Responding to Steve Kelman's recent blog post, Alan Thomas shares the inside story on 18F's evolution.
Editor's Note: Steve Kelman recently blogged about the bad reputation 18F and other digital service teams have developed in more-traditional corners of the federal IT community. That piece prompted Alan Thomas, who headed the Federal Acquisition Service from June 2017 until October 2019, to share his take on the conflicting cultures and the steps taken improve the organization. At Kelman's encouragement, Thomas wrote the following article:
I read Steve Kelman’s recent blog post, “Two tech titans take on 18F and USDS,” with more than passing interest. I respect Bob Woods and Ed Meagher, and they raise some good points. But I think they missed some big changes that happened in the last four years, especially with 18F.
I should know, as I ran the General Services Administration’s Federal Acquisition Service (FAS) from June 2017 until October 2019. My first big task after being sworn in as the FAS commissioner was to take a completely separate organization at GSA, the Technology Transformation Service (TTS, which includes 18F), and merge it into FAS. The marching orders were to make peace between the hoodies and the suits. Like so many stories where technology is in the headline, this one is really about people, culture, and organizational alignment.
What I found upon arrival was bad blood and dysfunction that flowed from the culture clash created by standing up a digital consultancy within a government agency. Rehashing the past and pointing fingers is, well, pointless, but it is fair to say there was a general management failure to integrate the new capabilities and new people embodied by TTS and 18F into an organization with a strong culture like GSA. Cue the IG reports, Office of Special Counsel complaints, and infighting between career staff and political appointees.
The result was that many smart people were wasting time battling each other instead of being focused on serving customers. Yet upon arrival, everyone I met in FAS and TTS told me, “I’m here for the mission.” That seemed like a sentiment around which we all could rally.
To begin creating a shared culture, we stood up an in-house integration team and kicked off a series of confidence-building sprints across eight functional areas, dubbed “Joining Forces,” designed to bring TTS into FAS. Those eight teams paired leaders from FAS and TTS together in pursuit of the common objective to align people and processes in areas like procurement authority and customer relationship management. Over time, we also made some personnel moves, taking leaders from TTS and placing them into new leadership roles in other parts of FAS.
The Joining Forces sprints enabled us to start acting like teammates with a shared set of top-level goals. If someone from TTS needed to work an issue with the General Counsel, they often enlisted the help of the FAS chief of staff. The same went for things like blog posts and speaking events that needed agency-level approval. As part of FAS, the “hoodies” were plugged into an established set of business processes that gave the overseers and institutionalists a sense of assurance.
One anecdote from late 2017 demonstrates the progress made in getting leaders from FAS and TTS to work together. Dave Zvenyach, the whip-smart 18F alum who is now back at GSA as the Director of TTS, and Erv Koehler, a tough-as-nails career SES, gave a joint presentation on customer relationship management to the entire leadership team at an offsite. Zvenyach, a recovering lawyer who often wore a hoodie, put on a shirt and tie for the occasion. Koehler, always dressed formally, donned a hoodie. It was the perfect pre-planned wardrobe malfunction that signaled, “I’m okay, you’re okay, so let’s focus on how we can best work together.”
Getting culture right is important, but it needs to be backed up by alignment between authority and resources. Perhaps the most important change from the order merging TTS into FAS signed by the acting GSA administrator and championed by then-senior advisor Emily Murphy, soon to be the leader of the entire agency, was that putting all of TTS into FAS better aligned reporting relationships, accountability and funding authority.
The consultants at 18F, like the rest of FAS, are fee-for-service. All the fees go into a revolving fund known as the Acquisition Services Fund or ASF. Broadly speaking, the financial goal for FAS is to break-even at the enterprise level by providing great service to agency customers and, in return, charging fees that cover the cost of providing that service. There are dozens and dozens of programs that pay into and utilize the ASF, including the Multiple Award Schedules program, contract vehicles like Alliant and OASIS, assisted acquisition services like FEDSIM and the Fleet program, to name just a few.
Not all programs utilizing the ASF break-even on their own. Some programs, like the Integrated Award Environment, are “good for government” investments and may not approach break-even without increased agency contributions. Some, like the Enterprise Infrastructure Solutions program, have significant outlays upfront and recover their costs over a long payback period that is sometimes greater than a decade. Others, like Fleet and assisted acquisition services, are financial superstars with well-established business models and a consistent backlog of work that produces positive returns year after year.
As still-fledgling efforts, TTS and 18F were not fully recovering costs. With authority and resources aligned, we established financial targets, put the targets in performance plans, and focused on leaders at the operational level in TTS who knew how to hit these targets. Financial performance for TTS improved as the book of business grew through new offerings such as the Centers of Excellence and the expansion of existing offerings like the Presidential Innovation Fellows program. The finances at 18F also improved through better hours utilization and improved cost control, going from a loss of $8M in 2017 to near break-even in 2019 with a loss of $800K. All these factors combined to produce a realistic path to financial health for TTS over a multi-year time horizon.
More important than the individual financial performance of TTS or 18F, both relatively small in the context of the ASF, was that the overall FAS portfolio needed to get healthy. Through improved governance of new investments and the establishment of shared executive goals on financial performance, the leadership team at FAS delivered and the ASF went from a string of losing years culminating in a $100M loss at the close of FY17, to a positive result of $70M “in the black” by FY19, a trend that has continued.
So, if the overall financial picture was improving, what about those supposedly expensive 18F consultants? I typically saw a fully loaded hourly cost of between $250 and $275 which was in line with similar offerings at GSA. Salaries were at or below industry averages for these skill sets, but the overhead burden and utilization rates offered opportunities for improvement. Some things about the model do drive higher costs. For example, bringing in a large cadre of term employees creates near-constant churn and a recruiting challenge just to maintain staffing levels. The additional effort spent on recruiting is reflected in higher expenses.
The larger point is that asking why those consultants are so expensive misses the mark because cost is relative to value. The question for 18F projects should be the same as asking if running a project through FEDSIM is expensive? The answer is no, not for customers who value the speed and quality improvements driven by both these teams as worth the investment. The bottom line is that charging for an optional service lets the customer determine value. If the primary objective is lowest cost, then find the cheapest service provider and cross your fingers! Otherwise, let competition and customer choice determine how to best allocate resources for mission success.
What’s the moral of this story? Standing up a new organization within a government agency is hard. Culture and people matter a lot, and authority and resources must be aligned. Bob and Ed accurately portrayed some of the dysfunction and distrust that I saw in the summer of 2017. Fortunately, the story didn’t end there.
Did everybody always get along and was everything perfect? Of course not, but these digital consultants provide real value as evidenced by the pipeline of work 18F and TTS are performing for agency partners. Everyone just needs to remember that whether you wear a suit or a hoodie, the mission matters most.
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