrine Other Transaction Authority Procurement Authority Public-Private Partnership • Agencies have been running prize competitions since the mid-2000 s with hundreds documented in annual reports to Congress, available on www. challenge. gov.

Where Does Challenge. gov Come In? We’re Here to Help The Challenge. gov program,

Where Does Challenge. gov Come In? We’re Here to Help The Challenge. gov program, maintained by the GSA, serves as the belly button for federally sponsored prize competitions. We coordinate with agencies across government to build capacity for incentive prizes by providing the following at no cost to our agency customers: • • • An official listing, ideation platform and data archive Prize structure and design consultation Training and resources Communications and outreach Reporting on impact, working closely with White House Office of Science and Technology Policy staff

Questions? Ryan Novak, Senior Acquisition Principal rnovak@mitre. org, 703. 983. 1819 The Center for

Questions? Ryan Novak, Senior Acquisition Principal [email protected] org, 703. 983. 1819 The Center for Acquisition Management Sciences (CAMS) The MITRE Corporation Tammy White, Sr. Challenge. Gov Analyst tammyj. [email protected] gov, 703. 915. 3407 GSA (Contractor) Principal, Potomac Haven Inc.