Well, looks like everybody really is getting into the defense tech VC game. Yesterday, at the US Army Demand Signal Forum in DC, SecArmy Dan Driscoll officially unveiled a new innovation program called Fuze, designed to better scale commercial products from prototypes to programs of record.
Driscoll (a former VC and investment banker himself) said that with the new program, the service will begin thinking (and hopefully acting) like a VC fund that wants its investments to scale.
“[The] core purpose is to invest in promising companies, rapidly prototype, and put them on a path to scale,” he said.
Each year, the Fuze “fund,” as Driscoll described it, will dole out $750M to smaller companies building critical tech. The Army will use speedy contracts to get prototypes of that tech into the hands of soldiers, have them try it out, and scale the things that work.
“We must equip our soldiers with the best possible capabilities faster than ever before, or it will be our soldiers that pay the price for our collective inaction,” he said, “For us, the choice is clear. We will change. We will fight and we will win.”
Slow your roll: We don’t have to tell you, dear readers, that selling to the Army can be a massive pain in the butt. While there are a few quicker-turnaround contracting vehicles (everyone’s favorite OTAs and the like), most higher-end contracts take 12 to 18 months. In that time, geopolitical realities can change, tech can become outdated, or new and better solutions can emerge.
Even the system designed to be innovative can be byzantine. The Army currently tries to bring new and commercial companies into the fold through a range of initiatives, including:
- The xTech program
- The Small Business Innovation Research (SBIR) program
- The Tech Maturation Initiative (TMI)
- The Manufacturing Technology office (ManTech)
- Other Transaction Authorities (OTAs)
But here’s the problem—there are some big ol’ air gaps between these programs, and between them and the program offices responsible for scaling tech to the rest of the Army. As Driscoll himself said, often companies get stranded after being picked up by a smaller innovation program—stuck in the infamous valley of death.
“The good news is that we already have some of the pieces in place to make acquisitions work for our soldiers,” Driscoll said, “The bad news is currently, there is absolutely no continuity between them. Each has distinctive goals, distinctive funding streams, and distinctive stakeholders. They work in isolation. They lack continuity, and they are disjointed.”
Bridge the gap: Fuze will bring all of these initiatives under a new umbrella—and inject them with a new wad of cash. The $750M fund will fund companies through “prize competitions, minimum viable product (MVP) prototype development, integrated capabilities, and rapid manufacturing,” an Army spokesperson told Breaking Defense.
The goal is to massively shorten contracting timelines and directly fund product development, especially in “unmanned aerial systems, counter unmanned aerial systems, electronic warfare, and energy resiliency.”
- For companies that have never worked with the Army before, Driscoll says their tech will be contracted in 60 to 70 days.
- For existing suppliers, that can be as short as 10 days, he added.
Once a company is contracted, the Army will get the tech into the hands of soldiers within 45 days. They’ll try the kit out, and whatever works gets to stay—the Army and Fuze will help scale the contracts into full-blown programs. “We will bring a capability to prototype and then set it on a path to scale before handing it over to our program executive offices,” he said. This is similar to the philosophy that underpins the service’s Transformation in Contact initiative, which we’ve covered before.
“Our goal is to create a system where decisions that used to take months are now made in a matter of days, allowing us to rapidly adapt to the changing battlefield requirements from around the world,” he said, “We know that no one, from our soldiers to startups and garages to defense crimes, has time to waste.”
The road ahead: The first prize competition for Fuze (in cooperation with Y-Combinator) will take place at AUSA next month—with a $500,000 prize pool using funding from xTech. Driscoll also hinted at a $2.5M c-UAS competition with US Army Europe for later this year, and said there would be demo opportunities in the Pacific in November.
And the changes are unlikely to stop here. “In a matter of weeks, we will announce organizational changes to the very fabric of our acquisition enterprise that will fundamentally alter how the United States Army purchases things,” he said. PEO shakeups, here we come. Popcorn, please.