I started off my career at 19 years old building custom 468x80 pixel web banners back in 2000.<p>I found customers on EBAY (yes, literally EBAY's web section) and charged $9.95 a pop which was a fraction of the big agency rate.<p>I would pour hours into designing and tweaking the banners to fit into the 15k size allotment of the day while also being aesthetically beautiful.<p>After hundreds of iterations I learned how to not only make beautiful banners, but banners that drove CLICKS & conversions which was all the customer ultimately cared about.<p>As the free market took hold in my own life the customers that were showing up for the cheap rate were pushed aside from the customers that wanted to harness the value I was delivering and were happy to pay increasing fees.<p>On the back of those customer relationships I've spent 15 years building amazing businesses and exceeding my highest expectations for where a lowly photoshop jockey could go in the world.<p>My point is while this 18F project is fascinating as a thought experiment the publicity alone for the winning bidder @ $1.00 disqualifies that from being the actual "rate".<p>This isn't an experiment in "I'll deliver quality, high-skill work for $1.00" this is an experiment in "Who wants a SHOT" at making a name, an intro, or have a permanent stand-out line on their resume.<p>If you want to see what kind of work really gets accomplished for $1.00 at scale, go poke around Mechanical Turk or Fivver.
The bidding structure, as specified is:<p>1. You can only bid lower than the previous lowest bid.
2. At the end of the auction, the lowest bid will have 10 days to complete the project. If they fail, the next lowest bid will.<p>This appears to be a simple attempt to game the system. A low bid of $1 prevents any other bids from being registered, which guarantees that whatever the previously lowest bid was will not have to compete on price with other good-faith bidders.
They could've avoided this at least partly with a sealed bid process and a (secret) minimum reasonable bid to disqualify ridiculous low bids. Advertising the fact there is a floor but not its value.<p>At that point, rational bidders would have had no choice but to bid something they are willing to work for. Collusion between bidders is possible (as routinely happen for things like road paving...) but if there are enough bidders then it becomes impossible to collude with reasonable success expectations.<p>Further a registry is needed to allow black listing of trolls and penalizing of folks who routinely fail to meet terms. It would also be possible to give slight weighted edge to bidders that have a history of delivering conformant implementations.
The micro-purchase experiment is .. an experiment!<p>My guess is that bidders are interested strengthening the mechanism, so they've demonstrated exactly how this early version is broken.<p>Why would bidders want a stronger mechanism? So they can have a reliable income stream going forward. The broken mechanism serves no one well.
Their bidding rules encourage participants to behave strategically by bidding more than their reservation price, frequently rebidding and waiting until just before the auction ends to place bids.<p>Here's a suggested bidding format that would avoid these problems:<p>(1) Everyone bids the lowest price that they would be willing to accept for completing the task<p>(2) If the lowest bid is unique, the task is assigned to the lowest bidder and they are offered the rate offered by the next lowest bidder<p>(3) If many people bid the same price, one is randomly chosen and they are offered the rate that they bid.<p>(4) If they fail to complete the task according the requirements, the next lowest bidder is offered a quote according to the criteria above.<p>This is just standard auction design theory.
The value of the contract is $1 + $X dollars in expected future revenue from having 18F on your resume, which is probably higher than the starting bid of $3499. $1 is win-win, because reputation is really valuable in our world.
The bidding structure was set up to have provoked a bidding war. 18f tried a bold experiment with unconventional ways. It might be good to take a leaf out of the conventional system...at least for things that work well. There isn't much broken in the way the govt takes bids for work: They release an RFP, vendors review it, ask questions, govt. answers the questions, vendors send their bids for the work. All that works well. What doesn't work well is when the govt. teams assigned to review the bids from the vendors don't have the engineering know-how to assess which vendor can actually deliver on what they want. I've seen a CMS system being proposed and go on to win the work to solve the need for keeping scattered databases of submarines in-sync.
If a vendor performs part of the service to the government for this micro purchase bid and does not end up meeting the full criteria, are they able to sue for partial recoupment of costs of delivery of the software and/or entitled to it? I can imagine this has already been sorted for commodity delivery but I'm not sure what happens when that sort of thing is applied to services. Firm Fixed Price contracts aren't usually an all-or-nothing deal, but I guess in this case the case could be made for all the risk being on the vendor side given the scale and intent.
So is this just a miniature version of how most government contract bids work? Somebody bids something stupidly low, and then tries to deal with that problem later?