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DIUx: Will Carter’s Innovation Unit Survive Trump?

Posted by Sydney J. Freedberg Jr. on


Sydney J. Freedberg Jr. photo

Defense Secretary Ashton Carter (left) and DIU(X) director Raj Shah (right) speak to reporters at the opening of DIU(X) Boston.

WASHINGTON: “My hope and sense is that innovation is not a partisan issue,” said Raj Shah, who runs the Pentagon’s outreach to the tech industry, the Defense Innovation Unit (Experimental), DIUx. “I would encourage the next administration to continue to enable, not just us, (but) several innovation efforts that the department has done.”

Shah, a reserve fighter pilot turned Silicon Valley entrepreneur, has led the unit for just six months. Now he’s got just two months before the departure of Defense Secretary Ashton Carter, the man who created DIU(x) last year, who hand-picked Shah to overhaul it after early problems, and to whom Shah reports directly. Also departing is Deputy Secretary Robert Work, who sits on DIU(x)’s steering committee and with whose Third Offset Strategy project Shah coordinates “very closely.” Team Trump has shown only contempt for the outgoing administration’s initiatives and personnel.

But rather than packing his bags and stealing office supplies, Shah is planning to expand DIU(X) with more contracts and new locations around the country.

“We have a slew of different projects that are currently underway, and contracts will be let in the next weeks and months,” Shah told the Federal Times CyberCon 2016 conference this morning. DIU(x) has already signed some $36 million worth of contracts and tens of millions more are on the way.

Much of the money comes, not from DIU(x)’s modest budget, but from co-sponsors in the four armed services, whose support will be crucial to DIU(x)’s long-term survival. Ultimately, it’s up to the services to pick up DIU(x) prototyping projects and actually buy things in bulk for troops to use. “Transition, obviously, is central to success,” said Shah. “A prototype is nice but it doesn’t help solve the problems.”

Transition is much easier now thanks to the 2016 National Defense Authorization Act, Shah said. Under the new law, if a service wants to buy something prototyped through DIU(x)’s Commercial Solutions Opening (CSO) contract vehicle, it can go immediately to sole-source, full-rate production with the original vendor, without having to go through the full all-comers competition that’s normally required. This statutory fast-track is “critical” to DIU(x)’s long-term success, said Shah.

Defense Innovation Unit (Experimental) in Silicon Valley

Deputy Secretary Bob Work visits the Defense Innovation Unit (Experimental) in Silicon Valley

Equally crucial is DIU(x)’s staying power is its ties with the tech community. From the parent office in Palo Alto, DIU(x) has expanded with an East Coast office in Boston and an outpost in Austin. DIU(X) Austin is weird: Rather than have its own, expensive office space and permanent staff, it’s housed in a tech incubator and mainly manned by rotating teams of reservists. That’s the model Shah wants — and can afford — to replicate across the country.

“The key untapped resource we have as a nation and a department is our reserve forces,” said Shah. “We have reservists working in technology companies of all sizes…across the nation.” Rather than uproot themselves to deploy to Afghanistan or Iraq for months on end, these reservists will work in their home states during their 39 days of mandatory annual training. Rather than work as tank drivers or staff officers, they’ll work with the same tech community they do the rest of the year.

This model could allow DIU(x) to extend its reach to tech hotspots nationwide — if it’s still around this time next year.

A source close to the Trump transition team pooh-poohed DIUX and voiced no support for Work’s Third Offset effort. They’re doing what we should have been doing all along, the source said. Besides, the push to bring large tech companies into a closer embrace with the Pentagon is simply unlikely to happen for market reasons, the source added. Instead, if Trump’s new defense secretary — who looks likely to be Sen. Jeff Sessions — wants to, he can jaw-jaw tech leaders and push the science and technology community to work more closely with the military, effectively what Ash Carter has been doing, without any special offices or offsets.

What do you think?