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Expert urges modular contracts, digital service and user‑centered design to curb expensive state IT failures
Summary
Waldo Jaquith of US Digital Response told the committee that large, waterfall contracts often fail; he recommended agile methods, product ownership, modular procurements (suggested contract increments under ~$10M and three‑year performance periods), and a state digital service to reduce risk and vendor lock‑in.
Waldo Jaquith, senior adviser with US Digital Response, told the Science, Technology & Telecommunications Committee that typical large custom‑software contracts carry high risk of cost overruns, schedule slips and failure to meet user needs. He used a Rhode Island Medicaid modernization example in which Deloitte was paid roughly $364 million on a project initially estimated at $100 million to underscore the scale of common overruns.
Jaquith cited studies showing low success rates for large government software procurements and said a shift to agile development, product ownership, user‑centered design and modular contracting would reduce those risks. He recommended keeping individual contract increments under roughly $10 million and limiting periods of performance to about three years (one base year plus two option years) so projects can be rebid or reassessed if requirements or circumstances change.
He also urged lawmakers to establish or fund a state digital service — a small, expert team of coders, designers and user researchers that can help agencies run procurements, validate needs before procurement and coach agencies on quality and acceptance standards. Jaquith recommended budgeting software as an operating expense rather than capitalizing it as a one‑time project, saying ongoing product teams better reflect how software is built and maintained.
On procurement oversight, Jaquith recommended more frequent, demonstrable oversight through sprint reviews and demos rather than relying solely on written IV&V reports. He advised that government should retain ownership of custom code produced with public funds to avoid long‑term licensing payments to vendors and reduce lock‑in.
Committee members asked about workforce models, code maintainability, and government‑owned/contractor‑operated systems. Jaquith said states can recruit and retain talent through targeted hiring and by creating roles that appeal to private‑sector technologists for fixed‑term public service, and that a robust quality surveillance plan and product owners who inspect code and acceptance frequently are essential to avoid perverse incentives that encourage poor documentation and vendor lock‑in.
Next steps suggested included exploring how to adapt procurement and budgeting rules in New Mexico to enable smaller, modular contracts and considering whether to create a state digital service.
