If there’s one truth in the defense market it’s that if you’re looking for a path to scalable and sustainable revenue, all roads lead to programs. But the playbook for winning them, how to engage, and where to focus isn’t formulaic or even clear. There are a few patterns to it though, so we thought it’d be helpful to do a data-driven breakdown of what those are.
How did we get here? Over the past year, we’ve been building our product to tackle this challenge alongside top defense tech startups, VC funds, established contractors, and advisory firms in the DoD market. We’ve been lucky to listen and learn from some of the best in this space, and if there’s one thing that each of them shares in common - they have a sophisticated, long-term programs pursuit strategy. The through-line that exists in all of them is that they’re all exceptionally good at identifying and building close relationships with the top percentile of innovation-adopting Program Executive Offices (PEOs).
So, what makes PEO innovative, and how do you repeatably qualify that? There are a few things that we've found are useful criteria to evaluate against:
- Do they have a history of working with non-traditionals? Has the organization awarded a significant number of contracts to startups and non-incumbents in the past that might signal they’re open to working with new technologies or nontraditional players.
- Are they acquisition innovators? In the contracts that they're awarding, are they leveraging innovative contracting mechanisms like OTAs and consortia? Or do they prefer traditional, FAR-based contracting / large GSA vehicles with incumbents?
- Does their messaging and engagement signal innovation? Are they often quoted in the news talking about innovative ideas? Regularly speaking about it at conferences? Frequently engaging with industry? All of these are positive signals.
- Do the program managers have an innovation background? - Have the people running the programs been part of groundbreaking efforts (like CDAO), new start programs, or collaborated with innovation orgs like DIU, Army Futures Command, etc. in the past?
- Does their budget back it up? This is two parts: 1) The language used in their budget can be a great signal, with keywords like rapid prototyping, experimentation, modular open systems architecture, iterative, etc. 2) As a diligence mechanism, do they have significant dollars to actually be able to execute their plans?
- Does my capability align with their strategy/portfolio? - This isn’t exactly an innovation indicator, but nothing else matters if there isn’t alignment with the org’s mission and requirements. If your solution can’t help solve a top problem that the PEO cares about or work in service of its long-term strategy, the rest is irrelevant.
Now that we’ve covered the factors, let’s apply them to determine a ranking of the most innovation-forward PEOs. To do so, we focused on two of the above criteria in particular and created a weighted ranking using the following methodology:
- Awards to startups/non-traditionals: Using our platform, we took every company that has won a Phase II or greater SBIR with the DoD since 2016 and received a contract or OTA funded at least in part by a PEO since then. We excluded companies who had won any contracts before 2016. From this, we calculated:
- The aggregate $$s each PEO is awarding to non-traditionals
- The number of unique companies getting those awards
- Demonstrated acquisition innovation: We tallied the total amount of $$s that a PEO has awarded using OTA awards and consortia over its lifetime
Here’s how the results shook out:
- Special Operations Command
- Air Force Digital Directorate
- Command, Control, Communications, Intelligence & Networks Directorate
- Naval Sea Systems Command
- PEO Command, Control, and Communications - Tactical
- Naval Air Systems Command
- Marine Corps Systems Command
- Armament Directorate
- Naval Information Warfare Systems Command
- Agile Combat Support Directorate
- Mobility & Training Aircraft Directorate
- PEO Intelligence, Electronic Warfare & Sensors
- PEO Aviation
- Air Force Nuclear Weapons Center
- Intelligence, Surveillance, Reconnaissance and Special Operations Forces Directorate
As a footnote… you’ll notice that Navy/Marine Corps and SOCOM don’t have individual PEOs listed, since their contracts are awarded through their parent organizations called Systems Commands (e.g. NAVWAR, NAVAIR, NAVSEA, Marine Corps Systems Command). And in SOCOM’s case, awards are often issued at the headquarters level.
This isn’t a perfect methodology, and there are lots of alternative ways that we could have run this analysis. But it gives a great picture of the PEOs advancing innovation (and helping solve the valley of death!)
This is just the first in a series we’ll be doing using data from our platform. We’ve been building data intelligence to simplify the hard parts of defense sales & acquisition - connecting the dots between the budget, programs, and the people/orgs that run them in the DoD. If you found this useful or want to discuss the full rankings, we’d love to talk. Thanks for reading!
