No pause in DOD innovation programs

DOD innovation programs are pushing ahead and industry show no signs of hesitation despite uncertainty around key leadership positions in the Pentagon.

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If there is any anxiety in the tech sector about whether Department of Defense innovation programs will continue under the Trump administration, there's no sign of it at conferences taking place in San Francisco.

Despite the fact that a number of key leadership positions at the Pentagon have yet to be filled, and some of the innovation programs were barely operational when Americans went to the polls, attendees at the RSA and AFCEA conferences told FCW that there's no hesitation to engage with DOD programs like Defense Innovation Unit Experimental or the Army's Rapid Capabilities Office.

"[We're] still open for business, so we haven't really seen any of that pushback or hesitation at all," said Lauren Schmidt, pathways director at DIUx in Silicon Valley.

"I think people recognize that we're here, we're here with money, we're here with our DOD customers and real problems and they can bring value to them, to their companies," she added.

Schmidt said that DOD customers see that DIUx is able to move money and complete contracts, so the demand has continued, and as a result, industry is still eager to work with them.

Retired Lieutenant General Rhett Hernandez, the former head of Army Cyber Command and a trustee of the Army Venture Capital Initiative, said that despite the fact there is no new secretary of the Army, the Rapid Capabilities Office is still pushing ahead.

"I have no reason to believe that there's any apprehension that it might go away or that people are on hold, I don't see that at all, I think they are moving pretty quickly still," he said.

Alberto Yepez is co-founder and managing director of Trident Capital Cybersecurity, a venture capital firm that just raised $300 million to invest exclusively in series A and B funding for cyber startups. He said that speculation about who will be appointed to Pentagon positions or how the split of DOD's office of Acquisition, Technology and Logistics will take place is all Washington stuff that the Silicon Valley community doesn't understand.

"We know that what we heard is 'you're in my cabinet, you're going to be responsible for cyber, you're going to be given the resources, you're going to spend the money' -- for us, music in our ears," he said.

Other industry executives that FCW spoke with at the conferences expressed similar sentiments – they said people will continue to go where the money is and if anything they expect to see an increased Pentagon budget going forward, and therefore more opportunities for industry.

Yepez said there has been a surge in enthusiasm to work with the government. But, he did say that while he is advising cyber startups to look to DOD and the Department of Homeland Security, they do need to focus on where the customers are, and 85 percent of the networks in the U.S. are in the commercial sector, he said.

"You need to drive focus," he added. "If there's certain technology that will be best incubated and worked in the government and then bring it to commercial, we'll do that all day long, but often times it's the other way around."

And so, he expects most new companies will continue to see the commercial sector as their prime target.

Trident has already invested in five companies, and Yepez said that number will grow to two dozen in the next few years. He said that it's essential to invest in new startups because they are more likely to develop innovative solutions.

Hernandez agreed and said that DOD needs to be reaching out to find new partners. "I think more collaboration, more awareness is necessary cause in dual-use capabilities you're often looking for someone who's already doing it that doesn't realize that he could very quickly adapt to what it is you need by simply adjusting something."

Both Yepez and Hernandez said the challenge is making it easier for new and small companies to deal with the bureaucracy of government acquisition.

"It's got to be worth their interest and their time, 'cause time is money to them," said Hernandez. "If you're saying something may come, every day that they're waiting is lost potential opportunities on the commercial side."

"I think [small companies that want to work with DOD] exist and we just have to continue to have that discussion, collaboration to find the ones that really we need to leverage sooner rather than later," he added.

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