DOD seeds market for new IT

OSD Defense Challenge Program information

The Defense Department is about to begin a detailed review of the 240 responses it has received since March 17 under a new program designed to bring innovative technologies from the commercial sector into the department.

The program, called the Office of the Secretary of Defense (OSD) Defense Challenge Program, is intended to bring innovative technologies and product improvements into DOD from organizations in either the government or the commercial sector.

Later this year, the program will award $12 million to Defense agencies to fund the development and testing of the most promising proposals. If program managers ultimately want to buy a new product, they will negotiate their own contracts with the vendors.

The program was authorized in DOD's fiscal year 2003 budget to run through 2007, said Adele Ratcliff, one of the program's overseers in DOD's Comparative Testing Office. The program is targeting ideas that will improve existing DOD operations, not searching for entirely new implementations or projects.

The solicitation, published last month, has generated a great deal of interest, said Paul Frichtl, a senior systems analyst with Centel Corp. and a support contractor to the Defense Challenge Program.

The program has put many of the proposals through a preliminary evaluation to identify those that need additional information and to "weed out kooks," Frichtl said. Now the office is convening panels of experts to subject the submissions to more detailed merit evaluations.

"Once that merit evaluation is done, we will take those proposals that passed the review and work with the program managers and submitters out there and try to develop good solid proposals," he said. "Those will be competed for funding."

Frichtl declined to identify the companies that have submitted proposals or discuss the specific submissions.

"It's pretty much all over the map," he said. "We got about 60 to 80 proposals each from the areas of land, sea and air, and then a sprinkling of chemical and biological."

Such programs are necessary to entice many companies, especially smaller firms, to get involved with DOD, procurement analysts say. Some companies are afraid that if they collaborate with DOD during the research and development phase, they will have to give up too many intellectual property rights.

"Government needs some assurance that products will be supportable in the field," said Karen Sorber, principal for studies and assessments at consulting firm Acquisition Solutions Inc. "That's the biggest concern for government."

DOD will sometimes ask a company to grant third-party licensing so another company can support the product, she said.

Commercial firms have their own concerns.

"A large percentage of the [commercial] technology base is reluctant to get into research and development with the government," said Stan Soloway, president of the Professional Services Council. "The most important asset a company has is its intellectual property. We still haven't solved the legitimate concerns of that technology base."

Soloway served as deputy undersecretary of defense for acquisition reform from 1998 to 2000 and as director of the Defense Reform Initiative from 1999 to 2000.

Some studies have found that 75 percent of information technology firms won't share research and development with DOD, Soloway said. There are other limiting factors too, such as profit caps, which force companies to take smaller returns on their investment than they would if they worked only in the commercial sector.

Sorber, who spent 15 years with a nonprofit think tank called the Logistics Management Institute and supported the OSD in that role prior to joining Acquisition Solutions, said solicitations for the program have the potential to allay the fears of businesses, depending on "the attitude and the leadership on the government side and how open-minded they are about considering alternative procurement strategies," she said.

The program solicitation doesn't address intellectual property rights, Ratcliff said. "That is an issue that would have to be worked out between the program and the vendor," she said.

The broad agency announcement is "part of a recognition by DOD that they're not in touch with all of the technology base," Soloway said. Such programs are "good ideas, but we still haven't gotten to the core problems of companies trying to get into the government market."

The new announcement is similar to one the government issued immediately after Sept. 11, 2001, although that one was not specific to DOD. Ultimately, it did not turn into a windfall for the companies and individuals who submitted ideas, Soloway said. "Out of the thousands [of proposals] they got, only a few got a little bit of money," he said.

In the past, Sorber said, DOD would own all rights to and data of systems it developed. Now that most innovation comes from the private sector, the department has to find ways to make it available to its agencies.

So far, it hasn't done a good job, she said. "It's almost impossible to knock on DOD's door," she said. "Over the last several years, I have heard of many technologies where the door gets slammed in the company's face for a variety of reasons, and they go away. Small companies don't have the resources to continue to market, prepare proposals and fight the paper wars to get inside. They walk."

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A challenging proposition

Organizations proposing technologies, products or processes to improve acquisition programs at the Defense Department are requested to provide a five-page summary proposal that includes these elements:

* Description of the technology, product or process to be evaluated.

* Summary of its capabilities and the potential benefit(s) to the program gained by inserting the technology/ product/process.

* DOD acquisition category designation of the program involved.

* Cost estimate, including methodology, for the test article acquisition or proposed technology or process improvement.

* Current maturity state of proposed project, including estimated test phases for evaluation approach.

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