Tag Archives: small business opportunity

US Space Force Schedules Spring 2021 Small Business Pitch Day

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Image: “afwerx.af.mil

C4ISRNET

The Air Force first introduced its pitch days in March 2019, and has since held several to find “defense unicorns” — nontraditional companies with innovative solutions that lack the resources and know-how to secure Department of Defense contracts.

While the current plan is to host the event in person in Los Angeles, California, SMC noted that it may move to a virtual environment due to the ongoing coronavirus pandemic.

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“Inspired by the popular television series “Shark Tank,” select companies are given the unique opportunity to present their solutions to acquisition leaders, who are then able to award Small Business Innovation Research grants.

“Space Force is committed to procuring things differently. We continue to recognize the need for faster and smarter methods to quickly identify, procure and develop military space solutions. Space Pitch Day is one way SMC is bridging the gap between small businesses and the military,” said Maj. Ryan Pennington, project lead of SMC’s deputy space ventures.

A major draw of the events is the responsiveness, giving smaller companies the chance to forgo the traditional, lengthy DoD contracting process. The Air Force boasts that on its first pitch day, the service awarded a contract within three minutes of seeing the presentation. During the first Space Force Pitch Day in November 2019, the Air Force issued $9 million to 12 companies.

“The inaugural Air Force Space Pitch Day last year was very successful. Although SMC is hosting its second pitch day event, it really is the first under the USSF. We are excited to host another event that enables us to grow and leverage small-business innovation into thriving ecosystems,” said Roberta Ewart, SMC’s chief scientist. “The next SMC Space Force Pitch Day event will have the same focus and that is to open doors for innovative technologies and ideas and then create transition on-ramps into the USSF enterprise and architecture. We are fielding tomorrow’s Space Force faster and smarter and we do this by changing the way we buy things.”

SMC has laid out 11 focus areas for the upcoming Space Force Pitch Day:

  • Innovation in early missile detection and warning
  • Space situational awareness
  • Space communications
  • Space visualization
  • Multidomain command and control
  • Data mining
  • Operations within electronically contested environments
  • Artificial intelligence
  • Responsive launch systems
  • Space logistics
  • Protection of critical space assets

Interested companies can register and submit their proposals at www.spaceforcepitchday.com.”

https://www.c4isrnet.com/battlefield-tech/space/2020/08/27/space-force-sets-pitch-day-for-spring-2021/

GSA Cancels Troubled ALLIANT 2 Small Business Vehicle

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FCW

The General Services Administration has cancelled the troubled $15 billion Alliant 2 Small Business vehicle and announced plans for a new set of small business contracts in a July 3 announcement.

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“GSA awarded spots on Alliant 2 SB to 81 companies in February 2018 but those award were followed by over a year of protests at the Government Accountability Office and at the U.S. Court of Federal Claims.

In March 2019, GSA cancelled all the awards so it could rework the procurement in light of the court rulings against it.

In late August 2019, GSA said it was prepping for a redo of Alliant 2 SB. At that time, GSA said it was going to expand the number of winners to 120.

With Thursday’s late-day announcement, GSA is abandoning Alliant 2 SB completely. The agency said it is working on a new approach to governmentwide contracts for small businesses.

“Plans are underway for a new and enhanced small business GWAC program that better reflects the changing landscape and addresses the needs of agencies to access the expertise of small businesses. The changes will support recent developments in cybersecurity, emerging technologies, and supply chain risk management,” the agency said.

GSA is going to conduct more market research and develop new solicitations for contracts for small and women-owned, HUBZone, and service disabled, veteran owned small businesses.

It’s expected that some of the gap left by ALLIANT will be filled by STARS II — GSA’s 8(a) Streamlined Technology Application Resource for Services contract vehicle. That contract recently bumped up against its ceiling value, but just last week GSA announced it was adding $7 billion to the current contract and said a solicitation for STARS III would be hitting the street this summer.

In addition to STARS II, GSA wants agencies to use the VETS 2 vehicle and the IT schedule to reach small businesses.

“We are working to expand the number of master contract awards to highly qualified small businesses on our [governmentwide acquisition contracts], while focusing on technology requirements that support our customer agencies for future mission success,” Laura Stanton, GSA Acting Assistant Commissioner, Office of Information Technology Category, said in a statement.

While Alliant 2 SB never got off the ground, Alliant 2 Unrestricted has become a very active contract for companies competing in the full-and-open environment. According to Deltek, $1.6 billion of work has flown through the contract.”

https://fcw.com/articles/2020/07/02/wakeman-alliant2-cancelled-small-biz.aspx?oly_enc_id=

New SBA On-Line Tool Matches Small Business to Lenders

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Image: SBA

SBA

SBA’s Lender Match is an additional resource for pandemic-affected small businesses who have not applied for or received an approved PPP loan to connect with lenders.  

A dedicated online tool for small businesses and non-profits to be matched with Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), Farm Credit System lenders, Microlenders, as well as traditional smaller asset size lenders in the Paycheck Protection Program (PPP).

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“The SBA is focused on assisting eligible borrowers in underserved and disadvantaged communities and connecting them with forgivable PPP loans, especially before the June 30, 2020, application deadline,” said SBA Administrator Jovita Carranza.  “As communities begin to carefully reopen across the country, there are still many more opportunities to provide this assistance to businesses who have yet to access these forgivable loans.  SBA is utilizing these partnerships with CDFIs, MDIs, CDCs, Farm Credit System lenders, Microlenders and many other participating small asset lenders to ensure that access to this emergency funding reaches the most small businesses and their employees in need.”

Lender Match Background

Within two business days after entering their information into the Lender Match platform, a borrower receives an email from lenders who have been matched with them.  The borrower can see lenders’ requests for them to begin an application.  Borrowers are then able to begin the application process directly from the email they receive.

Lender Match was on pause due to CARES Act implementation priorities and loan volume. It is now being reinstated for CDFIs and other Small Asset Lenders.  Leads will only be forwarded to CDFIs and Lenders with < $10b in assets until the PPP program ends on June 30, 2020, at which time Lender Match will be open to all participating SBA Lenders.  Lender Match not only connects borrowers with accessing PPP loans, but also other SBA lending products, such as 7(a), 504, Microloans, and Community Advantage loans which are currently offering debt relief.

About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.­”

Air Force Executes Program To Reshape Defense Industrial Base

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FCW

Goal is to pivot away from the defense prime model (while still working with those companies) and create a new industrial base that more easily allows tech companies to simultaneously work with the Defense Department and the commercial sector.

The Air Force’s Ventures team, launched earlier this year with a tentative $1 billion in contract awards for 550 small businesses, oversees all of the branch’s small business initiatives, hopes to codify the process this year.

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“The Air Force’s increasing interest in startups isn’t just to get a taste of innovation but completely change the defense industrial base.

“We’re not going to win against China long term if they’re got a nationalized industrial base. They have access to that entire talent pool, they’ve got access to every company within their borders. And we are only working with a small subset,” Will Roper, the Air Force’s acquisition chief said of defense prime companies during a virtual Air Force Association Mitchell Institute event June 9.

“That subset continues to collapse every year under the pressure of programs that are too few and far between to sustain diversity and continual competition. So we have to have a new model that encourages companies to come in and work with [the] military but not necessarily put them on a path to become a defense prime.”

The Air Force began hosting pitch events in 2019, to stimulate its work with small businesses and speed contract awards for capabilities that could readily transition to the warfighter, and attract venture capital investment. Roper announced the creation of the AFVentures team in March as a joint effort with the service’s acquisition team, AFWERX, and the small business innovation research and small business technology transfer program.

In the last year, Roper said the Air and Space Force has added 1,000 new companies to its industrial base over the past 18 months. Those companies are still focused on research and development but the acquisition chief wants to make working with the Air Force simple and keep up that pace, adding another 1,000 companies each year with smaller investments in the tens of thousands of dollars.

Roper also said he hopes to fund “medium bets” of about $1.5 million in contract awards for about 350 startups each year.”

Servant Leadership- A Long Term Change To America’s Work Infrastructure?

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Image: “Servant Leadership.ca

WASHINGTON TECHNOLOGYBy Bruce Lyman

As many companies consider making the transition to remote work more permanent, there are four areas leaders should emphasize to create a successful corporate culture in a coronavirus pandemic-era remote work environment.

They all begin with servant leadership – putting employees and their work first by creating an environment in which employees are safe, challenged, effective, motivated and productive.

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“As the COVID-19 pandemic eases and economies reopen, many companies and people will return to the office. However, according to a recent survey, remote work may become even more popular. The socially responsible coronavirus-related quarantines of the last few months may have created a long-term change to America’s work infrastructure, especially as employees show greater happiness and productivity while working remotely and modern technology makes this option easier than ever.

Once this [Servant Leadership} is accomplished, other leadership goals like organizational performance, profits, and cost-cutting will become more easily — and more naturally — accomplished.

Ensure employees and their families are safe

All servant leaders will agree the focus should be on the employee, and the leader’s job is to block and tackle to enable employees to be effective. More so than in a normal environment, however, this time of COVID-19 pandemic and quarantines require that employees know that their safety and that of their families are important to the company. If the employee is experiencing a battle between protecting their family and meeting the demands at work and the employee does not feel the company cares, the employee will not be as committed to company work or to achieving company goals.

Empower the team

Second, great leaders empower employees to work together in teams to develop ways to get the work done in the most efficient way. Employees who are told what to do may grudgingly follow orders — or they may not. Empowered employees know what work needs to get done, and are creative and hard-working enough to create partial or complete solutions on their own. Leaders need to spend their time identifying goals, providing guidance and offering support as opposed micromanaging daily staff activity and behavior.

This strategy allows the most flexibility for the team and puts results ahead of artificial measures like number of hours worked. It also allows for long-term efficiency because the natural ebb and flow of each team member will, over time, increase their individual contributions as well as their synergy and effectiveness with the rest of the team.

Communicate

Third, create an environment of continual communication. It is easy to fall into the trap of using email or text to task others or to share work products. While this can be an effective way to transfer documents and exchange data, e-mail and texts do little to build team cohesiveness, ensure employees are challenged, or disclose areas where individual or team performance that can be improved. Have team meetings on-line and, as the leader, reach out to each employee often to discuss their work and their life, listening to what they need to be successful.

Effective intra-company communication also creates opportunities to catch and correct employee errors, dis-engagement, and other performance issues before they become long-term problems. Great leaders know that almost every issue is personal – which means that listening is often more important than talking to employees, especially employees experiencing personal or professional challenges.

Create a modern governance structure

Employee and company performance are best measured through effective corporate governance structures. Leaders must be able to evaluate individual and team productivity objectively — and correct issues or celebrate high performance. If each employee and each team understand the definition of success, they will know how to manage their time and their work-life balance to achieve this success. If they have input into the definition of their success, they will have more buy-in and be more motivated to achieve personal, team, and company goals.

Effective leaders create a culture which clearly defines and a governance structure that enforces the company’s ethos, practices and client focus. This not only provides focus and creates a culture of high performance for current employees, but it also increases the likelihood of hiring highly motivated, effective employees from the start.

With a high performing, innovative, empowered team, companies will outperform the competition and increase revenue, market share and profit.”

https://washingtontechnology.com/articles/2020/06/10/insights-lyman-team-optimization.aspx

ABOUT THE AUTHOR:

Bruce Lyman

Bruce Lyman is a former Air Force Colonel and the CEO of Parabilis, a small business government contractor lending company.

SBA Advocacy Office Releases 2020 Small Business State/Territory Profile Stats

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Image: SBA

“U.S. SMALL BUSINESS ADMINISTRATION”

Advocacy’s Small Business Profiles are an annual portrait of each state’s small businesses. Included in each are snapshots into each state’s small business health and economic activity. Some economic data is also supplied for U.S. territories.

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“This year’s profiles report on state economic growth and employment. The data included in each profile answers the following questions:

  • How many small businesses are in my state?
  • How many jobs do they create?
  • Which industries have the most small businesses and small business jobs?
  • How many establishments opened and closed?
  • How many exports are small businesses responsible for?
  • Which counties in my state have the most small businesses?

The files below contain the 50 individual state profiles, plus profiles for the United States, District of Columbia, and five U.S. territories.

2020 Small Business Profiles
AlabamaAlaskaArizona
ArkansasCaliforniaColorado
ConnecticutDelawareDistrict of Columbia
FloridaGeorgiaHawaii
IdahoIllinoisIndiana
IowaKansasKentucky
LouisianaMaineMaryland
MassachusettsMichiganMinnesota
MississippiMissouriMontana
NebraskaNevadaNew Hampshire
New JerseyNew MexicoNew York
North CarolinaNorth DakotaOhio
OklahomaOregonPennsylvania
Rhode IslandSouth CarolinaSouth Dakota
TennesseeTexasUtah
VermontVirginiaWashington
West VirginiaWisconsinWyoming
American SamoaGuamNorthern Marianas
Puerto RicoU.S. Virgin Islands 
United StatesAll Profiles 

Notes on the data and methodology used are available here.”

Small Tech Companies Got $1 Billion At USAF Virtual South By Southwest

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DEFENSE NEWS

The U.S. Air Force lost its chance to hang out at South by Southwest this week after the new coronavirus known as COVID-19 caused the cancellation of the festival.But the service still awarded nearly $1 billion in contracts during a virtual version of its event held March 12.

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“[The event], included keynotes from Air Force Secretary Barbara Barrett, a “Pitch Bowl” where companies delivered short pitches in the hopes of receiving small contracts from the Air Force, and other events meant to deepen the Air Force’s connection to small commercial tech firms.

The largest contracts — worth more than $550 million total — went to 21 companies to develop “big bet” technologies. Those companies are Aerial Applications, Analytical Space, Anduril Industries, Applied Minds, Elroy Air, Enview, Edgybees, Essentium, Falkonry, ICON Technology, Orbital Insight, Orbital Sidekick, Pison, Privoro, Shift.org, Swarm Technologies, Tectus Corp., Virtualitics, Wickr, Wafer and one company that the Air Force has not disclosed.

“For all these awardees, you’re on a four-year, fixed-price contract that we believe, if successful, will disrupt part of our mission in a way that will give a huge advantage for our future airmen,” said Will Roper, the Air Force’s acquisition executive.

The value of the contracts awarded by AFWERX may seem small compared to the multibillion awards for major defense programs. However, these awards go a long way in helping technology firms overcome the “valley of death” between technology development and production, when a lot of companies are vulnerable to failure, said Chris Brose, head of strategy for Anduril Industries, which specializes in developing artificial intelligence technologies.

“For a company like ours or companies of that size, It’s quite significant. It allows us to really kind of do more of the good work that we’re doing, to scale and grow and work with new partners, and it makes a huge difference,” Brose said.

Brose declined to detail the precise nature of Anduril’s contract with the Air Force, but said that the general objective is to prove that an unmanned aerial system can deliver a mass of swarming drones capable of performing complex missions. While a human would still be “in the loop” overseeing the network, certain tasks — such as steering the drones, moving their sensors and processing gathered data — would be automated.”

https://www.defensenews.com/industry/2020/03/13/small-tech-companies-got-a-combined-1b-at-the-air-forces-virtual-version-of-south-by-southwest/

Air Force To Pump New Tech Startups With $10M Awards

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BREAKING DEFENSE

The service has been experimenting with ‘pitch days’ across the country over the last year, such as the Space Pitch Days held in San Francisco in November when the service handed out $22.5 million to 30 companies over two days. 

The first-of-its kind event in Austin, called the Air Force Pitch Bowl, will match Air Force investment with private venture capital funds on a one to two ratio

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“PENTAGON: The Air Force will roll out the final stage in its commercial startup investment strategy during the March 13-20 South By Southwest music festival, granting one or more contracts worth at least $10 million to startups with game-changing technologies, service acquisition chief Will Roper says.

So, if the Air Force investment fund, called Air Force Ventures, puts in $20 million, the private capital match would be $40 million.

AFWERX, the Air Force’s innovation unit, has one of its hubs in Austin.

“This has been a year in the making now, trying to make our investment arm, the Air Force Ventures, act like an investor, even if it’s a government entity,” Roper explained. “We don’t invest like a private investor — we don’t own equity — we’re just putting companies on contract. But for early stage companies, that contract acts a lot like an investor.”

The goal is to help steer private resources toward new technologies that will benefit both US consumers and national security to stay ahead of China’s rapid tech growth, Roper told reporters here Friday.

The Air Force wants to “catalyze the commercial market by bringing our military market to bear,” he said. “We’re going to be part of the global tech ecosystem.”

Figuring out how to harness the commercial marketplace is critical, Roper explained, because DoD dollars make up a dwindling percentage of the capital investment in US research and development. This is despite DoD’s 2021 budget request for research, development, test and evaluation (RDT&E) of $106.6 billion being “the largest in its history,” according to Pentagon budget rollout materials. The Air Force’s share is set at $37.3 billion, $10.3 billion of which is slated for Space Force programs. 

“We are 20 percent of the R&D is this country — that’s where the military is today,” Roper said. “So if we don’t start thinking of ourselves as part of a global ecosystem, looking to influence trends, investing in technologies that could be dual-use — well, 20 percent is not going to compete with China long-term, with a nationalized industrial base that can pick national winners.”

The process for interested startups to compete for funds has three steps, Roper explained, beginning with the Air Force “placing a thousand, $50K bets per year that are open.” That is, any company can put forward its ideas to the service in general instead of there being a certain program office in mind. “We’ll get you in the door,” Roper said, “we’ll provide the accelerator functions that connect you with a customer.

“Pitch days” are the second step, he said. Companies chosen to be groomed in the first round make a rapid-fire sales pitch to potential Air Force entities — such as Space and Missile Systems Center and Air Force Research Laboratory — that can provide funding, as well as to venture capitalists partnering with the Air Force.

As Breaking D broke in October, part of the new acquisition strategy is luring in private capital firms and individual investors to match Air Force funding in commercial startups as a way to to bridge the ‘valley of death’ and rapidly scale up capability.

Roper said he intends to make “maybe 300 of those awards per year,” with the research contracts ranging from $1 million to $3 million a piece and “where program dollars get matched by our investment dollars.”

The final piece of the strategy, Roper explained, is picking out the start-ups that can successfully field game-changing technologies.

“The thing that we’re working on now is the big bets, the 30 to 40 big ideas, disruptive ideas that can change our mission and hopefully change the world,” Roper said. “We’re looking for those types of companies.”

The Air Force on Oct. 16 issued its first call for firms to compete for these larger SBIR contracts under a new type of solicitation, called a “commercial solutions opening.” The call went to companies already holding Phase II Small Business Innovation Research (SBIR) awards. The winners will be announced in Austin.

If the strategy is successful, Roper said, the chosen firms will thrive and become profitable dual-use firms focused primarily on the commercial market.

“The, we’re starting to build a different kind of industry base,” Roper enthused. “So, we’ve gotta get the big bets right. Then most importantly, if you succeed in one of the big bets, then we need to put you on contract on the other side, or else the whole thing is bunk.”

2020 SBIR Road Tour

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U.S. SMALL BUSINESS ADMINISTRATION (SBA)

The SBIR Road Tour is a national outreach effort connecting entrepreneurs working on advanced technologies to the country’s largest source of early stage funding – the SBIR/STTR programs.

Also known as America’s Seed Fund, the SBIR/STTR programs provide over $3.7 billion in funding to small businesses each year in a wide variety of technology areas.

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“Each SBIR Road Tour stop, hosted by a local organization, will provide attendees with an opportunity to hear directly from the participating federal agency program managers that administer over 5,500 new awards annually and to meet one-on-one with program decision makers.”

Pentagon DIU Bringing New Commercial Partners Into The Fold And Expanding

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NATIONAL DEFENSE MAGAZINE

Armed with new contracting authorities and a mandate to help the U.S. military stay head of peer competitors, the Pentagon’s Defense Innovation Unit is bringing new commercial partners into the fold and expanding its technological focus.

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“DIU was launched in 2015 by then-Secretary of Defense Ash Carter to bridge the gap between the military and the nation’s tech hubs. It is headquartered in Mountain View, California, in Silicon Valley, with additional outposts in Austin, Texas, Boston and the Pentagon.

“More and more of what the department needs going into the future is dual-use technology, which means it’s equally or more important in the commercial space as it is for the military. So we’ve got to leverage what’s going on with the tremendous innovation hubs that we have around the country and make sure those companies … are thinking about the Department of Defense,” DIU Director Michael Brown said during a panel at the Reagan National Defense Forum in Simi Valley, California.

The organization has three core mission sets: accelerate commercial technology to the warfighter; boost the military’s capability and capacity by taking on transformative projects that can be scaled across platforms and across the services; and grow the national security innovation base.

Its offices in Austin, Boston and Silicon Valley are focused primarily on commercial outreach, while the one in Washington, D.C., engages with military partners such as service acquisition executives.

“We start with the DoD customer with a DoD problem,” Mike Madsen, DIU’s director of strategic engagement, explained in an interview. “Then we put that out to the tech sector and get the imaginative minds in the tech sector to help solve our problems.”

Over the past year or so, DIU’s hand has been strengthened by a number of initiatives, he noted.

A crucial one was Undersecretary of Defense for Acquisition and Sustainment Ellen Lord’s decision to give the organization new contracting authorities, including the ability to directly enter into other transaction authority agreements that are intended to cut through bureaucratic red tape associated with the Pentagon’s traditional acquisition procedures.

“She delegated that authority so that we could award our own OTA contracts, which is a pretty big deal to continue moving fast,” Madsen said.

OTA mechanisms favor nontraditional suppliers, he noted, “whether it’s a couple of folks in a garage in Minnesota or whether it’s a Fortune 100 company in Silicon Valley that just have never done business before with the department.”

The Defense Innovation Unit has awarded about 150 contracts to 122 nontraditional vendors. Of those, 66 are first-time suppliers to the military, Madsen said.

In the past, high-tech companies in the commercial sector “evaluated the $740 billion defense market and said, ‘No thanks. I don’t want a slice of that. … It’s too complex, it’s too hard,’” he said. “What we’ve represented is a lowering of those barriers to entry, making it easier for those leading-edge technology companies to get their technology to the men and women in uniform.”

Madsen said DIU understands the commercial sector’s faster business cycles.

“We want to move at commercial speeds … and look like a commercial entity to those tech companies” that are wary of doing business with government agencies, he noted.

With other transaction authority agreements, DIU can transition from a prototype contract right into a production contract as long as the prototype contract was awarded under competitive circumstances.

The organization has stood up a defense engagement team and a commercial engagement team. The defense engagement team reaches out to the services, combatant commands and other agencies to learn about their needs.

“Then we put that problem [statement] out to the commercial sector and work with them for proposals and look to award a prototype contract as quickly as we can,” Madsen said. The goal is to award a contract within 60 to 90 days, and then move through the prototyping phase and field new capabilities within 24 months.

Once a successful prototype is developed, DIU’s defense engagement team looks for ways to scale it across the department. An example is a recent effort to use artificial intelligence for predictive maintenance.

An AI prototype developed by a company called C3.ai is capable of reducing unscheduled maintenance for the Air Force by about 30 percent, “which is pretty significant for our mission-capable rates for aircraft,” Madsen said.

“We took that successful prototype to the Army and said, ‘Hey, this works on aircraft, what do you think about trying to prototype on wheeled vehicles?’” Madsen explained.

“We worked a prototype for the Bradley fighting vehicle. Now we’re engaged with the Navy to apply the same concept to not only the aircraft in the Navy, but also shipbuilding.”

The commercial engagement team’s charter, meanwhile, is to pave the way for high-tech firms to enter the defense ecosystem and transition their products into a program of record.

It also reaches out to venture capitalists to gain greater visibility into the marketplace.

“They’re effectively the gateway to hundreds, if not thousands, of companies,” Tom Foldesi, DIU’s director of commercial engagement, told National Defense. “For any particular solicitation when we’re looking for specific technologies, they are … able to point us in the right direction.

“The VCs are always a really valuable source because oftentimes they have line of sight to companies that we might not even know about. They might be in stealth mode, they might not have announced their [funding] rounds. So we can gain a lot of insight into what might be going on in the market that might not be public.”

Being co-located in the tech hubs offers advantages. DIU also has its eye on other tech centers such as Seattle and Pittsburgh, Foldesi noted. The organization has received proposals from companies based in 44 states.

“We cast a very wide net across the country,” he said.

DIU is uniquely capable of reaching out to the commercial sector and venture capitalists on short notice, putting firms on contract and helping to scale solutions across the Defense Department, officials say.

“This is very important because most of the companies are [otherwise] pulled into a labyrinthine system within the Pentagon, and it’s really demotivating,” Foldesi said.

The often-cumbersome nature of the traditional defense acquisition system is one of the reasons why a lot of companies have opted not to do business with the U.S. military. But

DIU posts it solicitations directly on its website, with the aim of moving fast on all of its projects.

“There’s money on the table,” Foldesi said. “Someone will be awarded a contract within a few short weeks or months. And then there’s the opportunity to transition that prototype contract to a program of record.”

Over the past year, DIU has improved its decision-making process for taking on new projects, Madsen noted.

“We’ve really focused on building out that concept of transition much earlier in the process so we know what that transition from prototype to production to fielding that technology to the men and women in uniform really looks like before we’re even down the prototyping path,” he said.

The Defense Innovation Unit also helps companies navigate security and compliance issues.

“Part of the benefit of working with DIU is you have a trusted advisor and partner being able to help you manage through those … potential challenges, which can be quite significant for a company that isn’t used to doing business with the DoD,” Foldesi said.

Meanwhile, the U.S. military is trying to stay ahead of advanced adversaries such as China and Russia.

“In this great era of great competition, we think the tech race is the most important one,” Madsen said.

DIU’s top five technology focus areas are artificial intelligence/machine learning, autonomy, human systems, space and cybersecurity.

“Those are the areas that we see undergoing the greatest rate of change in the commercial sector. We think they also best represent the defense mission set,” Madsen said. “But we’re not just sitting back static on those.”

DIU is now broadening its aperture and eyeing other capabilities.

Foldesi and his team are talking to venture capitalists to get a better sense of the business sectors with emerging technology that might be of interest to the military.

“We’re looking at things like power and energy right now,” including lighter and longer-lasting batteries with faster recharge, Madsen said. Advanced materials, additive manufacturing, communications technology such as 5G, and virtual reality and augmented reality capabilities are other areas of interest.

Another new initiative being pursued by DIU is known as National Security Innovation Capital, or NSIC.

About 92 percent of U.S. venture capital funding currently goes toward software, resulting in an underinvestment in dual-use hardware. As a result, early-stage hardware development companies are in such need of capital that they might turn to foreign investors that will exert influence over their intellectual property, Madsen warned.

“The concern … from our perspective is once that happens, now that technology is probably unavailable to the department,” he said.

A key objective of NSIC is to pump money into critical hardware ventures so that they don’t have to look overseas for funding and endanger the supply chain.

DIU is also overseeing the National Security Innovation Network, or NSIN, which includes universities that aid the Defense Department. The network is growing and developing relationships with nontraditional partners in academia that are not typically involved in generating technology for the military, Madsen noted.

Pentagon efforts to engage with the commercial tech sector have not always gone smoothly. For example, in 2018 Google pulled out of Project Maven — an Air Force machine learning initiative focused on sifting through drone imagery — after employees protested the company’s involvement in aiding warfighting.

However, that case is not representative of the commercial tech sector writ large, DIU officials say.

“In fact, we see the opposite,” Foldesi said.

Madsen noted that a recent solicitation for AI technology generated responses from 50 companies. “To me, that indicates that folks definitely want to work with us.”

Foldesi said overcoming wariness of the Pentagon procurement process is the greater challenge.

“This is why our mission is so critical,” he said. “If we’re successfully able to demystify and de-risk doing business with the Pentagon, people will have perceived us having opened up arguably the single biggest [potential] customer” for some of these new technologies.

As DIU reduces some of the barriers to entry into the defense market, venture capitalists are taking notice, he said.

“You’re seeing a lot more of the top VC firms in the world start to put a little bit more money into defense[-related] startups,” he said. “This is just the start of a trend that we expect to accelerate as it becomes smoother and easier to field your technology within the Pentagon.”

The Defense Innovation Unit’s resources are growing. Its budget increased by about 60 percent between fiscal years 2019 and 2020, Madsen noted.
Brown said the organization has started 60 projects and completed 30, delivering about a dozen new capabilities to the military using cutting edge commercial technology. Total contract values exceed $500 million so far.

Companies doing business through DIU have, in turn, been able to raise more venture capital, he noted.

“For every dollar we provide in a prototype contract, on average, $10 of equity capital is raised,” he said. “We just need more volume in this to get the flywheel effect going.”

https://www.nationaldefensemagazine.org/articles/2020/2/11/defense-innovation-unit-shifts-into-higher-gear