In the past five years, venture capitalists and private companies have driven commercial innovation in technologies such as artificial intelligence, automation, space flight and more, investing more than $1 trillion in capabilities attractive to federal agencies.
But to maintain a strategic lead in a world where global markets provide both adversaries and allies with easy access to this new technology, the federal government has a major challenge: to bring that cutting-edge market to bear at the speed of commercial enterprise business.
Startups and new businesses have long avoided the federal marketplace for well-documented reasons. Those include long sales cycles, complex intellectual property clauses and a cumbersome requirements/proposal process that was not designed to purchase new technology at a startup cadence.
Agencies Must Take a New Approach to Innovation
For agencies, the trick to attracting those businesses has been to evolve new practices such as prototype-to-adoption, to bring together a variety of expertise and create a cultural intersection between the world of nontraditional entities, startups and the federal IT establishment.
Three years ago, the Defense Department established a unit designed to do just that. The Defense Innovation Unit focuses on identifying highly relevant technology companies and matching them to DOD customers through collaborative, agile business processes.
DIU developed a solicitation and contracting process known as the Commercial Solutions Opening, which allows DOD and other agencies to lower barriers to entry for nontraditional companies that want to work with the government on prototype projects.
The first step in overcoming a company’s reluctance to deal with government starts with speaking the right language. DIU collaborates with DOD customers, for example, to develop clear and concise capabilities statements that avoid government-speak and make the agency’s needs completely transparent.
The next step is to publish the needs statement and request short capabilities statements from companies, then invite companies to make presentations. One or more companies may then be selected to develop a prototype that can be rapidly adopted and will scale.
The streamlined process usually takes only a few months, which is key to attracting new companies. The companies can then use their technology for new and challenging types of applications, and scale their business in a new, multimillion-dollar market.
Culture Changes Are Needed Across Government
Adopting new business practices to create and maintain an ecosystem of innovation, however, requires a blend of cultures. DIU recruits a combination of commercial executives and reservists with private sector experience and mixes them with active-duty military and DOD civilian innovators and thinkers.
DIU’s people, methodologies and cultural changes are attracting new technology companies to enter the DOD market and embrace its needs. However, leadership across government must also embrace successful innovation models, give innovators more freedom and shake up traditional methods to keep pulling in essential commercial solutions.
Those efforts make it economically attractive for commercial companies to work with the government and compresses the time to deliver solutions. The impact is evident and growing in DOD, which is moving new capabilities into the field while it builds a new network of technology contributors.
For example, DOD leverages existing predictive maintenance capabilities used by civilian airlines to streamline maintenance, thus improving combat uptime at potentially lower costs. Commercial sector AI is also being used for government enterprise-level strategic reasoning, allowing agencies to better make complex decisions at speed, just as large private businesses do.
DOD can solve high-impact problems while engaging an ecosystem of cutting-edge companies that would likely have never worked on such problems otherwise. Venture capitalists and company leaders are taking notice: The government is a market they can enter successfully.