Managing Innovation Prizes in Government

The use of prizes and awards is a visible element of the Obama Administration’s efforts to promote innovation in government. For example, the Office of Management and Budget (OMB) has sponsored a competition among federal employees to find cost savings and the White House has created the “challenge.gov” website where federal agencies can pose problems in hopes of getting solutions from the public.  OMB issued guidance to encourage agencies to offer challenges and prizes, as well.  

The use of prizes gained a legislative boost in December 2010 when Congress included a prizes component in legislation designed to increase American innovation and competition.  This new legislation expands the authorization to use prizes to every agency head, and creates a framework and eases existing administrative constraints for conducting a prize competition for those outside government.

In this report, author Luciano Kay surveys the literature and offers several case studies of recent prizes awarded for technology innovations: the Ansari X Prize for re-usable space craft, the Northup Grumman Lunar Lander Challenge, and a Defense Department prize for autonomous road vehicles.