California Companies Win Big with DIU Funding

By Jon Harper

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Companies based in California are by far reaping the most financial rewards from the Pentagon’s Defense Innovation Unit, which was created to help bridge the gap between the military and the high-tech commercial sector.

DIU is headquartered in Silicon Valley but has offices in other technology hubs around the United States including Boston, Washington, D.C. and Austin, Texas.

“DIU partners with organizations across the DoD and the interagency to rapidly prototype, field and scale commercial solutions that can save lives, lead to new operational concepts, increase efficiencies and save taxpayer dollars,” the organization said in its recently released annual report for fiscal year 2021.

Eighty-six percent of companies that have received DIU awards are considered nontraditional vendors and 73 percent are small businesses.
Between its relaunch in June 2016 and September 2021, DIU awarded a total of 279 contracts to 245 unique vendors with a total value of $892.7 million. The 10 states with the highest concentration of awards were California, Virginia, Colorado, Arizona, Florida, Illinois, Massachusetts, Texas, Pennsylvania and Alabama.

Of those contracts, a whopping 103, or 37 percent, went to firms based in California. They had a total value of $335.2 million, which amounts to about 38 percent of the total funding that was bestowed to vendors across the country.

California far outpaced second-place Virginia, where firms won 36 contracts worth $166 million. Colorado came in third, with six contracts worth $59 million.

More than 20 states were not home to any companies that received awards.

To help bring more innovators into the fold and expand its geographic reach, DIU recently announced a new “regional strategy” and focus that includes plans to open a Midwest outpost in Chicago.

“Through our regional hub office structure, DIU will leverage our staff, reservists, and our sister innovation organizations … to provide a front door to the DoD which will continue to broaden the” national security innovation base, the report said.

The Defense Innovation Unit is also looking to tap into the commercial sector overseas.

“Collaboration with our allies and partners is an area of asymmetric advantage for the U.S., and it is one of the keys to achieving integrated deterrence,” the report said.

Since 2016, DIU has made contract awards to 17 foreign-based companies with a total value of more than $24.8 million, the organization said. The list includes businesses based in Australia, Canada, France, Israel, Portugal, Spain, Switzerland and the United Kingdom.

Topics: Budget

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