Next year will mark the fourth iteration of the educational ICAP initiative, which DIU runs in partnership with the Defense Acquisition University. This fellowship is designed to provide DOD’s leading procurement professionals with hands-on experience and virtual training to help them more effectively buy in-demand commercial technologies from non-traditional military contractors. 

“We have other acquisition officers from across the department who can apply to the year-long fellowship with DIU — to learn our process, how we work with industry, and then bring that back to wherever they’re going. And [the next ICAP application] just opened today,” DIU’s Deputy Director for Commercial Operations Liz Young McNally told DefenseScoop during a panel at the Special Competitive Studies Project’s AI+ Expo.

If tapped for the fellowship, personnel will get a chance to work on a variety of real-world, military service-aligned projects alongside a DIU contracting officer, project team and commercial solution providers.

The fellows will also gain in-depth instruction on a flexible contracting mechanism designed for rapid prototyping and acquisition of commercial tech, known as other transaction (OT) authority. That mechanism, as well as DIU’s commercial solutions opening (CSO) solicitation process, helps the Pentagon operate at a pace that is closer to commercial speeds, when buying certain technologies.

Pointing to recent internal DIU stats, McNally said that for roughly 40% of the companies that win a new CSO deal each year, “this is the first time they ever worked with the DOD.”

“We’ve built all of these processes [to accelerate acquisition]. So we’re asking for a problem statement as opposed to a requirement. It’s a short response, right — like a few pages or a few slides, as opposed to something more — very rapid. And [the ICAP fellowship] is one of the processes that we have built to help not just do it ourselves, but then scale it across the department,” she noted.

Defense Secretary Pete Hegseth recently issued new guidance to inform how the Pentagon buys software capabilities. In it, he directed Pentagon officials to prioritize OT and CSO procurement options when purchasing digital assets for the military.

“[DIU is] also working very closely with [the Office of the Under Secretary of Defense for Acquisition and Sustainment] and others in the department to implement the president’s new executive order on acquisition. And programs like that fellowship are a real way that we’re going to be able to help upskill, and train, and drive the culture change required so that we bring in more commercial technology,” McNally told DefenseScoop.

Those who wish to apply for ICAP must be permanent government civilians or active component military contracting officers. Each fellow will produce a capstone project that will serve as a training plan for their home organization, based on what they learn throughout the 12-month program.

Applications will be accepted until July 31. DIU aims to notify selected candidates in September and begin the program in October.

“To ensure our warfighters maintain a decisive advantage, we need contracting professionals who are fluent in both the defense and commercial sectors, and who can help their teammates across the department to develop that same fluency. That is what the ICAP fellowship delivers, and we need to keep scaling it — and its impact — for the department’s critical needs,” DIU Director Doug Beck said in a statement.

The post Pentagon begins recruiting its next cohort of disruptive defense acquisition fellows appeared first on DefenseScoop.

DIU Director Doug Beck unveiled his updated strategic vision in early 2024 as a way to address a number of challenges that have kept the organization from accelerating the Defense Department’s adoption of dual-use, commercial technologies. A significant part of the new vision focused on both growing DIU and improving its ability to work with the commercial sector, Liz Young McNally, the organization’s deputy director for commercial operations, told DefenseScoop.

Hired in April 2024 to spearhead the unit’s collaboration with the commercial sector and investment community, McNally has spent the last several months integrating different components within DIU into a more unified commercial ops center while also helping the organization build out its regional infrastructure.

“DIU has folks all across the country helping to galvanize the defense innovation ecosystem,” she said in a recent interview. “We have onramp hubs, we have individuals — both government and contractor — bringing in talent, new companies [and] new technology into the department.”

Although the organization is still working to synchronize all relevant components into a single commercial operations center, McNally said DIU is already seeing improvements to how it brings new companies into the Pentagon ecosystem.

“I think now we’re in an even better position to focus on what the big rocks are, which are really around how do we lower the barriers for entry and … what are all the things that we can do to help make it easier to work with the department,” she told DefenseScoop.

For decades, Pentagon bureaucracy has been an obstacle for non-traditional contractors wanting to do business with the department — a phenomenon DIU and others are trying to remediate as commercial technology advances at a rapid pace.

McNally noted that while funding uncertainties have historically served as a barrier to entry, new entrants are also worried about other bureaucratic hurdles such as cyber resiliency, security clearances and the cumbersome authorization-to-operate (ATO) process. Addressing those specific challenges will be a focal point for the unit in 2025, she added.

“There’s so much chicken and egg for a lot of those in terms of when did the company work on them,” McNally said. “We’re in the process of, in the new year, launching some various efforts to pilot, in terms of what we can do even more to help our DIU portfolio companies in those different areas, using some of the [Defense Innovation Community of Entities] funding in the budget to do so.”

As it launches those pilots, McNally said her organization is taking lessons learned from working with some of the smaller companies on the Replicator initiative — an initiative that seeks to field thousands of advanced autonomous systems by August 2025. A future effort will allow the organization to aid those non-traditional defense companies in assessing their cyber resilience, she said.

“I think DIU just has more of a commercial lens to it than other parts of the department,” McNally told DefenseScoop “So when we do those assessments and help companies to think about what types of remediation they are going to do, quite frankly it feels different than when other parts of the department do it.”

The cultural difference between the commercial sector and the sprawling DOD is another barrier McNally pointed to as an area DIU will be tackling this year. For new entrants, the Pentagon is a large and opaque organization to try and navigate, and her organization wants to increase transparency to help companies know where to focus their investments and technology development, she noted.

It’s a task that requires change from both the top- and bottom-levels of the entire ecosystem, McNally said.

“By actually working together, you’re starting to evolve things as well so that there’s the top-down change,” she said. “But then ultimately, it’s starting work with those different program offices and starting to do the work that we’re doing at [Immersive Commercial Acquisition Program] offices and with the [Defense Acquisition University] and others to evolve that.”

Moving forward, a big focus will be on aligning the Pentagon’s most critical capability gaps with where the venture capitalist community is making investments. While some technologies — like AI and autonomy — are readily being funded, others that are more hardware-intensive currently don’t have as much private capital flowing in, she explained.

“Maybe there will be a window going forward to continue to think about what are the right incentives and other changes we have to make to ensure that we have enough private capital, [and] thinking about those other areas as well,” McNally said.

The post With growing presence, DIU continues efforts to lower barriers for new entrants appeared first on DefenseScoop.

Prior to joining DIU, Liz Young McNally was co-CEO of Schmidt Futures — a charitable venture founded by Eric Schmidt, the former Google CEO and leader of the Pentagon’s Defense Innovation Board, and Wendy Schmidt — that aims to find and connect talented people “to harness their collective skill for public benefit,” according to its website.

Before that, she was a partner at the at the global management consulting firm McKinsey & Company.

During her Army career, the West Point graduate and Rhodes Scholar served as a military police officer and on the staff of Gen. David Petraeus, retiring at the rank of captain after two tours in Iraq, according to DIU and her LinkedIn profile.

In McNally’s new role, she will lead DIU’s collaboration with the commercial tech sector and investment community, including “enhanced portfolio company scaling support and related Department partnerships, as well as the defense innovation on-ramp, talent, and investment capabilities resident in National Security Innovation Network (NSIN) and National Security Innovation Capital (NSIC),” according to a release.

The move comes as the unit is pursuing its new strategy known as “DIU 3.0,” an effort unveiled earlier this year by Director Doug Beck aimed at quickening and ramping up the Pentagon’s adoption of commercial tech to deliver what he called “strategic effect.”

“Liz’s expertise and dual fluency across the commercial and military sectors, combining deep experience with both operating businesses and investors as well as downrange in uniform, and on top of her hands-on experience with inspiring service-and purpose-oriented talent, represent an incredible asset to our mission of delivering real change to the DoD at speed and scale,” Beck said in a statement.

DIU, which is headquartered in Silicon Valley and has offices in other commercial tech hubs around the country, was stood up in 2015 under then-Secretary of Defense Ash Carter to serve as a bridge between the Pentagon and nontraditional companies working on military-relevant technologies.

Beck, a former Apple executive, has portrayed the current era as a time of transition for the unit as it looks to expand the impact of its work. DIU leadership reports directly to the secretary of defense and the organization has been adding senior executive positions to beef up its ranks.

“I am thrilled to join DIU at such a critical moment, not just to join such an innovative organization, but more importantly to help strengthen our national security innovation ecosystem and our country’s national defense,” McNally said in a statement. “I look forward to working across the commercial sector, the DoD, and our allies to bring critical solutions to our warfighters on a timescale that matters.”

The post DIU hires Liz Young McNally to lead commercial ops appeared first on DefenseScoop.