Non-traditional IT contractors unite to watch each other's backs

Steve Kelman writes that the nascent Digital Services Coalition could change industry collaboration -- if its members can preserve the culture of trust.


I have blogged several times in the past few months on new, non-traditional IT vendors in the federal marketplace and how they are delivering IT services in a different way from traditional IT contractors. It's a sign of the growing presence of such contractors in the federal IT ecosystem that a number of them, with no fanfare, last summer created a sort of support group to help each other in the federal marketplace.

The group originally used the non-descript moniker Community of Practice, but recently decided to change its name to the notably more ambitious “Digital Services Coalition.” The group has 56 individual members from 20 firms. About half these firms currently have at least one federal contract, with most of the rest serving state/local customers and a few who are still exclusively commercial and trying to enter the government marketplace. Until recently they had no way to communicate except a Slack channel, but have now decided to meet quarterly in person and monthly by phone as well.

What is now the Digital Services Coalition is the brainchild of Robert Rasmussen, CEO of a small IT firm called Agile Six. The “agile” references agile IT development, while "six" is a nod to military jargon for watching a comrade's back. (Rasmussen is a Navy vet, and “I’ve got your six” refers to one's six o'clock position -- the blind spot directly behind.)

After leaving the Navy, Rasmussen worked for a series of government contractors, but then his cousin sold a business he had started, which provided the two of them a few years income cushion to try something new. “Reading the Digital Services Playbook,” Rasmussen told me, “ I was inspired to become part of that new market.”

When he and his cousin decided this market was interesting, they launched Agile Six together. Rasmussen got advice from people at USDS and connected with a contracting officer at the Center for Medicare and Medicaid Studies who was interested in discovering new, non-traditional IT contractors. Agile Six won its first job there. 

The Digital Services Coalition not only believes in delivering IT in a new way. The members also believe in their companies interacting with each other in a more collaborative way that's different from the ways traditional IT contractors “network.”

While of course traditional government contractors often team or engage in formal collaboration with one another to win business, the traditional contractor mindset tends to include a very large dose of wariness about other firms in the space. Most have heard stories of competitors who come to government-sponsored industry days in the hope a competitor will, perhaps inadvertently, reveal information of competitive value to a firm seeking business that is also attending. Vendors often discuss internally how to “ghost” a competitor’s proposal, trying to uncover weaknesses the other firm can discuss in its own proposal, almost always by indirection, to discredit the competitor proposal in the eyes of the customer. And vendors often approach after-hours social events at government-industry conferences with a secret hope that a competitor at a gathering, perhaps having drunk a bit too much, will reveal information the listener can exploit for competitive advantage.

“In the traditional space,” Rasmussen said, “people are bartering information, or stealing and using information, hoarding information. ‘Capture management’ has a hostile ring. The BD culture is cannibalistic.”

The Digital Services Coalition is based on a very different cultural mindset. It is that new firms in the government IT space should aim to cooperate more than compete, to create an environment where, in Rasmussen’s words, “other member firms have your back, so you don’t need to be so careful about watching your back.” They seek information sharing, not information hoarding.

Membership in the Coalition is by invitation only; members are either people Rasmussen himself knows and trusts, or have been recommended by an existing member. (Rasmussen said he personally knows 20 of the 26.)

The criteria for membership are an innovative ethos (“question the status quo”) and public advocacy for the principles in the USDS playbook. The animating idea is to have a group of people who really trust each other.

“We need to protect hatchlings from the sharks," Rasmussen explained. "Now every established Beltway firm wants to be in digital services. Some of the older people in the new firms are not comfortable with sharing and transparency."

Even many of Agile Six's current partners are not in the Digital Services Coalition, he noted. "They are cautious, they’ve gotten same advice from other firms in the Beltway. But that’s not the future I want to build.”

Right now, membership is closed to ensure the group doesn't grow too fast and compromise that culture of trust.

The element of information sharing that is closest to interactions among traditional contractors -- and probably the most-important collaborative work the Coalition members do -- is using the organization to locate possible teaming partners for bidding on work. Here I think the main difference is that this approach saves on the costs of partnering – the coalition provides a pre-vetted group of contractors with similar values who can come to the head of the queue as possible teaming partners. It is simply a more efficient way to identify partners.

Rasmussen also has a fascinating point of view on the difference between prime-sub relationships among traditional contractors and what the Digital Services Coalition seeks to promote. “We aim to team with partners (as subs or primes) that understand our values and respect the role of autonomy and agility," he said. "A prime does not need to be a controlling influence in a technical project. Sometimes a sub brings the real talent, in which case a prime needs to trust that and let them lead from the backseat. For example, if I subcontract to a design firm, it is not simply to satisfy a socio-economic quota, I hire them because we are not designers, so when they tell me how to achieve a design I listen, I defer to their strength."

"The role of the coalition is to network with smart shops so when I need a subject area expert, I can find someone ready to lead with their strength, and when some prime needs my strength, they will let me lead in the areas where I excel," he continued. " Too often in this space teaming is not for capability but either for access [to customer relationships] or socio-economic targets. And too often new firms get their identity crushed as a sub just providing bodies.”

There’s more to this group than just helping with teaming, however. The aim is for members to be willing to provide information and insights that one firm has which might be beneficial to other firms in the space in dealing with the government market.

Having people be willing to help other firms in this way is harder to pull off, and hence less common, than connecting as possible teaming partners. Members did offer examples of such sharing, however.

“We had one of the members who mentioned they were trying to reimagine their capabilities deck and asked if anyone was willing to share what they have for inspiration," on coalition participant told me. “We along with at least one other firm responded and passed along our working copy.”

Another member said that, “every year, veteran-owned small businesses are invited to the VA (National Veterans Small Business Engagement conference. My first two years, I didn’t know anyone and had no idea how to start. This year, as a prime contractor, we knew hundreds of people, and dozens of firms sought us out. We were able to share that exposure with a member who knew nobody and make sure they shared our access. I asked my senior vice president to make sure this company got invited to all the important social events and introduced to key government folks.”

Why are members willing to do this? One reason is that they believe bringing more non-traditional IT contractors into the government ecosystem helps all of them. Some of them also remember their companies have a mission to help the government, and one way to contribute is to help new entrants.

The CEO of one of the member companies told me his company “has a passion for solving civic issues by providing better tech. Yes, we'll compete on some engagements, but … we want the ‘good guys’ to all win, and there is plenty of work to go around.”

Put another way, the coalition is trying to strengthen the competitiveness of non-traditional contractors versus traditional ones, more than the competitiveness of one non-traditional contractor over another.

Maintaining this kind of collaboration will not be easy. Members note that sharing has its limits. Proprietary information much be protected, and there is the risk of free riding – gaining the benefits of collaboration but not contributing to the effort yourself.

This will be the challenge for the Digital Services Coalition going forward. If free riding spreads, the win-win collaborations -- finding teaming partners efficiently -- could continue, but the mutual assistance might wither away. I suggested to Rasmussen that one way for his group to combat this might be for members to have a way within the group visibly to recognize members who have given useful advice, an approach often used to help maintain communities of practices in companies and government organizations.

“At this point,” Rasmussen says, “5 percent or less of government is looking at us -- but it’s growing, and it’s the future. That’s why the bigs are interested in us.”

The existence of the Digital Services Coalition is a sign of success for the new non-traditional vendors, but as they grow, Rasmussen doesn’t want them to lose their soul.