Pentagon Shakes Up Silicon Valley Outreach

PALO ALTO, Calif. —  Defense Secretary Ash Carter is elevating and expanding the Pentagon’s controversial technology sector outreach efforts—and replacing its leaders—just one year after launching a Silicon Valley initiative he calls crucial to keeping the U.S. military the best in the world. The Defense Innovation Unit Experimental, or DIUx, will also open a second office in Boston, where Carter has deep ties.

The secretary announced the changes on his fifth trip to Silicon Valley since taking office, reflecting on the past year and seeking better results.

“Some of what it’s taught us is not about DIUx’s shortcomings so much as about our shortcomings as a department as a whole,” Carter said Wednesday. “I think we need to admit when we have to change.”

Defense Department officials painted the leadership change not as a panicked shakeup nor as admission that the endeavor had stalled, but as a natural and organic transition into a more Silicon Valley-based model. Carter called the leadership swap and Boston expansion a “sign of confidence” in the endeavor.

The past year has “taught us is there there are some ways [DIUx] can improve in the way it connects to the wider tech community,” Carter said. "DIUx will be a testbed for new kinds of contracting with startup firms. They’ll work quickly to execute time-sensitive acquisition programs. And they’ll move at the speed of business. We know how fast companies run here and in other tech hubs around the country and we expect DIUx 2.0 to run alongside them.”

The new team at the helm includes fighter pilot-turned-entrepreneur Rajiv Shah, who will serve as managing partner. A senior director of strategy at Palo Alto Networks, Shah has also served as a special assistant in the Office of the Secretary of Defense, a business consultant with McKinsey and Company, the founder of a cyber security technology company, and an Air Force F-16 pilot who served multiple tours.

Others include Vishaal Hariprasad, an Iraq vet, Bronze Star recipient and cofounder of the software engineering firm Morta Security; Christopher Kirchhoff, director of strategic planning at the National Security Council; and Isaac Taylor, who was the founding head of operations at the Google[X] lab, the experimental group behind the company’s self-driving car and Glass augmented reality headset.  

These new leaders, a defense official told reporters Tuesday evening, bring both have military or Defense Department experience and Silicon Valley success to the DIUx effort.

"We’re taking a page straight from the Silicon Valley playbook: we’re iterating, and rapidly, to make DIUx even better. As a result of all this great experience and in view of technology’s and the world’s imperative to stay agile, today we’re launching DIUx 2.0," Carter said at DIUx’s Moffett field facility. The unit represents the cornerstone of Carter’s push to make the Department of Defense more nimble and cutting-edge. It will now report directly to the secretary’s office.

Why Boston? For one, it’s close to Carter’s roots from his days at MIT, where he was a research fellow and, later, on the board of the school’s Lincoln Laboratories. At Harvard, he served as professor of science and international affairs. He’s also served on the board of the MITRE Corporation and the Boston-based Draper Corporation.

Who’s Out

Carter removed George Duchak as director of DIUx after stints with the Air Force Research Laboratory, and the Defense Advanced Research Projects Agency, or DARPA. Rear Adm. Brian Hendrickson, a former Navy SEAL, served as his deputy. The Pentagon unveiled DIUx in April 2015.

“DIUx wouldn’t be where it is today without George Duchak, its founding director,” Carter said today. “We’re grateful to him…for helping launch such a path- breaking initiative...getting DIUx 1.0 off the ground, trying a whole lot of new things...and identifying potential partners.” Duchak will return to the Pentagon to “expand innovative practices in other areas.”

Critics of Carter’s outreach efforts, which has consumed outsized time and attention, say serious questions remain as to whether the effort can remove some of the barriers that keep non-traditional players and Silicon Valley startups from doing more business with the Pentagon. They aren’t merely cultural. Some entrepreneurs who professed interest in the idea say that getting a sole-source government contract takes too long and is far too complex. Congress sounded its own skeptical note on the effort, in the 2017 National Defense Authorization Act, which says that the “outreach is proceeding without sufficient attention being paid to breaking down the barriers that have traditionally prevented nontraditional contractors from supporting defense needs, like lengthy contracting processes and the inability to transition technologies.”

DIUx serves as a matchmaker, finding interesting technologies and trying to pair them to buyers within the Defense Department, or finding defense technologies that could attract interest in Silicon Valley. But it’s not a cure for the byzantine process of government contracting, something Defense Department officials acknowledged.

“We are still the federal government. We’re going to have hurdles that not every institution has. That doesn’t mean we can’t make it better. DIUx is a perfect example of trying to approach these issues in a more user-friendly way. This is something that’s come up in the course of the secretary’s conversations out here. How can we make this process more entrepreneur friendly. It’s not going to be perfect,” said one official.

Carter said that he was open to asking Congress for new authorities. “Where we think we can do better, we will ask Congress to change the law,” he said.

An administration official pointed out that the Defense Department, while not always the easiest partner to work with, is at least a stable one focused on the biggest and most enduring challenges on the planet. Not every commercial company can say the same.

“One of the things I think people often miss is they try to get very fast, quick revenue,” in Silicon Valley, the official said. “If you focus on that, you wind up with something that doesn’t have an arc that can sustain you over the long term…. What DIUx is able to do is say, ‘Here’s what the horizon is going to look like. DOD has led in that, historically, on everything. Whether it’s self-driving cars...you name it.’”