DEFENSE DEPARTMENT
Companies Ask if Pentagon's Innovation Ecosystem Is Getting Out of Hand
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For years, technology companies and defense officials lamented that the Defense Department’s acquisition system — built for procuring battleships and bombers — was too complicated and cumbersome to acquire commercial technology.
Thus, officials like the late Secretary of Defense Ash Carter worked on creating new pathways and offices for the department to rapidly ingest cutting-edge products from non-traditional defense companies.
While the Defense Advanced Research Projects Agency has existed for decades to accelerate early-stage research and development, it doesn’t address the universe of commercial technology, hence the department started standing up entities like the Defense Innovation Unit Experimental and the Strategic Capabilities Office that used nontraditional contracting mechanisms like Other Transaction Authority and the Middle Tier of Acquisition pathway to break free of the stranglehold of the traditional acquisition process.
Today, there is a veritable alphabet soup of incubators, accelerators, pathways and other mechanisms — DIU, AFWERX, RADR, MIU, ERDCWERX. Each service now has multiple mechanisms focused on different needs: acquiring mature commercial technologies, promoting early-stage research or bridging the various valleys of death between science-and-technology and prototyping, or between prototyping and production.
It has reached a point where the effort to make it easier for the department to ingest innovative commercial technologies is becoming more difficult for the department, industry and Congress to comprehend.
“Most companies probably don’t know how to navigate this,” said Alexis Lasselle Ross, former deputy assistant secretary of the Army for strategy and acquisition reform and current president of Apex Defense Strategies, a firm that helps companies understand the ecosystem of acquisition pathways and programs.
The ecosystem is healthier today because there are more options and pathways for companies, she said. But not all the options are delivering for the department or companies, and it also puts a burden on companies to understand the system and determine what’s the best fit. Are they trying to sell a technology, a weapon, or a software application? Are they looking for a contract or funding to mature a technology?
“You should kind of know going in what you’re selling,” which is a business fundamental, she said. “But we also need to line that up with the right acquisition approach.”
Even when things align, many companies still struggle to sell their tech to the department. “I’ve heard some non-traditional vendors express frustration about the fact that these entry points, these organizations, are really just interfaces,” Ross said. Some companies say “they’re kind of like a triage or a dispatcher to kind of tell you where to go. But they have limited capabilities and funding to really help you get on your way.”
Although the department created an online portal, www.ctoinnovation.mil, to serve as a gateway for industry, academia and warfighters to explore innovation avenues and opportunities, the “Browse Organizations” tab on the site leads to a doom scroll of 269 different innovation organizations, consortia, intermediary agreements, software factories, research centers, reinvention laboratories and technology transfers.
The Defense Department has heard the call from industry for more clarity about the different options and better guidance on working through the process.
In May 2022, the Pentagon launched an innovation ecosystem project to map and improve the universe of defense technology accelerator offices and programs.
A senior official in the Office of the Secretary of Defense and a senior official in the Office of the Undersecretary of Defense for Research and Engineering spoke to National Defense about the effort on background.
“The whole intent was to help create a framework for how first [the Office of the Secretary of Defense] understands our innovation environment, and then also understanding where the joint services and the [combatant commands] play, and through that work serve as a path to address our most pressing challenges,” said the first official.
Undersecretary of Defense for Research and Engineering Heidi Shyu began by meeting with businesses of various sizes to learn their pain points in dealing with the department’s innovation ecosystem, the official said.
The difficulties fell into six buckets: funding, contracting, structure and planning, information gaps, security — ranging from cybersecurity to clearances — and transition.
“Once we understood those categories, what we did then was map those categories to specific outcomes that the department was seeking, and then assign ownership areas to execute along those outcomes,” said the official.
The department is now working on four areas of improvement.
“One, we are seeking security processes that enable protection and industry participation … so it’s not as cost prohibitive,” the official said. “Two, we’re seeking higher rates of relevant tech transition that actually has an operational need.”
The third priority is “encouraging a workforce with the ability to creatively solve national security challenges,” in other words, “use all of their authorities and training to the greatest extent possible. And finally, increased new entrant contributions to DoD programs,” the official continued.
The next phase of the effort is “centered around how we stand up, solidify and scale the internal structures that enable innovation through the infrastructure that we create,” the official continued.
“My intent is that innovation doesn’t rely on a single champion, a single leader or a single advocate, but that we can actually set the conditions for innovation to succeed at scale,” the official said.
Just as the department has elevated DIU to a direct report to the Office of the Secretary of Defense, the department elevated innovation governance from the undersecretary of defense for research and engineering up to a co-chaired body at the vice chair of the Joint Chiefs and the deputy secretary level that includes members from the combatant commands, Joint Staff and services. The Deputy’s Innovation Steering Group will focus on identifying non-traditional solutions that address operational gaps and technology priority areas.
The department also created a Chief Technology Officer Council to serve as the governance body for the Office of the Undersecretary of Defense for Research and Engineering to drive cross-cutting research and engineering throughout the department and services, according to a department spokesperson.
Part of the challenge is building the right level of coordination and connectivity at the department level without stifling the service-specific innovation activities and offices like AFWERX, NavalX or SOFWERX, said the second official.
“Those are the innovation cells that are happening within each of the services. And I don’t personally, and I think I speak for the leadership on this, see a need to downsize and streamline and make sure that AFWERX works for everybody,” the official said.
The innovation offices are growing to scale to the increasing number of companies, research organizations and other entities that want to partner with the department, “and it’s our responsibility to make sure that they are connected,” the official said. “So, that if you knock on one of the doors, and you have a review with AFWERX, we can send you over to SOFWERX, or we can send you over to a lab, or we can send you to DARPA. … That would be the strategic goal of what we are looking toward.”
However, Ross thinks some streamlining could be valuable. “There might be some utility to considering consolidating them, or clarifying the different roles and better coordinating them,” she said.
“But any consolidation does not mean reduction in resources,” she continued. “If anything, they should be made bigger, with more resources, so that they can help sort of Sherpa good companies and good technologies to the right requirements and acquisitions stakeholder groups.”
Congress is similarly concerned with sorting out and clarifying the labyrinth of innovation entities and pathways, but it’s not clear that the Hill and the Pentagon are on the same page about how to move forward.
In its committee report for the 2024 National Defense Authorization Act, the House Armed Services Committee waded into the mix, stating DIU’s success in accelerating adoption of commercial technology has led to a growth in similar non-traditional innovation fielding entities.
“While the committee is supportive of innovation organizations within the department and military services, the committee believes that the unchecked proliferation of them could allow for significant duplication and confusion both inside and outside the department,” the report stated.
The committee directed the head of DIU to submit a report by the end of the year that identifies all the innovation organizations and suggests a plan to consolidate them under a lead in each service “that has shown competence at engaging with non-traditional technology providers.”
On its face, the requirement is burdening DIU with duplicating much of the effort already underway in the department.
In the meantime, both Congress and the department are looking for metrics to determine the success of the different accelerators.
The first official noted that Deputy Secretary of Defense Kathleen Hicks is focused on developing meaningful metrics “that are not just bound to time and space — did we do a thing at the timeline that we want it to happen? But did the thing that we did actually achieve the outcome that we wanted?”
Related is an effort to ensure that technology acquisition is meeting operational and warfighter requirements and needs.
“We’re seeing more of a focus internal to the department on the demand pull,” the official said. “So, the demand from the services and the [combatant commands] and the folks that are really buying the big bets versus a tech push of, ‘Look, I found this cool technology in commercial land, somebody, please take it.’” ND