Planning, Programming, Budgeting and Execution. PPBE has been the way of the Pentagon since the 1960s. Nobody is thrilled with it, but it persists. The latest set of recommendations for reforming Pentagon acquisition comes in a letter signed by a dozen contractors and venture capital outfits. For the details, Federal Drive with Tom Temin spoke with Ahmed Humayun from Applied Intuition and one of the signatories to the letter.
Interview Transcript:
Tom Temin Now, your company, let’s begin here, is a venture backed technology firm in the, I guess, autonomous zone that has probably been frustrated by trying to shove innovation at the Pentagon.
Ahmed Humayun Yeah. So applied intuition is a Silicon Valley software company. As you said, we focus on autonomous systems. Our mission is accelerating the adoption of safe and intelligent machines. We have a large commercial business that have been operating in that space for the last several years. And then recently, in the last few years, we started a government business. And we’ve been successful in so far as we are working with the Department of Defense on programs we think are essential. But we’ve noticed some challenges that we’ve experienced that have also been experienced by other of our peers and folks who are not just in the autonomous space, but in other key technologies. And that’s sort of what prompted us to think a bit more deeply about how could we be a small part of improving this process.
Tom Temin Now, it’s hard enough to sell pencils and desks to the government. That’s a long, involved process just to get on the [General Service Administration (GSA)] schedule. But in the high tech, let’s say, for lack of a better word, defense zone. What are some of the challenges you’ve seen or you’ve identified?
Ahmed Humayun Yeah, so there are a couple of things. First of all, the procurement process as a whole tends to be very long, very complex, and it tends to favor large incumbents. So securing these contracts takes a long time, a lot of resources, it takes a lot of access to particular networks. It tends to help existing incumbents much more at the expense of newer companies. And that could be fine, if it weren’t the case that a lot of the innovation that’s happening in the economy today in the commercial marketplace and in particular in Silicon Valley, is being done by nontraditional companies, by small businesses. And so this process, as it’s constructed, currently tends to disadvantage those newer entrants. That’s one part of this. The other piece here is, and this again, is in contrast to what happens in the Valley, there’s very limited access to users at the Department of Defense. So in the Valley, you were developing a lot of software very quickly, you’re deploying it quickly, you’re learning from users. The whole idea is to iterate quickly, to experiment and then scale what works. In the Department of Defense you can go 12 to 18 months longer. You can win contracts without having engaged with users. And so that, from our perspective, limits both the Valley’s ability to deliver solutions that are responsive to the DoD’s needs, and it also delivers subpar solutions to the department. Those are two things that popped in mind. Another common thing is, you see a lot of compliance requirements that are both specific to certain agencies that are also dispersed across multiple agencies. It’s this confusing labyrinth. It’s not clear what requirements are critical to have immediately, what can be deferred. And so all of that for newer entrants, the ecosystem becomes fairly challenging to navigate and introduces friction. Whereas if you’re an innovative company, what you want to do is prove that your software or your other commercial capability works. And you want the ability to demonstrate it and do it as quickly as possible. And this just introduces friction into that process.
Tom Temin Well, give us an example of what it might be like to do business with a commercial client and access to users and so forth. Give us a typical case history of where you’ve had success commercially and what that looked like, especially that idea of access to the ultimate user of the product.
Ahmed Humayun Yeah, that’s a great question. So I think one simple thing is we pride ourselves, as many companies do, on being able to deploy on our customer networks quickly, which then allows users on those networks to experiment with our tools and to give us feedback. We can do this typically within weeks in the right corporate environment, sometimes less than that. When it comes to deploying our software on the government side, it can easily take much, much longer than that. It can take months, if you don’t have the right accreditations in place. Even if you have those accreditations in place to operate on a given network, it’s unclear that they will transfer over to other networks or with other agencies. So in some sense, you’re reinventing the wheel each time. Again, this is sort of like a logistical, administrative example, but it has a very salient effect on the ability to deliver capability quickly. And at the end of the day, what’s the point here? The point is to deliver these capabilities to users who then will be able to give feedback and do something useful. But it’s not happening or not happening as quickly as it does on the commercial side.
Tom Temin We’re speaking with Ahmed Humayun, who leads federal marketing at Applied Intuition. And does that question specifically of the planning, programing, budgeting and execution process come up in their discussions with you? Do they say, Yeah, we’d love to get it in here now, but we can’t because of PPBE requirements and etc..
Ahmed Humayun So what I was offering you was a tactical example of a challenge that we face in delivering our capability quickly. I think, no, people aren’t citing the PPBE process when they’re bringing up these kinds of challenges. Where I think the broader PPBE process and really that’s, as you well know, it’s part of a broader set of processes like the process, which defines technology requirements. The PPBE process, which budgets for them, and then the acquisition system, which ultimately procure solutions against them. This whole web of systems works over a multi-year period. It defines requirements very rigidly in the beginning. It budgets for them in a very rigid way in the middle, and then it procures them through a drawn out process that’s often opaque to industry. So as a result of that, sort of in a macro sense, processes like PPBE constrain newer entrants to the ecosystem from participating.
Tom Temin All right. So you have signed a letter urging the defense secretary to really take a hard look at the Atlantic Council recommendations. And there is some crossover, I guess, in the ecosystem of the Atlantic Council study of this whole acquisition and inculcating technology question with a commission that’s looking specifically at PPBE. And so what in the Atlantic Commission that you signed to underscore, do you feel are the most important things DoD could do to speed up adoption of new technology and innovation?
Ahmed Humayun Yeah, for sure. I mean, there are several things. I think the first thing is to start with recognition of the macro point, which is that the center of innovation used to be the DoD. Now it’s shifted to the private sector. We know this just based on the level of investments that are being made. So if you look at the fiscal year 2024 budget, it spends maybe $145 billion in R&D. If you look at how much we see spent in the commercial side, for example, in 2022, it was north of $200 billion based on how you calculate. So there’s a lot of commercial investment that’s happening. It’s not being effectively leveraged by the Department of Defense. That’s sort of the core problem that we think the department should address, and that the letter and the commission recommendations attempt to address.
Ahmed Humayun So then what are the things that are being recommended that could help inject that commercial innovation into the department? So there are a couple of things. One thing is building on successes to date. So, for example, we shouldn’t say that the acquisition process has been completely static and there haven’t been attempts to improve, their have. The Department of Defense created, for example, the Defense Innovation Unit, the DIU that has played a central role in injecting commercial technology into the Department of Defense, but it has not been well funded. It has not been given historically a lot of authority to procure technology. Now, recently, and this was in fact a recommendation in the report that was released a few months ago. It’s been elevated as a direct report to the secretary of defense. So that was a great step. So what are other things that can be done to build on that? One thing is providing funding to DIU to directly be able to fund technologies, to work on consolidating the efforts being done by other innovation organizations within DoD. There are actually many of them. There are organizations and all the different services. There are organizations that straddle the services. But these need to be coordinated. They need to be consolidated. So the department has a better sense of where is the actual both demand signal within the department for specific technologies, and then also, where in the commercial marketplace are solutions that can fit those needs. So funding those efforts correctly and consolidating those efforts is going to be the key here.
Tom Temin And if you look at some of the solutions that are floating around that should be inculcated, such as yours or such as something in artificial intelligence, they all seem to be software. But is there innovation happening in materials science or some other type of hardware area that’s equally difficult in your experience?
Ahmed Humayun So that’s a great point. So the traditional acquisition process was designed around acquiring large, exquisite hardware platforms. Ships, tanks, planes. And it makes sense, the process makes sense if what you’re thinking about is acquiring these massive platforms over multi-year or sometimes multi-decade timelines. Much of the innovation that is happening today is happening on the software side. And these acquisition systems are not designed to leverage that innovation successfully. Now, to your point, yes, it’s not just on the software side that innovation is taking place. There’s all kinds of innovation taking place in the material sciences and other domains. And I think our broader position here is doing these kinds of changes will be helpful across the board. The technology is changing too fast now, both on the software and the hardware side for us to do these very rigid timelines where it takes two years to define a requirement, two years to figure out the budgeting process for it. Two years to get a company on contract. That’s not good, whether you’re a hardware provider or a software provider or you operate at the nexus of the two.