Defense Secretary Ash Carter’s signature innovation program will receive only a quarter of its fiscal 2017 funding until he delivers a report to Congress outlining the future of the hubs across the country that facilitate outreach to non-traditional business.
The fiscal 2017 National Defense Authorization Act includes a section that withholds 75 percent of the funding for the Defense Innovation Unit Experimental until the head of the Pentagon gives lawmakers details on the “charter and mission statement” of the program, as well as a description of the unit’s management and operations, staffing requirements, metrics for success and how it won’t overlap with other offices such as the Small Business Innovation Research Program.
The budget request had been $45 million.
“The conferees remain cautiously optimistic that the changes to the organizational structure and functions of DIUx could become important tools for the Department of Defense to engage with new and non-traditional commercial sources of innovation,” negotiators wrote in the conference report, released on Wednesday.
“However, the conferees are concerned that investments made by DIUx to-date were not focused on rapid delivery of much needed game-changing technologies.”
The bill is expected to be considered by the House on Friday and by the Senate next week.
The conference report also finds fault with the program for building relationships with new, non-traditional companies, while doing nothing to actually reduce the hurdles these companies face in doing business with the Defense Department, which could lead to frustration and, ultimately, an unwillingness to work with the military.
“The conferees remain concerned that in the department’s rush to try something new, defense leaders have not taken the time to determine how effective recent organizational and management changes are before seeking a rapid expansion of resources,” the conference report says.
Congress also asks for details on any planned expansion of DIUx beyond the three hubs already running in Silicon Valley, Boston and Austin, and how the Pentagon will handle intellectual property developed by non-traditional businesses with little or no government funding.
The House-passed version of the National Defense Authorization Act would have held back 80 percent of funds for the program, whereas the Senate bill did not contain any similar provision.
Even without the budget withholding, it’s unclear how the DIUx hub system to encourage innovation will fare under President-elect Trump’s administration.
When Carter opened the third DIUx hub in Austin in September, he touted progress the first two locations had made, including signing five contracts for $3.5 million. He also said 22 more contracts, worth about $65 million, were coming down the pipeline.
