Challenge-Based Acquisition (ChBA) is the concept where Government agencies present a need (the challenge) and potential providers are free to propose innovative solutions that fill that need.
Henry Ford once said, "If I had asked people what they wanted, they would have said 'faster horses'". But suppose that Henry Ford had heard, "I want to get to my destination faster and with comfort and affordability". In that case, the users would have issued a concrete mission challenge - get there faster and with comfort - rather than a specified solution - a faster horse. Government acquisition tends to not think in terms of mission challenges but in terms of tighter specifications to define solutions.
ChBA is appropriate in situations where the Government's need us urgent and time critical, where no traditional solution seems viable, or where emerging technologies have the potential to provide non-traditional solutions. It may not represent a good approach for large, multi-year major system acquisitions however.
Mitre Corporation, a Federally Funded Research and Development Center (FFRDC) through the Defense Department and other Agencies publishes a ChBA handbook (now in its fourth edition) giving guidance on how agencies can and should implement ChBA. Mitre concludes that while FAR (Federal Acquisition Regulations) authorizes a broad range of approaches that support ChBA, agencies often do not take full advantage of these existing flexibilities. Some agency officials may be reluctant to engage in innovative acquisition approaches out of fear of protests or binding the agency in an unauthorized manner. Others within the acquisition workforce may be unaware of alternative acquisition approaches that may be utilized under the current FAR. The "handbook" includes an analysis of how FAR supports the ChBA process.
There is certainly increased interest within the acquisition community on ChBA processes. It pays to be innovative.