Government policies on tech innovation are good news for startups – TechCrunch


The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the technology sector and global politics.

Much has been written in this space about the Department of Defense’s efforts to unlock Silicon Valley’s innovation — and the steep hills tech companies must climb to ultimately win DOD contracts and cross “Death Valley.” The good news is that the US government has heard Silicon Valley’s pleas to cut red tape and encourage new ways of doing business, and is taking action.

The critical 4Cs

Over the past year, a strong, bipartisan alignment has formed between the executive and legislatures to enact a series of actions aimed at closing gaps and removing barriers to success, best referred to as the “critical 4Cs”. : Culture, contracts, congress budget cycles etc master.

Let’s start with champions. The American people are fortunate to have two of Silicon Valley’s greatest innovators as Deputy Secretary Kathleen Hicks and Secretary of State for Research and Technology (R&D) and (CTO) Heidi Schyu. Along with other champions at the Pentagon, they fully understand the challenge and have taken concrete top-down steps to prepare the DOD system for innovation.

For example, in 2021, Hicks and her former software czar went to great lengths to provide DODs Software modernization strategy, which aims to better organize the Pentagon’s internal processes for the adoption of new software technologies across the company. The strategy also effectively creates the formal policy “demand signal” for the expansion of Silicon Valley technology throughout the Department of Defense.

Hicks has also visibly strengthened the CTO, their management group and the team Innovation Steering Group to map the Pentagon’s innovation efforts, examine its alignment and acquisition practices, and engage honestly with the industry’s smaller technology stakeholders – and incorporate their views into the future. DOD has also established new programs to recruit and nurture tech talent, thereby attracting and retaining a larger pool of defense tech champions. This leads to another key “4C”: building a tech-savvy — and tech-driven — culture within the Department of Defense.

Under Shyu, a veteran senior purchasing and acquisitions manager with degrees in math and engineering, the Pentagon has launched a series of efforts to help it “go faster.” As Director of Research and Engineering, Shyu helps coordinate hundreds of innovation offices and efforts across the Department of Defense. She has taken concrete steps to empower small tech innovators and break down barriers to working with DOD.

Below is a technology vision Published in February, which prioritizes the Pentagon’s focus areas such as Trusted AI, Space, Advanced Computing and Software. Undersecretary Shyu has also asked Congress for approval to support small innovators through a expanded Small Business Innovation and Research (SBIR) grants procedures to mature experimental programs and increases the likelihood that they will become record-breaking programs. This is one of many ongoing efforts aimed at breaking down the systemic “Contracting C” barriers to promising programs.

In the final “C,” the Congressional budget, the Biden administration proposed in its Budget for fiscal year 2023 a 9.5% increase over FY22 funding levels for Department of Defense research, development, technology and engineering. If passed by Congress, it would represent a significant effort to drive the modernization and adoption of technology, building upon the actions enacted by Congress in the FY22 National Defense Authorization Act (NDAA) and Budget for the fiscal year 22

The FY22 legislation specifically authorized and funded the DOD’s plans to reduce barriers to technology adoption and provided additional funding for software and SBIR programs. For example, FY22 NDAA Section 833 directed the DOD to develop a pilot program to implement unique acquisition mechanisms for new technologies. Meanwhile, Section 834 called for expedited procurement and the use of advanced technology – both aimed at addressing speed and reducing the pain of contracting “C” as funding levels should increase in FY23.

Congressional members and staff continue to hear from Silicon Valley startups about the lack of planned funding at the end of SBIR funding cycles, but they believe the challenge for Congress is to balance rapid innovation success with oversight and accountability for such funding to reconcile the taxpayer. They don’t write blank checks. For this reason, Undersecretary Shyu’s call for Congress to expand the SBIR cycle is important.

Unintended Consequences

As Congress and the Pentagon continue to address the “4C” challenges, they must avoid creating new ones. For example, as broader software and new technology spending and agencies passed, Congress created new reporting requirements to explain how the money was being used, which in some cases stalled innovation. As one DOD program manager put it, “Now I am required to provide quarterly quantitative and qualitative progress reports to include comparisons of similar programs. Thanks, but I’ll keep at it [traditional programs] and focus on delivering products instead of reports.” New reporting burdens can eclipse intent and create cultural antibodies in respected but overworked program leaders to do new things. There has to be a balance between “oversight” and “free for all”. Watch this room.

gaps remain

A recently report from consultancy Miter explained why simply throwing in more money and expanding the scope in the SBIR grant process is an incomplete solution to the problem of rapid technology adoption. In short, every defense acquisition is rooted in the formal requirements processthe lengthy Pentagon process articulating what the military needs and why, and related acquisition and budget processes that determine how much, how, and when to buy. If a particular new technology is not included in this requirements and budget process, it would be difficult for the Pentagon to fund and implement it.

The current processes often pit program leaders and contract officers against the innovation teams and end users who now want advanced technology – a dynamic that makes it easier to maintain the status quo. In order to make technology adoption a reality, these formal processes need to be overhauled to keep progress moving in the right direction. It’s one thing to develop or test new technology, it’s another to take it as a tough requirement and bring it into the formal purchase cycle to expand to the world’s largest and most complex military force and its networks.

operating license (ATO) presents a significant hurdle for both startups and end users. If one company’s software or hardware is considered secure on one army network, why isn’t it on another? Oftentimes, companies must go through separate approval processes for each office, branch, or Pentagon agency. This could be streamlined without the adoption of technology itself becoming a security vulnerability, including through more effective use of cloud resources. More work is clearly needed to address the ATO’s challenges if new technologies are to be scaled to the speeds and levels desired by the Pentagon leadership.

The US government clearly recognizes the serious national security and financial imperatives to rapidly adopt Silicon Valley’s most innovative and applicable commercial/dual-use solutions. But as the saying goes, “Rome was not built in a day,” and more effort is needed to fill gaps and mitigate unintended consequences. Startups must continue to actively work with the Pentagon and Congress to share concrete examples of their “pain points” and offer constructive ideas, while adapting to a business, compliance, and contract culture very different from that of the Valley. Working together towards success, the Pentagon and Silicon Valley are truly capable of anything, including defending the free world against the worst existential threats.

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