The Pentagon is introducing a new acquisition mechanism to bridge the gap between innovative prototypes and operational capabilities, a persistent challenge known as the “valley of death.” This new approach, the “innovation insertion increment,” aims to provide a funded pathway for promising technologies to transition from development to deployment.

A History of Disruptive Innovation

The history of defense technology is filled with examples of groundbreaking innovations that were initially met with skepticism. From the world’s first naval nuclear propulsion system to the reusable rocket boosters pioneered by SpaceX, transformative capabilities have often emerged from unexpected directions. These innovations frequently challenge the established norms and programs of record within the Department of Defense. A more recent example is the Low-Cost Uncrewed Combat Attack System, a drone built by an Arizona startup that went from contract to combat in just seven months, a timeline unheard of in traditional procurement.

The ‘Valley of Death’ in Defense Procurement

The “valley of death” refers to the funding gap between the successful demonstration of a new technology and its integration into a program of record. While the U.S. innovation ecosystem, with entities like DARPA and the Defense Innovation Unit, is adept at funding new ideas, the transition to operational use remains a significant hurdle. This is where the new “innovation insertion increment” comes into play, providing dedicated funding for portfolio acquisition executives to invest in and scale proven technologies. For more on the challenges of defense innovation, see our coverage of the DIU’s solicitation for counter-UAS sensing.

Implementing the Innovation Insertion Increment

Beginning in fiscal year 2028, each portfolio acquisition executive will be required to include an innovation insertion increment in their budget. According to a Department of Defense memo, this funding is intended to be “transition capital,” specifically for inserting validated innovative technology at speed. To ensure accountability, portfolio scorecards will be tracked through monthly acquisition acceleration reviews. As the defense landscape evolves, understanding the implications of new technologies is more critical than ever. For more on this, see our guide to cyber warfare and its real-world examples.

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