Stepping back from industry developments for a moment, I thought I'd try to make some sense of recent developments in Austin following a recent award of a major web development contract to a company from California.

First, some context.  I'm still a relative outsider in the Austin community, having moved back to town 8 months ago after spending almost 4 years in Seattle.  I am just now getting to meet folks and establish myself and my business here in Austin.  Additionally, I have met a few of the folks involved in government contracting from the private sector *and* our company Notice Technologies recently won a small contract with the city to help the SBDP (Small Business Development Program) market local businesses through its ExploreLocalAustin.com web site.  I am not going to make any value judgments here as much as I am going to summarize what happened (as far as I can tell) and suggest solutions to the systemic problems behind the story.

So what happened?  In shorthand, the City put out an RFP for a major overhaul of its web sites, citing that the sites are built using 12 year-old Web technology.  Makes sense, the world is *a lot* different today than 12 years ago.

Three companies bid on the project, two from the Austin area and one from California.  The Austin companies bid a little more than $1.3 million while the California company came in at a significantly cheaper rate of just over $700k.  Who won?  The California company, of course — I'll bet the cost difference was eye-opening.

All of this created quite a stink within the local Austin Web community.  Why?

1. Three companies bidding — The first many folks heard of this large project was the uproar around its award.  The City of Austin says that over 200 companies were notified.  While I'm sure that is based in truth, I wonder exactly what notification really means in this sense.  Clearly the tactics used to communicate with the community at-large didn't work very well.  It doesn't make any sense that a contract this large would only attract the interest of two local companies, especially in the recession we're in.
2. Loss of business to California — In the tech industry, folks here in Austin hear about how things are in some way more legitimate or more sophisticated on the West Coast.  In my experience, this is certainly true in some areas.  But there is certainly enough talent in town to build a Web publishing system for the City and its various departments.  There is enough social media talent here to figure out how to use new technologies to make communication more efficient.  Folks around town know this, which makes losing a contract to a company in another part of the country particularly painful.
3. Lack of community feedback? — In part because of the small # of companies bidding on the project, I think a lot of folks jumped to the conclusion that the City hasn't been seeking help to put together the best plan to fix its Web Sites.  Well, the City has apparently been thinking about this for awhile… try 18 months plus.  The City first solicited the Public for feedback in November 2007.  If you scan the City's AustinGo web site, you'll find detailed information on the process, a supporting blog (that was updated minimally), Town Hall meetings, etc. As a taxpaying citizen, I am not entirely sure I want the City to take longer than 18 months to go through feedback, evaluation, planning, scoping, and vendor selection.  But the data suggests that the City did a really good job of documenting the entire process here.
4. Concern over evaluation criteria & qualifications of evaluators — I've heard this mostly from folks in the private sector.  People are concerned that the City may not have the right people to make an informed evaluation of the proposals they see.  I can't & won't comment on this — I don't know the people involved, their backgrounds, etc.  What I can say is that very few people have 1) done business with the City, and 2) seen all the proposals to make a qualitative judgment.  Similarly, there is no governance from the private sector (as far as I can tell) to ensure that the City personnel are indeed making the right decision.  I think this is where private sector folks get concerned.

Meanwhile, in this case folks in the private sector have responded with the OpenAustin initiative — it's a collection of crowdsourced ideas of how to improve Austin & City operations.

Overall, this is a very interesting case for Government 2.0 broadly.  As Government institutions get more and more resources and as they modernize, there is more at stake for the private sector.  Ergo, I expect more private sector involvement and scrutiny of Government decisions.  Remember, folks in Government agencies are already limited by issues of fairness, equality, internal policy, limited budget, etc.  Public sector scrutiny may just make it that much more difficult for Government decision-makers to move quickly and be bold. 

So how can this be fixed to the satisfaction of all involved?  A few thoughts:

1. Official local government policy re: supporting local business/employment — This can be an explicit policy or one enforced in proposal scorecards. (i.e. Is the proposer doing most work locally?  Yes — high weight)  I think this works well in communities that have the existing talent to get the job done.  Going too aggressive would create negative outcomes as well, so there is a happy medium here.  In any event, I think each local government should have a policy regarding the use of local companies vs. companies that don't contribute meaningfully to the tax base.
2. Public/Private Partnerships — Government personnel are not always going to be the most qualified people to assess private sector proposals.  Get people from the private sector to help with these assessments.  Note I did not say "get them to make the decision for you".  A private-sector board that is available to answer questions surrounding a proposal or Government 2.0 decision is a very valuable thing to have at your disposal.
3. Government Transparency in terms the private sector can understand — Government language and process is very difficult for private sector people to understand.  Often times, folks in Government positions don't understand that this can be very difficult for businesspeople to navigate and plan around.
4. Patience in terms Government can understand — Entrepreneurs and businesspeople are often used to making quick decisions and doing things in ways that help advance their business.  Agility & execution are keys to winning.  The same is true for Government, but within the confines of what is possible.  Government personnel are often under a microscope that entrepreneurs are never, ever under with respect to public outcry and overreaction.  So when dealing with Government, harken back to the most bureaucratic corporate job you've ever held… and empathize.

Government 2.0 is going to be a major league adjustment for all sides of the equation.  We're just getting started.  Buckle up. 😉