How the Government’s Quest to Block Robocalls Ended Up In Court

As agencies embrace innovation contests, one entrepreneur cries foul.

The Obama administration’s seven-year push for agencies to hold contests to tap the public for innovation ideas appears to be flourishing.

This month’s annual update from the White House Office of Science and Technology Assessment reports that 35 agencies have held 134 prize competitions under authority provided by the 2010 America COMPETES Act. In 2015, agencies conducted 47 prize competitions under that law, plus another 69 challenges using other authorities.

By June 2016, the General Services Administration's website “had featured more than 700 prize competitions and challenges—conducted under the authority provided by COMPETES and other authorities—from over 100 federal agencies, departments, and bureaus,” it said.

According to the White House, such challenges allow the government to pay only for successful ideas with little risk.

But at least one citizen participant believes he got a raw deal. David Frankel is founder and CEO of Monte Sereno, Calif.-based ZipDX, which “provides innovative teleconferencing solutions.” He will be in court next month, taking on the Federal Trade Commission. The issue: whether the FTC’s contest seeking new ways for consumers to block those annoying robocalls treated him unfairly, by not picking him as the winner and changing the judges’ criteria mid-stream.

“Robocalls are one of the most complained-about things at the FTC,” Frankel told Government Executive. So the contest launched in 2012 “came to my attention by virtue of my business. But I made it a personal mission, as a sideline to my profession.” Despite the FTC’s having announced contest winners, he said, “for the layman over the last few years, things have probably not gotten better but worse.”

The FTC’s ongoing battle against illegal robocalls is clear from its website: “If you answer the phone and hear a recorded message instead of a live person, it's a robocall,” it says. “We’ve seen a significant increase in the number of illegal robocalls because Internet-powered phone systems have made it cheap and easy for scammers to make illegal calls from anywhere in the world, and to hide from law enforcement by displaying fake caller ID information.”

The agency has brought more than 100 lawsuits against more than 600 companies and individuals for violating the Do Not Call List protections for consumers. “The FTC also is leading several initiatives to develop technology-based solutions. Those initiatives include a series of robocall contests that challenge tech gurus to design tools that block robocalls and help investigators track down and stop robocallers.”

In 2013, Frankel submitted a proposal for “It’s My Number,” a software trace-back mechanism under which telephone carriers would track billions of calls placed on or routed through their networks so that the data would be matched to calls reported by consumers as robocalls in complaints to the FTC.

The judges were the current and past chief technology officers for the FTC, who are academics, and a well-known technology journalist. After reviewing entries, they announced that two winners tied and would split the $50,000 prize.

Frankel, having lost, challenged the result. His attorney, Matthew Dowd, told Government Executive that he learned from FTC internal documents produced during discovery that the agency “changed the judging criteria, the way the rule specified the judge, specific categories and percentage weights for each category.”

The agency’s problem, Dowd said, was that the judges—who were moonlighting from busy day jobs—were “overwhelmed by submissions, so they opted to change the criteria midway through.” He added that, compared to the two chosen as winners, “Frankel’s product is necessarily better and gets the higher score when one considers the judging criteria as published.”

So Frankel filed suit. He lost in federal claims court in July 2015, and now the appeal—based on the argument that the contest is a form of procurement—is scheduled to be heard in U.S. Court of Appeals for the Federal Circuit in September.

An FTC spokeswoman said the agency generally doesn’t comment on pending litigation. But its appeals brief filed last March said, “The three contest judges each evaluated [Frankel’s] entry, but none of them found that it would work. That decision was in line with the contest’s rules. Nevertheless, Frankel now asks that the court award him the entire prize amount for an alleged breach of contract or, alternatively, that it order the entire contest to be re-run.”

The agency’s attorneys argue that Frankel agreed to the contest rules, which said judge’s decisions are final and that the FTC “would be released from any claims arising from the contest,” unless Frankel can prove “fraud, irregularity, or gross mistake” in the contest, which, the FTC argued, he has not done.

There are larger issues at stake, Frankel’s attorney said. “The reason government is encouraging contests is that it’s an attractive means to incentivize innovation, like patents, which encourage new work and inventions,” Dowd said, “As more federal agencies rely on these competitions, there is a transparency problem.” If changing rules midstream is allowed, he argued, “it will essentially undermine the objectives of these competitions in both the contracting space and in trying to encourage smart firms to try to solve problems in the world.”

Frankel said many of his friends wondered, “Why waste time with a stupid contest?” But after filing a Freedom of Information Act request, he felt the agency at first rebuffed him by sending minimal information that was “secretive or opaque.” Eventually, the documents showed that contest planners were worried that their discussions “might be FOIA-able,” Frankel said.

Unless he mounted a challenge and appeal, he and his lawyer agreed, “we poison the challenge model going forward,” which could have wider impact on the government’s general approach to procurement, he said.

Frankel’s solution to the robocall problem is not part of his company’s profit strategy, he said. “I don’t have the wherewithal to end world hunger or cure cancer, but I would like to make a contribution to solving this particular problem.”