Government innovation needs a different path and approach than in the private sector. It’s something the Office of Financial Innovation and Transformation (FIT), in the Treasury Department’s Fiscal Service Bureau, knows well. As they begin working to implement their first blockchain project, a better tracking method for federal grants, here’s what they’ve learned.
It Takes Time
The project, Blockchain for Grant Payments, has its roots in work begun in 2017. The FIT team was excited for the potential of blockchain, but before any work could be done, it had to thoroughly understand blockchain and its pitfalls, setting aside the hype and looking at the pros and cons.
Probably the most time-consuming was answering the simplest question: Does this approach have a use case in government? Part of determining this involved breaking blockchain down to its basics, looking at the underlying idea of distributed ledgers with encrypted entries instead of buying into hype.
Learn From The Past
There were multiple blockchain-related efforts before the current project, Blockchain for Grant Payments, came to fruition. While ultimately, those projects wrapped up without being implemented, they built institutional knowledge and helped identify unique concerns that government innovation needed to address.
Encryption is a good example; one of the key stumbling blocks is whether blockchains were encrypted to the degree demanded by regulation in government records, while conversely, it had to be clear that the data was accessible by the public.
There’s No Off-The-Shelf Solution
When working with technologies, governments tend to prefer time-tested, heavily debugged technology. This is why COBOL is still in use across the federal financial system. Yet blockchain is such a new technology that no such tech really exists in that realm. Part of developing the office’s latest blockchain project was drawing from the technology and regulations available to determine what that solution would look like and to plan for future concerns.
Fairness In Application Matters
Another concern, and part of the test, was developing a system everyone can use. Since this project is focused on federal grants, it’ll ultimately have to work on an enormous variety of systems, from simple PCs to complex networks. Creating a blockchain system that worked and was fair to all stakeholders was part of the need for government innovation in this area.
Make Clear The Benefits
What needs ultimately to be considered, in the end, is what the overall benefit is to citizens. Part of the reason other blockchain projects wrapped up was that this question simply didn’t have a clear answer. Blockchain for Grant Payments, though, offers more transparency for government grants, helps grant recipients track payments and where they go, and creates a more rigorous accountability chain for taxpayer money. Not bad for three years of work!
Government innovation will continue to offer unique challenges and new approaches as new technology arrives and as new stakeholder concerns emerge. Learning from previous innovation initiatives is a strong way to keep the future in mind while ensuring the safety of the present. To learn more about government innovation and change management in the public sphere, contact us!