New Standard for engaging SME participation in open public contracts
GovTech Poland has developed world's first challenge based procurement model where the authors of the best idea receive a full implementation contract without the need for an additional cumbersome tender. With the goal of opening procurement to all creative individuals, the model covers the process from identification to implementation. A pilot run, tested in both central and local institutions has increased SME participation in procurement processes by an average of 1600% (in a sample of 250) and further implementation of the model is ongoing.
Imagine - a public official identifies a problem, quickly fills in a form and soon after, thousands of innovators from all around the world can start working to solve it, leading to a fully workable and implemented solution only a few months later. No formalities involved - a simple idea-code-reward system that allows everyone to focus on what they do best and for small start-ups to compete with multi-billion corporations. The very idea to make government agile and bring the innovative spirit to the public administration was the founding principle of the GovTech Poland initiative.
The process, initially piloted in 2017 in the Tax Administration, started with a small idea. Current procurement regulations were designed for large, experienced market players, proving a detriment to small companies with big ideas. We started off with the challenges presented at the largest stationary hackathon in Europe. The best were asked to further develop their solutions using the infrastructure the State can provide, and ended up with a solution that decreased fraud rates by over 80%, all in a few months. The development of a 48-hour hackathon challenge which lead to spectacular field results showed us that opening ourselves to these brilliant individuals and small businesses could bring astonishing results. All we needed was to further develop the process, bringing in the entire public sector.
This year, we are doing just that. Six ministries along with several local governments are participating in this year's edition, showing that the approach can work just as well for a central institution or the smallest municipality. All our partners are in constant need of digital solutions but have not had the expertise or market power to reach the worldwide community of innovators. In order to change it we have focused on five main goals:
- equal opportunities for innovators: ideas matter, not the organisation's size
- making government procurement simple and agile
- knowledge exchange: promoting the innovative spirit to the administration, and public involvement to the innovators
- opening the government to best market practices, making it an attractive business partner
- increasing the diversity of ideas, helping small institutions implement big projects
Challenge areas vary - from developing a learning image recognition software to combat traffickers, to a system allowing residents to report malfunctions of public infrastructure, or an algorithm for making emergency number operators more efficient. They have one thing in common - they all directly or indirectly benefit the community. Once the challenges are formulated, the GovTech team works with the institution, helping it to assess the challenge's viability, prepare the budget and legal documentation. Even at this earliest stage a number of companies of all sizes that normally work on similar projects are constantly consulted to make sure the challenge conforms to the highest industry standards. After that, the first stage begins. With adaptability in mind, we allow those with clear-cut ideas to go through the entire process online, but if someone wants to form a spontaneous team, it is possible during one of the largest hackathons in the world, where the event officially begins. After two weeks, the participants submit their ideas which, along with some small sample of the work to come, are evaluated by a jury composed of public officials and industry experts. The best win cash prizes and advance to the second stage, where the challenge sponsor hosts participants for a week and creates an environment where they can perfect their initial submission using every resource available. After that, the winner is invited to implement their solution. There, the process is facilitated by professional staff, employing workflow improvement methods, such as scrum, design sprints, and milestone setting. The process is kept agile and makes use of a new type of contract design to combine transparency with efficiency. All that's left is for everyone to enjoy the fruits of their labour and use the experience for future initiatives.
Parallel to the legislative changes, we are working on expanding the initiative both in width, by involving more institutions and in-depth, by adding new components. We are working on introducing an acceleration program, to turn one contract into a lasting partnership, and a digital marketplace platform, where innovators can interact directly with institutions. While all that is in the works, a perhaps even more important process is occurring - officials are being trained in design thinking, openness and best market practices to build what GovTech (and administration) is really about - people working with each other to make something around us better.
What Makes Your Project Innovative?
GovTech Poland changes:
- A procurement system that was only attractive to large corporations into one where a start-up can compete with a Forbes500 company. By keeping the documentation minimal and getting rid of prerequisites we are able to focus on the quality of an idea, not on the creator's market power, and thus become more start-up friendly.
- A cadre of career administrators into innovation-embracing officials. By constantly bringing them together with market professionals we ensure that the ideas take less time to diffuse from the market to the public sector.
- Small and local institutions into equal participants in the software procurement market. By hiring the winners to implement their ideas we ensure that even organisations with minimal IT staff can obtain working software solutions.
- A disintegrated, obscure process into one that is simple for all parties. We cover most legal, budgetary and logistical concerns, letting everyone focus on what they are best at.
Collaborations & Partnerships
The process is coordinated by the Office of the Prime Minister, to which the GovTech core team reports, but success would be impossible if not for the following:
- Challenge sponsors (local governments, ministries, administrative divisions), who volunteer to become the nation's innovation leaders
- Foreign partners and consultants (CivTech Scotland, Finnish SITTRA)
- Small businesses who we work with and consult on the programme's shape
- Citizens and NGOs providing us with feedback
Users, Stakeholders & Beneficiaries
GovTech is a procurement scheme, so the ultimate beneficiaries are the participating institutions and the communities they serve. They provide challenges and mentors and indicate the results of the projects already implemented.
This said, the other important actor is the administration as a whole, who benefit from a better public perception and exposition to market practices.
Finally, the participants (SMEs) themselves, who can now compete with the titans, and gain contracts and experience.
Results, Outcomes & Impacts
So far, the first edition has produced a number of working solutions for the respective institutions. One application has decreased the tax fraud rate by over 80% in some markets, while others are vital tools in the administration's operations. All institutions that participated in the first edition chose to do so again this year.
In this year's edition we are hoping to achieve similar results, but with much more complex problems. Also, while previously some of the implementations were up to the Institution's existing personnel, this time we are hoping to have the winners implement their own proposals, giving them the contract, and experience and letting smaller institutions participate. We are also hoping even more institutions will choose to get involved with GovTech next year and that it will ingrain itself in the public perception.
Challenges and Failures
Perhaps, it shouldn't be surprising that the largest challenge for a program aimed at reforming the public administration was uncertainty. We decided to take the matter seriously and after a thorough examination, and a number of interviews and meetings have discovered that while the administration is full of people with brilliant ideas, they can sometimes feel uncertain about expressing them if they do not lie strictly within their narrow field of duty. We have thus taken it upon ourselves to tackle the matter by:
- setting clear responsibilities
- defining standards (communication tools, decision making procedures etc.) and convincing others to use them
- conducting a series of workshops aimed at assertiveness and self-confidence
Perhaps the best call we have made was to involve outside experts to show the officials the "market" way of setting internal relations. This gave everyone more confidence and resulted in a rise in confidence, efficiency and morale.
Conditions for Success
While our project involves setting legal and technical standards, it is mostly about people and their involvement is the most critical factor in the entire undertaking. We have set out to build bridges between officials and innovators, but ultimately any bridge is useless if no one wants to use it. Luckily, we have been met with constant enthusiasm on both sides and will continue to work to maintain this state.
Also, we are fortunate to maintain the confidence of the private sector and SMEs. Ultimately, they are the initiative's target audience and it is with them that we continue to consult on all the challenges and practices implemented. Without them trusting us enough to share their methodology and strategy we would never know what can work and what to avoid.
From the very beginning, the programme has been designed to be built upon in the future. An idea used in one ministry spread on to four unaffiliated others and a number of municipalities and hopefully one day will encompass the entire administration.
Already we can see other institutions follow standards set by us - ranging from the armed forces, through hospitals, to railway networks. We have found that perhaps the most important part of our task was to set standards and convince others they are just as appropriate as the old ones, but easier. The scalability isn't just formal, however - we also plan to launch our own acceleration scheme as well as a digital marketplace platform (2019). The latter will have a list of all digital solutions used by the administration that are to be modified, so that anyone in the world could enrich the market with their proposals. We are also talking with our international partners and providing them with advice on how to develop their initiatives further.
After working with over 500 officials in each of the 19 ministries and dozens of other departments, as well as a number of start-ups and small software houses, we have seen that one word was always key - responsibility. It was the lack of familiarity with the other world's expectations that was causing everyone to remain in their niche, which was perhaps the projects' greatest foe. While the innovators always need clear answers to their doubts and questions, the long chain of command does not allow for efficient replies. Therefore the only condition we set for institutions willing to participate is to assign business owners and give them enough decision making power to compensate for their vast responsibility. Of course this may create tensions within the team, however, we have learned that appointing people who will once become the solution's final user to make the key decisions regarding our requirements proved fruitful, and even the most diverse teams in terms of rank, social status, minority status and experience are able to work together given good guidance and an ear ready to listen to their concerns and needs.