What the Defense Innovation Unit Wants Industry to Know About CSOs – Part 1

Stephanie MeloniBy Stephanie Meloni, Market Intelligence Manager

We received a tremendous response to my blog posting on Commercial Solutions Openings (CSOs) as another innovative option the government is using to quickly acquire commercial solutions—in fact, it was my most viewed blog ever!

In that blog, I mentioned that CSOs, a type of OTA designation, were initially piloted by the Defense Innovation Unit beginning in 2016. Defense Innovation Unit read my blog and offered to answer more in-depth questions I had about CSOs and OTAs and how they can help solve military challenges. I share their answers with you here, in a two-part series.

A special thank you to DIU for the outreach and answering my questions!

SM: What is DIU’s mission?
DIU: The Defense Innovation Unit (DIU) delivers advanced commercial technology into the hands of men and women in uniform to enhance national security. DIU partners with the services, combatant commands, and component organizations to seek out and rapidly prototype commercial solutions to military challenges while lowering barriers to entry for non-traditional companies interested in working with the Department of Defense (DoD).  There has never been a more important time for the military to leverage commercial technology. Former Secretary of Defense Ash Carter established DIU in August 2015 to capitalize on U.S. businesses’ growing investment in research and development (R&D) and venture capital funding of high-tech startups. Rapid technology developments led by the private sector and the global diffusion of emerging dual-use capabilities are changing the character of warfare. It is DIU’s mission to ensure the Department has a pathway for integrating these commercial capabilities at the speed of relevance to maintain a decisive military advantage over our adversaries.

SM: Can you describe DIU’s operations, like the size of team and locations?
DIU: DIU has offices in Silicon Valley, Boston, Austin, and the Pentagon. DIU’s staff of 45 includes active duty military from every Service, Reservists, the National Guard, civilians, and contractors with extensive private sector experience and deep ties into venture capital and startup communities. DIU’s staff and presence in key tech innovation hubs around the country provide direct access to core U.S. technology ecosystems, facilitating richer ties with leading edge companies and venture capital firms.

SM: How does DIU leverage Other Transaction (OT) authority?
DIU: In June 2016, DIU, in partnership with Army Contracting Command – New Jersey (ACC-NJ), launched the Commercial Solutions Opening (CSO), a three-phase, competitive merit-based business model leveraging prototype OT (10 U.S.C. 2371b) authority. The process is focused on balancing speed, flexibility, and collaboration to award prototype projects to leading-edge, dual-use technology companies that might otherwise not do business with the DoD.

While OT authority originated with NASA in 1958, several federal agencies including DoD since 1989 have had OT authority. For DIU, OTs are a great acquisition authority for its mission because it provides maximum flexibility to develop the right framework to address DoD challenges with the best of breed commercial innovation ecosystem. Additionally, OT authority authorizes the ability to enter into non-competitive Production OTs to scale the successfully completed prototype project capabilities. By transitioning from prototype to production DIU is able to accelerate cutting edge technology adoption across the services.

SM: How are CSOs different from other OTAs?
DIU: CSO is a multi-faceted term. For DIU, it is a business model/process leveraging Other Transaction authority to award merit-based competitive prototype agreements. This differs from other types of OT arrangements, specifically the consortium model which is a popular OT agreement structure. Additionally, since the 2017 NDAA, CSO can also be awarded as a FAR contracting deviation. That same NDAA provided CSO authority to GSA who has established their own procedures under their unique acquisition authorities. At its heart, the CSO model/authority is leveraged to encourage contractual arrangements geared towards prototype/innovative solutions.

SM: Who can use CSOs?
DIU: Any organization in the DoD can use CSOs to enhance capabilities through commercial technology. Beyond DIU, CSOs are being leveraged by the Army, Air Force, Navy, General Services Administration (GSA), Special Operations Command, and Department of Homeland Security.
SM: DIU originated the Commercial Solutions Openings process in June 2016. Why did you feel the need to create a new competitive procedure to access commercially available technology?

DIU: DIU recognized that in order to meet the challenges of a new technology race, it would need to create a process that maximized collaboration, speed, and flexibility if the DoD was going to partner with the innovation ecosystem to address DoD priority problems. It is a three-phase process that mimics industry standards to ultimately lower the barrier to competition to efficiently evaluate the right company for the right problem area.

SM: Has the CSO process changed since its inception?
DIU: Over the past year, DIU has made a number of updates that streamline the CSO procedure and incorporate customer feedback and direction from Pentagon leadership – specifically incorporating policies on the definition of ‘successful completion’ and notification of ‘follow-on production.’

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