Give $100M to DOD for innovation fund, top GOP appropriator says

The top Republican on the House Defense Appropriations Subcommittee said he wants to give the Department of Defense $100 million in open investment money to help sustain the department’s ongoing work with innovative companies.

Rep. Ken Calvert, R-Calif., said the proposed funds would be meant to help transition emerging technologies from seed investments into larger procurements, bridging the so-called “valley of death” where companies often struggle to receive major, follow-on funding from the DOD after receiving research or pilot grants.

Calvert said the fund would pick companies with ideas that could fill capability gaps and provide funding to keep them afloat until they earn a production contract, which can take years.

“We can pick a number of people we want to succeed and get them through that valley of death so they can actually get to procurement,” Calvert said during the Reagan National Defense Forum Saturday.

The valley of death is a challenge DOD innovation and acquisition leaders have been grappling with for years. Many startups that want to work with DOD typically start with small research grants worth up to a few million dollars. But after that, they struggle to win larger, meaningful production contracts.

Calvert said that a pool of funding that DOD can spend freely could help ease the gap between those two phases of acquisition.

“It’s frustrating as hell,” he said. “I’m hoping we can do that as soon as possible.”

The idea is included in the fiscal 2022 National Defense Authorization Act, which still awaits congressional passage but has passed in the House.

Calvert’s idea does have support from a very important leader in the DOD: Heidi Shyu, the department’s chief technology officer. Shyu has been pushing for a similar innovation funding mechanism called the Rapid Defense Experimentation Reserve (RDER) that aims to achieve the same goal.

The reserve funds ideas submitted by the services and combatant commands for technologies that are ready for testing to fill joint capability gaps. It’s overseen by a new innovation steering group chaired by Shyu and has requested funding in the DOD’s fiscal 2023 budget request.

“That’s exactly the path we have to be on,” she said of innovation funds that navigate around the traditional budget process.

The traditional Planning, Programming, Budgeting, and Execution (PPBE) process has been the bane of innovators and acquisition reformers for years. But so far little structural change has been made. The DOD was given tools to navigate around that slow-moving process in Other Transaction Agreements, but most contracts remain planted in the regulations that require years of planning before money can be sent to a contractor.

“We don’t have a lack of innovation; we have a lack of innovation that’s actually in the hands of the warfighter,” Gen. Charles Brown, chief of staff of the Air Force, said during the forum.