DOD and the Army can do more to help, innovative firms say.
by Michael Bold
Tapping the innovation of small high-tech businesses has been a goal of DOD and the Army for some time now. How well has the effort gone? Army AL&T talked to some small businesses that range from 250 to five employees. They have some definite ideas about what government can do—and stop doing—to work better with them.
“Having come from industry and understanding the challenges associated with entering ‘the process,’” Dr. Bruce D. Jette, the assistant secretary of the Army for acquisition, logistics and technology and the Army acquisition executive, wrote in his column for the Fall 2018 issue of Army AL&T magazine, “I know firsthand that the Army must proactively and aggressively engage with innovators to see what new ideas, concepts, systems and subsystem components they can bring to the table. The next generation of enabling technologies required to achieve our modernization priorities may not currently exist—or they may, and not be apparent to the Army.”
This is by no means a comprehensive list, but it does provide a snapshot of the types of problems small businesses run into when working with DOD and the Army.
IT HELPS TO HAVE HELP
Tobin Fisher is co-founder and CEO of Vantage Robotics, a team of 20 Stanford- and Yale-educated engineers based in San Leandro, California, that builds ultra-lightweight and compact unmanned aerial surveillance drones.
After focusing on consumer and commercial opportunities, Vantage became involved with DOD through the Defense Innovation Unit’s (DIU) Short Range Reconnaissance (SRR) Unmanned Aerial Vehicle project. In August, DOD gave five small drone manufacturers, including Vantage, permission to sell to the U.S. military and federal agencies, in the wake of last year’s ban—based on espionage fears—on these agencies buying Chinese-made drones.
Fisher, who had worked with DOD earlier in his career at other companies, found DIU invaluable in helping Vantage land the SRR project. “There’s great people involved that understand the challenge and are really working hard to do it,” he said. “[The credit] certainly goes to the work of DIU—I can’t say enough good things about them.”
“DIU did a spectacular job of really streamlining the process for working with DOD to the extent possible,” he said. “So I’d say, in general, it’s been a really great experience for us working with DOD. Having worked at the DOD over a long period of time, I have definitely seen a real massive change in the streamlining of approaches that DOD has. I think the big challenge for us is we want to develop great products and we want to make a lot of them for our customers who can use them. Anything that’s other than that, in our minds at least, it’s a hindrance.”
For Lumineye, a five-person company based in Boise, Idaho, the initial push for working with DOD came from a Hacking for Defense class at Boise State University. Corbin Hennen, a co-founder and CEO of Lumineye, and Megan Lacy, a co-founder and chief design officer, were members of the Hacking for Defense team tasked by U.S. Special Operations Command (SOCOM) with coming up with a way to identify humans through radio frequencies. Through their work in solving the challenge, the students started Lumineye in 2017. (See “More than a Competition,” Army AL&T, Winter 2020, Page 94.)
The lightweight, compact device they created, the Lux, can provide first responders and warfighters “through-wall sensing” and can detect moving and still people from more than 10 meters away. It enabled Lumineye to win the xTechSearch 2.0 competition, sponsored by the Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology.
But, in establishing Lumineye and trying to work with DOD, the team discovered it had to find its own way. While at Boise State, Hennen talked his professors into sending him to the Hacking for Defense educators class at Stanford, thinking it would benefit his studies in cybersecurity. But the problem addressed to him wasn’t about cybersecurity but about how to understand what threats lay behind a wall. “They talked more about the problems, about blind breaches and not knowing what’s on the other side of a door or wall when they know they need to go in there,” Hennen said. “And that really hit home with me because my uncle is a detective, and his partner was actually killed in a blind breach. And so I was, like, ‘I want to help solve this problem.’ ”
“We ran into a lot of obstacles in the beginning, just because, one, we didn’t have any funding,” said Lacy. “So it’s kind of hard to build hardware when there’s no money. SOCOM was kind enough to give us some prototyping funds, so that was really helpful, because we did have some support there. But still, to kind of stop your master’s programs and work on something full time is definitely challenging.
“And then also just figuring out how to start a DOD-compliant company. You’ve got to get your SAM.gov [System for Award Management] situated, your DUNS [Data Universal Numbering System] number. And all those things seem really easy now looking back at them, but in the moment, we had no idea what we were doing. … So there was a lot of work that had to be done outside of just building the through-wall radar, which was kind of hard as it was.”
The xTechSearch competition proved to be a bit of a life preserver for Lumineye. “The fact that they give you those small checks for travel throughout the process and then give you more funding for the six-month feasibility type of study and then the grand prize, I just think that program’s really cool,” Lacy said.
LPTA SOURCE SELECTION
Erin Horrell is chief growth officer for Intelligent Waves LLC, a 250-employee company based in Reston, Virginia, that
provides IT solutions to both public and private sector clients. What’s been her biggest headache working with DOD?
“Easy. LPTA [lowest price technically acceptable]. Sometimes, government makes the wrong choice by s
electing this route, which could result in inferior outcomes and not meeting the mission requirements,” she said. “To get the best value, contracts should set higher standards so contractors can deliver the value that government deserves, with full accountability and superior performance.”
In an LPTA source selection, the award goes to the lowest-priced offeror who submitted a technically acceptable proposal. LPTA is not the optimal mechanism to procure IT services, Horrell said.
“Naturally, when there’s an LPTA procurement, there’s a race to the bottom. And when there’s a race to the bottom, it becomes a price shootout among bidders, which may result in compromising the integrity of solutions or their quality,” Horrell said. “Moreover, the winning contractor struggles to staff critical positions at the lower labor rates that they bid to win, and then is unable to fulfill the quality positions that the government deserves and expects to perform the work to the highest standards. This can result in open vacancies and unhappy customers, which is self-defeating to mission success. We know we don’t and can’t control it, but in my opinion, it’s not a good business model for professional IT services, where innovation, quality of the solution and the expertise of the people matter. LPTA should be relegated to commodity purchases, where all specifications are equal.”
OFFSITE WORK FLEXIBILITY
Eric Strauss is director of business development at Connected Logistics, a Huntsville, Alabama-based Service Disabled Veteran-Owned Small Business with 35 employees that provides logistics, systems engineering and program support to DOD, the Army and other government contractors. “My recommendation would be focus less on counting butts in seats and more on results and outcomes and how effectively the mission is being accomplished.”
Requiring contractors to work onsite—most of his clients are based at Fort Belvoir, Virginia—limits the available talent pool, he said. He admits he’s as guilty as anyone of wanting “to be able to see people in their seats as I walk down the hallway.” But “that fear and concern clouds our judgment and our ability to really focus sometimes on what’s most critical, which is not is that person working from my office from 8 a.m. to 4:30 p.m., but at the end of the week, did they get done what they needed to get done to be successful?”
Roughly half of his company’s work is with the Army, the other half is with the Defense Logistics Agency (DLA). “I think it’s fair to say that DLA has been more forward-thinking in its approach to offsite work,” he said. One of the DLA projects requires a lot of travel to DLA sites in both the continental United States and abroad. The Connected Logistics-led team on that contract is based in eight states across several time zones. “And it works great,” Strauss said.
“We couldn’t have gotten to that point had DLA said we need everyone to be within 50 miles of Fort Belvoir,” he said. “And that gave Connected Logistics and our teammates huge flexibility to recruit and hire and retain the most qualified personnel for the job, not those individuals that happen to be either closest to Fort Belvoir or most willing to say, OK, I’ll spend an hour and 15 minutes in my car each day or each way traveling to and from Fort Belvoir.”
EXCESS, REPETITIVE PAPERWORK…
Vantage’s Fisher finds the paperwork involved in working with DOD to be a challenge. “I think whatever could be done to allow the company to focus to the extent possible on innovation is, I think, best for both sides.”
Not only is there a lot of paperwork, but it’s often duplicating the same information on multiple forms, he said. “Occasionally, just the nature of working with a larger organization like the Army, we find ourselves filling out the same information in multiple different formats, and there being a bit of documentation overhead that obviously we prefer to minimize. But we also understand that it’s a large organization and there’s a lot of complexity they’ve got to manage. I think it’s an adaptation process on both sides a little bit.”
His company is good at building drones, and that should be its focus, he said. “Our expertise and our skill set is not understanding the details or the ins and outs how to navigate the Army’s organizational structure. So the more that we can get help in understanding how to navigate the organizational structure and how to work effectively, which the Army or other parts of DOD can be extremely helpful for us.”
…AND UNCERTAIN FUNDING
For a tiny startup like Lumineye, funding is key. But they’ve learned that, in dealing with DOD, just because you’ve been awarded work doesn’t mean the check is in the mail.
“We spent the first two years bootstrapped,” Hennen said. “We were working full time on this [developing their through-wall sensing technology], but we were working odd jobs as well to be able to pay our bills. we were doing pitch competitions and stuff to get funding around the state and everywhere else so that we could pay for new prototypes.”
“And any of the additional funding, we were just trying to keep ourselves afloat; xTechSearch was some of our first real significant funding.” Lumineye has been able to get funding though some high-tech startup accelerators. “Initially, cash flow is extremely important. And even as you go on, for hardware and everything, if I need the tooling and everything else set up at a particular point in time and that cash flow doesn’t make the time that they originally intended it to, that can delay everything.”
Many startups and small businesses work on very tight, and often unforgiving, margins. “Every business has to make assumptions,” said Lacy. “But startups and small businesses have to make a lot of assumptions about their revenue model and where they’re going to get funding and when they’re going to get that funding. And you want those to be as accurate as possible because you’re spending money on different investments.
“I think one of the things that the DOD could be helpful with is faster payment and regular execution dates. With contracts, there’s always a little bit of wiggle room as to when they’ll actually start, versus when you’re selected for them. So having some consistency there would do wonders.”
When DOD releases a request for proposal, and then materially changes the requirements after the request, it costs companies money, said Strauss of Connected Logistics. He noted that, in the week before he talked with Army AL&T, he had seen two different requests amended by DOD “that significantly changed the requirements” before both were canceled.
“What it means from industry’s perspective is additional time and effort spent to revise and resubmit proposals. And we’re one of X number of bidders. If you look across all bidders on a given opportunity, you probably easily have 1,800 to 2,000 hours being spent by industry to revise these proposals. On one hand, the government may look at it and say, well, we need to make sure the requirement is right. But perhaps in this case, with additional time spent upfront by the government, it might have saved 2,000 hours on the industry side, which in the end, saves the government money.”
Much has changed since the Army convened its first innovation summit in 2016. DOD, working with Congress, received new authorities beginning with the 2017 National Defense Appropriations Act to get small, innovative businesses on board. Despite the paperwork and the bureaucracy faced by the companies that Army AL&T talked to, their work would have been much harder, if not impossible, if the government had had to rely on traditional Federal Acquisition Regulation-based contracting.
New organizations like the U.S. Army Futures Command and DIU, and new efforts to reach small businesses like the xTechSearch, will enable a more diverse ecosystem to meet the Army’s evolving needs. For these businesses and others like them, trends are promising, but more work needs to be done.
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MICHAEL BOLD provides contract support to the U.S. Army Acquisition Support Center. He is a writer-editor for Network Runners Inc., with more than 30 years of editing experience at newspapers, including the McClatchy Washington Bureau, The Sacramento Bee, the San Jose Mercury News, the Dallas Morning News and the Fort Worth Star-Telegram. He holds a Bachelor of Journalism degree from the University of Missouri.