The American military is entering an era of great power competition, where agility and quick adaptation matters more than ever. For too long, emerging capabilities failed to bridge the valley of death and get integrated into Department of Defense programs of record. In recent years, the DoD has launched groups aiming to change the tech insertion reality, such as the Defense Innovation Unit, Joint Artificial Intelligence Center and Army Futures Command, which accelerate adoption of innovative technologies across the department.

Even so, disruptive innovation in the commercial sector still struggles to enter the federal market, including at the Pentagon. The recent trend toward the defense industrial base consolidating down to a handful of large system integrators tuned toward winning contracts that require custom-developed solutions must cease. Their hold on DoD means innovative software startups and small businesses find the federal government market increasingly complicated, lacking transparency and fraught with misaligned incentives, which further supports the incumbents.

Thankfully, it doesn’t have to be this way. DoD is primed to accelerate digital innovation through procurement and governance transformation enabled by cloud software marketplaces. Last year’s NDAA contained Section 834, which allows for pilots of consumption-based technology and provides an opening to think differently about buying services for the war fighter. Cloud software marketplaces offer the government the potential to simplify the approach for procuring independent software vendors (ISVs) through the growing number of cloud contracts, which can fundamentally change the paradigm on tech insertion.

The Biden administration can leverage new DoD acquisition authorities and make long overdue shifts in the DoD IT and software budgets to accelerate the department’s cloud transformation. Budgetary realignment offers the government an opportunity to open the door to innovation from third party providers, cutting edge software and cloud-based workloads. Such an approach would streamline tech insertion, increase government access to new solutions, mitigate concerns about vendor lock in, and level the playing field for small vendors that struggle to navigate the complicated process of selling into the federal government.

In particular, cloud marketplaces provide DoD an opportunity to successfully execute its software pilot mandate as required by Section 834. For instance, software marketplaces enable utility software consumption models, by providing scalable usage on demand, and at established commercial catalog prices. Marketplaces ensure that once new capabilities are launched and accredited, they are available for use under the program, while also enabling flexible and as-needed teaming arrangement to enable the software channel to participate in the ecosystem to support the mission. A strong 834 pilot can allow government to test and validate new technologies prior to making time-intensive investments in meeting security certifications required for production workloads.

By aligning tech delivery with its existing cloud service provider relationships, DoD can offload tech insertion to commercial industry via a cloud marketplace aligned to existing contracts.

In August 2020, Bessemer Ventures and Alliance for Digital Innovation member released their first “State of Cloud Marketplaces” report. In it they note, “Fundamental shifts in the enterprise software industry come around very rarely, but when they do, most of us tend to underestimate how large of an impact they will have … All we know in the near term is that Cloud Marketplaces will likely exceed all our expectations … most large software buyers are just waking up to the opportunities that these Marketplaces afford them to save precious time and money on the procurement of cloud software that they are already buying.”

DoD is the type of large enterprise that must embrace this opportunity and, thanks to some recent developments, is well positioned to unleash innovative software solutions across every inch of the Pentagon.

As DoD moves the Cloud Computing Program Office from the Pentagon to the Defense Information Systems Agency, now is a perfect time to examine the role of cloud software marketplaces, establish software-as-a-service pilots consistent with Section 834, and remove friction to allow easier procurement and integration of ISVs into the DoD’s agile acquisition framework. This approach will save time and money on procurement, create opportunities for small businesses, and enable DoD to deliver the best solutions for the war fighter faster.

Matthew T. Cornelius is the executive director of the Alliance for Digital Innovation. ADI is a coalition of innovative technology companies focused on improving mission outcomes in the public sector through the adoption and use of modern commercial capabilities.

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