The Case for Commercial Solutions in Government

For years, U.S. policy has held that taxpayer dollars should not be spent to develop technological capabilities that are already commercially available and can meet the government’s needs.  

Occasionally there are calls to loosen or circumvent this policy, but doing so would be a mistake. With very few exceptions, open competition is essential to ensure the best result for the warfighter or citizens being served and for the taxpayers who are funding the purchase.

Commercial-off-the-shelf, or COTS, technology products are usually the result of an exhaustive development process, including engineering and testing, customer evaluation and revision, ongoing innovations and modifications. Companies incur additional costs for services, training, and customizing solutions to meet customer needs. All of this requires an enormous, years-long investment of time, labor and money that the private sector has borne before recouping those costs by selling the finished product.  

A recent report released by the Alliance for Digital Innovation on the enormous costs of the federal government’s reliance on custom-built IT solutions and legacy systems said there is a multibillion-dollar history of custom federal IT projects that have been canceled because the systems wouldn’t work. Taxpayers bear those costs but commercial solutions fund their own failures and restarts, the report said. 

Evaluations that tout government solutions as being lower in cost frequently fail to include the total costs and true value of finished products. Most government-developed solutions rely on private contractors for much of the work that goes into them so final true costs are not always revealed. Why should tax dollars be used to pay for the government—often through another contractor—to develop a capability that is often nothing more than an attempt to duplicate and unfairly compete with an existing, successful product?

Experience has also shown that the government has a much harder time walking away from a government-developed solution that doesn’t meet its needs, and instead keeps pouring money into reinventing that same wheel. What it should do is look first to the private sector for commercial options, and conduct a fair and open competition, including a thorough and honest business case analysis of available alternatives. Without such analysis and competition, the government has no basis for concluding that it is maximizing economy and efficiency (i.e., realizing the best value) by going with a government solution.

COTS isn’t just a good idea. It’s the law.

In fact, federal law requires such an approach. In 1994, Congress passed the Federal Acquisition Streamlining Act), which clearly established a preference for COTS solutions. FASA essentially provides that it is arbitrary and capricious to select a government-off-the-shelf, or GOTS, product over a COTS product, or to assume a GOTS product is superior to COTS solutions, without doing a factual analysis of relevant issues related to the choices. 

FASA specifically requires that agencies “shall conduct market research appropriate to the circumstances” before developing new specifications for procurement and before soliciting bids or proposals for a contract in excess of the simplified acquisition threshold. The law further directs agencies to use the results of that research to determine whether there are commercial products that already meet their requirements or could do the job if either the product or the requirements were reasonably modified.

But sometimes this law is ignored. FASA’s requirement “that federal agencies, to the maximum extent practicable, procure commercially available technology to meet their needs” was even cited in a federal appellate court decision last year when Palantir challenged a U.S. Army contract award favoring a GOTS product. The court disapprovingly noted that, in this situation, no business case evaluation of COTS alternatives was conducted, even though a competing COTS product was already being used elsewhere by the government and could easily be evaluated. 

The Trump administration has, to its credit, stated a clear preference for COTS cybersecurity solutions, consistent with FASA. This position is reflected in the Department of Defense’s 2018 Cyber Strategy, which pledges that the department “will make greater use of COTS capabilities that can be optimized for DoD use” and t“will also leverage COTS capabilities where feasible to reduce our reliance on expensive, custom-built software that is difficult to maintain or upgrade.” 

This admission that custom-built, government cyber-related software is often “expensive” and “difficult to maintain or upgrade” should be taken very seriously by all federal agencies considering whether to ignore commercial capabilities in favor of government-developed software.

There will always be a place for government-developed solutions. We applaud recent movements in federal development toward agile, SecDevOps and professionalized product management to ensure those solutions are rapidly and safely fielded.  In fact, commercial vendors must continue improving their work using those same techniques in order to be more responsive to the needs of their federal customers when there’s a need to create something new rather than to reinvent the wheel. 

But government solutions should only be rare exceptions to the proven rule that the commercial marketplace can most effectively meet the government’s technology needs. Commercial vendors are standing by and eager to bring their proven capabilities to bear in supporting federal agencies and the military in pursuit of their missions.  

 John B. Wood is the chief executive officer of Telos Corporation.