Idea: 2% Skunkworks Carve-out for Large Contracts
Government agencies struggle with large IT projects. Stories abound of $100 million+ contracts going wrong. The typical remedy is to double-down and spend more money. Perhaps we should bring in the skunks instead.
Note: There are many reasons to avoid huge contracts to avoid problems in the first place. Sometimes the size seems necessary given the scale and complexity of mission-critical systems. For the sake of this article, let’s assume that a mega contract is the correct strategy.
The Complacency Problem
All parties in these mega projects can become complacent. Everyone makes excuses and “moves the goalposts” to account for whatever challenges arise that push the timeline out to 5+ years. It is a complex undertaking, so it’s simply expected.
There’s no basis of comparison for the performance of the contractor (or the government management). It’s hard to say after 2 years if they are cruising along or stuck in the mud. The only way to say for sure would be to award the contract to two firms in parallel and spend twice the money… right?
2% Carve-out for the Skunkworks
Perhaps the government could award to a second firm. Instead of doubling the contract cost, reserve 2% for a shadow skunkworks team. Here’s how this might work:
- ABC Government Agency needs a big system built, and they’ve budgeted $100 million over two years, or $50m/year.
- ABC awards the contract to BigCo, with a $98 million ceiling.
- ABC also awards a second contract to LilCo for $2 million.
- BigCo brings in a program manager and many teams of people to ramp up for the big complex project.
- LilCo brings in a small team of about 4 hands-on practitioners which is intentionally untethered to the majority of process, communications, methods, etc. of the larger team.
Over the course of the contract, when the government is getting word that certain tasks are challenging and/or going to take a ton of time and money from BigCo, they see what LilCo can do. This could be a user experience prototype or tackling architecture/performance issues.
Why it Might Work
For a variety of reasons, groups can settle into complacency. It happens to the best of us. A separate isolated team brings a new perspective. They can question or avoid assumptions that anchor the big team in poor solutions. They have the freedom to experiment.
This shadow team would maintain a bit of competitive pressure on the big team. If the big team is simply milking the contract, and putting lesser experienced / lesser-skilled staff on the program, the shadow team can show them up. If BigCo strays to far, work may be pulled away.
But That’s Not All
Since the skunkworks team flexibility provides a test bed. In addition to moving immediate project goals forward, this flexibility can highlight areas for general process improvement — i.e. surfacing which agency processes have grown to bring more harm than good. Nothing demonstrates that like a side-by-side comparison.
Contracting Options
The precise contracting mechanism would depend on the situation. A few things might work:
- Consolation Prize: if you really want to up the competitive dynamic, give the 2nd place finisher the shadow contract.
- Separate RFP: the ragtag shadow team is a bit different in terms of core capability, so you might want a separate RFP to find the right team.
- Directed award: since the shadow contracts would be small, they might be doable under a streamlined mechanism such as an 8(a) set-aside .
Just an Idea
This is just a half-baked idea at this point. I’d welcome thoughts and pushback. What gives me some confidence is that it’s hard to be worse than the status quo for this type of project. Further, I’ve heard anecdotes of similar scenarios — where a fed up program manager hears their vendor say “it will take $800k and 2 years,” then finds one person to do it in 2 months.
