WASHINGTON — Secretary of Defense Ash Carter today announced further changes to his Defense Innovation Unit Experimental (DIUx) program, and announced the first tangible contract out of the innovation office.  

Speaking at the DIUx Boston office – which Carter and DIUx head Raj Shah officially opened today – Carter praised the Boston area as an innovation hub

"We couldn’t have picked a better place for our startup," Carter said of the office, located just outside Boston in Central Square, Cambridge.

But with the Boston office come structural changes to DIUx.

DIUx will now be divided into three units. The first is an Engagement Team, which, Carter said, not only "introduces the military to entrepreneurs, but also – and more importantly – introduces entrepreneurs to military problems."

Then there is the Foundry Team, which works with technology that is maturing or needs to be changed to be used by DoD. That includes the launch of a "Warfighter-in-Residence program and an Entrepreneur-in-Residence, program, which bring together servicemen and women detailed from across the military with top engineers contracted from outside the military for focused design sprints, rapid prototyping, and field trials," Carter said.

That Foundry Team is already working on how the military can use virtual- and augmented-reality technologies, and they will also look at commercial space technologies and advanced robotics.

The third group is the Venture Team, the largest of the three, which Carter described as being "tasked with identifying emerging commercial technologies and exploring their applicability with potential military and civilian customers across the Defense Department."

The new organization seems to be designed to counter the most common criticism of DIUx since the office opened its doors nearly a year ago: the lack of visible, tangible progress.

Ben FitzGerald of the Center for a New American Security notes that there is work getting done, albeit behind the scenes.

"They’re talking about contracts getting signed, dollars going out the door. My sense is those are happening through other contracting agencies," FitzGerald said. "DIUx may have set it up but the contracts are executed by the Army. That’s a good model because it makes it easier to do recurring business, but it’s hard to track."

In fact, DIUx has been workin with the Army, Carter said, highlighting that Army Contracting Command-New Jersey and DIUx have come together to develop a "Commercial Solutions Opening," based on acquisistion authorites for prototyping that Congress put into place in last year’s defense bill

As Carter described it, that authority works like this: DIUx posts on its website about a potential problem to be solved, giving interested companies a chance to submit comments. DIUx then invites selected companies to pitch those solutions to the DIUx board. In essence, it mirrors the kind of venture-capital investment structure so familiar in Silicon Valley.

Once a solution is identified, DIUx can move to fund a program within 60 days of first meeting – and it sets up the military customer to, down the line, keep the program going.

"This new approach is already generating lots of enthusiasm," Carter said. "Our military services, combatant commands and defense agencies like the speed and agility it affords. Tech companies like that they can work with DIUx to design projects jointly, negotiate appropriate agreement clauses – including those concerning intellectual property rights – and also rapidly make adjustments as needed."

Under this new system, 15 programs are being worked on, Carter said. The first group to go on contract is Halo Neuroscience, a company that has developed a wearable device that looks like headphones but increases the human brain’s natural ability to adapt to training, he announced.

These headsets will be used by special operations teams to see how effective it could be to increase military skills training.

Pentagon officials have argued that DIUx can be a success even without hard contracts signed as long as it serves as a bridge for talent and idea sharing between the commercial sector and the Department of Defense.

One quiet example of that happened the weekend of June 24, when the Naval Postgraduate School held an event in San Francisco called "Hack the Sky," a hackathon that allowed developers and coders a chance to play with the largest swarm of unmanned systems ever assembled. On the event registration, 319 people RSVP’d as attending.

Although not specifically a DIUx event, the office had a key role in getting the two sides together. The event was held at the Galvanize shared office space, the same location Carter visited for a DIUx event in March. That type of event is the type of win-win DIUx should be driving at, FitzGerald argued.

"That shows value to everyone. The Navy gets great coders looking at how to improve the [user interface] or other elements of the code base, and the coders get to brag about improving the world’s largest swarm of drones, which shows the type of collaboration where both Silicon Valley and DoD folks can get value out of collaboration," FitzGerald said. "It’s exactly what we want to see out of DIUx."

Carter noted that the hope is more parts of the Pentagon would adopt DIUx practices, including non-traditional contracting methods.  

"If DIUx is truly successful in catalyzing broader interaction between DoD and non-traditional technology firms, then it will eventually put itself out of business, since the department as a whole will be doing what DIUx does today," Carter said. "In fact, we’d welcome that outcome, because DIUx is, after all, an experiment, as well as a pathfinder. We created it so we could try new approaches, learn what works and what doesn’t, and iterate until we get it right. And we’ll keep iterating together and learning from each other as we go forward."

Email: amehta@defensenews.com

Twitter: @AaronMehta

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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