Procurement cycles for the US Department of Defense have historically taken a long time—a decade has not been unusual. Many recent acquisition projects are longer even than the historical norm, and are of course incompatible with the pace of change in contemporary information technologies. For example, an analysis by the DoD, Rand Corporation, and the Center for Strategic and International Studies found that procurements since 2015 took at least five years to complete; some stretched out to fifteen years. This is at a time when announcements of new AI capabilities take place daily.
This is a problem widely understood in the US government; a 2024 Atlantic Council report described it as an “innovation adoption problem.” Fortunately, some acquisition organizations have used this report as an Archimedes lever to pole vault over the status quo to more rapid and less bureaucratic procurement and field implementation. And one may have just cracked the nut on a blueprint for cost to value at the speed of relevance.
The Department of the Navy’s Program Executive Office (PEO) Digital has created a surge of partnerships with new and innovative companies that may have found it too burdensome and time-consuming to sell to the military in the past. PEOs cover traditional materiel such as planes, ships, and guns, but Digital is demonstrating a blueprint for accelerating outcomes particularly focused on information technologies given the rapid pace of change in that sector.
I spoke with Justin Fanelli, the Navy’s Chief Technology Officer, who is also the Technical Director for PEO Digital there. As he summarized the effort, “We are simplifying and expediting how we identify the best internal and external innovations and getting them to the field faster and at better value.” Fanelli and his team developed an Innovation Adoption Kit for their and other PEOs to use in speeding up procurements and working with an expanding vendor ecosystem. It includes 15 different “plays,” including employing outcome metrics for prioritization and structured piloting for speed.
The PEO has also identified “investment horizons” for streamlining the procurement process into a funnel for outcomes and effects. Horizon 3 is the earliest stage of evaluating new, potentially disruptive technologies. Horizon 2 is the phase where promising technologies from Horizon 3 are further developed and piloted before scaling up to full deployment. That level of full deployment across the Navy fleet and Marine Corps units are Horizon 1. And Horizon 0 is divestment—an area of increased emphasis for turning off legacy tools that cost more than they provide in value.
This novel approach and its results have caught the attention of other departments and agencies within DOD, as well as procurement organizations in some other parts of the government, such as Veterans Affairs and the Department of Homeland Security.
Within the Navy, there are dozens of technology pilots that have moved from Horizon 3 to Horizon 2 to Horizon 1 just this year. They include performance management for computer telemetry, cloud native access points, workflow automation and analytics, infrastructure for edge computer use, and divestment of legacy hardware. There are also pilot projects involving AI and cybersecurity, one of which is based on technology from a company named VIA.
A New Entrant’s Experience with the Innovation Adoption Kit and an Outcomes-First Approach
VIA is a Boston-area company that I have known and kept track of for over a decade (I was an advisor to another company once affiliated with VIA management, but no longer have that role). VIA once had an analytics software focus, but has evolved into primarily being a Web3 and blockchain-based cybersecurity company with a high level of underlying cryptography. It helps its customers keep data private and compartmentalized while also verifying that it’s real.
I spoke with Colin Gounden, VIA’s CEO, to discuss the company’s experience with the PEO process. The company had previously done business with other branches of the US military, but the Navy had not been a customer. Fanelli and his PEO used the Defense Innovation Unit (DIU) to reach non-traditional vendors who have more experience solving hard problems than working with the government. VIA was recognized as just such a company that could help to address a particular problem they were facing, which involved connecting—while keeping secure—information technologies (computers used for managing Navy and Marine Corps business) and operational technologies (HVAC, shipboard machinery with digital sensors, etc.).
After identifying that need for more data-centric security, the PEO issued a public RFP in October 2022. Vendors were given only 11 days to respond, and 114 companies submitted proposals. By the end of December, the PEO staff had whittled the list down to 13 companies. Each of them was invited to Washington DC to pitch their offerings in January 2023, and given 61 questions to answer in 60 minutes. Soon after, VIA was told that it would be the sole winner if its references checked out, and in March 2023 the company was told that it won. By May 1 VIA was under contract to the Navy for a pilot, which was structured as a production commitment with flexibility. If the product worked as advertised, the Navy could buy substantial licenses without rebidding.
This pace is clearly a major improvement in the speed of the procurement process, and Gounden has been impressed by the way it works. He said he felt that the Navy was looking for capabilities that are demonstrable, and VIA presented a live demo within one week of contract signing with more than a hundred people on the call. VIA received immediate feedback, and that’s been the overall pattern. Every week at a specified time, VIA demos a new capability that incorporates feedback from the previous week, and gets new feedback right away. In short, it’s a very agile process.
Gounden says that another positive attribute of the PEO process is its recognition that perfection is rarely achievable with new IT. Both the requirements and the capabilities of new technology change as users discover new potential use cases for the technology and the technology continues to evolve. The key performance metric then becomes mean time to upgrade—how fast can you fix a problem or add a new feature. VIA is working hard to make that time as short as humanly possible, in some cases within the same day. And the Navy is working just as hard to make the process of acquiring new technology just as efficient and effective, if not perfect.