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DIUx or Defense Innovation Unit Experimental is a United States Department of Defense (DoD) organization focused on accelerating technological innovation to the DoD and U.S. military service members. A first-of-its-kind unit for DoD, DIUx is staffed by civilian, active duty, reserve, and contractor personnel. DIUx has offices in Silicon Valley and Boston, and a presence in Austin.
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The DIUx initiative started in August 2015 with an office opening at Moffett Federal Airfield in Mountain View, California. In May 2016 Ash Carter announced he would be opening another office in the Boston Area.
DIUx uses a partnership-style, flat leadership structure that includes technologists, investors and business executives. Raj Shah, Air Force reservist and co-founder of cybersecurity company Morta Security, is currently the managing partner of DIUx 2.0. Other partners include Isaac Taylor, former head of operations at Google X, Vishaal Hariprasad, Air Force reservist and co-founder of Morta Security, and Chris Kirchhoff, former Director for Strategic Planning at the National Security Council.
“I’ve personally experienced how difficult it can be for a startup, who wants to make a contribution to our national security, but simply can’t afford to do business on the timelines that it takes to work with the Pentagon,” Shah said.
In May 2016 Secretary Carter altered the command structure of DIUx, bringing in this new leadership team and designating "DIUx 2.0" as an office that reports to him personally, bypassing all senior acquisition leadership within the Pentagon.
A New Way to Contract
Leveraging the Other Transaction Authorities recently granted by Congress, DIUx 1.0 under previous director George Duchak's leadership established the new Commercial Solutions Opening (CSO), a contracting mechanism that enables DIUx to do business with companies that traditionally don’t do business with DoD. The CSO mirrors the commercial contracting practices these companies normally use, enabling DIUx to work with companies to design projects together, and negotiate payment milestones, terms and conditions, and intellectual property rights within 60 days.
As of September, 2016, DIUx had signed five agreements for $3.5M, with another 22 projects in the pipeline, totaling an estimated $65M in investment. Because DIUx operates on a co-investment model in which it pools funds with the end-customers it works with, DIUx’s $17 million of spend will be augmented by $48 million of additional funding promised by others within DoD.
In spite of the fact that DIUx 1.0 was rolled out to great fanfare by Secretary Carter in Aug 2015, senior acquisition leadership within the Pentagon to which DIUx 1.0 reported was not supportive of the new office. Staffing, funding and overall office setup were slow to be approved. For its first six months the DIUx 1.0 office functioned with no support staff, internet access, or office furniture. Nonetheless, many positive initiatives were put in place, including the use of the new CSO contracting authority. The contracts for most of the current $65M for activities and projects in which DIUx has invested to date were initiated during the earliest days of DIUx 1.0, but were not awarded until June of the following year when the new DIUx 2.0 staff were in place. It is anticipated that use of the new CSO contracting authority will shorten this cycle.
Matching Technology to Warfighter Needs
DIUx solicits solutions from industry to warfighter challenges it is trying to solve by releasing Technology Areas of Interest on their website. Companies submit short solution briefs, DIUx performs a down-selection process, and then the chosen companies are invited to pitch. Once a company's solution is selected, DIUx helps the company through the proposal process.
Criticism
Many in the defense community have argued these functions are already being well served by the Defense Advanced Research Projects Agency, which has an expansive mission that already covers the niche area envisioned for DIUx. As a result of this controversy, the House Armed Services Committee has proposed to zero out the $30 million requested by DOD for DIUx in the president's budget plan for fiscal year 2017.
In addition, Pentagon officials have expressed concern that the current DIUx 2.0 leadership team has limited experience with and knowledge of Pentagon acquisition rules and procedures. This, combined with the current reporting structure that isolates DIUx 2.0 from the entire Pentagon acquisition process, limits its effectiveness in positively influencing DoD acquisition policy.