Immersive Commercial Acquisition Program—Delivering Innovation-fluent Contracting Officers
by Devon Bistarkey
The Immersive Commercial Acquisition Program, or ICAP, is a collaborative fellowship between DAU and the Defense Innovation Unit (DIU) to provide defense acquisition professionals the tools and insight needed to bridge the gap between the DoD and leading-edge commercial technology. ICAP is in its third year; solicitations for the FY2025 cohort are open until Aug. 30, 2024.
The ICAP program is a result of DIU’s efforts to catalyze DoD’s innovation entities into an impactful ecosystem synced with DoD’s engines of scale as outlined in the “DIU 3.0: Scaling Defense Innovation for Strategic Impact” report released in February. DIU is deepening its department wide partnerships to ensure that successful prototypes scale and transition to the Joint Force. To accomplish this, DoD needs innovation and dual-fluency talent across the workforce.
The ICAP fellowship combines virtual classroom training with classes on Other Transaction (OT) authorities through DAU’s Defense Acquisition Credentials program with experiential learning. This involves completion of prototype projects, including hands-on experience with every aspect of DIU’s Commercial Solutions Opening (CSO) process, and education about the commercial sector.
The experience and skills that ICAP fellows build and learn during the 12-month program are essential to complementing the DoD’s more traditional defense acquisition pathways with disruptive tech-sector innovation.
The current FY2024 cohort was recently interviewed by Devon Bistarkey of DIU. The fellows discuss their experience and provide key takeaways near their halfway mark—as framed by the program’s goals. These goals recognize the national security need to keep pace with commercial product cycles and adopt commercial procurement best practices by training a corps of acquisition professionals on DIU’s acquisition process.
Q. What have you learned about effectively acquiring innovative commercial technologies through flexible acquisition authorities?
Brittany Harris: The process doesn’t have to be complicated to prudently spend taxpayer dollars to get after the nation’s most difficult problems. Congress has expanded who can use these alternative, or “flexible,” acquisition authorities. These authorities exist outside of the Federal Acquisition Regulation (FAR) to allow federal procurement professionals to move fast while still following the same key principles: Deliver on a timely basis the best value product or service to the customer while maintaining the public’s trust and fulfilling public policy objectives.
These alternative authorities allow for research, prototyping (10 U.S.C. 4022), and experiments (10 U.S.C. 4023) allowing the government to operate like a business partner with industry instead of dictating all of the terms. An agile process opens the door to smaller nontraditional companies and allows the government to take advantage of emerging technology instead of relying on a procurement process that takes years and risks delivering technology that is verging on obsolescence.
Another lesson is that the government doesn’t always know what they want—because they aren’t aware of the new technology that is available to them. The government’s unique requirements do not preclude it from taking advantage of emerging commercial technology.
DIU demonstrates how the government can prototype mature commercial technology, contract for it to be slightly altered so it meets a specific military need, and deliver a capability quickly. This process allows the government to take advantage of the commercial investment instead of starting over with a government-defined product.
Working to co-develop the statement of work improves understanding and performance, and the prototype is allowed to change and grow with the government’s needs.
Christine Docker: The main takeaway is that flexible acquisition authorities facilitate much more discussion in development of the Statement of Work and expedite the transition from prototype to follow-on production. The free exchange of information describing the government’s needs and the vendor’s capabilities is critical for successful prototype development. The exception to full and open competition for the follow-on production contracts included in 10 U.S.C. 4022(f), Authority of the Department of Defense to Carry Out Certain Prototype Projects, significantly reduces lead time to acquire production models, ensuring the technological advantages gained with prototype development are not obsolete by the time production models are fielded.
Q. What insights have you learned about commercial markets and what motivates organizations to do business with the government?
Rebecca Lingenfelter: Private industry exists to make a profit. If the process is burdened and cumbersome, a company may not be willing to invest the time and effort required to maneuver through the process. A company is motivated to invest time and effort when the process is streamlined and efficient. Flexible acquisition authorities such as 10 U.S.C. 4022, prototype projects, and 10 U.S.C. 4023, procurement for experimental purposes, provide the framework needed to encourage private industry to do business with the government.
Christine Docker: Building on that, DIU does a tremendous job of researching the commercial marketplace for nontraditional businesses that may want to do business with the government. DIU is constantly engaged across the full spectrum of defense-critical technology ecosystems and is an essential piece of how the organization serves as the bridge between the notable “valleys of death.” This proactive engagement approach with companies helps to shape the initial phase of the CSO [Commercial Solutions Opening] problem statement process and provides valuable insights into how projects are scoped.
Ralph Barnes: Additionally, DIU’s commercial engagement approach helps program managers locate and engage with companies that work within the industries covered by the DIU portfolios. I believe this is the success factor for how DIU better understands the art of the possible in these industries.
It’s my experience that these companies want to do business with the government—and are willing and able to collaborate and negotiate—but value being an equal partner. That is why I believe that using the flexible acquisition authorities to carry out certain prototype projects enables candid, collaborative conversations that companies value and best enables the government to explain the problem we are trying to solve.
Q. What tools have you learned that can be used to effectively craft acquisition, contracting, and negotiation strategies?
Tianna Seaman: Keeping the end in mind. DIU and their defense mission partners are breaching innovation in a manner never seen before in the DoD. For companies, the goal is not just obtaining the prototype agreement; rather, it is putting their best and brightest teams on the projects at the best competitive prices to win the prototype, successfully completing the prototype, and noncompetitively entering into another agreement for full-scale production. The end state for both the companies and DoD is obtaining those production agreements to scale the technologies and provide the innovative solutions to the Warfighter.
Christine Docker: Another great tool is perspective. Approach the acquisition, contract, and negotiation from the perspective of providing the “freedom to fail.” Since the mission of DIU is to procure commercially developed prototypes, the performers are given the freedom to fail. Prototypes are experiments, and there is a lot to be learned from a failed experiment, so it would be counterproductive to punish a performer if the prototype is a failure. For this reason, using performance reporting tools, such as Contractor Performance Assessment Reporting System and Supplier Performance Risk System, is inapplicable to DIU prototype awards.
It is also important to recognize when a prototype really is failing and build in off-ramps for the vendor. DIU uses milestones as go/no-go discussion points. The milestones are uniquely defined for each agreement and serve as opportunities to decide whether to continue developing the prototype. In the case of multiple agreements with different performers, the milestones-as-decision-points may serve as a method to off-ramp a vendor.
Shaun Bright: The best tool I’ve learned is creating a model OT agreement as a baseline can help with negotiating the OT terms and conditions.
A standard set of government terms and conditions allows the contractor to propose edits, additions, or deletions that align more closely to their standard commercial practices. Agreement officers should work with their organization’s legal counsel to determine if the proposed changes are acceptable and if they would adversely impact protections to the government’s interests.
Additionally, it is a best practice to start negotiating the terms and conditions as soon as possible, and preferably in conjunction with the development of the statement of work (or similar document) to expedite the OT award. Finally, while a model OT agreement is a valuable tool, agreement officers should consider the government’s specific requirements for the OT and whether or not additional articles (e.g., cybersecurity) need to be drafted and included in that requirement’s OT agreement.
Q. What best practices around the Other Transaction Authority (OTA) and the Commercial Solutions Opening to acquire innovative commercial technologies have you learned and will take back to your organizations?
Christine Docker: The standard CSO, which includes the standard evaluation procedures applicable to all prototype efforts, simplifies the solicitation and evaluation process. DIU’s CSO is posted to SAM.gov and its own website, DIU.mil. As new areas of interest (AOIs) are accepted into DIU’s portfolio, these AOIs are posted to DIU.mil with a response due date for solution briefs. From the solution briefs, DIU’s acquisition team follows a standard evaluation process that does not need to be rewritten with every solicitation (as with FAR-based contracting) and reduces the learning curve for the acquisition team.
Ralph Barnes: The SAM.gov data bank tool verifies companies as NDCs [Nontraditional Defense Contractors]. This tool builds a report, using the companies’ CAGE [commercial and government entity] code to find all contracts, within the last year, that have been subject to the full Cost Accounting Standards. Prior to this tool’s introduction, there was no good way to research the company and make a determination. I have already brought that back to my organization for their use.
Q. What has been your personal highlight of the first half of the ICAP program?
Ralph Barnes: The highlight thus far has been the innovative use of the CSO process to very quickly develop an OTA agreement that will greatly increase the speed of innovation while also maintaining an incredible amount of flexibility to adjust the agreement as needed to move the prototype into a solution suitable for production.
Shaun Bright: My personal highlight has been using multiphased down-select assessments during the CSO process. DIU often receives up to 100 solution briefs in response to a solicitation, and the down-select process allows the government team to quickly identify innovative solutions and make OT awards in approximately 90 days after the solicitation posting. Using solution briefs and oral presentations in assessment phases prior to requesting proposals allows the government team to focus on the technical merits of each company’s solution upfront and reduces the amount of information that nontraditional defense contractors must submit in responding to the solicitation.
Tianna Seaman: A professional highlight for me will be working with DIU during a departmental first. A DIU contract is set to be the first in the DoD to obligate Military Construction (MILCON) funds using an OTA under the FY 2023 NDAA [National Defense Authorization Act] pilot. As an ICAP fellow, I have been assigned to the Energy portfolio to specifically work on this area of interest. I am able to witness firsthand how DoD is able to apply new authorities, create the process in which best to apply the authority, and contract with vendors.
Rebecca Lingenfelter: My personal highlight is being a functional part of the award process and assisting in awarding a $98 million prototype award in less than 40 days from the request for prototype proposal. The streamlined acquisition process, open collaboration, and innovation of DIU made this award possible. I was also granted the privilege to attend Phase 2 Pitches in person. Attending the Phase 2 Pitches provided valuable insight into the working nature of the CSO.
Brittany Harris: As an ICAP fellow, my eyes have been opened to an entirely new way of doing business that I had no idea was even authorized. Alternative authorities and CSOs are the way of the future in federal acquisition.
Visit the DIU website to apply to be part of the next ICAP cohort.
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Top photo: Doug Beck (right), Director of the Defense Innovation Unit (DIU) and senior advisor to the Secretary and Deputy Secretary of Defense on technology innovation, competition, and strategic impact (right), speaks with DAU President Jim Woolsey (left) for DAU’s On Acquisition series Oct. 24, 2023, at DAU, Fort Belvoir, Va. DIU partners with DAU to develop and implement the ICAP. Source: Photo by Nicole Brate
The views expressed in this article are those of the author and participants alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.
