Silicon Valley Takes on the 'Valley of Death'.

• Author: Harper, Jon

SIMI VALLEY, Calif.--The commercial technology sector wants to help the U.S. military acquire new capabilities. But if the Pentagon doesn't change the way it does business soon and help innovators bring their products across the "Valley of Death," they will go belly up or walk away, industry and military leaders are warning.

The Defense Department has launched a slew of initiatives in recent years aimed at expanding its innovation base and bringing startups and non-traditional companies based in Silicon Valley and elsewhere into the fold. But there's a problem--promising technologies still often fail to move beyond the research-and-development phase and into large-scale procurement. The phenomenon is known in defense acquisition circles as the Valley of Death.

The problem--and the need to fix it--was front and center at the recent Reagan National Defense Forum, the annual confab of national security elites in Simi Valley, California.

"Let's face it. For far too long, it's been far too hard for innovators and entrepreneurs to work with the department, and the barriers for entry into this effort to work with us in national security are often too steep--far too steep," Secretary of Defense Lloyd Austin III said during his keynote address.

"Let's say some great California startup develops a dazzling way to better integrate our capabilities. All too often, that company is going to struggle to take its idea from inception to prototype to adoption by the department," he added. "We call this syndrome the Valley of Death, and I know that many of you in this room are painfully familiar with it."

The phenomenon deters some innovators from ever trying to do business with the Pentagon, he noted.

Undersecretary of Defense for Research and Engineering Heidi Shyu said there isn't a dearth of high-tech firms that want to work with the military.

"Looking around in terms of number of companies, I don't see a shortage of innovation. Where I see the problem is they get seed money to develop designs and prototypes, and they die on the vine, because our acquisition system is too rigid," she said during a panel at the forum.

As an example, Shyu noted her recent visit to a small business in Santa Monica, California, working on what she dubbed a "superb product."

"They said, We're running out of money,'" Shyu recounted without identifying the company. "I said, 'Hello, you're just telling me today' You think I have a bank account I can open up and give it to you...