Contract Awards by US Department of Defense - November 04, 2020

On the same subject

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  February 18, 2019 | International, C4ISR

  There’s a Big Obstacle to the Pentagon’s New Strategy to Speed AI to Troops

  BY PATRICK TUCKER Defense officials want to accelerate the delivery of artificial-intelligence tools from the lab to the field. But it's hard to obtain the massive data streams that make AI work. The Pentagon's new artificial-intelligence strategy, released on Tuesday, aims to get AI out of research labs and into the hands of troops and employees across the Defense Department. But truly transforming the Defense Department into an “AI First” institution will require help from tech companies — and the military to rethink its approach to the massive data streams that AI needs to work. In a conversation with reporters on Tuesday, Dana Deasy, chief information officer of the Defense Department, and Lt. Gen. Jack Shanahan, who runs its new Joint Artificial Intelligence Center, said the JAIC will develop AI tools and programs to assist with everything the Pentagon does. That will eventually include combat operations, although both said the military won't deviate from its core doctrine that dictates how humans are to have authority over autonomous systems. They said near-term projects include efforts to predict forest fires, better spot network anomalies that can indicate cyber attacks, and, most prominently, predictive maintenance. It's an area where some smaller tech firms are already working with the Pentagon. SUBSCRIBE Receive daily email updates: Subscribe to the Defense One daily. Be the first to receive updates. One such firm is Uptake, run by GE alum Ganesh Bell, which has a contract with the Defense Innovation Unit to better predict and accelerate repairs for Bradley Fighting Vehicles. The company is building a virtual Bradley, using data streams from sensors on real Bradleys in the field — what Bell has called a learning, digital twin. “We are able to collect what the best-performing Bradley would look like because we are able to go into many of the subsystems and pull the data,” he said. “Just from a single vehicle, we were able to pull terabytes of data.” Bell aims to also incorporate data from external sensors, and use it to digitally recreate the vehicles' operating environments. It's a process that could be relevant to larger military endeavors, such as the Army's effort to design a new combat vehicle, Bell said. “If we prove the value here, imagine what we can do in that environment as we build that system out? We do the same thing in wind turbines. There's so much to learn from all the unused data in these industries; less than one percent of the data is ever actually used.” Bell says that he's had promising conversations with Army officials about helping out. “It's better to get in all the data right now while you're designing the next generation of vehicles,” he said. Or take California-based C3, whose nine Pentagon contracts include predictive-maintenance work on the Boeing E-3 Sentry for the Air Force's AFWERX office. Here, too, massive amounts of diagnostic data plays the essential role. But finding that data wasn't easy. “You go through the wild goose chase with DOD to get the data that you need,” Lt. Col. Dave Harden, AFWERX chief operating officer, said in December. “I had another project where I literally had people with 10-terabyte hard drives going around the country to get the data. I talk to people who are in charge of the data. The data in the database isn't what we needed. I wonder, ‘Who put these people in charge of the data?'” The main thing that the Defense Department brings to the process isn't the algorithms or machine-learning methodologies. Those are increasingly coming from the private sector and companies like Uptake and C3. It's the unique data sets. Thus, if getting that data is a problem, then the Department has a major obstacle in terms of realizing its ambitions. In their briefing on Tuesday, Deasy and Shanahan said they are willing to work with companies on intellectual property issues, which have deterred some companies from taking government contracts. But Shanahan made one condition clear: “The government owns the government's data.” That begs a few questions: How will contractors get the data that they need if the Department is so bad at collecting and keeping it internally? Who owns a datastream that combines private and government data? AFWERX's Harden said getting the Defense Department to change how it collects and makes data available on systems like the E-3 aircraft is less than totally straightforward. Another challenge is getting the department to actually accept AI-generated recommendations. “All of the processes and procedures need to change,” he said. “When I get a prediction now that says, ‘Hey, this aircraft battery, the data shows you were parked in Alaska and it's cold in Alaska and you were there for years. You don't have to swap out this battery on a regular cycle like you're doing,' how are the policy and guidance and procedures changing to allow that to occur? That is our billion-dollar question for DoD. We haven't solved that. How do we get the technology win that we get and turn that into true ROI?” https://www.defenseone.com/technology/2019/02/department-has-rolled-out-its-ai-strategy-now-hard-part-begins/154864/

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  January 31, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

  ‘The math doesn’t make sense’: Why venture capital firms are wary of defense-focused investments

  By: Aaron Mehta WASHINGTON — In American's technology marketplace, venture capital funds are crucial for pumping capital into small companies in need of cash infusions to keep operating. Part of the venture capital model is acknowledging that many of those businesses will fail, but if a few are successful, venture capitalists can make huge returns on their investments. At a time when the Pentagon is working hard to entice small technology companies to work on defense projects, venture capital, or VC, funding could further mature technology and give entrepreneurs a chance to keep projects going. And yet, investors seem wary of putting forth cash to support companies with a defense focus. Why? In the wake of the very public fight inside Google over working with the Pentagon — which ended with the company pulling the plug on its Project Maven participation — there was a consensus from the defense establishment that there may be a culture gap that is simply too large to overcome. But according to a trio of venture capitalists who spoke to Defense News in December, the reasons are simpler. Katherine Boyle, with VC firm General Catalyst, said the culture issue is overblown for the VC community. The reluctance to work on defense programs comes down to a mix of “math and history," she said. "The math is the reason why investors are hesitant to put a third of their fund into these types of technologies because history shows us that they haven't worked out well,” Boyle explained. She said the math can be broken down into three factors: mergers, margins and interest rates. On the first, she pointed to the fact that the defense sector has seen thousands of firms exit the market, sometimes because of acquisitions by primes. But, she argued, where mergers and acquisitions tend to occur in other parts of the world to acquire new technology or capability, in the defense realm it's all about contracting value. That makes it “very difficult for new technologies to enter the market and ultimately be acquired at the valuations that venture investors would need to see in order to have a return for their fund.” In terms of margins, Boyle pointed out that defense firms are very focused on hardware, which requires a lot of investment upfront. That makes it “very difficult to invest in for venture capital firms because software has 80 percent margins, and it's much easier to build a company that can scale very quickly if it's software-based versus needing a lot of capital,” she said. The third factor, interest rates, ties into the last two. For decades interest rates have allowed VC firms to expand dramatically — something that requires a constant flow of return from investments in order to turn around funds and quickly invest in another opportunity. In the world of defense, investors with $3 billion to $5 billion under management by the VC community will find it difficult to get the kind of returns investors are accustomed to from other markets. All three of those factors come together in a mix that means there are very few chances for VC firms to invest in defense-related companies that match up with what a VC traditionally wants to see, said John Tenet, a partner with investment firm 8VC and vice chairman of the defense company Epirus. “VC investors invest based on speed and scale and probability of a 10 to 20 times return. And so I think that's where you've seen a little bit of apprehension, at least in [Silicon] Valley,” Tenet said. “The exits haven't been that fast, and you sort of have these five big players on one side [that] sort of monopolize the market.” From a pure numbers standpoint, a good benchmark for performance is to look at the S&P 500, according to Trae Stephens, co-founder and chairman of Anduril Industries and partner at Founders Fund. Over a 10-year period, an investor in the S&P can expect to get roughly 3 times their investment back. VC firms want to be able to beat that for an investment to be worth it. To highlight the challenge of attracting VC funding to defense firms with potentially limited return, Stephens pointed to the case of Blackbird Technologies. A venture-backed player in specialized communications tech aimed at the defense market, Blackbird was bought in 2014 by Raytheon for about $420 million. That looks good on paper, but the reality is the churn isn't strong enough for a big, Silicon Valley-based venture capital group. “A lot of times in the government, people say: ‘Oh, Blackbird is this, like, great example of a success story that was like a boost for venture.' It's actually not. It's not a venture scale of return for most funds,” he said. “There are some funds where the economics of [an exit that size] is really good, but for large, Silicon Valley tier-one funds, it doesn't move the needle. And so you have to have these multibillion-dollar opportunities in order for it to really make economic sense.” Another issue raised by Stephens will be familiar to defense primes as well: concerns over sharing intellectual property with the Defense Department. The department is essentially saying “you are the right product for us, now turn over your source code,” Stephens said. “It's crazy. We're literally doing to our companies in America what we're criticizing the Chinese for doing to their companies and to our companies when we enter that market. And so there has to be a better commercial practice for enabling companies to retain their IP and do business with the government without having to fight a legal battle every time they go through a contract.” ‘Knock down the doors' Despite those concerns, all three venture capitalists that spoke to Defense News are involved in investments in defense-focused firms. So why are they spending their money in the sector? Mission is part of it — the belief that, as Americans, a stronger Defense Department benefits their firms. But that only goes so far if dollars don't follow. Once again, it comes down to math. Investing in a company focused on defense technologies, which may have to wait years to secure a contract with the Pentagon, isn't a great strategy for a VC firm looking for quick returns. But if a company is able to get government funding early on, the business suddenly becomes more worthy of investment, said Boyle. “If the government is allocating capital in the right way, it will get VC dollars immediately. Like, it will follow so quickly,” Boyle said. “I see so many people come in to our office and they have an OTA [other transaction authority contract], and they're excited. It's a small, $1 million contract, and that is great for a seed company. But if that same company came in 18 months later and said, ‘Oh, by the way, the OTA has turned into a $10 million contract,' that would meet every milestone that I usually see to series A.” (An OTA is a type of contract that enables rapid prototyping; series A financing is the investment that follows growth from initial seed capital used to launch operations.) “$10 million to the US government is nothing, but to [a] startup — $10 million is the best startup I've seen all year, if they're an 18-month-old startup and they're getting that kind of capital early on,” she said. Added Stephens: “It means they're doing something right.” That creates a chicken and egg scenario: Venture capitalists only want to invest in companies that already have a Pentagon contract, but small firms often can't keep the doors open long enough without external funding while waiting for the department's contracting processes to progress. While groups such as the Defense Innovation Unit — the Pentagon's technology hub — are helping speed along that process, it remains a problem with no easy solution, at a time when the Pentagon needs the nondefense technology community in ways it hasn't for decades. Boyle believes there is a “growing group” of investors who see the strong success of a handful of companies like goTenna, Anduril or Shield AI that have managed to break through and become successful defense-focused investment vehicles. That means the next few years are going to be critical for everyone involved. “None of us would be here if we weren't optimistic,” she said. “I actually think this is an incredible time to be investing in deep tech, particularly deep-tech companies that are selling to the Department of Defense because if it doesn't happen now, it never will.” https://www.defensenews.com/smr/cultural-clash/2020/01/30/the-math-doesnt-make-sense-why-venture-capital-firms-are-wary-of-defense-focused-investments/

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  June 23, 2021 | International, Aerospace

  German defense ministry seeks $5.3 billion for next FCAS research phase

  Berlin wants to create a separate pot of 750 million euros dedicated solely to national developments.