Thursday, December 16, 2021
Conversation with Michael Brown, Director, DIU, U.S. Department of Defense

The Defense Innovation Unit, DIU, is the only U.S. Department of Defense organization focused exclusively on fielding and scaling commercial technology across the U.S. military to help it solve critical problems and build a force for the future today. 

Mike Brown, Director of the DIU joined me on The Business of Government Hour to discuss its critically important mission, his fast-follower strategy, how DIU uses alternative acquisition approaches to bring commercial technology into the U.S. Department of Defense, what its doing to give innovative businesses and startups the opportunity to solve high impact national security problems, and highlight some key successes. The following is an edited excerpt of some of the key insights from our conversation.

On the History and Mission of the Defense Innovation Unit. In 2015, then Secretary of Defense Ash Carter created DIU with the expressed purpose of helping the U.S. military make faster use of emerging commercial technologies. Secretary Carter saw that more R&D spending in the U.S. was happening in the commercial sector; it was essential to get access to this commercial technology in areas like AI, autonomous systems, and cyber to enhance our warfighting capability.

Along with getting access to commercial technology, the department needed to become better adept at fielding and scaling such technology across the U.S. military. For these reasons, he established DIU to lead this mission and realize this vision.

Since its inception, the mission of DIU has expanded somewhat. We continue to focus on accelerating the adoption of commercial technology, but we’ve taken on two additional core elements, which expands the number and diversifies the types of companies the department can access. We call that in the defense strategy, the national security innovation base, meaning we need to work with more than just the defense contractors, the defense primes, to make innovative capability available for the department. Here are the two complementary efforts:

  • National Security Innovation Network (NSIN) works with universities, incubators, and accelerators attracting new talent to solve national security challenges, leverage start-ups and academic communities for new concept development, and facilitate the launch of new, dual-use ventures by commercializing DoD lab technology and through customer discovery. In fact, some companies have started from this program that are now vendors to the Defense Department.
  • National Security Innovation Capital (NSIC) is a way to catalyze private investment in hardware. The venture capital industry in the U.S. is more focused on software than hardware, but the military runs on hardware. We have an initiative that just got funded last year that enables dual-use hardware startups to advance key milestones in their product development by addressing the shortfall of private investment from trusted sources.

On the Working with DIU. We have a process that models the commercial world focusing on speed and simplicity which is different than how the Defense Department has traditionally acquired capabilities. When you buy an aircraft carrier you might need some of that complexity, but if you’re buying commercial software, you don’t need it. What we’ve done is maximize the ability for competition by minimizing the opportunity costs for those companies to compete.

We engage across the department to identify and understand critical national security challenges that can be solved with leading edge commercial technology within 12 to 24 months. Through our Commercial Solutions Opening (CSO) process, we competitively solicit proposals for innovative solutions that meet the needs of our DoD partners. DIU leverages “Other Transaction Authority" (OTA) to award prototype agreements in as few as 60-90 days. More importantly, after a successful prototype, the company involved, and any DoD entity can enter into a follow-on production contract or agreement just as easily. 

We make it easy for companies that have never done business with the Department of Defense - or the U.S. government - to win contracts based on merit and implement solutions at commercial speeds. DIU has already introduced more than 50 first-time vendors to the DoD. DIU delivers revenue through flexible prototype contracts that apply commercial innovations to solve national security challenges.

Whether seeking hardware, software, or service solutions, DIU lowers the barriers to entry and makes it faster and easier for companies of any size to do business with the department.

On Challenges. Regarding challenges, three immediately come to mind. The first challenge involves resources. As DIU has grown, just to give you a quick example, we started thirty-seven projects last year. That’s almost double the average number of projects we’ve started for the six years we’ve been around. Our average over the six years is twenty. Last year, we started thirty-seven. So, we’re on a growth path. We need resources to be able to sustain that growth. Getting those necessary resources is certainly one of the major challenges that has my focus.

The second challenge involves working effectively with an organization the size of the U.S. Department of Defense. As you noted, we are a change agent charged with fielding and scaling technologies in the department to ensure that these technologies have an impact for our end users, the warfighters.

The third challenge centers on making sure we can transition commercial technology. We look at how we are changing the process inside the Pentagon to create what we call a transition. For instance, we have a commercial technology capability and it’s been qualified or proven to work in a military environment. How do we make sure we’ve got a production contract, the budget behind it, and that it can be scaled so that warfighters can use that commercial technology? Getting the department to work with commercial technology and a process to get that scaled is quite a challenge.

On Informing and Shaping a Vision. Understanding the strategic competition we have with China is what brought me to DIU. We haven’t faced such a competitor in our history. This competition has many dimension – economic, technological, geopolitical, and ideological. It is likely the challenge that defines the next fifty years. It is a distinctly different challenge than what we faced with the Soviet Union during the Cold War. China is a much bigger economy and is more integrated into the global economy than the Soviets. This reality shapes and informs the strategic vision of the DIU.

To that end, we have a model that scales in terms of bringing commercial technology into DoD. The question is:how do we drive more impact? Our impact is measured by identifying the most critical projects to work on and dedicating the proper resources to allow us to focus and take on more work. We are close to twice the level of projects we’ve done over our historical average. We’re working with many more companies. Last year, we had a thousand different submissions from companies. We’ve probably introduced eighty first-time vendors to the Defense Department, written a few hundred contracts, but we’re still just scratching the surface of what can be done. How do we scale our impact so that we can influence even more of what the Defense Department is buying? Better yet have that be commercial technology which has the advantages of being more current and being much more cost effective than when we designed something ourselves.

We also need to develop solutions alongside our allies and partners around the world on a large scale. We would like to be more proactive in using technology from allied companies and we should be selling technology solutions qualified in a military environment to our allied military or partner military.

On Pursuing a "Fast-Follower" Strategy. We need to pursue a “fast-follower” strategy. This is what is done in the commercial world when you are not first to market. You quickly follow so that you minimize the time between the first mover and your ability to deploy that technology. In the 1960s and decades following, the Pentagon was a first mover taking the lead in technology R&D and bring it to use. Times have changed.

Eight out of the ten modernization priorities identified by the department are commercial technologies such things as AI software, cyber, autonomous systems, rapid launch, satellite imagery, additive manufacturing, and more.

As such, positioning the department as a fast follower would make it far more competitive in fielding and scaling the best technology quickly. There are four core elements to a fast-follower strategy:

  1. Identify an organizational home for commercial technology. We don’t need a technology that is service specific. Rather than duplicate a specific technology across the services, we need an organizational home for each technology. We do need to have a technology owner whose job it is to assess the need and field that technology across the services. Doing this will eliminate duplication and the wasting of resources.
  2. Consistent budgeting for capability. We need flexibility from Congress to budget for a capability rather than a program. We are going to buy and field a certain technology for decades, so we really need to have a process in place that allows us to refresh and upgrade that technology that capability at the rate of the commercial market. Therefore, we need to budget for that capability and have that organizational home be constantly refreshing the technology.
  3. Use commercial acquisition processes. If we want to encourage more companies to work with us, then we’ve got to use speed as an advantage and we’ve got to be encouraging that competition. That’s what we’ve done at DIU with the commercial solutions opening. We use Other Transaction Authority (OTA) as opposed to relying on the Federal Acquisition Regulations (FAR) to meet these demands and exceed our expectations.
  4. Jettison the requirements process. Today, anything that we buy at Defense Department starts with requirements specifying what we need. With commercial technology, we don’t need to specify it. Therefore, requirements can be eliminated. We probably need something in place to validate that we have a need, but we don’t need to tell the market what to build.

If we pursue these four steps…three things that we need in place and one that we need to remove …the obstacle of requirements, then we could effectively implement the fast follower strategy.

Ultimately, we need to modernize faster, use more commercial technology, and make the interlocking aspects of Planning, Programming, Budgeting, and Execution (PPB&E), requirements, acquisition, and budget work for the department to be enablers rather than impediments. We owe it to our service members to give them the best tools and technologies so they can keep us safe.

On the Effective Use of Other Transaction Authority. We continue to use Other Transaction Authority (OTA) very effectively. While this authority has been used by NASA since 1958, its expanded use is somewhat recent within the Department of Defense. OTs have become a vital part of the defense research process. In fact, the IBM Center recently released a report, Other Transactions Authorities: After 60 Years, Hitting Their Stride or Hitting The Wall? concluding that OTs are an invaluable tool and offer an increasingly common, viable alternative to traditional, FAR-based procurements. Using them does not represent a significant departure from the principles of public procurement—competition, transparency, and accountability.

OTs offer a more streamlined, flexible, and faster way to buy things. The use should continue to grow, more people should be trained in how best to use this authority, and I would like to see department leadership encouraging more widespread use OTAs as an alternative to the federal acquisition regulations.

On DIU Successes. We must increase the impact of the work we are doing. We’d like to be doing more projects that are larger scale. We’d like to be working internationally with our partners. That said, we have much to be proud of at DIU. I’ll just highlight a couple of successes. One is the creation of the Blue sUAS project that develops trusted small unmanned aerial systems (sUAS) for the broader DoD and other federal government partners. This effort builds upon the U.S. Army’s sUAS program of record, Short Range Reconnaissance (SRR), for an inexpensive, rucksack portable, vertical take-off and landing sUAS. Blue sUAS systems share the SRR air vehicles' capabilities but integrate a vendor provided ground control system. We decided what we needed to do was harmonize requirements across DOD so that we’re not splitting the volume that we need across multiple different vendors. Blue sUAS is really aimed at doing that and today we’re increasing the number of vendors who are on the approved list, that are cyber hardened, that don’t use Chinese components, obviously don’t come from China as a completed product, and making these vendors and their technology available for the government to purchase today. They are available on the GSA schedule so any agency can purchase them

Another example is buying launch as a service technology combined with sponsoring small satellite companies. It’s phenomenal what’s happening: being able to launch more cargo at low prices and accessing technologies that give us visibility around the earth, that go beyond optical, what’s called synthetic aperture radar that allows us to see day and night and through clouds. Then of course, AI/ML technology that allows us to spot what’s changing in these images so that people don’t have to go blind looking at pixels. We’re bringing this combination of technologies to the Defense Department so that we have much more situational awareness or global visibility.

On Key Takeaways. The first takeaway is truly recognizing the strategic competitor that is China and that this competition amongst other things centers on technology. We must make sure that the country does not fall behind. Our technology lead is eroding today. This underscores a sense of urgency not only about the work that we’re doing at DIU but what the Defense Department and the whole nation needs to be focused on in terms of making sure that we’re making the right investments to be preeminent in science and technology for decades to come.

Another key takeaway is understanding that commercial technology is critical to making sure the Defense Department has leading capability. We’re not a first mover anymore. Therefore we have to be a fast follower and be able to incorporate commercial technology and field it more quickly.

The third takeaway is speed. Speed is absolutely critical to making sure we’ve got a Defense Department that is competitive, that it has the capabilities it needs, is adopting new warfighting concepts, and is changing at the speed of relevance as Secretary Mattis used to say. We’re not an agile organization at DOD but we need to become one.

These are some of the key areas that we’re thinking about and focusing on at DIU every day. I was heavily influenced by Secretary Jim Mattis who hired me. He impressed upon me that DIU is a change agent. We have a dedicated part of DIU that continuously scans for the most important problems, finding solutions that save us the most money while delivering new capabilities that save the most lives. How robust are the different types of commercial capabilities we could bring to bear on this problem?

The sweet spot we look for is very high impact and a robust commercial set of vendors. That’s the area that we want to be targeting.

On Leading. Leadership principles are transferable across sectors. We must understand what we are trying to accomplish or what I call setting the agenda. If you don’t have that vision in mind, a destination for where you want to go, then all roads can take you anywhere. A leader must have that vision and agenda for where the organization is going. Once you have a vision, then it’s all about realizing it and executing on it.

Having the best possible staff and talent working alongside you to achieve that vision is key. This is true across industries.

I’ve been very impressed with the caliber of talent that we have at DIU. I feel very fortunate. A leader what we must do is to give staff the proper tools and resources to be successful. This also involves developing processes and fostering a culture that allows staff to do their best work.

We want to make sure that we have an environment where staff can do their best with access to all the tools they need to work collaboratively to realize the vision and mission of this organization.