The Army is borrowing from venture capital’s playbook to field promising tech faster

Terry Gerton You are the director of Army FUZE, so I first have to say, what is that?

Matt Willis Yes, Army FUZE, so it was established about a year ago by Hon. Dan Driscoll, who at the time was the Secretary of the Army. It was really established on the principle that the Army needed to have a more deliberate, agile acquisition and innovation program to stay abreast of how fast technology changes and also recognize that we need to take more risk. So Army FUZE is essentially adapting or adopting venture capital-based principles into our innovation investments. So what does that mean, from a practical standpoint, is how can we take more risk, make lots of small investments, scale what technologies are working, and divest what isn’t? And this is foundationally different from the traditional acquisition process, where we have acquisition programs that last decades and cost hundreds of millions of dollars — and pivoting it to, how can we measure things in terms of deploying capabilities to our soldiers in weeks or months, iterate on capabilities that work, and really bringing that innovation to the soldier or innovation in the dirt?

Terry Gerton So you’re funded at about $750 million a year. Do you treat that like a venture capital fund? Do you choose where that money is going to be invested and you hope for success?

Matt Willis Yes, I think that’s a good way of describing it. Of course, the $750 million is divided over a few different programs, mostly focused on maturing prototypes. And unlike a traditional venture fund, where we’re looking for financial returns, we’re actually looking for technical returns. So how can we invest in the capabilities that have that greatest potential for transformational change in the capabilities that our soldiers have available to them?

Terry Gerton Talk to me about the programs that are combined to make FUZE, because you’ve got SBIR/STTR in there and some other things.

Matt Willis The programs that make up FUZE all existed previously, but the challenge, particularly for industry that hasn’t worked with the government before, was there’s four or five different doorways, different application processes, different outcomes, and it’s intractable for companies moving through the process. So what FUZE does is it brings all these pieces together. So one program is the xTech program. So this is a program that’s really designed to lower the barrier to entry for new businesses that haven’t worked with the government before. It’s a very, very simple application process. We provide non-dilutive cash prizes to companies. So when they go out and participate in an exercise, let’s say, we’re providing those resources to offset those engagement costs. You mentioned the SBIR/STTR program, so of course the government loves acronyms, but the Small Business Innovation Research/Small Business Technology Transfer program. So the Army in the last few years has actually pivoted our focus of that program on prototype development — capabilities that we believe can nominally get into our soldiers’ hands in 18 to 24 to 36 months. SBIR can, though, sometimes be limited. The awards are typically capped at around $2 million. We have some new, unique flexibilities that allow us to go higher than that. But another program within the portfolio is our Technology Maturation Initiative; this allows us to have larger prototyping awards. And then finally, we have the Manufacturing Technology program; so this investment allows us to address challenges with supply chain or manufacturability or developing capabilities with a more cost-conscious perspective. So it’s really the full gamut, from identifying new technologies that are out there that the Army might not be aware of, do initial stage prototyping, more advanced prototyping and then getting companies ready to scale.

Terry Gerton I’ve walked the floor here at AUSA and there’s anything you could imagine that would go along with Army operations. How in the world do you sort what might be competitive ideas and innovations from what might not?

Matt Willis One of the adages I often say is, if everything’s a priority, nothing’s a priority. So we’re really focusing our dollars on those challenges that our warfighters are facing today. Army FUZE is the capital engine behind the Army PIT. So Army PIT, Pathway for Innovation and Technology, stood up about 10 months ago. And what the PIT does is it brings together the capital engine, the acquisition program management that we have within the FUZE portfolio and connects it with four deployed acquisition officers at the ASCCs — so in U.S. Army Europe-Africa, U.S. Army Pacific, and also at the tactical level at the Corps, so 18th Airborne Corps, I Corps, III Corps. What does all this mean? This all means that we are getting our technical priorities directly from commanders, so we are investing in real problems with real needs and real opportunities. So it’s not just investing in science for the sake of science or a thousand flowers blooming. We’re investing in real needs.

Terry Gerton And then do you go out and ask the community for input? Will you say, I have a need for a particular problem?

Matt Willis There’s a variety of mechanisms, but the most common mechanism is putting out a call for proposals. But we’ve, I’d say, vastly simplified the process. So gone are the days where we’re asking for companies to develop a 50-page manuscript. Most of our applications are two to five pages, so being very, very simple and not asking companies to spend hundreds of thousands of dollars developing a proposal, not having to have on-staff technical writers or consultants to help them write their proposals. We’re trying to make it easier to work with the Army, not more difficult

Terry Gerton At what point in the process do you put the equipment into soldiers’ hands to let them test it?

Matt Willis Yeah, soldier feedback is of critical and tantamount importance. And I’ll say that throughout the Army FUZE lifecycle, we start and end with soldiers, and then soldiers are involved throughout. So many, if not all, of our programs involve soldier touch points. And these are really critical. I wouldn’t call them exercises; I would say an operational assessment, where we are giving kit to a soldier. The vendor may or may not be there, and that feedback goes to the vendor. So I think it’s beneficial on both sides. Soldiers learn how they can use new tech that might change the way that they execute their mission. From a vendor side of the house, they are getting realistic feedback in an operational scenario that shows where their capability does or doesn’t work. And from the Army, we want capabilities that are successful and we want companies to be successful. So vendors utilizing that feedback to change how their technology works or an interface or whatever is really critical for moving forward in a competition.

Terry Gerton How do soldiers feel about it when they get it and maybe they love it and then they have to give it back?

Matt Willis I mean, we get great feedback from soldiers. This is, again, a foundational shift in terms of how we are injecting new technologies into soldiers’ hands. So feedback from the process before was, the Army would spend hundreds of millions of dollars and decades developing a capability. We give it to a soldier and it just wouldn’t operate as advertised. And so bringing them into the process earlier has made a foundational change in terms of how we are developing new capabilities and developing relevant capabilities.

Terry Gerton One of the tenets of a venture capital fund is that you fail fast. So in this process, again, how do you figure out which products aren’t going to make it?

Matt Willis  I think for us that soldier touch point and soldier demonstration in an operational or realistic environment is absolutely critical. And I think that the philosophy that has really enabled the FUZE program to exist is this recognition from leadership that failure is not — it’s not a bad thing. My philosophy is that if we have 100% transition rate, if 100% of what we invest in works, then that means we’re not pushing hard enough. We’re not at the bleeding edge of technology. So we need to be willing to take risks. We need to willing to have capabilities that don’t work and that feedback can be provided back to that vendor.

Terry Gerton Are there characteristics of the programs that you’ve seen be successful that differentiate them from ones that don’t?

Matt Willis I think that the companies that are not wedded to one specific, I won’t say capability, but one specific way of leveraging their technology — maybe we use a capability, and it can be leveraged in a different way by our soldier than that vendor envisioned. Or maybe there are opportunities to leverage a different facet of their capability to be integrated within other capabilities. I think that’s another piece we haven’t really talked about, but it’s that, I think the Army recognizes that there isn’t one bespoke, eloquent capability that’s going to solve all of our problems. With what we’ve seen in Ukraine and elsewhere, the pace of technology change is vast, and we’re going to need a layered, integrated solution to address our problem set. And that means having capabilities that can be plug-and-play or interoperable or layered and integrated. And so companies that want to operate in their bubble and have a complete black box that doesn’t talk to anything else are companies that are not going to be successful.

Terry Gerton Soldiers are infinitely creative and you give them a box and tell them it’s for X, they may find 100 different applications for it. Much like the commercial market, right?

Matt Willis Yep, absolutely.

Terry Gerton So are there places where you’ve seen FUZE foster technologies that have been deployed now, made it to operational deployment and are in use?

Matt Willis So I can give an example, not specifics. But one example is Operation Jailbreak, which the secretary talked about in his opening remarks yesterday. This is really a challenge where there was a specific problem set that some of our forward-deployed soldiers were facing. The secretary at the time said, hey, we need to address this problem and we need have a capability in theater in 10 days. And so by bringing together the power of the Army FUZE Program with our partners across the Army PIT, we were able to put out a solicitation, do some pitches with companies, do a down select, and then get companies on contract using contracting officers within the Army FUZE program within 128 hours. And those capabilities were tested domestically at Aberdeen Proving Ground and then forward deployed into CENTCOM.

Terry Gerton That’s pretty impressive. So as FUZE has matured, are there lessons that you’ve learned in watching companies go from start to deployment that you’d want to make more readily available?

Matt Willis Of course, there’s no one magic pathway that always works for companies. It’s specific to the firm, specific to technology and how it’s going to be used. I think the beauty of what we’ve built within the Army is, again, leadership that recognizes that we need to take risks. We need to really compress that timeline from when vendors develop a capability to when we bring that capability to soldiers and have that iterative feedback loop. I think that’s really what has been missing in the past in the acquisition process in general — it’s that folks are operating in silos, we’re not talking to each other, or it’s more like a relay race, where, in fact, it should be highly synchronized and integrated, particularly for these capabilities that need to evolve quickly.

Terry Gerton Do you see those lessons learned being adopted back into the traditional acquisition system, or is it a handoff or a partnership between what you do and what they do?

Matt Willis It certainly is a partnership. I mean, so Army FUZE and Army PIT, we are within the acquisition enterprise, the Office of the Army Acquisition Executive. And that, I think, actually enables us to deploy things quickly. That being said, we are doing everything in partnership with the portfolio acquisition executives and the capability portfolio executives. Because ultimately, they are going to be the partners that take the promising technologies that we’ve identified and help them get to scale.

Terry Gerton So with everything you’ve seen on the floor here at AUSA and heard in the conferences, what’s next for FUZE?

Matt Willis I think FUZE has a very promising future. I think that what we’ve built and demonstrated and piloted over the last year, of the benefit of bringing all these programs together, has had outsize impact. The other piece that I haven’t talked about is the other half of the FUZE program — is our capital integration team. So we’ve built a robust network of partnerships with both domestics and international venture capital, private capital firms, again, helping companies within the FUZE ecosystem have access to cheaper capital. This is really all about, how can we have one Army dollar match with one, let’s say, private capital dollar and have more than $2 worth of impact? I think that that’s really the power of American ingenuity in our capital ecosystem that can really have this outsize impact. So I see that continuing to really promulgate across the Army acquisition and innovation ecosystem.