GAO gets schooled by the Department of Education

The FAFSA team snaps back, then punches back

This Substack should probably be called “Obscure government documents you may find entertaining.” We had our guidance on whether a commander could expense bottled water, a request for comment on requests for comment from OMB, and most recently an executive order on paper straws from Gabe. I’ve got another one for you today: an ED response to a GAO letter. The Government Accountability Office isn’t known for its gripping reads, and neither is the Department of Education. But government reform nerds, I promise you: this one is good.

You’ll need a bit of the back story. As you may recall, in December 2023, the Free Application for Federal Student Aid (FAFSA) launched its new system, three months late and with what the Department of Education would later call, in classic bureaucratic understatement, "significant and widely-reported challenges." What they meant was that millions of students could not access financial aid.

So far we’re in quite familiar territory. The FAFSA had run the play many agencies still follow: vendors working in isolation, little internal technical expertise, a big-bang deployment, and a detailed set of specifications written with little understanding of the actual need. It was a perfect example of what I’ve called the project model, governed by rigid, waterfall project management, which amounts to a pledge by all parties not to learn anything while doing the actual work, to quote Clay Shirky. The predictable result (predicted, in fact, by the department’s own staff) was that the FAFSA Processing System had "availability issues, recurring errors, and long wait times." Forty percent of calls to the help center were dropped before anyone even tried to help. Students couldn't get aid. Colleges couldn't plan. Parents saw their dreams for their kids slipping away.

But in 2024, Ed began to right the ship. This year’s FAFSA tells a dramatically different story. Through July 2025, more than 14 million students completed the form—11.4% growth compared to the previous year. Student satisfaction hit 93%, with 88% saying the form took a reasonable time to complete. The National College Attainment Network called it a "tremendous achievement."

What happened?

Enter the Product Model

I've written before about why government needs to move from project-based to product-based operating models when it comes to technology, and my janky graphs illustrating the difference apparently got passed around quite a bit. Then Ann Lewis and I laid out the case for the product operating model in detail in our Niskanen Center paper. The basic idea is simple: instead of treating technology as a one-and-done project completed by deathmarching through a colossal set of predetermined features, you create persistent teams that can act on what they learn as they go and measure success through delivery of meaningful outcomes. In order to do that, we said in the paper, you have to align several elements: funding mechanisms; team structure and roles; roadmapping and prioritization practices; decision-making authority; and success metrics. But we missed one. You also have to align your oversight bodies.

What happened is that the department brought in a team from the College Board with a long history of working in the product model, and they have transformed the FAFSA and the team responsible for it. Starting last summer, this small band of product leaders, with help from a few detailees from the US Digital Service, took the reins and not only wrestled the form back into functionality but also steered the entire enterprise in a new direction. (Steering makes it sound a lot easier than it was, but you get my drift.)

The new team started hiring actual engineers and product managers. They started procuring capacity from vendors instead of specific deliverables, enabling quicker responsiveness to bugs and user needs. 55% of contractors’ entire FAFSA team used to be dedicated to manual testing, so they automated testing, which enabled them to move from 67 testers to 32, while at the same time dramatically reducing "regressions" where new features break existing functionality. They started doing smaller software releases far more frequently, reducing the risk of introducing bugs into existing functionality, and making it easier to measure outcomes and fix issues quickly.

These changes, especially getting far more digital expertise in the FAFSA staff who could make actual decisions about priorities, allowed them to quit the death march through the predetermined feature set and respond to what users actually needed. The original contract required custom-built analytics software, but the engineers and product managers now on the team knew that commercial off-the-shelf offerings would be better and cheaper, so they just bought what they needed, freeing up budget and development capacity for actual user-facing improvements.

The contract also called for a renewal capability feature – a way for users to import their prior year answers as a starting point for their form. Clearly the FAFSA should have this feature. But the team could see that about 1 million students weren’t making it through the part of the application where they have to get their parents on the platform to input their employment and income information. That was a clear and urgent need. The team decided to fix the invite experience immediately and let the contractually specified renewal feature wait. It was the right decision, enabled by the elements of our model as described above, especially a new definition of success in which helping the students mattered more than sticking to the plan. But it was a decision a legacy IT project team could not have made. The standard combination of vendors obligated to fulfill the terms of a contract and project managers whose job it is to make sure they do just that would have locked the Department of Education into the wrong priorities, and worse outcomes for kids applying for aid.

This is what good product management looks like: user data drives decisions, not fidelity to a plan written before anyone understood the real problems.

GAO doesn’t get the memo

Fixed system, happy users, costs contained—what's not to love? Well, as evidenced by a report out earlier this week, the Government Accountability Office found a lot not to love. Because the new, improved FAFSA team hasn’t been following the same rigid, compliance-heavy, project-based approaches that had created the original disaster, GAO penned a 60-page slap on the wrist.

Please enjoy the made up words, courtesy of Gemini. Aceduction should definitely be a thing.

The report reads like a greatest hits of outdated IT management: demands for better "contract monitoring processes," documentation of "contractor performance reports," and ensuring "assessments of contractor performance are documented in accordance with departmental guidance." It's like scolding someone for putting out a fire with water instead of the gasoline that started it.

Read it if you like, but the GAO report is not today’s “obscure government documents you may find entertaining.” The thrilling read is the FAFSA team’s rebuttal. Aaron Lemon-Strauss, the Executive Director of the FAFSA Program, penned a nine-page letter that is essentially a point-by-point demolition of GAO's project-thinking. It's polite, thorough, and devastating.

The letter makes clear that GAO fundamentally misunderstood how the FAFSA system actually works. It wasn't just one contract with one vendor, but a complex ecosystem of five different components across multiple contracts. But more importantly, the letter defends the product operating model that actually saved the FAFSA.

GAO complains about the team not following rigid contract specifications, but the FAFSA team explains why that approach fails with complex software systems: "The lesson to draw from this is not that someone had made a foreseeable mistake for which they should be held accountable, but that with complex software systems it is impossible to foresee how everything will work together until you are actively building the features."

They cite our Niskanen Center report and make the case for continuous, user-centered delivery over milestone compliance. Their suggested revisions to GAO's recommendations are a clinic in how to think about government technology differently. Instead of "improve contract monitoring processes," they suggest "create time-bound Objectives and Key Results for improvements." Instead of "validate contractor performance reports," they recommend "establish a process for demonstrations of completed work after every development sprint."

They're teaching GAO how modern software development actually works.

Aligning Oversight

The FAFSA team learned the hard way that it’s not enough to adopt better practices internally. You also have to educate the entire ecosystem of people who fund, mandate, and oversee your work. Part of the job of shifting from an outdated model to one more fit for purpose is helping Congress, oversight bodies, and other stakeholders understand what they should be holding you accountable to.

But leaders at GAO and other oversight bodies need to take responsibility for educating themselves about how modern technology development works and updating their playbook. They can’t keep applying 20th-century accountability frameworks to 21st-century challenges. Instead of asking whether a team delivered specific features on time and under budget, they need to ask whether they're improving user outcomes and learning from data. Everyone at GAO should read Lemon-Strauss’s memo ten times, and ask 100 questions until they understand everything he’s saying.

A final point: The Department of Education leadership deserves kudos for backing Lemon-Strauss and publishing his frank rebuttal. Far too often in government, a bad GAO or Inspector General report is the death knell of change. Promising new tools get shelved, new practices reverted, and “lessons” are “learned.” People often ask me why there aren’t more product teams in government and the answer is that many teams try to make the shift, but a good number of them end up right back where they started because someone, somewhere calls foul, and leadership buckles. Sometimes it's not an actual critical report that kills progress, just the threat of one. The final ingredient of the model, then, is the backbone to defend these practices against oversight that fundamentally misunderstands what it's overseeing.

Thank you, FAFSA team, for showing the way forward, for standing up for yourselves, and, of course, for fixing federal student aid. And thanks for the spicy memo. This one goes in the Obscure Government Documents Hall of Fame.