The Defense Department’s newest hope for the military’s future is trying to win over non-defense technology companies to harness their groundbreaking advances.
To do that, DoD is trying to show Silicon Valley that government contracting isn’t a quagmire of acquisition rules and regulations, but rather an opportunity for profits.
Last week, the Defense Innovation Unit Experimental (DIUx) opened its doors to industry in hopes of addressing the boogeymen of government contracting: intellectual property rights and the government acquisition system. And according to Assistant Secretary of Defense for Research and Engineering Stephen Welby, in an exclusive interview with Federal News Radio, DIUx is going to be doing a lot more reaching out.
Nestled at ground zero of the technological revolution in California, DIUx was created to strengthen and build relationships with innovative companies, scout breakthrough and emerging advances and serve as a local point of presence for DoD.
“We had a little over 200 companies that came [to the town hall]. We got to talk to them about the things the department is looking at in areas like advanced computing and areas like big data,” Welby said Feb. 22.
DoD’s third offset strategy is focused on bringing the military into the future by investing in specific research areas like man-machine teaming, autonomous learning systems, semi-autonomous weapons systems and assisted human operations.
DIUx is the face of the third offset strategy when it comes to courting industry to work on these topics.
Small businesses and tech companies working in third offset technologies are quick, agile and not afraid to fail. All things the government traditionally is not. Plus, some of these companies, like Apple, are making profits hand over fist without government contracts.
DIUx wants to change industry’s perception.
“What we hear from these companies is that the government acquisition system is not as transparent as it could be, that they don’t understand the kind of problems the department has, the opportunities it has and we want to reduce barrier for entry,” Welby said. “We want to try and help those companies understand the problems that we have, the places where they can help and the ways that they can do business with us.”
One barrier that has tech companies holding back on business with DoD is intellectual property rights.
Since Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall released his Better Buying Power 3.0 reforms, industry has been on edge over how intellectual property will be treated.
The point of contention comes from a 2014 white paper that states DoD needs “to do a better job of ensuring that [its] designs are modular — and that the government is in a position to control all the relevant interfaces so that competitors have the opportunity to win their way onto our programs.”
Welby said a lot of intellectual property fears are myths.
“When we work with people on developing systems for us, those companies retain all of the intellectual property rights for any commercial application of any work that goes on in almost any agreement that we sign,” Welby said. “For these companies that are looking to work with us and working with the commercial sector, it’s a win-win all around. The department is only focused on retaining the minimum set of intellectual property rights to do our business.”
DoD’s interest in intellectual property rights stems from a need to add competition to legacy systems. If one company has all of the rights to a certain system, DoD can only hire that company for add-ons or other work on that system because the company is the only one with the know-how. Without an open architecture, competition can be stifled.
Welby said he is getting positive reviews from industry on DoD’s work with intellectual property. He said during the town hall, one company stood up and said it never worked with a better partner than DoD with respect to intellectual property.
Of course, even if intellectual property is less of an issue, DoD’s bloated and bulky acquisition process is another factor.
Welby said DoD is prepared to use any acquisition vehicles necessary to make the process easier, which could include a rapid acquisition office or other transaction agreements (OTAs).
OTAs have been successfully used by DoD to cut some of the red tape for small businesses in the acquisition process.
In searching for technologies to share electromagnetic spectrum, DoD used an OTA that allowed companies to form a consortium of businesses. The consortium made it easier for small businesses to break into government contracting and skirted some of the time-consuming regulations that slowed the process.