Defense Speak Interpreted: The Defense Innovation Unit

Many of my columns are about new defense technologies and innovations. What about an organization with “innovation” in its name? In this column, I’ll describe the history and purpose of the Defense Innovation Unit (DIU), as well as some of its programs.

According to its website [1], “The Defense Innovation Unit (DIU) strengthens our national security by accelerating the adoption of commercial technology throughout the military and growing the national security innovation base. DIU partners with organizations across the Department of Defense (DoD), from the services and components to combatant commands and defense agencies, to rapidly prototype and field advanced commercial solutions that address national security challenges…The DIU connects its DoD partners with leading technology companies across the country.”

The DIU was launched in 2015 to significant publicity by Ashton Carter, the defense secretary at the time. The rallying cry was, “Silicon Valley is ignoring the DoD.” The belief was that domestic commercial electronics technology was being implemented, and high-tech companies did not want to do business with the DoD for a variety of reasons. In my opinion, some of that criticism was well-earned, considering the laborious contracting process of Federal Acquisition Regulations (FAR).

Personally, I have found that the Defense Federal Acquisition Regulation Supplement (DFARS) process is fine when the Pentagon wants to order more of the same item they are already acquainted with. However, there are a variety of reasons why traditional FAR procurement fails at buying research work or first prototype articles:

  • The amount of research time is not known to obtain the answer (if ever).
  • The number of prototype iterations is unknown.
  • “We can’t tolerate any failures,” so only small incremental improvements are specified in development contracts, while the electronics industry is used to “big leaps and breakthroughs.”
  • The traditional acquisition process involves submitting ideas, waiting until a bid spec is drawn up, having to go through a down-select of potential technology suppliers, submitting a painful final proposal, waiting for months for a contract award, and finally waiting even longer for contract money to flow for the work. This laborious process can take two years or more. At the pace of electronics development, sometimes the technology awarded under contract is already being supplanted by newer technology.
  • In DIU’s own words [1], “We aim to move from problem identification to prototype contract award in 60–90 days whereas the traditional DoD contracting process often takes more than 18 months. Prototype projects typically run from 12–24 months…Upon completion, successful prototypes may transition to follow-on production, OTA, or FAR-based contracts.”

The DIU was first known as the Defense Innovation Unit eXperimental (DIUx), which was founded as an other transactional authority (OTA) from the start. There had been prior defense OTA contracts before DIUx, but DIUx had great national publicity right from the Pentagon and with the blessing of the White House [2].

The core of DIU is “focused exclusively on fielding and scaling commercial technology across the U.S. military at commercial speeds.” The DIU has down-selected five technology areas where the commercial sector is operating at the leading edge, including [1]:

  • Artificial intelligence (AI)
  • Autonomy of operations
  • Cybersecurity
  • Human systems
  • Space

The DIU also has three principles [1]:

  1. Integrity: DoD access to advanced commercial technology depends on mutually beneficial business processes. We ensure a competitive process that is open and fair to all participants.
  2. Initiative: We’re in a technology race with our adversaries, and speed is critical. Our team builds processes that allow us to move fast and deliver trusted, scalable solutions.
  3. Impact: Our value to the military and to the companies we work with is based on delivering results. We know our metrics and assess our results to continuously improve our performance.

The DIU was originally founded in and still headquartered in Mountain View (Silicon Valley), but branch DIU offices were quickly established in Boston, Austin, and—most recently—the Pentagon. The Pentagon office focuses on the needs within defense while the other three survey emerging commercial technology across the U.S.

The DIU functions as something of a “marriage maker” to identify and understand critical national security challenges and marry those with leading-edge commercial technology within the target 12–24 months, especially in small companies. In following up after a successful prototype, the demonstrating company can now move to a follow on procurement/production contract much more easily.

The DIU’s special emphasis (a metric in performance) is to work with companies that have never before done business with the DoD or U.S. government. By February 2020, the DIU already introduced 122 non-traditional defense contractors, and 66 had their first time in dealing with the DoD. Proposals came from 44 different states [3]. Remember, the DIU is focused on demonstrated commercial-only technology. There is little emphasis on traditional inventions or process developments that symbolize pure or applied research.

Another approach to development that the DIU plans is the National Security Innovation Capital (NSIC) effort. This recognizes that venture capital—a worrisome amount coming from overseas and including adversary countries—is critical to technology success [3]. This program is authorized in the existing National Defense Appropriation Act (NDAA), but funding depends on the exact language to be found in the forthcoming final 2021 NDAA. Defense Research and Engineering requested $75 million for NSIC in the FY 2020 NDAA.

The next, but slightly different, DIU program is the National Security Innovation Network (NSIN). This previously was known as MD5 [4] with more emphasis on university participation in the “secure communications” effort than just commercial entities traditional in either the DIU or NISC [5].

In contrast to NISC (with emphasis on monetary capital), the emphasis of NSIN is on human capital—hence the work with universities. Perhaps the most newsworthy—and controversial—activity of MD5 or NSIN are the “hackathons” it has sponsored to promote “white hat” efforts to point out weaknesses in DoD software and communications systems.

Organizationally, the DIU has had several leaders throughout its existence. In 2015, the founder was Maynard Holliday. In May 2016, Ashton Carter, defense secretary, grabbed DIUx and had it report directly to his office. The managing DIUx partner was Raj Shah until February 2018. After a short period of interim directors, Michael Brown took over DIU and dropped the “x” in September of 2018; he remains the DIU director. Brown came from the White House and was instrumental in the establishment of the NSIC effort. Now supervising the DIU is the undersecretary of defense for research and engineering. On July 10 of this year, USD for R&E Michael Griffin left the Pentagon, and Michael Kratsios is now serving as interim USD for R&E [6].

Of course, someone in Washington is going to ask, “What are we getting for the DIU money you are spending?” Annually, the DIU issues a public report on its activities. However, analysis is required, and yardsticks for performance are drawn up. One such analysis is provided online [7].

At that point, almost a year ago, some 23% of completed projects (authorized between 2016 and report date) had moved to defense applications—10 of 43. Approximately 63 other projects were incomplete as of that report date. The article author also interviewed three Silicon Valley venture managers, and the report is that Silicon Valley’s expectation is that roughly 33% of ventures move forward compared to the 23% DIU experience. You must also remember that a high percentage of the DIU awards are to companies with little or no experience dealing with defense, so count for a learning curve both from DIU and small technology venture companies being awarded.

The real yardstick for the DIU and its NSIC and NSIN programs in the final FY 21 NDAA budget. Will Congress and the White House be satisfied with DIU progress and fully fund its requests? Then, there are signs that Washington is also not too happy with the pace of technology at traditional defense contractors [8].

While this General Accounting Office study of defense primes shows where they spend their own internal research (not granted by DoD). The report [8] found, “Coincidently, ‘our analysis also showed that the majority (67%) of IR&D projects completed between 2014 and 2018 focused on incremental, rather than disruptive, innovation.’” The Pentagon may be saying, “If you are not planting your own seed corn in disruptive innovation, why should we give you billions of tax dollars on top of that?” Stay tuned.


  1. The DIU, “Defense Innovation Unit.”
  2. Wikipedia, “Defense Innovation Unit.”
  3. Jon Harper, “Defense Innovation Unit Shifts Into Higher Gear,” National Defense, February 11, 2020.
  4. MD5 Adopts New Name to Reflect Refined Mission,” NSIN, May 6, 2019.
  5. Wikipedia, “National Security Innovation Network.”
  6. Wikipedia, “Under Secretary of Defense for Research and Engineering.”
  7. Scott Maucione, “SPECIAL REPORT: Failure is an option for DoD’s experimental agency, but how much?” Federal News Network, October 30, 2019.
  8. Patrick Tucker, “Pentagon, Defense Contractors Are Out Of Step On Tech Innovation, GAO Finds,” Defense One, September 3, 2020.

Dennis Fritz was a 20-year direct employee of MacDermid Inc. and is retired after 12 years as a senior engineer at (SAIC) supporting the Naval Surface Warfare Center in Crane, Indiana. He was elected to the IPC Hall of Fame in 2012.



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