Steve Kelman, Professor of Public Management at the Kennedy School at Harvard University, says in the appropriate circumstance, a contest is a great way to generate ideas and, above all, to pay only for results.
“The basic idea is you set out a goal and you give a prize. Either you give out the prize to the first person who reaches the goal…or you give a prize to the best one,” says Kelman.
“Compared to a normal procurement, the agency doesn’t have to choose the team they’re going to go with,” says Kelman. “As many people who want to participate get to make their entrance.”
With contests, agencies save on administrative costs – expenses for source selection, bid protests, contract administration, auditors and checkers are nonexistant.
And they also eliminate much of the suspicion surrounding bureacracy in the procurement process, says Kelman.
But, there are certain downfalls – for example, if no one enters the contest to begin with. And there are instances where contests do not work, especially in cases where traditional companies are submitting the prize applications.
Kelman says these companies will often not invest a large amount of time and resources into a risky, competitive bid that is not guaranteed, unless the award is profound.
Contests are most appropriate in circumstances that are innovative and speculative, says Kelman.
Situations with nontraditional players also tend to be appropriate, “for example, when the EPA invites the kids of America to develop a public service announcement on various kinds of environmental things, and they give a prize of $2,500 – essentially no money. You couldn’t get a conventional company to develop a PSA of any quality for $2,500,” says Kelman.
Essentially, contests are successful because of what Kelman refers to as the “cool factor” – it’s for people and organizations who just think it’s cool to try an idea out.