How the Pentagon plans to recruit new suppliers.

• Author: Erwin, Sandra I.
• Position: Defense Insider

The Pentagon spends $400 billion a year on products and services, but still cannot always find the goodies it really needs. Some of the technologies on the Pentagon's wish list exist in the larger marketplace, but are supplied by companies that shy away from government contracting or may not be aware that the Defense Department is in need of their products.

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To bridge the gulfs between demand and supply, the Pentagon created the Defense Venture Catalyst Initiative, known as DeVenci.

"We identify innovative companies that are usually small, with an emerging product that can meet Defense Department needs," says Glenn Fogg, director of the DeVenci program and head of the Defense Department's Rapid Reaction Technology Office.

There are two ways to become a DeVenci nominee. One is via the federal procurement website fedbizopps.gov, where DeVenci posts announcements under the category of "Special Notice." Unlike a traditional "Request for Information" or "Request for Proposals," the special notice invites companies to express interest in participating in an upcoming DeVenci nomination, but does not act as a formal solicitation.

The other avenue is to be nominated by one of the venture capitalists who were handpicked to work on the program.

* After the program was launched nearly two years ago, DeVenci recruited a cadre of VCs--26 so far--who were willing to help the Pentagon, pro bono, spot the hot suppliers. To prevent conflicts of interest, the VCs are required to choose suppliers based strictly on whether they can fill a Pentagon need.

VCs do not just get to pick their favored companies, Fogg says in an interview. "They've signed paperwork saying they are not going to profit in any way from what they do or see in the DeVenci office."

VCs commit in writing to seek out companies with which they normally do not do business. "About 70 percent of the companies nominated by the VCs come from outside their portfolio," Fogg says. A majority has not done business with the Defense Department before, and many lack the financial means to bid on traditional government contracts.

But becoming a nominee is just the beginning. Before the Pentagon makes any purchasing decisions, the pre-selected products must survive a gauntlet of tests, which lasts from six to 18 months.

Over the past year and a half, 376 companies were nominated. Defense Department subject matter experts reviewed every...