Expand your vendor pool

Your existing vendors are unlikely to employ the modern software development practices outlined in this handbook — they were hired for their legacy practices back when that was what you needed. To find vendors who meet your new needs, you’ll likely need to identify and attract new companies that use modern software development practices.

If it is important to get bids from in-state vendors, then know that odds are good that there are many qualified small businesses that can deliver agile development programs in your state.12 However, if you want to drive down the price of bids, then it’s important to consider working with remote or distributed (rather than on-site) vendor teams.

In places like California, Washington, New York, Virginia, and Maryland, the cost of an agile team can be easily twice the cost of a team in the Midwest or the northern plains — a difference of over $1 million each year with no difference in quality. That’s a price point at which it’s worth rethinking how important it is that the team be local, or even in-state.13 Encouraging distributed vendor teams also gives you access to a wider talent pool, so it’s smart to embrace distributed working best practices to engage with development teams14 and only require on-site visits when necessary (such as for user research).

How do you find those qualified small businesses? There are a number of cities and states that have created a pool of agile software vendors. For example, California’s Department of Technology has a vendor pool that adds new companies on a rolling basis. Seek out and draw from these vendor pools, and include some of these companies in future RFP processes. Also, ask around among colleagues in other state agencies to see if they can recommend any vendors to include. Finally, try thinking like a software developer looking for a job, and check out sites that are well-known for posting job opportunities and professional networking, to identify agile vendors in your state. This entire process only takes a few hours.

Although the procurement team will be tempted to seek out vendors who have previously built a near-identical system, that’s both unnecessary and limits the vendor pool to just a few big, international companies. Instead, they should widen their scope to look for vendors that have built something analogous. A vendor that has built a website to book rental cars can build a website to apply for backcountry camping permits. A lead developer who has built a database to track the positions of comets can build a database to track state-owned vehicles. By seeking relevant expertise with this axis, the procurement team will find plenty of developers who can get the job done.

Checklist

  • [ ] The RFP will be streamlined (no more than 20 pages), and comprehensible by software developers who do not normally work with government
  • [ ] The acquisition plan includes reaching out to small vendors to encourage them to bid
  • [ ] The RFP will not be hidden on a registration-required procurement website, but published openly on the web so the vendor community can share it
  • [ ] The RFP will require that vendors name their key personnel in their proposals — no more than three people — such as the lead developer or the lead designer
  • [ ] The acquisition plan includes interviewing the finalists about their proposed approach, questioning the named key personnel, not the vendor’s sales staff
  • [ ] Vendor employees will not be required to work on-site at a government facility
  • [ ] Vendor teams and the government product owner will be permitted to use a desktop-based video call service (e.g. Zoom, Google Meet, etc.), a real-time chat tool (e.g. Slack, Microsoft Teams), and a public, Git-based version-control system (e.g. GitHub, Bitbucket).

Key questions

  • Are there any benefits — political or otherwise — to awarding contracts to in-state vendors, or even requirements to do so? Might that limit the degree to which you can expand your vendor pool?
  • Is $1 million per year savings for each scrum team sufficient to overcome any objections to remote teams?
  • Has lightweight market research been done to know what vendors will be targeted with the RFP, rather than only issuing an RFI and hoping for the best?


Footnotes

12. Alaska’s Department of Health & Social Services faced this challenge in 2017, and their Contracts and Procurement Manager wrote about the process that they used to attract small, agile, Alaskan vendors in "How Alaska is using transparency to attract modern software vendors." ↩︎

13. The Bureau of Labor Statistics provides state-level wage information for software developers, which shows that the difference between the most expensive developers (Washington state) and the least expensive (Puerto Rico) is a 150% wage gap. Even within states there can be tremendous variation in labor costs between urban areas and rural areas. As a result, insisting that vendor teams work on-site can double the cost of software. ↩︎

14. See "18F’s best practices for making distributed teams work" for specifics. ↩︎