Congress pushes DoD to deliver

In the $825 billion defense spending bill Congress passed March 21, one of the under-the-radar winners was the Pentagon’s Defense Innovation Unit, which saw its 2024 budget skyrocket to $945 million, up from the $107 million enacted for 2023.

The eye-popping increase sends the Pentagon a loud and clear message: It’s time to get serious about transitioning cutting-edge technologies into real military capabilities. It also reflects Capitol Hill’s growing impatience with DoD’s sluggish adoption of emerging private sector technologies in artificial intelligence, space, and autonomous systems.

Notably, lawmakers specified that most of the add-on for DIU — about $589 million — go toward “fielding,” or transitioning successful prototypes into operational use.

Established in 2015 in Silicon Valley, DIU serves as a bridge between the Pentagon and commercial technology firms. Its mission is to scout for mature solutions that can integrate rapidly into existing programs and platforms.

DIU has a broad portfolio, and space is one of its focuses. Startups have come to rely on DIU for crucial financial support and a gateway to defense contracts.

The agency has cast a wide net in funding projects that span the space technology landscape — from small satellite launch vehicles to satellite communications, space logistics and on-orbit mobility.

DIU was an early proponent of a “tactically responsive space” program focused on speeding up the planning and execution of launch missions so satellites can be deployed on-demand to meet specific military or intelligence needs. Maj. David Ryan, DIU’s space portfolio program manager, said his office is partnering with the Space Force for an upcoming responsive mission known as Victus Haze.

Although the government is expected to be the main customer for tactically responsive launches, he said, DIU sees broader benefits from investing in these capabilities alongside commercial partners.

“This is about understanding how to best leverage the commercial industry,” Ryan said March 18 at the Satellite 2024 conference. He noted that projects like Victus Haze and other DIU initiatives have a dual focus: addressing urgent defense needs while fostering industry growth.

In-space services industry

One area where DIU’s investments could be particularly catalytic is the nascent market for in-space satellite servicing and logistics.

Commercial players are developing capabilities for in-orbit refueling, inspection, spacecraft relocation and debris removal. But with the commercial marketplace still in its infancy, the Pentagon is expected to be the primary customer for these fledgling services over the next few years, said Ryan. That’s where DIU sees an opportunity to help nurture the industry through critical seed investments while needs remain modest. “Some prototypes will likely have to be adopted by the government, in the near term, because we have the most expensive satellites and there won’t necessarily be a commercial market for salvaging a lower cost satellite,” Ryan added.

DoD knows it will ultimately need a robust, competitive ecosystem to keep its most valuable assets healthy and operational, he said. By funding demos
and prototypes today, DIU can help ensure key capabilities survive the proverbial “valley of death” until the commercial market scales up.

For DIU, fostering the growth of these commercial capabilities checks multiple boxes — from bolstering deterrence by improving spacecraft survival to enabling DoD to shed its dependence on painfully long and costly acquisition cycles.

Pentagon power structure

DIU’s blockbuster budget increase was preceded by a reorganization nearly a year earlier that signaled the innovation unit’s rising clout within the Pentagon hierarchy.

In an April 2023 memo, Defense Secretary Lloyd Austin announced DIU would report directly to him, even though the agency is part of the office of the undersecretary of defense for research and engineering. The memo elevated DIU’s institutional stature and profile due to its role in injecting commercial technologies across the military. Coupled with the reorganization was the appointment of former Apple executive Doug Beck as DIU’s director.

For the Pentagon, still bound by ponderous bureaucracies, DIU represents its clearest pipeline yet to the dynamism of commercial innovation and new space companies.

Throwing money at DIU may not fundamentally change the entrenched defense procurement culture. But by turbocharging DIU, Congress has put some teeth behind its calls for faster tech adoption and the idea that America’s tech edge remains its decisive advantage on the future battlefield, if it can be operationalized at speed.

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