House authorizers are criticizing the Defense Department’s Silicon Valley outreach effort for not tackling what they call “traditional” barriers to entry like a lengthy contracting process and an inability to transition technologies.
The House Armed Services Committee (HASC) emerging threats and capabilities subcommittee, in the summary of its mark released Tuesday, supports the effort to increase outreach to, and collaborate with, non-traditional sources of commercial innovation throughout the United States overall. This effort is formally known as Defense Innovation Unit Experimental (DIUx). 
The subcommittee says it recognizes that commercial innovation is not only a significant driver for the economy, but it also provides significant contributions to national security. But the committee says it is concerned by the “pinpoint focus” on one geographic region, northern California, as well as the dedication of significant funding at such a “nascent” period in the development of this organization and the concept on which it was founded. DoD requested $45 million for DIUx in FY ’17, for both east and west facilities and $40 million for In-Q-Tel, considered the Pentagon’s venture capital (VC) arm.
The subcommittee believes the DIUx effort is occurring without sufficient guidance, oversight and coordination with, and into, the various laboratories, engineering centers and existing state and local innovation centers that must bridge into this community. The subcommittee believes that focusing on laying a “solid foundation” for DIUx and its interaction with communities and DoD enterprise is critical to ensuring effectiveness, especially if such initiatives will be expanded to include other locations.
The bill language restricts appropriations for DIUx to 80 percent until the defense secretary submits a report that defines DIUx. The subcommittee also wants to know the charter and mission statement, metrics used to measure effectiveness and the process for coordinating and deconflicting between services and other federal government agencies including In-Q-Tel, DARPA and DoD laboratories.
The subcommittee wants the report to spell out any planned expansion to new sites and an explanation of how such expansion will provide access to innovations of non-traditional defense contractors, as defined by law. It also wants to know how compliance with DoD requirements could affect the ability of nontraditional defense contractors to market products and obtain funding and how to treat intellectual property (IP) that has been developed with little or no government funding.
A HASC staffer told reporters Tuesday that the committee doesn’t necessarily disagree with the theme of DIUx, but it is simply expressing concern. Another staffer said DoD needs to explain how DIUx is going to make it easier for those businesses to work with DoD.
The Aerospace Industries Association (AIA) trade group is generally concerned about contracting process length and the treatment of IP, particularly in the context of commercial items procurement. AIA Vice President for National Security Policy John Luddy said Wednesday via a spokesman that if the organization can help its customer become a more agile and consistent buyer, both traditional defense companies and Silicon Valley companies will be encouraged to innovate and do business with DoD.
Consequently, Luddy said, if the Pentagon does not reform its acquisition process, these large, commercially-focused companies will have little incentive to engage in the defense business.
The emerging threats subcommittee performs its markup Thursday at 11 a.m. EDT. The full HASC performs its markup April 27 at 10 a.m. EDT.