Can DIUx help DoD unlock innovation roadblocks with Silicon Valley?

The Department of Defense’s (DoD) new innovation “outpost” facility – the Defense Innovation Unit Experimental (DIUx) – is generating both high hopes and some skepticism in Silicon Valley.  Many in the tech community, myself included, are cautiously optimistic about this new partnership. But many have serious concerns about a federal body’s ability to overcome bureaucratic inertia and embrace Silicon Valley’s entrepreneurial environment. If DoD wants to build effective relationships with innovative companies to address emerging national security challenges, then they are going to have to do something very challenging for the DoD: change. And change quickly.

Just as necessity is the mother of invention, today, dynamic innovation is the mother of military strength. The DoD’s outdated, World War II-era procurement systems and development cycles simply can’t deliver on the rapid cross-application and short innovation cycles needed today. By the time DoD gets new technologies up and running, they are already outdated.  We are falling behind, and need to catch up to maintain our dominant geopolitical position. Aggressive procurement changes are needed to accomplish this.

Change is Hard, But Necessary

The key question is: can DoD change its entrenched culture and migrate to commercial acquisition to include smaller, more innovative companies? A clear example of this struggle is the debate in Washington regarding acquisition reform efforts. Senator John McCain, Chairman of the Senate Armed Services Committee, spoke out strongly against a new DoD rule that would effectively limit availability of commercial items to the government and undermine Secretary of Defense Carter’s efforts to make the process easier for tech companies. Again, this demonstrates that members of Congress and DoD are creating barriers to rapid innovation and to the incorporation of commercial procurement and pricing practices. This is in direct conflict with DIUx’s charter and Secretary Carter’s stated goals.

Things have not improved in the last four years. In theory, the federal procurement process demands “full and open competition.” In reality, DoD prefers to stick with what it knows: large-scale procurements (e.g. Joint Strike Fighter, Virginia class submarines, Ford class aircraft carriers), and with the companies that have decades of experience dealing with these programs, typically the large established system integrators.

While this approach may have been adequate during the Cold War, it is untenable in the 21st Century. Today, start-ups, and commercial entities drive innovation and offer technologies that could be applied to bolster our National Security efforts. And yet, DoD struggles to take advantage of these companies’ technologies, even when they have obvious national security implications.

 A Cultural Shift that Rewards a Better Procurement Policy

What is needed most is a cultural shift at DoD. One that opens and rewards the Department to incorporate new innovations and technologies from outside the traditional defense community. It is imperative that DoD moves quickly to accept commercial products and services, transition to commercial procurement, and adopt commercial pricing and best practices. This will significantly reduce procurement timelines, which are more often than not counted in decades instead of years or months.   For small companies, this is especially critical to move from proof-of-concepts to inclusion in operational missions where the volume and revenues are financially compelling.

Equally important to this cultural shift is to find a way to change the status quo. Leaders driving change can only be effective if the organization is motivated and rewarded to take risks, incorporate new ideas and not fear failure.

There is some cause for optimism. 

The White House and DoD Secretary Ash Carter are working to maximize efficiency and encourage greater innovation in federal contracting. Secretary Carter and DoD Undersecretary of Acquisition Frank Kendell’s Better Buying Policy (BPP) is the implementation of best practices to strengthen the Defense Department’s buying power, improve industry productivity, and provide an affordable, value-added military capability to the Warfighter. This encourages new processes such as rapid technology prototyping (RTP) – an innovative contracting model that consists of multiple, small-scale acquisitions to test out pioneering technologies. But the cost and complexity of winning public-sector contracts continues to severely limit the pool of companies willing to bid.

My company, Liquid Robotics (LRI), is a case in point. Our unmanned ocean robot – the Wave Glider® – enables unprecedented monitoring, assessment, and protection of the world’s oceans, and offers tremendous value to the U.S. government.

But working with the DOD has come with its’ challenges. We began working with the U.S. Navy in 2007, but Liquid Robotics’ first operational programs are just starting to come online now. If we did not have strong commercial and international demand, we simply would not have been able to survive on U.S. Defense business alone.

In addition, Navies and Coast Guards across the globe are rapidly innovating and incorporating powerful new technologies that could challenge the United States’ ability to dominate the world’s oceans. This includes the rapid acquisition by international countries of technology that is developed in the United States, including our own products from Liquid Robotics. This is a technology that the U.S. Government needs today – not years from now.

Washington Has to Make a Choice

Silicon Valley, for its part, has proved time and again that innovation doesn’t have to be expensive, development doesn’t have to be slow, and structures don’t have to be top-down in order to achieve organizational and mission requirements. The Valley should serve as both a model for DoD as it looks to reform internal functions, as well as an incredibly powerful partnership and tool with which to safeguard our nation and maintain global peace.

Secretary Carter is an admirable leader with a strong vision, and I am encouraged with his candor during recent trips to the Valley and specifically with the recent CEO Roundtable at DIUx where I was one of eleven start-up CEOs in attendance. These visits provide an excellent opportunity to honestly and openly engage in important dialog.

Innovation occurs at a rapid pace, and Silicon Valley is at its global epicenter. Instead of spending billions on duplicative research while ignoring commercially available solutions, the DoD can and must embrace the systemic changes needed to meet the challenges presented by rivals like China and Russia. Silicon Valley is ready to get to work; now it’s up to the DOD to decide if, and how, they will work with us. It is imperative that we do so to continue to provide the best solutions for our National Defense.

 Gary Gysin is President/CEO of Liquid Robotics. Secretary Carter, Mr. Gysin and eleven other Silicon Valley, start-up CEOs recently met at DIUx to discuss the issues surrounding rapid innovation in the Defense acquisition process.

Morning Consult