Why a federal high-tech start-up is a money loser • Hacker News Board

Re: Why a federal high-tech start-up is a money loser

#101

Post by jldugger » Thu, Nov 03, 2016, 6:42 AM UTC

pcurve wrote: post #71

If they booked 0 in revenue but helped other agencies save money by lower procurement cost or generate revenue, is that a problem?

I assume their financial model is to charge agencies for their services. Often times by competing with private vendors. If such an agency is 10 percent over budget, it means they're undercharging agencies by that much. By failing to charge their true cost, they're potentially undercutting vendors who would have cost the taxpayers less overall.

It sounds like upper management doesn't want to do the hard work of accurately pricing their services, or maybe is intentionally undercharging to ensure they get to provide the service. In some ways, they're definitely in a bind -- if they undercharge, they're crowding out private competition, and if they overcharge, they look like greedy bureaucrats.

Re: Why a federal high-tech start-up is a money loser

#102

Post by madeofpalk » Thu, Nov 03, 2016, 6:42 AM UTC

Pyxl101 wrote: post #90

tyre wrote: post #44

Earlier quoted context omitted.

Sorry, I meant in this case, since they are a monopoly. Good clarification!

I don't think they are a monopoly. Other agencies can pay outside firms as an alternative to using 18F, can't they? I'm not exactly sure how it works so please educate me. I also separately heard that 18F wasn't supposed to bid against outside firms for government contracts. That doesn't really make sense, then, if they're supposed to earn revenue. If they're expected to earn revenue then they should be able to bid f…

At least Australia's version of 18F (called DTA) has an enforced monopoly

    The Australian Government has established a moratorium that stops Commonwealth
    (federal) agencies from investing in new, or duplicating, service delivery
    capability. The moratorium is an important tool to help government limit the
    fragmenting of users’ experience across the Australian Government.

Re: Why a federal high-tech start-up is a money loser

#103

Post by snowwrestler » Thu, Nov 03, 2016, 6:49 AM UTC

kyleblarson wrote: post #46

dangrossman wrote: post #17

Earlier quoted context omitted.

727 hours is a team of 10 working for less than 2 work weeks. Or a team of 6 having a couple 1-hour meetings with other groups in addition to doing the design work. It'd be hard for any medium to large organization with an internal design team to rebrand without using hundreds of hours of staff time.

that said, assuming you are working in the US, are you willing to work an extra few minutes over the course of the next year to generate the tax revenue for this?

The entire budget of 18F is about 10 cents per taxpayer. 700 staff hours is far below a penny per taxpayer. I'm fine with it.

In addition, most 18F employees are salaried, so this is not likely to be an actual cost overrun, but rather an opportunity cost.

Re: Why a federal high-tech start-up is a money loser

#104

Post by Pyxl101 » Thu, Nov 03, 2016, 6:54 AM UTC

pryelluw wrote: post #79

dangrossman wrote: post #17

Earlier quoted context omitted.

727 hours is a team of 10 working for less than 2 work weeks. Or a team of 6 having a couple 1-hour meetings with other groups in addition to doing the design work. It'd be hard for any medium to large organization with an internal design team to rebrand without using hundreds of hours of staff time.

Yes, good point. What I don't get is 727 hours for that specific logo. Either way, it just stood out.

> What I don't get is 727 hours for that specific logo.

It's not 727 hours for the logo. It was that many hours for the entire rebranding effort, including coming up with the brand and implementing it. When coming up with logos and brands, it's often necessary to brainstorm ideas, try many of them out, review them with stakeholders, before finally settling on one vision and then executing it.

Re: Why a federal high-tech start-up is a money loser

#105

Post by rmason » Thu, Nov 03, 2016, 6:55 AM UTC

tyre wrote: post #25

I don't care if 18F makes money, and in some cases it may make sense for them not to. In a perfect market, they would be able to sell their services at the same price as the value of those services. So if they build a system for the Veterans Administration (VA) that saves $1 million, they should get $1 million for it. Their EOY revenue would reflect their value created. But they are actually selling to themselves. Th…

I smell a hit piece from a mile away. 18F has done a lot of good but in trying to change how government IT does business but they've also made powerful enemies who view them as a threat to their power base..

Find something that can be spun negatively and sell the story to a friendly journalist. That it what appears to have been done here. Next get the head of a budget committee to question 18F spending. It is all done behind the scenes and sadly 18F's strongest supporters are all leaving government.

Re: Why a federal high-tech start-up is a money loser

#106

Post by snowwrestler » Thu, Nov 03, 2016, 6:55 AM UTC

The sniping about 18F seems pretty transparent: federal IT shops don't want to do anything differently, and private IT vendors don't want any more competition for their contracts.

18F might be one of those ideas where you can tell that it's working because it's getting attacked.

Re: Why a federal high-tech start-up is a money loser

#107

Post by rndmize » Thu, Nov 03, 2016, 6:55 AM UTC

lsmarigo wrote: post #10

Activities that can’t be billed to other agencies are another drain. One example is staff time totaling 727 hours on a logo change. The old logo was a blue square with 18F in the lower-right-hand corner. The new logo, a black square with 18F centered and a different font, wasn’t worth the time and doesn’t look as good. for anyone else curious: (new) Black Logo: https://18f.gsa.gov/assets/img/logos/18f-logo.svg (old)…

From the actual report - "18F Branding – Staff spent 727 hours (valued at an estimated $140,104) developing the 18F brand. An example of one of their branding projects is the 18F logo change, seen below in Figure 8."

Pretty poor journalism. Brand development strikes me as a much bigger category than a single logo change.

Re: Why a federal high-tech start-up is a money loser

#108

Post by morisy » Thu, Nov 03, 2016, 6:57 AM UTC

winter_blue wrote: post #36

They could've created feature/bug bounties and/or grants for open source contributors, and tried to build an open source community around what they're building. This would naturally attract/increase volunteer contributions, but they might also be able to control costs better with such a model. 18F is an uniquely special position since they are building software for the general public, and so are in a great position t…

They've actually done almost exactly this and are working to scale it up within limits of contractor system:

https://micropurchase.18f.gov

Re: Why a federal high-tech start-up is a money loser

#109

Post by Pyxl101 » Thu, Nov 03, 2016, 6:57 AM UTC

justinsaccount wrote: post #43

JBReefer wrote: post #31

Earlier quoted context omitted.

I don't get your point at all, I'd say the US's ability to project force is worth 19,000x a year more to me than what 18F does.

Why is it that 18f lost ~10 million dollars a year, but the military does not lose 600,000 million dollars a year? Sounds like a double standard to me.

It's about what an organization spent compared to their budget. It sounds like 18F was budgeted $0 since they were expecting to earn back their costs in revenue by charging other agencies for their services. Since they did not fully recoup their costs, they "lost money".

If you budgeted the military $1 trillion and they spent $1.1 trillion, then they would also have lost money.

Re: Why a federal high-tech start-up is a money loser

#110

Post by MichaelBurge » Thu, Nov 03, 2016, 6:58 AM UTC

jonstewart wrote: post #34

Hi Silicon Valley! Thanks for visiting our nation's capitol! kisses, DC -- Seriously, this shouldn't be surprising. It's a noble effort, the work is probably worth the so-called "losses", but the reason the government is the government and not Silicon Valley is that in government, there are a bajillion rules to keep you from screwing up too badly. There's been a fetishization in DC of Silicon Valley techniques, but 1…

> it will be interesting to see what happens to 18F after the presidential transition.

If Clinton gets in, she'll probably appoint people from Google into high government positions. Eric Schmidt has given her campaign a lot of money and technical support, and she's mentioned bringing people from Silicon Valley in during some of her rallies. Probably that means giving Eric Schmidt a high-ranking position, or Google lucrative government contracts.

I don't think that Trump cares too much about Silicon Valley. He'll probably just review them as part of a routine audit of all federal agencies, and ask them to explain what it is that they do and then make a decision to keep them. I think this particular agency is not high on his list of problems.