Oct 10, 2013 · 7 minutes

The day of the government shutdown, which came as a result of House Republicans’ stand against Obamacare, the government’s brand new $600 million Healthcare.gov website crashed right on launch. Instead of accessing the new healthcare exchanges and information, visitors were put in an eternal online waiting room. It is likely the most expensive 404 the world has ever seen.

Considered as a pair, the events seemed a pat metaphor for the cruel irony of the political standoff. As Wonkblog’s Ezra Klein put it:

[O]n the one hand, Washington was shut down because Republicans don't want Obamacare. On the other hand, Obamacare was nearly shut down because so many Americans wanted Obamacare.

As it turned out, that interpretation was a warm, fuzzy fiction. Healthcare.gov faltered not because of massive demand, but because of fundamental problems in its underlying infrastructure, both soft and hard. And they are problems that speak to wider, more serious issues in the way the federal government deals with technology.

In a post on his Department of Better Technology blog, open data advocate Clay Johnson, who also cofounded Blue State Digital, says the contractors who made the website were “at best sloppy, and at worst unqualified for the job.”

Not only did the site not scale at launch, it was riddled with errors, and it clearly wasn’t ready to go. Just taking a look at the code that runs the site, you can see that it’s riddled with “Lorem Ipsum Dolor” — the placeholder text that web designers and developers use to demonstrate designs before copy has been written. Reddit's gone wild with speculation about who built it and, of course, legions of IT experts have come out questioning the architecture of the website.

Johnson argues, however, that the procurement process, in which government contracts are doled out only to select vendors with a lot of federal experience, is worse than the technical problems.

Companies pitching for government contracts must endure an arduous registration and bidding process. Johnson says they must navigate 6,500 pages of regulation and “hostile bidding environments.” Inevitably, only a small number of companies meet the standard. At the same time, those companies have gotten the government used to the idea of over-paying for tech in order to avoid disasters like, ironically, the Healthcare.gov one.

If one of the startup world's catch cries is "Move fast and break things," the government sector's is, "Slather things with money in the hope that the dollar bills will cover the cracks."

“The truth is,” writes Johnson, “the people inside of government would like nothing more than to have the best and brightest minds in the world working on Healthcare.gov. But the best they’ve got to choose from are 58 different companies. That’s *the* problem.”

Something has to change, and it’s not a case of dedicating more money to tech projects. In fact, it may be the opposite. The challenge for the US government lies in overcoming deeply ingrained systemic issues, which requires a fundamental rethink of how it interacts with innovators and technologists. The procurement system has to be reformed to allow for younger, less entrenched, and more nimble companies to have a shot at providing solutions.

And that is actually beginning to happen, though you have to look closely to see it. It started in January, when President Obama said in his inauguration speech, “We must harness new ideas and technology to remake our government.”

Perhaps the most significant reform effort at the federal level is the Presidential Innovation Fellows program, which draws on the expertise of entrepreneurs and technologists from around the country and puts them to work on specific problems over a six-to-13-month period. During that time, the fellows work on potential solutions related to improving contracting tools, making better use of public data, and modernizing the Department of Veterans Affairs, to name a few of the categories.

The fellowship program was ushered in under the leadership of the Obama Administration’s chief technology officer, Todd Park, who has said he believes the “Lean Startup” methodology can “fundamentally change government for the better.”

Early initiatives to come out of the program include: the Blue Button, which allows military veterans to download all their personal health records from the Veterans Affairs website; Better Than Cash, a push by USAID  to replace cash with mobile payments in developing countries; and Project MyUSA, which unifies profile information for use across multiple government services.

The program is now midway through its second intake of fellows, which included 43 participants. Because of the government shutdown, however, none of the fellows are allowed to do media interviews until normal operations resume. Most of the fellows are currently furloughed, which means they’ve had to put the brakes on the products they’re currently building.

In San Francisco, meanwhile, the city government is about to start its first Entrepreneurship-In-Residence program. Also citing President Obama’s inauguration speech as inspiration, Mayor Ed Lee announced the program in September, promising to “select talented entrepreneurial teams and help them develop technology-enabled products and services that can capitalize on the $142 billion public sector market.”

The program, which will run from the middle of this month until mid-February, is targeted at startups that are attempting to tackle public sector problems such as transportation, tax collection, energy, healthcare, and public safety, among others. It will provide the startups with access to government opportunities, staff, and expertise, as well as help with product development and support.

Program leader Rahul Mewawalla, a former entrepreneur with executive experience at Nokia, NBC, GE and Yahoo, says the city is taking a startup-based approach to the initiative. “The intent is this is something you want to do and we help you accelerate doing it,” he says.

Mewawalla hopes the program will serve as a test bed for startups looking to roll out their products and services for the rest of the country. If they can succeed by working with the San Francisco city government, then chances are they can scale the products to work in New York, Los Angeles, and Chicago, too.

The EIR program has received applications from a wide range of teams, including Guinness World Record holders, NASA engineers, Y Combinator and Techstars grads, and serial entrepreneurs who have founded billion-dollar companies. By the time the selection process is completed in the coming weeks, only 3 percent of the applicants would have been successful, which suggests the program has attracted more than 150 applications.

Startup appetite for claiming more government business is understandable, even if the sector is mired in regulation and unknown quantities for entrepreneurs used to dealing with tight turnarounds and lean operating processes. As well as the incentives around creating better public services that benefit society as a whole, entrepreneurs are also motivated by the fact that government is just a giant customer.

In San Francisco alone, there’s an $8 billion budget, more than 25,000 employees, and more than 50 agencies and departments that have some catching up to do on the tech front. Zooming out, that $142 billion figure to which Mayor Lee referred is the amount government spends on information technology nationally each year. In sum, government accounts for about 40 percent of GDP, including state, local, and federal spending.

While sectors such as retail, finance, and advertising are now getting ample attention from startups and tech giants alike, the rest of the tech sector is waking up to the opportunity in government contracts, previously a domain dominated by hoary old behemoths such as BAE Systems and Northrop Grumman.

Accordingly, there has been a recent surge in startups hoping to work alongside government, including Techstars alum Outline, which boasts a policy visualization tool and has signed up the state of Massachusetts as its first customer, Brooklyn-based nonprofit Turbovote, which is working to make the voting system more transparent, and Popvox, which aggregates legislation and lets the public make their opinions heard on it.

In Washington DC, the 1776 startup campus is combining coworking space, an accelerator, education, a global startup competition, and events in an effort to help startups cut through red tape in highly regulated sectors such as transport, healthcare, and energy. At the same time, nonprofits such as Code For America are striving to use technology to improve government.

“A lot of entrepreneurs in addition to being successful want to change the world,” says San Francisco’s EIR program leader Mewawalla. “If you truly want to do that, there’s no greater place than government.”

Programs like his, the President Fellows initiative, and incubators like 1776, are intended to be bridges between the previously disparate worlds of startups and government. For now, those bridges are still very much under construction, but at least the foundations are going into place.

If the government wants to avoid another Healthcare.gov debacle, it must dedicate itself to making sure those foundations are as stable as possible. This rethink-in-progress has to be robust enough to withstand shutdowns, 404s, and – worse – the status quo.

[Image via Shutterstock]