BOSTON: “It’s like running through a briar patch naked,” Will Roper said of trying to bring start-up companies into the service’s contracting model to keep apace of commercial innovation. “You have to be willing to bleed a little bit,” Roper, the Air Force’s top acquisition official told me in an interview last Thursday, after watching 10 newborn companies pitch their products to Air Force officials and venture capitalists.
“The bottom line is that no one has taken a look at the acquisition system to make it friendly to the start-up world,” Roper told me. This is what he is trying to change. Indeed, he is so heavily involved with the effort to engage start-ups that he tells me he was personally “taking notes” during the pitches here in order to match the companies with potentially interested Air Force program offices.
The start-ups at the Boston meeting ranged widely. Just a few examples;
- a firm called Airshare that has converted a hobby rocket into a hand-held guided missile for taking down drones safely in crowded areas (I’m so writing about this in future);
- Vita Inclinata has created a drone-based mechanism for stabilizing packages and people dangling from helicopters
- FortifyEdge, a software start-up with Australian founders, that has developed a unique way to provide security for Internet of Things (IoT) devices, including on satellites.
The “Demo Day” was organized by the Techstars Air Force Accelerator in Boston and AFWERX, the organization launched by the service in 2017 to foster innovation within the Air Force, and link with innovators in industry, academia and think tanks. AFWERX now has “innovation hubs” in DC, Austin and Las Vegas. The goal was of the Demo Day was to provide a “coming out” party for the companies, which have spent the last three months working with the Techstars accelerator to hone their ideas into business plans, develop marketing strategies, and nail down in-person sales pitches to attract both commercial and Air Force investment.
Despite the difficulties involved, the ever-effervescent Roper is hugely pleased with the progress the Air Force is making in bolstering the start-up world and bringing new talent, and tech, into the DoD fold.
“This is the year we’re going to be pulling all of our venture work into one Air Force process. AFWERX is going be our open door for mentoring, working with groups like Techstars,” and giving company founders “the ability to reach back to our program officers that have the resources and the contracting authority to put people on contract,” he said. “I expect in future to be doing 20 or 30 pitch events across the Air Force every year with dozens of accelerators, and we will use every dollar of our $1.3 billion in small business money.”
While the Air Force has for a number of years had a dedicated fund to support contracts with small businesses via the DoD’s Small Business Innovation Research (SBIR) program, Roper says it was not attracting the right sorts of businesses in the past. Instead, the process has been somewhat hijacked by so-called “SBIR mills” — often companies spun-off by prime contractors to take advantage of the small business money pot.
By contrast, Roper said, “what was great about the ‘pitch day’ in New York was that over half of the companies had never done business with the government.” He was referring to the Air Force’s very first ‘pitch day’ for start-up firms to speed-date with potential Air Force buyers, held in New York March 6-7. The service awarded 51 contracts worth $8.75 million at that meeting in only a few minutes, using new authorities granted by DoD.
To help ensure the success of the start-ups the Air Force has eyeballs on, Roper explains that the service is standing up a new Board of Directors for Venture Capitol “to help us be a better investor.” Indeed, part of the Air Force model is to match venture cap funding to any one start-up by up to $1.5 million. Roper said: “We’re trying to not go it alone. We’re working with venture capitalists, like those who are here today coaching and advising us.”
Backup From Thornberry
At least one congressman agrees with Roper regarding the problems with the SBIR contracting process. Rep. Mac Thornberry, ranking Republican on the House Armed Services Committee and long-time champion of DoD acquisition reform, has put forward a draft bill designed to allow start-ups primarily funded by venture capitol to compete for a SBIR contract — something that is currently barred. The draft bill, the “Accelerating Defense Innovation Act of 2019,” would create a pilot program that would use allow DoD to use up to 15 percent of its SBIR budget for contracts to start-ups that are majority-funded by venture capital firms, hedge funds or private equity firms.
As an example of the problem, Thornberry’s fact sheet on the proposed legislation released this past Friday cites the fact that Capella Space, the San Francisco start-up seeking to build a commercial constellation of small synthetic aperture radar (SAR) satellites of interest to the Intelligence Community, was denied the ability to bid on a SBIR contract.
According to a fact sheet put out by Thornberry’s office this past Friday, the legislation would “create a pilot program with a modified SBIR waiver DOD can actually use. His bill will also ensure that other pathways exist to scale technologies across DOD through mechanisms like the Rapid Innovation Fund; while ensuring that those mechanisms are funded at levels that actually allow small businesses to break into major defense acquisition programs. His bill will also increase DOD’s level of engagement with commercial technology companies, create opportunities for new technologies to grow out of Universities and DOD laboratories, and introduce small businesses to cybersecurity best practices early in their journey.”