Federal Agencies Challenged in Attracting Tech Startups

“NATIONAL DEFENSE MAGAZINE’

“Entrepreneurs and innovators in commercial industry are just as patriotic as those who work in the traditional defense industry. They’re not comfortable on the long lead time and very long development cycles.

They are not comfortable inside the Federal Acquisition Regulations.

Startup companies and young entrepreneurs were largely absent from the Air Force Association’s air, space and cyber conference this week, an issue that came to a head Sept. 21 during a discussion among the Air Force’s top officers.

To speed the acquisition of commercial technologies and bring new companies into the fold, Defense Department leaders have been reaching out to firms in technology hubs such as Silicon Valley, Boston and Austin. But the AFA conference in National Harbor, Maryland, one of the most prominent annual defense industry expositions, was dominated by traditional contractors that have been doing business with the Pentagon for decades.

A panel of four-star and three-star general officers was asked by an audience member about the notable absence of the non-traditional companies that defense officials have been courting.

“Why would you expect to see a millennial at the opera?” said Gen. Ellen Pawlikowski, commander of Air Force Materiel Command. “By that I mean the forum that’s here for AFA and the booth concept is not the environment that the entrepreneurial community that … we engage with is one that they come to.”

“It’s not of interest to them,” she added. “That’s not their culture.”

The Defense Department will have to court them, not the other way around, she said. Pentagon officials must make a concerted effort to meet them on their turf, she noted.

“We have to reach out to the forums and to the venues that they go to,” she said. “That will put some of us out of our comfort zone that we’re used to participating in, but that is the way we have to draw them in.”

Secretary of Defense Ashton Carter has made several high-profile trips to Silicon Valley and other centers of innovation. Last week, the Pentagon chief attended a TechCrunch Disrupt conference in San Francisco, where he tried to persuade cyber technologists to work for or do business with the Defense Department

At a venue where a Pentagon official wearing a business suit looked like a fish out of water, Carter fielded tough questions. Some, including one about marijuana use, would be considered way out-of-left-field if they had been asked at a traditional industry conference.

Pawlikowski noted that she attended a venture capitalist conference in Los Angeles focused on space issues, with positive results.

“After I finished, I had about a dozen venture capitalists come up to me wanting [me] to know that they had entrepreneurs that were interested in getting involved in this business and [asking] how could they get involved” with the Defense Department, she said.

But the Pentagon’s acquisition process sometimes causes headaches for those involved in outreach efforts to non-traditional industry and startup companies.

Air Force Materiel Command has made a concerted effort to draw in commercial firms with small business innovative research funding, Pawlikowski said.

“What we found though that is if we just leave it up to our usual devices of going out and putting out, ‘Here’s our topics we’re interested in,’ we will get shall we say the more traditional small business” to respond, she said.

“It doesn’t necessarily attract the entrepreneurial business base as a general rule,” she added. “In fact, sometimes our definition of a small business actually makes it hard for that entrepreneurial business base to participate, because if a venture capitalist invests in an entrepreneur then they no longer qualify as a small business, for example.”

Gen. Paul Selva, vice chairman of the Joint Chiefs of Staff, echoed concerns about the hurdles thrown up by the often cumbersome acquisition process.

The Pentagon has been pursuing different paths of engagement, he noted.

“What we have to do and what we have been doing is trying to nurture relationships with those small companies by placing bets and asking them hard questions and giving them some time to chew on them,” he said.

They’re wiling to give their intellect to the questions we’re willing to ask,” he said. “We just have to find an environment that they’re comfortable operating in.”

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