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A challenge (also referred to as "prize challenge," "competition," "prize competition," "incentive prize" or any combination thereof) allows the public to solve problems presented by federal agencies and receive awards for the best solutions. This boils down to three steps:

  1. Agency announces a problem to the public
  2. Participants create and submit solutions to the problem
  3. Agency evaluates solutions and awards prizes to the best ones

This process may sound similar to grants or contracts, but challenges differ in small and significant ways. In grants and contracts an agency receives proposals to do work, chooses one and then pays the monetary award incrementally as the work is done. In challenges, an agency generally selects winner(s) after assessing work that has been completed. In more complex, multi-phase challenges, phase winners may be selected progressively as development stages are completed.

Unlike contracts in particular, which provide detailed and comprehensive specifications of the work that needs to be done, challenges define a smaller set of requirements, which allows participants to bring more of their own creativity to solutions. This can be advantageous when a problem can be solved many different ways, including ways that the agency is not even aware of. The open-ended approach can entice participation from those who may not have direct expertise in the problem subject matter area but can lend expertise from their diverse backgrounds.

Challenges can serve multiple goals beyond sourcing solutions to problems, including:

  • Signal interest in an area that you think markets should be doing more to serve
  • Reach wide communities of experts
  • Deliver messages to the public in a fun, interactive way
  • Generate interest in new services, data or technologies your agency provides
  • Develop public buy-in for agency initiatives

These are just a few of the many benefits that challenges provide. As you make your way through this toolkit, you'll start getting your own ideas about how challenges can best serve your organization and how to tailor them to your needs.

Stages. Challenges can be broken down into five sequential stages: preparation, development, conduct, award, and transition. This is a step-by-step guide to everything you have to do as a challenge manager to deliver a successful challenge, from getting to know challenges to sharing best practices and results. If you're unsure of exactly what the end-to-end challenge process entails, this is where to start.

Types. Challenges can generally be categorized into one of these seven types: ideas, design, software, technology, entrepreneurship, scientific, and analytics. These types are broadly defined as the types of activities or outcomes that will be worked on or produced in your challenge. Your challenge may fit into two or more of these categories, or it may not fit perfectly into any of them – that's ok! If you have a challenge idea and want to learn more about type-specific considerations, this is a good place to start.

Case Studies. This resource collection highlights the best challenges to come out of the federal government. These contain the most innovative ideas and best examples of what challenges can accomplish. If you're unsure about what challenges look like in practice, or what kinds of outcomes they lead to, the case studies will help open your thinking to the many possibilities that challenges enable.

If you're managing your first challenge and it's fairly straightforward, allocate at least eight months from building out an idea to awarding winners. You'll need to extend your expected timeline if the challenge is technically difficult and participants need significant amounts of time; if you incorporate multiple rounds; if it's the first time your agency is running a challenge; or if the challenge becomes more administratively complex.

The America COMPETES Reauthorization Act of 2010 ("COMPETES") provides the statutory authority for all federal departments and agencies to run prize challenges. COMPETES leaves a great deal of leeway for agencies to create their own policies and processes, so make sure to check with your leadership, legal and procurement teams to get off on the right foot. In 2017, the authority was updated under the American Innovation and Competitiveness Act of 2017.

Not all agencies use COMPETES to run their challenges; NASA, for example, has used the Federal Acquisition Regulation (FAR) and National Aeronautics and Space Administration Act of 2005. Both the Department of Defense and U.S. Agency for International Development leverage their own legal authorities: DoD Direct Prize Authority and USAID Innovation Incentive Award Authority, respectively.

Yes! The Challenges Listserv provides a forum for asking questions, marketing your challenge and just about anything else that could benefit from community feedback. You can be added to the listserv by emailing a request to

Additionally, the GSA team maintains a community of practice (CoP) composed of more than 730 challenge practitioners. The Challenge and Prize CoP holds a quarterly meeting, usually at GSA headquarters in Washington, D.C. These meetings are a great opportunity to learn about updates to and the Challenge and Prize Toolkit, meet fellow challenge practitioners and hear from challenge experts across the public and private spectrum.