Network / Cyber, Pentagon
Attendees visit AFWRX Spark Street at the Gaylord National Resort & Convention Center on September 11, 2023 in National Harbor, Maryland. Spark, a division of AFWERX, connects Airmen and Guardian operators to commercial innovators and acquisition processes. Spark Street, a custom set of four booth spaces, will feature approximately 20 of his Spark Cells from around the world. (U.S. Air Force photo by Matthew Clouse)
Defense Department leaders always talk about the need to strengthen relationships with the commercial sector, but do they really know what the commercial sector wants? I wonder? A recent study of 800 companies may provide even more insights. Below, Jeff Decker and Noah Sheinbaum, who helped conduct the poll, reveal their insights.
Thanks to efforts across successive administrations, it is now recognized as a fact that the Department of Defense needs to bring in commercial technology departments to fill critical gaps. But while everyone is talking about it, the success rate of collaboration with the private technology sector remains shockingly low, with one estimate showing that venture-backed companies accounted for only $411 billion in total Pentagon contracts last year. Only 1% was paid to companies.
The Department of Defense needs to invest more money to transition commercial technology into defense capabilities. But even well-funded commercial companies have a hard time generating significant defense revenue and reaching the right decision-makers at the Pentagon to secure contracts.
To understand the causes of this lack of progress, Front Door Defense, in collaboration with Stanford University's Defense Technology Transfer Program, conducted a recent survey of more than 800 companies that do business with the U.S. government. The biggest takeaway from the poll is that businesses don't just need money. Lack of access, clarity, and trust are significant obstacles to meaningful partnerships between businesses and the Department of Defense.
To give commercial companies a fair chance, the Department of Defense must quickly remove these barriers. Based on our findings, here are his three key areas to get the ball rolling.
Improve access: One of the areas highlighted in the survey was access. Access to programmatic customers is paramount because the people who use military products are different from the people who buy them. Over the past decade, the Department of Defense has created a variety of innovation organizations to work with commercial companies. It's now easier than ever for businesses to meet potential users of their products and get valuable feedback. That's good, but not enough. Companies also need access to a program office with a budget to sell their technology.
RELATED: 'There's a lot of capital': Defense innovation sector must be a better 'counterparty' to investors, Beck says
Several companies described how a lack of communication with the program office slowed progress, despite positive feedback from users. “Most of the challenges are non-technical,” one survey respondent explained. Arranging meetings with all key decision makers at the same time and competing with lower quality versions of similar functionality developed by government labs are some of the challenges companies reported. If the Department of Defense is serious about doubling down on effective technology, it needs to improve the flow of information between innovation organizations, users, and program personnel.
Improve clarity: Businesses of all sizes and shapes all want clarity. This study clearly showed that selling to the government is never so obvious, especially when it comes to navigating the maze of government compliance. Virtually every product used by the government requires some type of testing or certification before it can go into production. From operating permits to airworthiness testing, companies struggle to identify requirements and understand when they need to comply. Additionally, compliance-related costs may drive companies out of the defense market.
One survey respondent said particularly severe compliance challenges forced the Army to abandon its defense business even after awarding a large contract. Governments should be more clear about their requirements (and their costs) at the early stages of engaging with businesses. As companies begin to achieve important milestones in their pilots, the Department of Defense can set aside funding to help companies address compliance requirements. This allows businesses to move from pilot to production and accelerates government adoption of new capabilities.
Gives confidence: Businesses also benefit from confidence. Confidence that your intellectual property, the lifeblood of your business, will be protected and that you will be able to earn rewards and grow if you perform well. Government frameworks for intellectual property rights often require excessive control over privately funded technology. For example, one survey respondent explained that during the transition of a Phase I SBIR contract, contract officials “attempted to remove our existing data rights.”
Related: For Replicator to succeed, government must stay out of production operations
The current standard language requires companies to hire expensive lawyers, resulting in lengthy negotiations and delays in awards. Governments can greatly simplify the process by adopting terms that allocate rights to privately developed hardware and software more equitably. This will significantly increase the number and quality of potential government partners.
Not all problems facing the Department of Defense can be solved with commercial technology. But as conflicts intensify and adversaries begin to close the gap on America's technological superiority, close collaboration between government and industry is essential. Providing commercial companies with greater access, clarity, and credibility would dramatically improve their ability to participate in the federal marketplace, thereby significantly strengthening America's defense preparedness. Now is the time. Let's get this over with.
Dr. Jeff Decker He is the Managing Director of Technology Transfer for Defense at Stanford University's Doer School of Sustainability and co-instructor of the graduate-level Hacking for Defense course. Follow his research at his Hacking for Defense blog at Stanford University.
Noah Sheinbaum is the founder of Frontdoor Defense, a platform that simplifies the defense industry for mission-driven builders and operators. He hosts “Crossing the Valley,” a show that shares stories of technology transitions from pilot to production, and writes the Defense Technology Recruitment Newsletter.
