DIUx invites traditional and nontraditional defense contractors to build prototypes

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TAMPA, Florida — In its quest for cutting edge commercial solutions to military problems, the U.S. Defense Innovation Unit Experimental (DIUx) is not ignoring the talents of traditional government contractors.

“The defense industrial base has incredible capabilities and resources,” said Col. David Robinson, DIUx acting military director and Army lead. “This needs to be a joint effort.”

Traditional defense contractors can participate in DIUx programs by working with firms that don’t usually act as government suppliers, including subcontractors or vendors. “This is an opportunity for them to bring other smaller firms to market and to use their financial prowess,” Robinson said April 23 at the 2018 GEOINT Symposium here.

Instead of following the Federal Acquisition Regulations, DIUx relies on a contracting mechanism called Other Transaction Agreements Commercial Solutions Openings, which are far less time-consuming and paperwork-intensive. DIUx can award contracts for prototypes within 60 days. Some form of cost-sharing is required in most Other Transaction Agreements. When traditional defense contractors enter into Other Transaction Agreements, they must share one-third of the cost, Robinson said.

Since DIUx was established in 2015, it has awarded 67 contracts. Most of those have gone to companies that are not traditional defense contractors. However, language in the 2018 National Defense Authorization Act “expanded the ability for traditional defense participants to work in Other Transaction Agreements,” Robinson said. “We are finding that the defense industrial base oftentimes are the incumbents in the programs. We need to innovate with them, alongside them in the current programs.”

DIUx has five portolio areas: artificial intelligence, autonomy and counter-unmanned aircraft systems, human systems augmentation, space and information technology and cyber.

Space is an active portfolio focused largely on responsive launch, Robinson said. “There are so many payloads looking for rides to space, especially low Earth orbit. We’ve got a couple of contracts with some companies and more all the while on getting responsive launch capabilities for smaller satellites,” he added.

Through its Other Transaction Agreements, DIUx has the flexibility to negotiate milestone payments and intellectual property rules that work for small startups, Robinson said. “In other words, if we have a ten-person startup with a superior artificial intelligence algorithm we want to bring to the fight, we might have to generate a payment schedule that will keep that business viable and keep that entrepreneur able to pay his mortgage,” he said.

While DIUx is inviting traditional defense contractors to participate in projects, those large companies sometimes put pressure on DIUx to “back off its work with small companies or startups,” Robinson said. The work DIUx performs “could potentially perturb a very tried and true, longstanding procurement, acquisition apparatus that we have grown a culture around,” Robinson said. “On the edges of that might be some fear that the business cases of old are on shaky ground. I for one think that’s just fine.”

Congress is supporting DIUx because it wants to stimulate innovation, Robinson said. “The fact is we are being outpaced in the technical realm by near peer adversaries. If we don’t find another way to bring innovation taking place in this country to our own department, then we are going to get outstripped and we are going to be beat,” he added.