'Full speed' at DIUx, says chief

The 2017 Defense authorization bill put temporary funding restrictions on DIUx, but the innovation organization says it is forging ahead and now has 25 contracts in place worth $48 million.

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The 2017 National Defense Authorization Act put the brakes on the Defense Innovation Unit Experimental by restricting the amount of its budget that it can spend, but according to the head of DIUx, that has not slowed down the office's work.

During a conference call with reporters, DIUx managing partner Raj Shah said that since its May 2016 reboot, DIUx has signed 25 contracts worth $48 million for a range of commercial solutions for warfighter needs.

Of those contracts, 13 worth $12.3 million were awarded since the end of the fourth quarter of 2016.

The projects are in various prototype stages and include counter-unmanned aerial systems technology, autonomous indoor drone systems, non-invasive cooling technology for battlefield medicine and multifactor authentication for network access.

DIUx customers to date include the military services as well as the DOD chief information officer, special operations forces and the Combat Casualty Care Research Program. 

Shah said that of the 25 contracts, 22 were signed with non-traditional defense partners, and more than 350 companies have competed for DIUx contracts.

Right now, he said, DIUx has more demand than capacity, despite having grown to a staff of 45 across offices in Silicon Valley, Boston, Austin and the Pentagon.

Shah said DIUx has yet to feel the squeeze of the NDAA restrictions, which say the organization can spend only 75 percent of its operational budget and 25 percent of its program budget until Congress approves a mission statement and operational report submitted by DIUx.

For now, Shah said the lack of a formal federal budget means DIUx is able to continue operations, but the continuing resolution is extending the time to complete contracts.

DIUx does not rely entirely on its own budget, as its customers are investing $3 for every $1 that DIUx spends on projects. In addition, DIUx is indirectly benefitting from venture capital funding.

"If you look at the portfolio of companies that we are working with and have invested in, the private sector has invested over $1.5 billion of R&D in these companies," Shah said.

One company -- Shield AI, which is developing autonomous drone technology -- received $10.5 million in series-A funding from a venture capital firm after winning a DIUx contract.

"So here we are going to get full capability from this company, and they are only focused on the DOD market, yet we didn't have to pay for all of the R&D as they build out product for us," said Shah.

DIUx uses other transaction authority and the Commercial Solutions Opening vehicle from the 2016 NDAA to rapidly award contracts to prototype technical and cyber/IT solutions to warfighter needs. While Shah does not advocate for DIUx to become the acquisition wing of the DOD, he said that increasingly DOD customers are asking DIUx for training on how to use rapid contracting authorities.

Still, DIUx has faced strong opposition from members of the House, some of whom sought to kill funding for the organization last year. That led to the provisions in the 2017 NDAA essentially requiring DIUx to justify its value to Congress -- and could also be seen as motivation for DIUx to do public outreach to promote its work.

But Shah said he's seen no indication from the new administration or secretary of Defense that there is any change in store for DIUx.

"The guidance we've been given is to continue at the full speed that we've had," said Shah.

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