WASHINGTON — This week, Mike Brown wrapped up his four-year term as director of the Defense Innovation Unit — an organization tasked with helping the U.S. Defense Department more quickly field commercial technology and shepherding non-traditional companies through the Pentagon’s often arduous acquisition system.
During Brown’s tenure, DIU developed an in-house acquisition process, which has allowed it to get companies on contract faster. It’s also increased the number of projects it manages from a few dozen in 2018 to 100 projects today. DIU now boasts a nearly 50% transition rate, which means about half of its efforts end up in the field.
However, Brown is departing amid questions about the future of DIU. Indeed, he has said the organization is facing a shortage of funding and insufficient support from senior Defense Department leaders as well as fundamental problems with the budgeting process. Although he is leaving at the initial planned end of his term, he declined a one-year extension.
The Pentagon has not announced a replacement for Brown, but a spokesman confirmed DIU Deputy Director Mike Madsen will serve as acting director until one is named.
In his last days on the job, Brown spoke with C4ISRNET about the future of DIU, the importance of commercial capability integration and the need for resources and support from the department. This interview has been edited for clarity and length.
There’s been some speculation about the future of DIU given some of the criticisms you and others have raised about prioritization within the department, the challenges of expanding commercial technology adoption and budget constraints. What concerns do you have about DIU’s future?
Relative to a couple of years ago, there’s tremendous momentum for DIU. If you think about the number of companies that want to work with us — last year, on average, 43 companies responded to every problem that we put out there. So, we’re becoming a bit more well known. And it’s becoming more well known that we have a high transition rate. That only encourages companies to want to work with us, because it looks like this is a higher probability pathway into the Department of Defense. From the standpoint of companies that are interested in this market, we’re really leveraging this resurgence there’s been in investment in defense tech.
If I look at the demand side for what we do, we’ve never seen stronger demand from within the Defense Department, evidenced by the 100 projects that we have underway. There’s more of a need for what we’re doing. And that creates the crunch that I’ve been vocal about. To accommodate that kind of growth, we need the resources to be able to support the demand that we see. We’re still working with the same number of active-duty military that we had when [former Defense Secretary] Ash Carter set us up seven years ago. Yet at that time, we were an experiment, nobody knew if there was going to be anything here. And I think we’ve shown a proven way to bring commercial technology in and have that fielded to warfighters.
That’s where we need some help to expand some of the resources that really have not been expanding recently. In fiscal 2021, that was kind of a high-water mark for us for enacted appropriations. We’re a little better than FY21, but FY22 was a significant decrease for us.
So far, the president’s budget request for FY23 is the same. So, we’re just trying to make sure we’ve got the resources to accommodate that demand that we’re seeing from all areas of DoD. We’re working with every service, including Space Force, and Marines, many of the agencies, like [National Reconnaissance Office, National Geospatial Intelligence Agency and Defense Intelligence Agency.]
When you talk about needing more support from the department, are you mostly talking about funding?
It’s really three things. A lot of work we do, because it’s contracting, is inherently governmental. So, we need government billets. And that’s been a struggle. It’s a struggle for everyone in the department who’s trying to expand.
Budget, which we talked about, is such an important area that we need to be leaning into. Eleven out of the 14 technologies that my boss [Under Secretary of Defense for Research and Engineering] Heidi Shyu has highlighted as important for national security are being led by commercial companies — things like autonomy, AI, cyber tools. With 80% being commercial, we need to lean into activities like DIU, not see budget cuts.
The third is advocacy. It’s the support of senior leaders as they think about, what are the ways to get the technology we need to the warfighter.
Related to the resource discussion is the question of how much funding the military services should dedicate for commercial capabilities and whether they should be mandated to spend a certain percentage of their funding each year on commercial technology and services. Do you think that’s the direction the department should be moving?
What I think we really need rather than mandates and targets, or certainly something to go along with that approach, would be incentives. Today, if I’m running a major program, I have no incentive to take a risk and use commercial technology, even if I’m going to save a lot of money for the program. Why? If I take that risk I screw up, then I’m probably going to see a lot of negative consequences. If I am using commercial technology, and saving taxpayer dollars and actually having my budget go down because I have implemented this, that’s never seen as a good thing by DoD leadership. Why should we have the program go down from what we’re asking for? The incentives aren’t really aligned.
What we need to think about is, how could the folks who are taking the risk and hopefully delivering more value to the taxpayer, how do they benefit? Imagine if they were able to keep the savings or if they were able to keep a portion of the savings. Today, if you save the department money, it just goes back to the Treasury. It’s similar to the crazy incentive that I see, coming from the business world, of use it or lose it by the end of the fiscal year. Well, that is not a way to create value. That’s an encouragement for a little bit of waste.
For an organization like DIU that’s trying to help the Defense Department field commercial technology and help non-traditional companies work with DoD, does success in the long-term mean DIU is no longer needed?
It’s pretty aspirational. Were that to happen, it would mean that there’s widespread adoption of commercial technology, and we’re able to do it pretty well, meaning we can adopt that kind of technology fast. It takes on average nine to 26 years for the department to bring in new capability. We can bring in capability, because it’s commercial, in one to two years. So, I don’t know why everyone in the department isn’t all over this.
If you talk to the combatant commanders, they are because they see the need to get technology fielded quickly, as opposed to, “Great, we’re working on something that will be here, but I’ll be long gone by the time it comes.” So, there’s clearly a need for the long-term research that a very storied organization like DARPA would do. We need to balance that with the need to bring in capability, more of it, sooner as well. You need to have both activities going.
We’re starting to track for the companies that we’ve brought in — 100 new vendors that we’ve brought into DoD in an era where the defense industrial base is shrinking — what are the follow-on contracts, revenue contracts, for those vendors. Some are being pretty successful. Anduril just got a follow-on contract for $1 billion dollars from U.S. Special Operations Command for their counter [unmanned aircraft system] technology. Another vendor we brought in, C3.ai, to help with predictive maintenance on aircraft, just got a follow-on contract for half a billion dollars from the Missile Defense Agency because that company can also do synthetic trajectories of hypersonic missiles.
We think in total, the amount of follow-on contracts for vendors DIU has brought in is on the order of [$4 billion.] But in that same time, the Department of Defense has bought $1 trillion worth of goods. I don’t think that we’re ever going to approach 100% because you can’t buy everything the Defense Department needs commercially. But think about how far we have to go. If we get there, that’s what’s going to create the incentive for entrepreneurs to think more about national security needs, for investors to think about backing those companies and to find new companies that will be in that space. That’s the ultimate measure of success. It’s really, how widespread is the adoption, how successful are we making those commercial vendors, and are we encouraging new vendors.