Jeff Child, Editor-in-Chief, COTS Journal

During my tenure at COTS Journal there’s been several Secretaries of Defense and all have very sincerely demonstrated an emphasis on technology. But none in my view have gone the extra mile along those lines as our current SecDef Ashton Carter. One example is his establishment 11 months ago of the DoD’s first, full-time outreach office in Silicon Valley, called the Defense Innovation Unit Experimental. Dubbed DIUx for short, the office is staffed by active-duty and military personnel, plus key people from the Reserves who live in the Valley. Its mission has been to strengthen existing relationships and build new ones while also scouting for new technologies. Its role is to function as a local interface for the DoD.

Expanding on that effort, the Secretary this month announced the opening of an east coast DIUx based in Boston. In his speech at the opening, Carter reviewed how the DoD has already put some of the knowledge gained into practice. As Carter said, “We took a page straight out of the startup play book by iterating rapidly and then launching DIUx 2.0 with several new features,” he said. “It now reports directly to my office. It has its own contracting capability and budget resources.” This revamped DIUx has a new flatter partnership-style leadership structure led by managing partner Raj Shah. Shah is an F-16 pilot and co-founder of a successful technology startup. Now with the opening of DIUx East in Boston, the DIUx 2.0 is a nationwide system.

Raj Shah for his part has reorganized DIUx into three teams. First there’s an Engagement team which not only introduces the military to entrepreneurs but also introduces entrepreneurs to military problems. Defense challenges are some of the most exciting and consequential problems in technology and that’s an attraction for innovators and technologists who want to make a difference in the world.

The DIUx also has a Foundry team, which works with technology that’s either still maturing or that might need to be significantly adapted before it can be used. At the heart of that effort are a Warfighter-in-Residence program and an Entrepreneur-in-Residence program. These programs bring together servicemen and women detailed from across the military with top engineers contracted from outside the military for focused design sprints, rapid prototyping and field trials.

The third and largest team in the DUIx organization is the Venture team. This team is tasked with identifying emerging commercial technologies and exploring their applicability to potential military and civilian customers across the department. Secretary Carter was careful however to explain the distinct differences between the Venture team and how a venture capital firm functions. Instead of making equity investments like a venture capitalist would, the Venture team makes R&D awards. But they’re able to work with anyone-from two people in a garage or a dorm room all the way up to mature tech companies. They operate on a co-investment model: On any project that DIUx moves forward with, they aim to match funding and staffing resources with a customer organization within DOD. That way, they can ensure not only that the product meets the customer’s needs, but also that they have a partner to drive post-prototype transition.

“With these three teams-Engagement, Foundry and Venture-DIUx 2.0 has a lot to offer our department”, said Carter. Thanks to tech scouting prowess and a deep network within the technology and venture capital community, DIUx has a unique ability to identify and do business with companies outside the DoD’s traditional defense orbit-including many so-called stealth startups that aren’t even officially opened for business yet. This significantly enlarges the defense industrial base and helps existing DoD components who partner with DIUx to locate cutting-edge and best-in-breed technology.

Another interesting practice that DUIx 2.0 has put into action is an innovative method for defense acquisition it calls a Commercial Solutions Opening. It leverages expanded acquisition authorities for prototyping that Congress could fund last fall. To start, DIUx posts on their website a particular problem needed to solve that might have a commercially based solution-for example looking for way to quickly scale up production of the 3D printed micro drones under development.

Next, any interested company can share information on their technologies and how they propose to solve the problem. And if they’re invited to, they then pitch their solutions to the DIUx partners-using the same pitch deck and short concept papers they use to pitch their venture capital firms or their private sector customers. Once the most promising solution is identified, DIUx can then negotiate and execute fast, flexible, and collaborative awards with the goal to issue funding within 60 days of a first meeting with the company. And later, if the military customer is satisfied and wants to move to follow-on production, they can do so much more swiftly as well.

According to the SecDef this is generating results. Within five weeks on the job, Raj and his team developed and launched the Commercial Solutions Opening to begin work on 15 separate prototyping projects. And the first agreement was signed in only 31 days. Impressive stuff, and more proof to me that Ash Carter’s emphasis on technology and innovation is way more than just words.