GSA’s Virtual Startup on a Collision Course With Reality

startup-idea-broken

Silicon Valley is littered with the remains of failed startups. Why? Because most often new companies are unable to satisfy a real market need, mismanage their seed funding, and don’t put the right leadership team in place to ensure the business can grow and scale. It is the fate of 90 percent of all startups.

Now imagine taking this model to government, where you have little or no new business on the books, an inspector general investigation has uncovered tens of millions of dollars in losses and squandered funds, and your idea of leading the organization through the expansion stage is to put a Hollywood animator in charge of bureaucrats who “don’t give a rip about the losses.”

This is the very real story of the General Services Administration’s digital services arm known as 18F. And now longtime Federal IT professionals are warning privately that systemic dysfunction at GSA, and particularly 18F, could threaten GSA’s proposed management of the $3.1 billion IT modernization fund that the White House is desperately trying to convince congress to pass.

In the first of three investigations expected to be released before Inauguration Day, GSA’s inspector general last week concluded that 18F had consistently overestimated revenue projections by tens of millions of dollars, allowed IT staff to spend more than half of their time on non-billable projects, and continued to hire employees at the top of the Federal pay scale despite losses that now amount to more than $31 million.

“This paints a picture of folks running around with their hair on fire and not focusing on the mission. People were clearly empire-building rather than serving the customer,” a veteran Capitol Hill staffer told MeriTalk. “The big question now is what blowback will there be on the GSA’s desire to manage the $3.1 billion IT modernization fund?”

All of the current and former officials interviewed for this story agreed only to speak on background because they were not authorized to comment publicly or because of current business dealings with GSA.

The scope of their future participation in the modernization fund is now questionable, another official said. “I think this is really going to undercut their equities. They’ve got pretty big stars in their eyes about their future.”

Part of Congress’ reluctance earlier this year to fund the $3.1 billion IT modernization effort was the fact that agencies already spend $85 billion on IT. “Many questioned why the administration couldn’t find $3 billion within that pile of money,” said a former Federal CIO. “And concerns remain about who will run the fund, because they don’t trust GSA. You almost wish there was some other entity that doesn’t have GSA’s reputation.”

WALL-E Comes to Washington

When GSA reorganized in May and formed the Technology Transformation Service centered around 18F, most observers expected a seasoned government hand would be appointed as the first TTS commissioner. After all, when a startup experiences rapid expansion and growth it’s usually time for new leadership—the type of leadership capable of taking the organization to the next stage of its development.

Two well-known and experienced government officials were in the running for TTS commissioner—Homeland Security Deputy Chief Information Officer Margie Graves, and Kshemendra Paul, the program manager for governmentwide information sharing and a former Federal chief architect at the Office of Management and Budget. But neither got the call.

Instead, GSA went with an inexperienced outsider—Rob Cook, a former Pixar executive who’s spent his entire career in the film industry doing graphics and animation software development.

Rob Cook. (Photo: Pixar.com)
Rob Cook. (Photo: Pixar.com)

“Some of my friends have asked what could possibly have gotten me to leave the life I love in the Bay Area and take a government job in D.C. My answer is straightforward: I believe the Technology Transformation Service has an unprecedented chance to dramatically improve the way we all interact with our government,” Cook wrote Monday in a blog post. “TTS is built on the principles cutting-edge companies across the world thrive on, principles like agile development and user-centric design.”

But some see Cook’s appointment as an effort by GSA and 18F to divert attention away from the very real wonky dysfunction that has contributed to 18F’s current problems.

“The new TTS commissioner is part of GSA’s effort to continue its avant-garde spirit,” a former Federal CIO said.

“But what it really needs is a seasoned Washington insider with good credibility on the Hill who knows how to manage. You don’t need more edge and pizazz,” the source said. “18F is at a much different stage now. If this were a private company, it would be clear that somebody with a different skill set was needed to take the enterprise to the next level.”

For now, Cook inherits a massive leadership challenge—a challenge that may be beyond even the most skilled Federal bureaucrats.

“I’ve never seen a cover-up like this in my entire Federal career,” a former GSA official told MeriTalk. “The loss is not as bad as the blatant disregard and the fact that they didn’t give a shit. 18F has no work in the pipeline. They want people hitting the street selling anything they can, no matter how small. And they are making recommendations to agencies whether the agency needs the services or not.”

Still, the bigger challenge remains the trust deficit that GSA and 18F must overcome if they want to avoid additional scrutiny by Congress, a former Hill staffer said.

“Part of the reason for the trust deficit is that they hired up so quickly. That was really about trying to make it as difficult as possible to abolish 18F,” the former staffer said. “But that only made it a bigger target. The person who devised that strategy was clearly not a very seasoned, smart person.”

Dan Verton
About Dan Verton
MeriTalk Executive Editor Dan Verton is a veteran journalist and winner of the First Place Jesse H. Neal National Business Journalism Award for Best News Reporting -- the highest award in the nation for business/trade journalism. Dan earned a Master's Degree in Journalism and Public Affairs from American University in Washington, D.C., and has spent the last 20 years in the nation's capital reporting on government, enterprise technology, policy and national cybersecurity. He’s also a former intelligence officer in the United States Marine Corps, has authored three books on cybersecurity, and has testified on critical infrastructure protection before both House and Senate committees.
7 Comments
  1. Anonymous | - Reply
    Good article. I hope more light is shed into 18F.....and let's add USDS to the list while we are at it. Infusing innovative thought into government operations is a laudable notion, but there are a ton of govies out there alteady who are thoughtful and constantly seek ways to meet their mission goals while maximizing the use of the taxpayer dollar......and thet are not rogue players.
  2. Anonymous | - Reply
    Why couldn't GSA have looked at the successful examples of modernization and moving to public cloud hat agencies have done independently? Were they so focused on their brand they missed listening to the successful agencies?
  3. Anonymous | - Reply
    Haha.. the only people fanning the flames is the old guard at GSA who's empires failed long ago and were taking a hit from something that actually achieved some success in changing the poor way government acquisitions worked. A stated goal all along was culture change. The old guard didn't like that 18F's success highlighted how ineffective they had become, how it detracted from their existing fiefdoms, so are killing it with their buddies at OMB (which is a lot of GSA people, right?). What we are seeing now is how the "we be here before you" crowd handles anyone with fresh ideas. Because "they be here after you". Textbook case of how culture eats strategy for lunch. How about we look at the financials of the other GSA programs if you want fair reporting of waste? You're writing an article about $30M when the other GSA programs are losing hundreds of millions? They're all losing money while investment fund money seems to flow out in buckets to preferred vendors (that happen to have ex-GSA'ers leading BD). Oh, that's right, you can't do that type of reporting because then the GSA people won't show up to speak at your paid events and you lose money... the entire process is so corrupt and full of nepotism.
    1. Anonymous | - Reply
      Yeah....no. 18F was a grift from the start. Phaedra and Dan T. and Aaron Snow need to be hauled in front of Congress again and asked why they lied and misrepresented everything about 18F.
  4. Anonymous | - Reply
    Great anonymous sourcing in this article as always
  5. Anonymous | - Reply
    Remarkable sourcing from a coward of a reporter and a coward anonymous sources.
    1. Dan Verton | - Reply
      Remarkable anonymous comment. I'm willing to debate anybody on the issues and my reporting, but not anonymous ghosts.

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