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Phase 3 - Technology Selection

Blockchain was first introduced as a type of DLT presented as the underlying platform of the Bitcoin cryptocurrency but has now evolved into a platform with much broader uses cases and various technical implementations. When it comes to selecting a blockchain solution for your agency, there are several factors to consider:

This section explores each of these factors in depth to guide you in the selection process.

Phase Inputs

The Selection Phase expands upon the outputs from the Readiness Phase and starts delving into the various concepts and requirement categories that need to be considered and analyzed for successful selection and implementation of a blockchain solution.

Playbook Phases Figure 6: Selection Phase (3) summary - expand

Business Considerations

The business problem and requirements must be clearly identified to ensure the appropriate blockchain platform is selected. Blockchain is a cross-cutting and transformative technology, but it is not the solution to every problem. Review and understand the description of the platform to ensure it matches the need. Look past the jargon to understand the specific differences noted below:

Technology Considerations

Permissioned versus Public Permissionless Blockchain

A blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. There are mainly three different types of blockchains.

All three types of blockchains use cryptography to allow each participanton any given network to manage the ledger in a secure way without the need for a central authority to enforce the rules. In addition to an introduction to the types of blockchains in the ACT-IAC Blockchain Primer, Appendix A provides further details about these blockchain networks.

Determining Which Blockchain is Right For You

The following criteria should be considered while evaluating a blockchain for any project:

There may be exceptions depending on the project, and it is possible to use a different type of blockchain to reach a particular project’s goal. Please refer to Appendix F for further explanation of the technical criteria.

Digital Assets and DLT Requirements

A digital asset is a floating claim of a certain service or good(s). It is ensured by the asset issuer, which is not linked to a particular account, and it is governed using computer technologies and the internet – including asset issuance claim of ownership, and transfer. Blockchain-based DLT provides an alternative to centralized digital asset management system by providing:

Specific Considerations of a Blockchain Supporting Digital Asset Management

There are some additional considerations for using blockchain technology to support digital asset management (additional details are in Appendix F):

Deployment Models

There are various deployment models for blockchains in the market. Government should consider which model suits them the best. Listed below are the common models. Please refer to Appendix B for details.

Open Source Versus Proprietary Blockchain Platforms

Differentopen source blockchain platforms are suitable options in implementing different consensus protocol mechanism, blockchain network types or specific use cases. They are a good option when implementing blockchains with more censorship resistant use cases. The use of open source blockchains would reduce the investment cost in building blockchain services. However, organizations may need to manage the security, scalability and throughput considerations in their own custom ways. Interoperability and ease of integration are areas of consideration, as open source blockchain platforms do not traditionally do well in these areas. (Details for open source/proprietary models are in Appendix C.) Blockchain as a Service (BaaS) (details in Appendix D) is an emerging model that combines the benefits of an open source platform with the benefits of proprietary solutions.

How to Buy – Reference to GSA Atlas

While the procurement methods and vehicles vary, GSA’s FastLane process improvement contract serves as a good example of how an agency should procure a blockchain solution.

Leverage commercial contracting methods

Leverage the efficiency of commercial contracting methods. Blockchain was created by the commercial industry, so government should buy it as a commercial item and use commercial buying methods. Similar to how private companies structure blockchain development buys, the procurement process should require vendors show, or demonstrate, how they build blockchain products, not merely tell about process via a long proposal. In addition, industry doesn’t use cost- type contracts for blockchain and neither should government.

Buy small, build small, test, and iterate

Set up each contract for a quick win, then determine how to scale that success or pivot quickly. Well-intentioned agencies frequently default to creating large scale software development contracts. However, these procurements often take years. In addition, larger contracts often lead to more bureaucracy, slowing down the delivery of a working blockchain. Instead, adopt modular contracting methods. First award a smaller contract for the developmentof a blockchain MVP. The time to award will be faster, the procurement risk lower, and within 12 months of award, the agency will likely show a quick win with a deployed working product. Working products also convince others about the utility of the technology and, therefore, play a role in the agency’s comfort and adoption of blockchain. Once the MVP is developed, the agency can pivotor procure additional services to further develop features for the blockchain product.

Do not lock technical requirements into the contract

To ensure the use of new, more effective technologies and methods is not blocked, do not lock technical requirements into the contract. Overly prescriptive requirements significantly limit a vendor’s flexibility to propose innovative approaches to blockchain. They also wrongly assume that the features described in the original requirements document are equally valuable and the users’ needs will not change over time. This significantly limits the ability to leverage valuable blockchain product features that are not yet developed. Instead, use a Statementof Objectives to scope the requirement around the use case or product vision. The government will still control the technical requirements in the form of user stories, which will be crafted during the life of the contract and will be prioritized and selected by the productowner before each iteration cycle. The contract will provide the flexibility to build any features within the broader use case or product vision. In addition, this approach allows technological enhancements to never end.

Pay for results, not time

Buy blockchain design and development services as a repeated process for the delivery of a working product. When technical requirements are not locked into the contract and the government and the vendor together formalize the definition of “done,” then one of the most advantageous pricing formats is firm-fixed price per iteration. When the vendor completes the user stories at the end of the sprint, and the definition of done is met, the vendor gets paid and the government receives working code that is ready to be deployed.

Acquisition Considerations

The focus in government in engaging in any new Blockchain endeavor begins with the contracting community which includes Contract Officers (CO), Contract Specialist (CS), and Contract Officer Representatives (COR/COTR). The acquisition workforce enables the government to access and consume emerging technologies such as Blockchain.

If the introduction of a Blockchain enabled portfolio requires a Blockchain enabled enterprise, provide appropriate infrastructure requirements to the Enterprise Architect and Information Systems Security Officer for concurrence. Enable and configure the General Support System (GSS) to accommodate the newly tooled portfolio. Enabling the enterprise may require contract modifications in future phases across the vendor landscape. Collaboration with the Contracting Officer stabilizes the project as a whole.

Develop Acquisition Models and Milestones

You have assessed and selected the Blockchain technology. You have determined the readiness of the agency. The acquisition now turns its attention to the solicitation and production aspects of the program. If the Blockchain project is considered a pilot or proof of concept, the acquisition team can utilize specialty mechanisms such as the Procurement Innovation Resource Center’s (PIRC) Commercial Solutions Opening (CSO) procedures. This program is designed to expand beyond the current Federal Acquisition Regulation (FAR) procurement methods. CSO provides a streamlined approach to exploring the acquisition of emerging technologies by the federal government. If the project is considered a standard modernization activity of the current portfolio, the Contract Office follows standard procurement methods for their agency. The solicitation defines the method of evaluation, basis of evaluation, basis of award and determination of price fair and reasonableness. These criteria assist in the selection of the successful bidder.

Define Performance Metrics

The project team provides performance metrics for both the technology and services to be included in Section C of the solicitation documents. The Statement of Work (SOW) expresses expected Service Level Agreements (SLA) and performance metrics to assess the success of the implementing contractor and overall success of the program.

Prepare Acquisition

The Statement of Work (SOW) will also state the selected technology for the desired Blockchain solution, express the component and configuration of the selected platform, describe the required supplies and/or services required by the government for implementation of the target technology, and define anticipated tasks necessary to successfully implement the Blockchain enabled solution.

Award Solicitation

The source selection team evaluates offerors, identify deficiencies, weaknesses, risks, and strengths. After scoring proposals, the source selection team with produce proposal analysis reports and brief the source selection authority. Upon award of the solicitation, the Acquisition Team approves the contract, send out notifications to all acquisition participates, announce the award and debrief unsuccessful offerors. Notice to proceed is sent to the project office to implement the selected Blockchain solution.

Phase Outputs

After analyzing the various factors that have to be considered in choosing a blockchain platform, a detailed platform model starts to evolve, which then drives a detailed schedule, cost, resource and task estimate. The corresponding acquisition model, along with the operational framework, start to take shape.

Decision Gate

At the end of Selection Phase, the following use case questions should be answerable:

The following factors will determine your moving to the next phase: