White House details how agencies should legally organize contests

The White House released guidance late Monday on how agencies can legally arrange contests to seek ideas for using technology to open government.

Options include operating the competition under federal acquisition rules when the payment is for a good or service that benefits the government; contracting with a third party that can cover the cost of administering the prize; and directly awarding prizes under agency-specific mandates.

The Obama administration plans to launch within the next four months an online forum where agencies can post legal barriers and seek solutions, according to the memo.

The new policy stems from a directive the White House released in December 2009 that instructed the Office of Management and Budget to issue guidance on organizing public, incentive-based strategies to improve open government, which encompasses agency transparency, industry collaboration and public participation.

The memo also addresses prizes for promoting innovation and other national priorities. Agency contests were commonplace internally last year. While the White House has urged them post ideas online, citizens typically have not been rewarded for their efforts -- until now.

The timing of Monday's memo is important because the next assignment for agencies required by the directive is to develop a plan that institutionalizes the three principles of open government, partly by using contests.

"There are a number of authorities under existing statutes that agencies potentially could rely upon to structure prize competitions," stated the memo signed by Jeffrey Zients, the federal chief performance officer. "Agencies considering prizes and competitions should consult with their general counsels concerning legal issues relevant to their agencies and to ensure that each use of a prize or competition is consistent with congressional authorization or appropriation."

For example, Congress mandated that the Energy Department's H Prize, created to recognize the best commercial applications of hydrogen energy technologies, be coordinated by third parties. Meanwhile, the Transportation Department is permitted under law to present medals and cash awards to people who have substantially improved domestic motor vehicle research and development in the areas of safety, energy savings or environmental impact. NASA exercised the so-called necessary expense doctrine, which gives agencies some discretion in carrying out appropriations, to sponsor a 2005 contest for finding the best technologies to construct a space elevator. (NASA never awarded a prize in the competition and did not disburse funds.)

Zients noted in the guidance that rewards should not be the sole instrument for achieving an agency goal: "A prize should not be an end in itself, but one means within a broader strategy for spurring private innovation and change."

Also, certain challenges do not confer awards at all, but instead derive value from participation. For instance, students who enter a contest that encourages healthy eating habits would do so to have fun and feel better, not necessarily to collect a reward.

Zients, a former chairman of the management consulting firms Advisory Board Company and Corporate Executive Board, has said challenges are one of the best tools for motivating people to act. Previous White House contests targeted the federal workforce, and prizes were often a chance to meet senior officials. The competitions asked employees to suggest cuts to the fiscal 2011 budget, propose approaches to reduce greenhouse gases and work out with agency-provided pedometers. Rewards included meeting President Obama and Office of Management and Budget Director Peter R. Orzsag.

One of the earliest and most high-profile contests called on employees at the Veterans Affairs Department regional offices to devise new uses of technology and other means of cutting red tape to reduce the backlog of benefits applications. Obama told veterans in August 2009 that VA offices would identify "the best ways of doing business, of harnessing the best information technologies, of cutting red tape and breaking through the bureaucracy. And then we're going to fund the best ideas and put them into action, all with a simple mission: cut those backlogs, slash those wait times, deliver your benefits sooner."

Last month, VA picked 10 winning concepts, including several IT-centric proposals, such as providing regional offices with digital images of claims-related records and developing software that can calculate additional benefits owed to veterans who have the most serious injuries.