What the Defense Innovation Unit Wants Industry to Know About CSOs – Part 2

Stephanie MeloniEarlier this week we published Part 1 of “What the DIU Wants Industry to Know About CSOs”. Here, in Part 2, DIU answers additional questions, which delve deeper into the use of CSOs and possible future expansion as the need for adopting advanced commercial technologies continues.

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

SM: Do you think the spread of the CSO process is indicative that the Department is embracing a shift toward executing more OT agreements?
DIU: The past few NDAAs encouraged OT and CSO utilization. As more DoD partners experienced or witnessed the successes of DIU prototype projects as well as the capabilities of the non-traditional ecosystem, we have seen a groundswell in interest to adapt CSO procedures for different mission set use-cases. Additionally, OSD leadership issued a highly regarded OT guide and OT policy in November 2018 to help acquisition professionals leverage and demystify authority.

SM: Why use CSOs as opposed to traditional acquisition methods?
DIU: The ultimate goal of a CSO is to enable project teams the flexibility and freedom to execute purpose-driven contracts with best-of-breed companies, including traditional (subject to cost-sharing requirements) and non-traditional vendors. CSOs provide an opportunity for acquisition professionals to develop a deliberate based process focused on project outcomes instead of a default-driven process focused on compliance. CSOs and OTs in general are great acquisition instruments for experimenting and prototyping new technology, methodologies, etc. whereas the traditional acquisition authorities are geared towards procuring supplies and services. Truly, the authorities are highly complementary and should be used in conjunction with one another. Moreover, the potential to scale successful prototypes into production contracts provides a clear value proposition that incentivizes companies to seek out opportunities to work with the Department.

SM: How does DIU’s use of CSOs implement DoD priorities?
DIU: DIU recognizes its role and responsibility in achieving priorities articulated in the 2018 National Defense Strategy, including building a more lethal force, developing a national security innovation base, and reforming the Department for greater performance and affordability. CSOs provide a means of addressing each of these priorities. Through prototype and follow-on contracts awarded through the CSO procedure, DIU is able to develop and deliver impactful technologies to men and women in uniform faster, better, and cheaper than traditional acquisition methods. The fastest transitions from solicitation to prototype awards are less than 35 days with the current average hovering around 115 days. Not only can the CSO be faster but, since its inception, more than 40 companies DIU has put on contract have never before worked with the DoD. These technologies enhance the readiness and lethality of our men and women in uniform and help reinforce our competitive military edge.

SM: Can you share some examples of success DIU has had with CSOs?
DIU: In August 2017, DIU awarded a prototype project to Pivotal Inc. in partnership with the Air Operations Center (AOC) program office. Up to that point, the program office had gone down the traditional waterfall approach for software delivery. Unfortunately, after $345M and seven years of development, the Air Force had little to show in the way of new capabilities and the program was terminated. Through the prototype project, the Air Force embraced the industry standard of ‘DevOps’ whereby the software developers would continuously deliver and receive continuous feedback on the software applications delivered to their end-users. What was unique about this prototype project, is that it didn’t focus on any single piece of software or application, rather it was the cultural and organizational shift of a new (for DoD) methodology to deliver software to the end user. In May of 2018 the Air Force awarded a Production OT to expound upon the prototypes successes and now have 20+ applications deployed across several AOC’s and the Air Force is expanding this methodology to include other major programs like the F-35. The organization leading all of this is now known as Kessel Run.

SM: Do you think CSO usage will expand in the future?
DIU: Yes. The 2018 National Defense Strategy (NDS) articulates the urgency of adopting advanced commercial technologies today and describes a paradigm shift to grow the NSIB. Our adversaries also recognize the enormous military potential of commercial technology. China is investing heavily in dual-use technology and benefits from civil-military fusion, which dictates by law that every commercial innovation is transferred to the military. Maintaining overmatch against near-peer competitors necessitates the rapid adoption of commercial technology. CSOs continue to be an effective means of addressing this capability gap, and so will likely become increasingly more prevalent across the federal government.

SM: Can CSOs be used to adopt any kind of commercially available technology if it furthers innovation at DoD?
DIU: Yes, provided it addresses a DoD customer demand signal and the project fits the statutory definition of a prototype project. DIU is structured to address critical gaps in DoD’s technology capabilities, with portfolios in artificial intelligence, autonomy, cyber, human systems, and space. These portfolios are areas where commercial research & development spending outpaces federal spending. In FY2020, DIU will expand to include power & energy and advanced manufacturing materials. Also, in FY2020, DIU will implement the National Security Innovation Capital (NSIC) as authorized in the FY2019 National Defense Authorization Act. NSIC will catalyze investment in dual-use hardware capabilities often deemed too risky for traditional venture funding, such as small unmanned aerial systems, quantum sensors, and advanced battery technologies. The CSO process accelerates commercial innovation in these areas necessary for ensuring our technological overmatch.

SM: How can commercial industry help advance use of CSOs with their government customers?
DIU: For decades, the slowness and cumbersome bureaucracy surrounding traditional acquisition methods have deterred potential partners in the commercial sector from engaging the government as a customer. This has led to something of a cultural rift between the government and non-traditional vendors in the commercial sector. The expansion of OTs in general will help break down some of these barriers. The commercial industry plays a critical role in safeguarding our military’s technological superiority against our adversaries. Willingness of the commercial industry to take the government on as a customer is fundamental to the success of CSOs. DoD has always relied on its commercial enterprise to maintain its technological advantage over peer rivals and the challenges of today make this even more apparent.

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