WASHINGTON — Secretary of Defense Ash Carter is expected Wednesday to announce an expansion of his Silicon Valley outpost to other regions around the country, as well as changes to leadership at the Defense Innovation Unit-Experimental (DIUX) office.
The changes, which are expected to be announced Wednesday during a speech by the secretary to California, come after months of what sources describe as internal bureaucratic challenges to DIUX.
A senior defense official, speaking on background to not get ahead of the speech, said the changes will involve "expansion plans and structural adjustments to make it more nimble and take it to the next level," as well as "leadership changes" for the still-nascent DIUX.
The expansion plans will involve opening offices in other parts of the country. Although the official would not confirm locations, Carter has visited, and praised, the tech scenes in both Boston, Massachusetts, and Austin, Texas, in recent months. These expansion offices will operate under the aegis of the DIUX brand.
Sources expect that DIUX director George Duchak will no longer be in charge of the outpost after Carter's shakeup of the unit, although it is unclear who would replace him or if he would have a different role in an expanded DIUX network.
DIUX was launched with much fanfare early in Carter's tenure, with its doors officially opening in August. But while the outpost has been a focal point for the secretary's innovation push, skeptics have pointed to a lack of visible output from the office.
Despite a March statement from Stephen Welby, assistant secretary of defense for research, that the first contracts would be arriving "in the next week or two," no official announcements have been made. However, the senior defense official pledged that the Silicon Valley office "has already created a pipeline of more than 20 technology acquisitions. There are successful deals already and more on the way."
While leadership changes are coming for the group, one source with knowledge of the program said Duchak and military deputy Navy Rear Adm. Brian Hendrickson have been constrained by the internal politics of the Pentagon.
The source defended the efforts of the DIUX team, saying the leadership made "huge sacrifices" to get the unit up and running. But, the source said, bureaucracy inside the Pentagon that never liked the idea of a semi-independent California office operating outside the traditional department sphere of control.
"Early on, they didn't give DIUX any money or contracting authority. You can't have an organization on the West Coast micromanaged from OSD [the Office of the Secretary of Defense] and think it's going to be successful," the source said. "The Pentagon sees everything in power balance views of bureaucracy and they don't see it in long-term security issues."
Those concerns match up with a report, released April 29 by the Center for a New American Security, warning that if Carter's innovation push is going to succeed, it must come with a focus on fixing internal cultural roadblocks.
In an interview with Defense News TV, Ben FitzGerald, one of the authors of the report, said that changing DIUX would be a smart, symbolic move if Carter wanted to show he takes the Silicon Valley concept of "fail fast" seriously.
"If I was the secretary I would actually look at cancelling and restarting the DIUX. That's not to say the DIUX hasn't done good work — I've met with many of the folks out there, I'm very supportive of the concept, I think the department needs to have a presence in Silicon Valley," FitzGerald said. "But the secretary has an opportunity to take this, his own baby, say they have successfully experimented, there are things they have learned and institutional fixes that are required to really take this to the new level.
"He could put this away, start something new. That would be right for the DIUX and also send a powerful message to his constituents in the Pentagon and the Silicon Valley that he means what he says and that it's OK for others to do the same. I think it would be an exceptionally strong message to send."
The senior official agreed there are lessons to be learned from the first few months of DIUX, and indicated that more changes are going to come in the future.
"There will be other adjustments," the official said. "This thing has always been a startup and like all good startups it's adapting and evolving, and the changes the secretary will announce are designed to improve its mission effectiveness and improve the end results."
One potential structural change suggested by a second source: putting DIUX directly under acquisition head Frank Kendall and tying the work the unit is doing into that of other high-tech, innovative groups inside the department, including DARPA and the Strategic Capabilities Office.