The Defense Innovation Unit made significant strides in increasing the number of commercial prototypes that made it into warfighters’ hands and quickening the pace to award contracts in 2019.

Those two factors are strong indicators of success for an organization created to deliver privately made products tweaked for military-use to troops quickly.

In 2019, DIU transitioned eight of its prototypes to actual follow-on contracts with Defense Department customers — it also awarded 63 prototype contracts.

The agency reduced its time to award a prototype contract down to 127 days, according to DIU’s 2019 annual report.

Those numbers show serious growth over the past two and a half years. From June 2016 to December 2018, DIU only transitioned 16 commercial products to DoD and took 187 days to award a prototype contract.

DIU’s self-imposed goal is to get that timeline down to 60 days.

“DIU has deepened institutional relationships with venture capital firms and private investors, and built trust with commercial companies by establishing a clear, proven path to large-volume defense contracts,” Michael Brown, DIU director, wrote in the annual report. “With our growing network of DoD partners and American entrepreneurs, we are delivering capabilities that save lives, inspire new operational concepts, increase efficiency, and scale across the department while saving taxpayer dollars.”

Read more: Defense News

DIU attributes some of its success to increased contract capacity generated by new authorities. Last February, DIU was given the power to award its own other transition agreements — a procurement method that circumvents traditional federal acquisition regulations.

“Our partnerships with Army Contracting Command–New Jersey and Washington Headquarters Services–Acquisition Directorate, which both award agreements on behalf of DIU, continue to be huge assets to our operation,” the report states. “The addition of our own authority and growing acquisition team not only increases our overall contracting capacity but also allows DIU to more flexibly manage new starts, projects in execution, and successful transitions.”

DIU also established its defense engagement team this year.

“The team worked to identify and implement project and DoD partner selection criteria that, if met, provide a strong foundation for prototype success and subsequent transition and technology adoption,” according to the report. “Team members are either active duty military or have past military experience and represent each of the services; they are well qualified to understand the complexities of engaging DoD as a customer.”

The report bodes well for an organization that has taken some bumps over the years. The main question underlying DIU is how much risk DoD is willing to take using taxpayer money to build weapons systems that may not pay off in the end.

“If we were transitioning 100% of our projects, then we wouldn’t be leaning far forward enough. We wouldn’t be taking enough risk,” Mike Madsen, DIU director of strategic engagement, told Federal News Network last fall. “That equilibrium spot would not be getting innovation for DoD. One of the things we are looking at as we go forward is how we can take some of the transformative projects and make sure we have robust transition mechanisms in place.”

DIU’s bolstered transition rate puts it on par with what private companies expect from their research and development shops.

“The progress is tangible,  but, as previous DIU directors have noted, it needs a greater investment to be able to scale and best leverage the start-up and venture capital innovation ecosystem,”  Wes Hallman, senior vice p resident for strategy and policy at the National Defense Industrial Association, told Federal News Network. “Also and importantly, DIU is still operating on the margins of the acquisition system.  Part of scaling will necessarily mean understanding when and where DIU’s unique position and capabilities make it the primary acquisition avenue.”

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Congress takes its oversight over DIU very seriously and carefully watches how it balances prototype failures and product transitions. It’s fenced the organization’s funding and withheld money in the past over concerns about how the agency operated.

DIU has since made some serious organizational changes in response.

DIU created a formal project decision board composed of core leadership, which evaluates projects based on eight criteria that mirrors the Defense Advanced Research Projects Agency’s approach to projects as a means to legitimize its decisions.

For the latter end of the acquisition process, DIU also created a project pipeline review process to regularly check on current projects’ cost, schedule, technical performance data and transition plans.

2020 plans

In 2019, DIU continued to focus in areas DoD is trying to expand like artificial intelligence, unmanned systems, cyber and space.

In 2020, it is working with a $70 million budget, 55% larger than 2019.

Over the next two years DIU will work on applying machine learning to classify objects as air threats, build a U.S. and allied commercial drone industry and accelerate a software patch inventory.

That inventory will  “address critical vulnerabilities throughout DoD’s network of 3 million users and 11 million endpoints impacting all service members and agencies.”

DIU will also invest in predictive health and secure cloud management.

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