Since 2015, millions of dollars have been invested in the Pentagon’s Defense Innovation Unit, the agency watched as some of its projects fell flat, and only about 23% the organization’s completed projects ended up in the hands of troops — but the thing is: DIU is completely fine with that.
… 77% of completed prototypes DIU invested in failed to make it to contract or have yet to make it to contract. That leaves millions of taxpayer dollars on the table, which can sometimes be a hard sell for lawmakers. Congress remains at least marginally skeptical of the program built to convert private cutting edge technology for military use…
“If we were transitioning 100% of our projects, then we wouldn’t be leaning far forward enough. We wouldn’t be taking enough risk,” Mike Madsen, DIU director of strategic engagement, told Federal News Network.
That was an excellent report from the Federal News Network, “Failure is an option for DoD’s experimental agency, but how much?” Some other figures from DIU’s report:
- Average time to contract is 187 days instead of 60 day goal.
- Of 43 completed projects, 10 transitioned and 13 were ineligible for transition. 62 projects are still in execution.
- 92 of 105 prototype awards went to non-traditional contractors, 45 of which were first-time sellers to gov’t.
- DIU funding was $44 million in 2019. Over 2.5 years, DOD components matched $406 million on DIU efforts.
These figures are difficult to interpret, however, without knowing the qualities of projects that were initiated and transitioned. This valuation process is much more difficult than using aggregate statistics. Perhaps the 10 transitioned projects drove huge capability increases for far lower cost than a traditional process. That could more than make up for failed transitions. Or perhaps they were mediocre projects at best.
Transitioning the iPhone, for example, drove far more value than transitioning Google glass. We know that because of revenues/profitability. But these are indicators not available to government. Evaluation requires a qualitative look into the technologies. That is more difficult, especially for a person so far removed from operations and technical knowledge.
Congress seems skeptical and has cut funding out of DIU’s FY 2020 request. Perhaps the skepticism is in part due to the fact that DIU’s budget is fundamentally organizationally based rather than detailing every project line item so that Congress can scrutinize it and give a stamp of approval. Even then, budgeting isn’t so simple for DIU.
DIU recently moved from an account in Washington Headquarters Services RDT&E request to one under USD(R&E) in OSD’s RDT&E request. For FY 2020 under budget activity 4 (Advanced Component Development & Prototypes ), DIU requested $17 million in prototyping at $75 million in National Security Innovation Capital programs. Under budget activity 4 (Advanced Technology Development), DIU requested $29.398 million and an additional $25 million in National Security Innovation Network funds.
DIU states in the broadest terms what kinds of projects they will be working on, rather than allocating the funds down to specific projects. This is incredibly important in terms of prototyping and trying to transition new technologies. It allows them to move funding to where it’s needed most. They aren’t beholden to estimates of what projects will need what funding 2-3 years in advance through the program objectives memorandum (POM) process.
The issue is that while DIU doesn’t have to justify budgets to such exacting detail, the DOD components which will eventually take over the prototypes and scale them for production/operations still have to abide by the POM process. And that continues to present the challenge of the “valley of death“.
Of the 33 completed projects that failed to transition at DIU, a full 20 of them are available for transition rather than ineligible. This means that the success rate might have been much higher if the DOD components wanted the technologies but couldn’t find funding to support them. That might be due to tradeoffs — existing programs are higher priority. But it might also be due to the fact that the DOD component had a hard time justifying the project through the POM process, or that the inertia or cost growth of existing programs dominated over agile redirection of funding to higher-valued uses.
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