Innovations: How the DIU Delivers Commercial Capabilities at Speed

INTRODUCTION BY ANNE LAURENT, NCMA DIRECTOR OF PROFESSIONAL PRACTICE AND INNOVATION

What’s all the recent fuss about the Defense Innovation Unit? How about the new DIU-Defense Acquisition University Immersive Commercial Acquisition Program (ICAP) virtual course? It’s intended to help Defense Department (DoD) contracting and acquisition leaders learn how to use other transaction authority and effectively buy innovative commercial products and services.

Also in the headlines is DIU’s April ribbon cutting at a new office in Chicago, which joined Mountain View, California; Boston; Austin, Texas; and Washington, D.C. Both will be featured at World Congress 2022 in Chicago July 17-20.

Here, DIU’s Indy Toliver gives us an inside look at how DIU has awarded 270 other transaction prototype agreements using commercial solutions openings (CSOs) to companies, including nontraditional providers, in just a few months each in most cases. DIU is known for its pathbreaking use of CSOs. Toliver makes the case that contracting professionals should employ them liberally as a pipeline to emerging technology.

BY INDY TOLIVER

Silicon Valley, and its associated innovation culture, was built on early and large government investments made during the 1950s space race. The government invested in critical areas like semiconductors, microelectronics, and telecommunications.

During this period, the Department of Defense (DoD) operated as a “first mover” or primary investor in technology. Thanks to these early investments, as well as close coordination with industry and academia, the United States enjoyed a technological edge for decades.

DoD has gradually shifted away from being a first mover due to decreases in its research and development funding and is, instead, poised to be a “fast follower.” As a fast follower, DoD can adapt and integrate commercial technology in key domains – artificial intelligence, autonomy, cyber, energy, human systems, and space – to solve defense challenges more quickly and efficiently than by developing them itself.

DIU Origins

The Defense Innovation Unit (DIU) was launched in 2015 to rekindle the DoD relationship with the commercial technology ecosystem and to accelerate the adoption of cutting-edge technology and methodologies within the DoD.

DIU seeks out partners within the uniformed services and combatant commands who are facing challenges that have the potential to be solved through the adoption of commercial technology. If DIU selects a particular problem, it will work with its DoD partner in soliciting vendors, granting a prototype other transaction (OT) authority award, and managing the prototype award.

DIU's focus is on finding innovative commercial solutions to DoD problems, so it does not charge a fee for these services.

While DIU does not charge for the program and contract management services, DIU expects its DoD partners to fund these innovative commercial prototypes. DIU partners typically participate in the assessment of the prototypes and the viability determinations.

To fund a prototype, DIU accepts Military Interdepartmental Purchase Requests (MIPRs) from its DoD partners and applies the funds directly to the OT awards.

The CSO Process

DIU recognizes that speed to contract is critical with nontraditional companies. Accordingly, DIU developed the Commercial Solutions Opening (CSO) source selection process in 2016 based on the OT authority to prototype and acquire dual-use technology at the speed of relevance. The DIU CSO is flexible and collaborative, encouraging a wide range of solutions from the most innovative, non-traditional companies.

What does this look like in practice?

The OT authority authorizes the use of legal agreements to procure commercial technology prototypes. It further allows the government to use OT terms and conditions for successful OT prototype projects to go into production. While the authority allows for streamlined awards, the statute requires competition to the maximum extent practicable.

The CSO process satisfies the competitive requirements for OTs while providing maximum flexibility in making award selections. The CSO process intentionally mirrors commercial acquisition methods, as opposed to traditional regulatory approaches, to quickly vet and select technologies that provide value to DoD.

The DIU CSO is not a consortium. Consortia are defined as a “relationship between a government sponsor and a collection of traditional and non-traditional vendors, non-profit organizations, and academia aligned to a technology domain area (i.e., cyber, space, undersea, propulsion) that are managed by a single entity, and focused on innovative solutions to government technology challenges that meet the intended scope and purpose of other transactions.”[1] DIU solicits and evaluates each problem set competitively via its CSO process, resulting in the award of standalone OTs.

More concretely, the DIU CSO process consists of the following steps conducted with its DoD partners:

Phase 0 - Solicitation. This initial phase starts the solicitation process by releasing on the DIU website an area of interest (AOI), which contains a problem statement and requests that interested companies submit solution briefs.
Phase 1- Solution Brief Evaluation. Once solution briefs are submitted, DIU and its DoD partners review the solution briefs based on the CSO evaluation criteria and decide which companies will receive invitations to pitch their solution.
Phase 2 - Company Pitches. DIU, its partners, and other DoD subject matter experts listen to company pitches, obtaining additional information, including estimated costs, solution schedule, corporate viability information, and intellectual property concerns.
Phase 3 - Request for Pilot Proposal. If DIU determines that a company’s pitch is worthwhile, DIU will request that the company prepare a formal proposal. Upon receipt of the proposal, DIU, the DoD partner, and the company representatives will collaboratively develop a specification, negotiate terms and conditions, and establish payment milestones.

Under CSOs, each project is competed at the outset. Often, more than one contract is awarded per effort to acquire the best-of-breed technology. DIU has an acquisition team of agreement officers who are responsible for awarding prototype OTs. DIU also can seek assistance from agreements officers based out of the Washington Headquarters Services and the Army Contracting Command of New Jersey to issue OT awards on behalf of DIU.

While this process may seem an anathema to the tried-and-true acquisition processes mandated by the Federal Acquisition Regulation – it works.

Through CSOs, DIU has awarded more than 270 prototype agreements to commercial companies, including non-traditional solution providers, with an average acquisition time of just a few months. To date, more than 40% of these prototypes have transitioned to fielded technologies and are available for further scaling through production OT.

While it is understandable that some may view this process as daunting and unfamiliar, there is no reason that the CSO process cannot be the go-to acquisition tool for a trained acquisition workforce to buy innovative commercial technologies.

The CSO process is a pipeline to nontraditional businesses that develop and sell emerging technology. It allows for diverse competition of solutions and the speed, agility and transition opportunities that attract innovative vendors. The same vendors that often avoided doing business with the government because of its slow and bureaucratic acquisition processes.

Learn more at www.diu.mil. CM

Indy Toliver is defense innovation unit agreements officer for the Defense Innovation Unit at the U.S. Department of Defense. She has also served as a contracting officer for the Air Force Life Cycle Management Center and Air Force Space and Missile Systems Center. Toliver was also previously defense health agency portfolio executive officer for Defense Healthcare Management Systems.

ENDNOTES

Mitre AiDA. Definition of Other Transaction Consortia. Retrieved from https://aida.mitre.org/demystifying-dod/otsotconsortia/#:~:text=An%20OT%20Consortium%20is%20a,focused%20on%20innovative%20solutions%20to.