When NASA scientists were stymied last year trying to devise a formula for predicting solar flares, they took an unusual approach: They posted their problem online and offered a prize to anyone who could solve it.

The online contest, which stretched from December 2009 to March, asked the public for help. One requirement set by NASA: the person with the winning solution must fork over exclusive rights to the intellectual property in exchange for a $30,000 prize.

During the contest, which was posted on a website called InnoCentive.com, 579 people examined NASA's challenge, but only five people submitted entries. The winner was a retired radio frequency engineer from New Hampshire who offered analysis and an algorithm that may be a first step in helping NASA predict when solar particles might endanger astronauts or spacecraft.

"I think of it as on-demand problem solving," Jeffrey Davis, director of Space Life Sciences at NASA, said at a conference Aug. 19. "I think it's leveraging your own internal resources. You're adding potential solvers to the mix of the staff that you do have."

Bev Godwin, director of the Center for New Media and Citizen Engagement within the General Services Administration, agrees.

"It's taking citizen engagement to the level of co-creation," she said. "It really is the beginning of a huge movement," she said, highlighting NASA as one of its pioneers.

Unlike the traditional procurement process, this approach pays only for performance, Godwin said. "You get a tremendous amount of solutions but only pay for return on investment. Everybody wins."

The Office of Management and Budget is also cheering on this novel approach. In a March 8 memo, OMB's deputy director, Jeffrey Zients, issued guidance on the use of prizes and challenges and called for the creation of a website that agencies can use to post their challenges in the future.

The website challenge.gov, which became available to agencies in July, allows agencies to post challenges, create blogs and discussions, and reward winners with social or monetary incentives. The process is simple. Agencies will have to create a title and description of the challenge, rules, prizes, voting process — whether public or expert judging — and other information. Upfront, agencies should address the issue of intellectual property, which will vary based on the type of challenge.

GSA will manage challenge.gov via ChallengePost, a startup that recently ran the Apps for Healthy Kids challenge for first lady Michelle Obama.

The website is closed to the public for now, but the public may be able to access the site in September. The website enables users to search for challenges; share ideas with the government; submit possible solutions through text, video, files or links; and support challenges by following their progress or writing congratulatory notes to winners.

Both federal agencies and the private sector say this approach can save time and money when used as an alternative to the government's acquisition process.

Brandon Kessler, founder and chief executive officer of ChallengePost, said the Apps for Healthy Kids challenge yielded more than $5 million in software from participants for a $60,000 prize and publicity through newspapers, Twitter and Facebook.

Lack of clarity, the size of the order, a change in requirements and the competitive process are all legitimate reasons why the procurement process is often seen as slow or more expensive, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council.

There must be balance between using both methods, Chvotkin said. "I don't think there is a bright-line test yet," but "it ought to be a part of the ongoing discussion."