“BREAKING DEFENSE” By Jeff Decker And Noah Sheinbaum
“The Pentagon needs to invest more of its budget to transition commercial technologies into defense capabilities. A lack of access, clarity, and confidence are significant impediments to meaningful partnership between companies and the Defense Department.”
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“Thanks to efforts across successive administrations, it is now taken as fact that the Defense Department needs to bring in the commercial tech sector to help fill critical gaps. And yet, while everyone talks the talk, the success rate of working with the private tech sector remains staggeringly low — with just 1 percent of the $411 billion of Defense Department contracts going to venture-backed companies last year, according to one estimate.
The Pentagon needs to invest more of its budget to transition commercial technologies into defense capabilities. But even well-financed commercial companies struggle to drive substantial defense revenue and reach the right decision makers in the Defense Department to successfully get a contract.
In an effort to understand what is causing this inability to move forward, Front Door Defense, in partnership with the Tech Transfer for Defense program at Stanford University, conducted a recent survey of more than 800 companies doing business with the US government. The biggest takeaway from the poll: companies need more than just funding. A lack of access, clarity, and confidence are significant impediments to meaningful partnership between companies and the Defense Department.
Giving commercial companies a fair chance demands that the Defense Department swiftly remove these barriers. Based on our findings, here are three key areas that would get the ball rolling.
Improve access:
One area highlighted in the survey is access. Access to programmatic customers is paramount because the personnel who use military products are distinct from those who buy them. In the past decade, the Defense Department created a variety of innovation organizations to liaise with commercial companies. It’s now easier than ever before for companies to meet potential users for their products, and receive useful feedback. That’s good, but not enough: companies also need access to program offices with budgets to sell their tech.
Multiple companies explained how the lack of communication with program offices stalled their progress, despite positive user feedback. “The challenges are largely non-technical,” one survey respondent explained. Arranging meetings with all the key decision makers at the same time and competing with lower-quality versions of similar capabilities that have been developed by government labs are some of the challenges companies reported. If the Pentagon is serious about doubling down on tech that works, it needs to improve how information flows between innovation organizations, users, and program officers.
Improve clarity:
Companies, no matter what size or shape they take, all crave clarity. The survey starkly showed that selling to the government is anything but clear, especially when it comes to navigating the government’s compliance maze. Virtually every product the government uses requires some testing or certification before it can be fielded. From authorization to operate to airworthiness testing, companies struggle to identify requirements and understand when they need to comply. Moreover, the costs associated with compliance can deter companies from the defense market.
One survey respondent shared that a particularly thorny compliance challenge forced them to abandon their defense business even after the Army awarded a sizable contract. The government should be much clearer about its requirements (and their costs) at the earliest stages of company engagement. As companies begin to achieve key milestones on pilot engagements, the Defense Department can set aside money to help companies tackle compliance requirements. This will help companies graduate from pilot to production, while accelerating government adoption of new capabilities.
Provide confidence:
Companies also benefit from confidence. Confidence that their intellectual property – the lifeblood of their business – will be protected, and that if they perform well, they will be rewarded and able to grow. Government frameworks for intellectual property rights often demand too much control over privately-funded technologies. For example, one survey respondent explained that a contracting officer “attempted to remove our existing data rights” when transitioning a Phase I SBIR award.
The current boilerplate language sends companies running to expensive lawyers, resulting in drawn-out negotiations that delay awards. The government can vastly simplify the process by adopting terms that more fairly assign rights to privately-developed hardware and software. This would dramatically accelerate the number and quality of potential government partners.
Not every problem the Defense Department faces can be solved by commercial technology. But as conflict proliferates and adversaries are closing the gap with America’s technological edge, closer ties between government and industry are essential. Delivering greater access, clarity, and confidence to commercial companies would dramatically improve companies’ ability to participate in the federal market, and thereby significantly strengthen America’s defense readiness. The time is now – let’s get this done.”
Jeff Decker, Ph.D. is managing director of Tech Transfer for Defense at Stanford University’s Doerr School of Sustainability and is a co-instructor of the graduate-level Hacking for Defense course. Follow his work at Stanford’s Hacking for Defense blog.
Noah Sheinbaum is the founder of Frontdoor Defense, a platform to simplify the defense industry for mission-driven builders and operators. He hosts Crossing the Valley, a show that shares stories of technology transition from pilot to production, and writes the Defense Tech Jobs newsletter.
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