DIUx leader Raj Shah bows out

Raj Shah, who ran the Defense Innovation Unit Experimental for almost two years, is leaving his post.

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The man who built up one of the Defense Department’s first major forays into Silicon Valley stepped down from his position last week.

Raj Shah, formally the leader of the Defense Innovation Unit Experimental (DIUx), quietly left his position on Feb. 22 after nearly two years on the job.

Navy Capt. Sean Heritage is holding the acting leadership position until a new person is appointed to take the helm.

Shah was pivotal in building up DIUx under the direction of former Defense Secretary Ash Carter. Shah took over just as it looked like DIUx was about to tank trying to fulfill its mission of reaching out to small, innovative and traditionally nondefense companies to partner with the Pentagon.

Shah, a venture capitalist, replaced George Duchak, a more traditional government employee, when Carter decided to reboot DIUx.

“DIUx right out of the gate was really trying to get its legs under it, really trying to figure out what it was,” said Stephen Rodriguez, founder of One Defense said in 2016. “It had a tough mission because it immediately had metrics imposed upon it for success and for execution. … It was also compounded by the fact that when you engage these startups the best way to have credibility is to have your own balance sheet, your own capital fund, so people actually know you have money to invest.”

Companies were excited by the idea and inundated DIUx with meetings.

But when they found out there was no money to be invested the calls dropped off, Rodriguez said.

“[DIUx] just sniffed around, they’re not an actual serious customer,” Rodriguez said.

By May 2016, DIUx had put no money on contracts.

Carter decided to restart the program and put Shah in the driver’s seat. Just four months later there was significant movement in the organization.

“Raj [Shah] and his team are already bringing in game-changing technologies that will benefit America’s warfighters. They’ve closed five deals in the last three months, totaling $3.5 million. It took an average of just over 50 days after they first interacted with a company to award these funds — that’s lightspeed for the Department of Defense, and appropriately so. And they have another 22 more projects in the pipeline, for an additional $65 million — in areas like network defense, autonomous seafaring drones, and virtual war-gaming,” Carter said in the fall of 2016.

Since then DIUx has made significant strides. It opened campuses in Austin and Boston and awarded tens of millions of dollars in contracts.

“We actually put tremendous demands on [DIUx]. In the programs that they are working for us, we were notified early last week by Director Raj Shah that there had been cash flowing into two programs,” Gen. Paul Selvatold, vice chairman of the Joint Chiefs of Staff, told the Senate Armed Services Committee July 18, 2017.

DIUx even ran out of money in the middle of 2017 because it was awarding so many contracts.

DIUx was given $30 million in 2016 and $10 million in 2017. DoD requested $45 million for DIUx for 2017. The organization has been able to obtain private investment to fund some programs. Shah stated previously that it receives $3 in investments from customers for every $1 it invests.

The future of DIUx was up in the air as the Trump administration took office last year, but Defense Secretary Jim Mattis reiterated his commitment to the organization.

As DoD’s acquisition office is being split in half to encourage more innovation, DIUx will now report to newly confirmed Defense Undersecretary for Research and Engineering Michael Griffin.

Griffin will most likely have a large say in who is appointed to head DIUx next.

Read more of the DoD Personnel Notebook.

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