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US Government Successfully Issues Contract For Open Source Code... For $1

Surprises

from the why-that's-1/37-of-a-screw dept

Mon, Nov 9th 2015 9:25am — Mike Masnick

One of my very first jobs in Silicon Valley was to try to help an internet startup get a big juicy contract with the US government (specifically the Department of Defense). The whole process was a disaster of epic proportions, in which I learned a ridiculous amount about government procurement, none of it good. At one point, I believe the company I worked for was paying a 5-figure-per-month "retainer" to an ex-high ranking military guy, mainly so that he would go out and drink a lot of bourbon with his DoD buddies and award us a no-bid contract before anyone realized it should be put out to bid. And, of course, as an internet startup, we didn't have a GSA contract, and had to find a sham "partner" who would officially get the contract, under which we'd be a subcontractor. And, of course, we were asking for millions of dollars in government cash, and the technology we had in place wasn't anything like what the DoD was actually looking for. In short, the whole thing was a complete mess. That was two decades ago, so I'd hope that things had changed, but we've heard so many stories of the ridiculousness of government procurement, that I doubt it's changed that much.

But... there are glimmers of hope. And a neat little technical division of the GSA, known as 18F, which is modeled on startup culture and bringing a much more innovative take on technology to the government (it's the same group that's going around making the rest of the federal government encrypt their websites...), recently ran an experiment which (somewhat unexpectedly to all involved) resulted in the GSA awarding a $1 contract for a bit of open source software. And, yes, that's ONE DOLLAR.

A few weeks back, 18F announced this experiment in "micro-purchase" contracts, with the idea being to see if they could create a quick and simple process to both (1) do small focused contracts and (2) make it easy for smaller tech firms to actually provide their products and services to the government. So 18F posted the details of a specific problem it was trying to solve to Github, and then created a Google form, to serve as a sort of blind reverse auction. Here's how 18F described things:

If you’re interested in bidding, the closing time for the bid is 12 p.m. on Thursday, October 29, 2015. The opening bid starts at $3,499, and 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. If the criteria aren't met the vendor shall not receive payment, the next lowest bidder will have the opportunity.

Got it? Makes sense, as a way to try to keep costs down, but not to make it so crazy low that it's not worth someone's time (or where they're not able to deliver). Except... no one expected someone to (a) bid $1 and (b) then deliver working code that not only met the requirements, but exceeded them. But that's what happened:

Then, there was the $1 bid.

When we received the $1 bid, we immediately tried to figure out whether it was intentional, whether it was from a properly registered company, and whether we could award $1. We contacted the bidder and we confirmed that the bid was valid, that the registration on SAM.gov was current, and that the bid would be the winning bid. It was a plot twist that no one here at 18F expected. This unexpected development will no doubt force us to rethink some of our assumptions about the reverse-auction model.

In some respects, this result was the best possible outcome for the experiment. It proved that some of our core assumptions about how it would work were wrong. But the experiment also validated the core concept that open-source micro-purchasing can work, and it’s a thing we should try to do again. A few weeks ago, micro-purchasing for code was just an idea, but now that we’ve done our first experiment, the data demonstrate that the idea has potential and can be improved upon.

You can see the "winning" $1 pull request by Brendan Sudol over at Github, which went above and beyond the requirements:

Not only did Brendan Sudol meet the requirements of loading the data, the new code had 100 percent test coverage, an A grade from Code Climate, and included some new functionality to boot.

18F notes that the experiment turned up a few other interesting tidbits, including that of the 16 bidders, 8 of them registered to be a government contractor on SAM.gov after the project was announced (showing that, indeed, the process of becoming a government contractor appears to be getting much easier). They also noted that the highest bidder was for $740 with the smallest (obviously) being $1. The most common bid was $50.

Obviously, the $1 bid is both a bit of a gimmick, and something where Sudol recognized that it wouldn't be that much work to provide the code and it apparently seemed like a project worth doing. I doubt that we'll regularly see the government awarding $1 contracts, and the GSA is hardly likely to become the government version of TaskRabbit or Mechanical Turk. But it's still interesting to see the ways in which the terrible inefficiency of government purchasing might go down -- and more recognition over the idea that, if the government just needs a few lines of code, it doesn't need to award a multi-million dollar contract to some stodgy old "services" company.

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Filed Under: $1, 18f, brendan sudol, contracts, gsa, micro-purchase, open source, us government

20 Comments

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That One Guy (profile), 9 Nov 2015 @ 7:36am

Long-term thinking
That worked out great for both parties I'd say. 18F got the code they needed for dirt cheap, and the coder in question got the kind of promotion that can't be bought, drastically increasing the odds that they'll be hired to provide similar service in the future, from both the government and private companies. And those jobs... well, they're likely to pay quite a bit more.
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Anonymous Coward, 9 Nov 2015 @ 9:36am

And, of course, as an internet startup, we didn't have a GSA contract, and had to find a sham "partner" who would officially get the contract, under which we'd be a subcontractor. And, of course, we were asking for millions of dollars in government cash, and the technology we had in place wasn't anything like what the DoD was actually looking for. In short, the whole thing was a complete mess.

So your first job in Silicon Valley was to scam the government out of millions with a sham contract? Sounds about right.
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Anonymous Coward, 9 Nov 2015 @ 9:40am

$1.00 'bid'
In my area local governments are not allowed to give away property; they have to put up the property at auction or otherwise offer it for sale. I've seen $1.00 transactions for rents/leases to other government agencies, deed-overs to other government agencies, police dogs 'sold' to their handler when the dog can no longer serve, and police sidearms 'sold' to retiring officers or deceased officer's families. In most cases the local government would have no problems donating or giving away the property but the state laws prohibit that.
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Anonymous Coward, 9 Nov 2015 @ 9:48am

Wonder how much he'll get after taxes
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Anonymous Coward, 9 Nov 2015 @ 10:03am

Re:
Good thing governments dont interfere negatively in peoples lives, otherwise this would sound more like karma
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Anonymous Coward, 9 Nov 2015 @ 10:04am

Re:
Probably end up owing $2 dollars
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Anonymous Coward, 9 Nov 2015 @ 10:07am

Github and the like should implement this type of thing merged with kickstarter kind of thing, on their websites....kinda thing
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Anonymous Coward, 9 Nov 2015 @ 10:09am

Re:
"So your first job in Silicon Valley was to scam the government out of millions with a sham contract? Sounds about right."

Something I learned from my post-graduation job (a company whose primary business was also based on milking the government) is that anyone with any sense of ethics will never succeed in the company (or in business in general). I can only wonder if Mike was smart enough to keep his mouth shut -- which I was definitely not in my early 20s.
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PRMan, 9 Nov 2015 @ 10:30am

Re: Re:
I have my ethics intact and I am doing just fine.

But whatever you need to do to excuse your evil...
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Anonymous Coward, 9 Nov 2015 @ 10:48am

Open source micro-purchasing: a tax dollar at work.
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Mike Masnick (profile), 9 Nov 2015 @ 1:36pm

Re: Re:
Something I learned from my post-graduation job (a company whose primary business was also based on milking the government) is that anyone with any sense of ethics will never succeed in the company (or in business in general). I can only wonder if Mike was smart enough to keep his mouth shut -- which I was definitely not in my early 20s.

I quit soon after. I lasted all of 8 months at that job and left with no new job in place -- in large part because of the ridiculousness of the gov't deal (which was never completed).
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Anonymous Coward, 10 Nov 2015 @ 1:32am

Mr. Sudol just got a killer resumé-boost (and a dollar to celebrate that). Great PR.
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Ninja (profile), 10 Nov 2015 @ 3:36am

Re:
Precisely. It happens frequently here. Companies want to have a determined governmental agency on their clients list then they offer a service at a loss for much less than any sane price and get the job, offer it and never come back. Happened recently to an environmental agency: the company was in the environmental consulting business and won a contract to provide boat rental for services in the seas for a bit more than half the value of the second lowest bidder. They got the name in their portfolio and the Government got the service.
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Steve R. (profile), 10 Nov 2015 @ 4:01am

The Federal government as well as all State and local governments can save taxpayer dollars by using open source software, such as Linux and LibreOffice.

Most of the office work done by staff is based on word-processing and spreadsheets. LibreOffice is just as good as MS Office, and is a lot cheaper - as in free.
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scatman09 (profile), 10 Nov 2015 @ 5:10am

creating vital code for the US government: 1 hr

payment for said code: $1

having a back door into the General Services Administration: priceless
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scatman09 (profile), 10 Nov 2015 @ 5:14am

creating vital code for the US government: 1 hr

payment for said code: $1

having a back door into the General Services Administration: priceless

(then having the TechDirt website freeze when trying to make a smart alec comment: WINNING!)
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Anonymous Coward, 10 Nov 2015 @ 5:28am

Odd thing: It costs something like $700 to register and get a CAGE code (to the constant pissing and moaning of some suppliers). It cost him money to get this contract, though the press he's getting is probably worth it.
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Anonymous Coward, 10 Nov 2015 @ 5:32am

Re:
Oddly enough, it is easier to get software into the system if you have to pay for it, particularly if you have to pay a yearly maintenance. This is because it "proves" that the software is being developed and maintained actively. Tougher to show that to non-technical folks maintaining the list of approved software.
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RMS, 10 Nov 2015 @ 9:31am

Pro tip: Open source is not free software.
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vcragain, 11 Nov 2015 @ 5:37am

The guy knew exactly what mattered to his future - give 'em something virtually free and then add to your resume - boom - done !
This method should be used for ALL small contracts for government requirements, we all know perfectly well that government facilities are all being completely ripped off, trouble being a lot of the 'procurers' don't know enough technically to know when they are being sold a story.
We all watched in horror at the health care front end's complete failure - anyone who has written software knows that was a diabolical rip-off for millions of dollars that then took more millions of dollars to fix - really??? Those who write software for a living would have died of shame at the result !!!
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