You can’t swing a cat in Defense Department circles without hitting someone talking about innovation. And how to get innovative companies into the ecosystem of DoD’s and the armed services’ supplier base.
One small company just showed what’s possible. Thirty-employee Ditto makes software that ensures data synchronization and application operation in situations with unreliable connectivity. It got an Air Force contract with a ceiling of $950 million. CEO Adam Fish says that was Ditto’s second federal contract. The first was an other transaction authority (OTA) deal through the Air Force’s Afwerx, part of the Air Force Research Laboratory. The larger contract was a regular Defense Federal Acquisition (DFAR) transaction.
Isn’t that how it’s supposed to work? Silicon valley startup, get in through one of the innovation-focused DoD operations, move on to a big production contract.
The Air Force acquired Ditto technology for its Advanced Battle Management System project, it’s next-generation command and control network, and the Air Force’s part of the DoD Joint All-Domain Command and Control initiative.
Couple of things to keep in mind, though. Fish told me his two major backers — True Ventures and Amity Ventures — were skeptical of Ditto’s going after a big federal contract. For perhaps slightly different reasons, so did Fish’s employees. Fish said the ventures capitalists don’t like what they perceive as the uncertainty of the federal environment. Budgets don’t come through, lots of people to say no, whole programs that disappear or whither on the vine. Indeed, the type of contract that Ditto won, an IDIQ, contains the word “indefinite” twice.
“That was the hardest challenge,” Fish said. “Investors want predictability.” He added, that at least on the West Coast, investors’ “eyes glaze over” at the thought of government business.
Relative to federal, the commercial market is more predictable. That’s why, Fish said, he plans to keep Ditto primarily a commercially-focused company. Not that he’d turn away from a Navy or Army solicitation, far from it. But Fish said there’s a couple of reasons to stay commercial. Besides the predictability, Fish said he believes a focus on commercial, from a technology standpoint, will keep the technology development going at a faster pace, and thereby further the government’s own imperative to ingest the latest technology as soon as it’s available.
Operationally, he said, the company is looking to hire program managers and engineers to service the Air Force contract. Fish also said he personally was motivated to pursue federal business because of his support for the military mission.
In many ways, Fish’s observations match the commercial cloud industry’s and the software-as-a-service industry’s claimed benefit: The newest technologies and innovations are organically available to all customers as soon as the vendors develop and install them.
I think the Ditto example shows that the DoD’s approach to chasing innovation can work, that the various “werxes” and use of OTA can in fact get capabilities to warfighters in a hurry.