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Remarks Announcing DIUx 2.0

Good morning, everyone. Thanks everyone for joining me here today and all of us.  Great to be back here in Northern California, even though the weather isn't quite what I was hoping, but it's a lot better than it is in Washington, I can tell you that.

Now, look, as some of you have heard me say before, one of my core goals as secretary of defense has been to build, and in some cases to rebuild, the bridges between our national security endeavor at the Pentagon and the wonderfully innovative and open technology community of companies, universities that comprise one of America's great strengths.

We've had a long history of partnership, working together to develop and advance technologies like the internet, GPS and years before that, communication satellites, the jet engine, all of the benefit of both our society and our security.  But when I came here for the first time in my current job a little over a year ago, I discovered that I was the first Secretary of Defense to visit Silicon Valley in almost 20 years.  So, today, it's a pleasure to be back on my fourth trip in the Bay Area as secretary of defense since then to host all of you here at our startup the Defense Innovation Unit-eXperimental, DIUx, and to share with you some exciting how we're taking this to the next level, and building on the success we've had.

Now, when I announced we were creating DIUx here last April, I said it would be the first of the kind unit for us. Staffed by some of DOD's best technologists -- present here -- active duty and reserve personnel. And I met with some of them earlier this morning.  We put our first outpost here in the heart of Silicon Valley to help us connect with leading edge technologies and the entrepreneurs behind them. And we did it because we live in a changing and competitive world.

Technology itself is an example of that. When I began my career in physics, most technology of consequence originated in America, and much of that was sponsored by the government, particularly the Department of Defense.  Today, we're still major sponsors, much more technology is commercial, and the technology base is global. Indeed, technologies once long possessed by only the most formidable militaries, including ours, have not gotten into the hand of previously less capable forces, and even non-state actors.  And nations like Russia and China are modernizing their militaries to try to close the technology gap with us.

So, to stay ahead of those challenges and stay the best, I've been pushing the Pentagon to think outside our fix-sided box, and invest aggressively in change and innovation.

One way we're doing that is by pushing the envelope with R&D in new technologies, data science, bio tech, cyber, electronic warfare and many, many others.  In fact, in the budget I've been defending before the Congress over the past few weeks, we're proposing spending nearly $72 billion on research and development next year alone—and for a little local context, that's more than double what Intel, Apple and Google spent on R&D last year combined.

The money goes to funding things like making DOD a leader in cyber security, and advancing our commanding lead in undersea warfare, and invest in new strategic approaches to preventing and winning conflicts against 21st century threats, like hybrid warfare, counter-space systems, electronic warfare and anti-access area denial capabilities.  It enables taking long-existing systems and giving them powerful new capabilities -- like the arsenal plane, which takes one of our oldest aircraft platforms and turns it into a flying launchpad for all sorts of advanced, conventional payloads. 

And among other things those funds support our nation-wide network of private-public Manufacturing Innovation Institutes, also, where we're working with companies, universities and research labs to fund emerging technologies like 3D printing, advanced materials, integrated photonics and digital manufacturing and design.  One brand new one we just announced last month—in Boston, as it turns out—is focused on revolutionary textiles, combining fibers and yarns with things like circuits and LEDs, and solar cells, electronic sensors and other capabilities to create fabrics that can see, hear, sense, communicate, store energy, regulate temperature, monitor health, change color and much more.  And we announced last fall right here at Moffett Field in fact, a center focused on flexible hybrid electronics, which will make it possible to seamlessly print lightweight, flexible structural integrity sensors right onto the surfaces of ships, bridges, cars, aircraft and so on.  So these are just a few examples of how we're intent on expanding the boundaries of what's possible in technology.

And another way we're investing in innovation is through people. I call it on-ramps and off-ramps for technical talent to flow between DOD and the tech sector in both directions. That way, more of America's brightest minds can contribute to our mission of national defense. And our outstanding military and civilian leaders and technologists across the DOD and in the innovative defense industry that supports us already, will themselves be able to interact with, learn from and explore new ways to innovate with innovative ecosystems like this one.

One example of this is our new Defense Digital Service, which brings in technologists ranging from large companies like Google, to startups like Shopify, for what we call a tour of duty. These are great people. These are talented people who are coming into DOD just for a year or two, maybe one project. But they make a lasting contribution to us and our mission, and also experience being part of something bigger than themselves. 

They're helping us to solve some really important problems.  DDS, for example, improved DOD's data-sharing with the Veterans Administration, so we can help veterans get faster access to the benefits they've earned. They're working with a team that's developing a better and more secure next generation GPS to be used by billions of people around the world, military and civilian alike.  They have a team right now improving our systems for tracking sexual assaults, so we can understand the data in a more meaningful way and then do more to eliminate these crimes from our ranks, and ultimately to be more transparent with advocates and others.  And later this month, they'll work with a team to pilot one of the largest deployments of a commercial cloud computing platform, largest ever, to help streamline how we manage travel orders and reservations for DOD's nearly 3 million military and civilian personnel, making it easier to use and more efficient of taxpayer dollars.

The wizards at DDS also helped us invite vetted hackers to test our cybersecurity under a pilot program called "Hack the Pentagon." You may have seen this in the news over the last few weeks. Sounds crazy to a lot of people, right? But as many of you know, this is actually something we're stealing from the private sector. It's similar to the bug bounties that many of the leading tech companies have. But this is the first one ever in the U.S. federal government and it's in the Defense Department.  And while it's still ongoing, I can tell you it's already exceeded all of our expectations. Over 1,400 hackers registered and so far have discovered more than 80 bugs that qualify for a bounty. All this helping us be more secure, and as you'll see in coming weeks, at a fraction of the price.

Meanwhile, an additional way we're investing in innovation is by developing new partnerships with the private sector in technology communities here in Silicon Valley and in America's many other great innovation hubs. And this, of course, is where DIUx comes in.

Since opening its doors eight months ago, DIUx has been a signature part of our outreach to the Valley. And even better, it's made great progress in putting commercially-based innovation into the hands of America's soldiers, sailors, airmen and Marines.

And so now, it's time to build on that.  Already, the DIUx team has made connections with more than 500 entrepreneurs and firms. They've hosted many highly-attended forums, connecting innovators here with senior DOD leaders and a full range of Pentagon funding sources, fellowships, rotations programs. And they've created a funding pipeline for nearly two dozen technology projects - spanning everything from wind-powered drones to data analytic tools - that will help address some of our most pressing operation challenges.  And I had the opportunity just a couple of months ago to take a look at a number of those really exciting projects. Exciting and consequential.

One of the most important things since staring DIUx is how much we've learned over the last eight months - not only about what works, but also what can make it work better, by being agile, throwing out what doesn't work, moving on.  I believe that doing business with the tech industry forces DOD to look ourselves in the mirror, which is healthy for us, healthy for any organization. And in this case, it's helped us identify not only our successes, but also our shortcomings, both in how we engage with tech companies here and in the tools we use to accelerate the uptake of technology in the Department.

So armed with this knowledge, we're taking a page straight from the Silicon Valley playbook: We're iterating rapidly to make DIUx even better. As a result of all of this great experience and a view of technologies and the world's imperative to stay agile, today we're launching DIUx 2.0, and there's several new features I'd like to tell you about.

The first new feature is that DIUx will be a nationwide release—we're not just iterating, we're scaling. Since creating DIUx, it's become even clearer to me how valuable this model is, this concept is of DIUx. And because America has many geographic centers of technical excellence, we already intend to open a second DIUx office to be located in the innovation hub of Boston, and there'll be more.

Second, we're upgrading DIUx's processing power. In our budget for the coming year, we've requested $30 million in new funding to direct towards non-traditional companies with emerging commercially- based technologies that meet our military's needs.  With co-investment from the military services, this number is really just a starting point. And to channel these resources into systems that will give our future warfighters a battlefield advantage, DIUx will exercise all avenues to fund promising technologies, including merit-based prize competitions, incubator partnerships and targeted R&D efforts.

The third new feature of DIUx 2.0 is an operating system upgrade, because the missions now assigned to DIUx are far broader than any one person could ever see. I'm establishing a partnership style leadership structure for DIUx, one that includes technologists, investors and business executives.  Here, we're taking yet another page from the Silicon Valley playbook, making leadership structure at DIUx as flat as any company here. Let me introduce some of them to you.

First is Raj Shah, the new Managing Partner of DIUx. You'll hear more from him in a few minutes. Now, for Raj, those of you who don't know him, he's a National Guardsman and F-16 pilot, a combat veteran, but he is also been co-founder and CEO of a very successful technology startup.

Next is Isaac Taylor -- where's Isaac? Isaac right there, there's Isaac -- who joins DIUx from Google, where he was head of operations for Google X, the company's R&D facility, back when Google X was new. I remember it.  There, he worked on Google Glass, on the self-driving cars, and virtual reality technologies and many other of Google's programs.

There's also Vishaal Hariprasad, right there. You can see him; you can't pronounce him, but you can see him.  Right, Vishaal? First name is easy. Air Force Reserve Captain, combat veteran, Bronze Star recipient, who co-founded a successful cyber security startup and served as head of threat intelligence at a large, public company.

And there’s Chris Kirchhoff, who served as a civilian adviser to the Chairman of the Joint Chiefs of Staff, and is a lead author of the White House's Big Data Report, and is Director of Strategic Planning at the National Security Council.

This impressive team of partners will be joined by an equally impressive team of reservists, who will serve at DIUx in a first-of-its-kind reserve unit.  America's reservists, our citizen-soldiers, can provide unique value in this field, as they do in so many areas. Given the fact that many of these patriots are tech industry leaders when they're not on duty for us in DOD.  And I'm pleased to say that here, they'll be led by Naval Reserve Commander Doug Beck, a decorated combat veteran - where did he go? There you are - a decorated combat veteran who served in Iraq and Afghanistan, and who in his civilian life is Apple's Vice President for the Americas and Northeast Asia, reporting directly to Tim Cook.

As we move to this new leadership model, we're also upgrading the I/O, so to speak, between DIUx and our operations back in the Pentagon. Going forward, DIUx will report directly to me.  I can't afford to have everybody do that, but this is to signify the importance I attach to this mission, and also the importance of speedy decision making.  And I'm committed to that in DIUx, and I'm going to do my part very directly to make sure that occurs.  And I'll work in close coordination with my Deputy Bob Work -- excellent deputy -- and Vice Chairman of the Joint Chiefs of Staff, Air Force General Paul Selva. And to maximize the rapid uptake of promising technology, I'm directing DIUx to work closely with DOD's rapid acquisition cells and R&D community.

DIUx will be a test-bed for new kinds of contracting with start-up firms; they'll work quickly to execute time-sensitive acquisition programs, and they'll move at the speed of business. We know how fast companies run here, and in other tech hubs around the country. And we expect DIUx 2.0 to run alongside of them.

Before I turn it over to Raj, I have to say that DIUx wouldn't be here today without George Duchack, its founding director. We're grateful to him. I'm extremely grateful to George for launching just a path-breaking initiative. Getting DIUx 1.0 off the ground; trying out a whole lot of new things is exactly what I wanted; identifying potential partners.  And now, we have the opportunity to build on his success.

And George has the opportunity to now work more for us in a new role, and his continuing service to our Department. What I've done is ask him to leverage his experiences here to expand innovative practices in other areas of DOD's Research & Engineering empire there in the Department of Defense, which I used to run. And George is going to help bring some of what he learned to that.

So George, thank you.

And I should say, and I had a chance to talk to them earlier today, all the wonderful people who came on board in 1.0 and are staying with us; absolutely fantastic group of people here. I'm very proud of you and very grateful to you.

And I want all of you to know that we're committed to growing the circle of entrepreneurs and investors interested in our mission. And we'll keep iterating together, and learning from each other as we go forward.

That's one reason, by the way, that I recently created a new Defense Innovation Board to advise me and future defense secretaries on how to continue building bridges to the technology community, and how we can continue to change to be more competitive.  And I'm very pleased that Alphabet's Eric Schmidt agreed to serve as the board's first chairman - stay tuned, by the way, in coming weeks for who else will be joining him - And I'm looking very much forward to hearing what they'll be doing.

As I've said before, this is a very exciting time. For those interested in foreign policy and national security, there are lots of interesting challenges and problems to work on. And that's also true for those interested in technology, but when the intersection of the two is truly an opportunity-rich environment.

Let me explain what I mean by that, because there are opportunities for partnership in every challenge we face.

Right now, our men and women in uniform are working partners from our worldwide coalition in more ways and with more and more power every day to accelerate the defeat of ISIL, which we will surely do, but we want to do soon.  They're training with our NATO allies in Europe to deter Russian aggression. They're sailing the waters of the Asia-Pacific, ensuring that the most consequential region for America's future remains stable, secure and prosperous for all nations. They're standing guard daily, nightly on the Korean Peninsula, and countering Iran's malign influence against our friends and allies in the Middle East. And all the while, they're helping protect our homeland.

In each of these missions, you can make a difference. Because whether it's algorithms that help a self-driving boat track submarines; or cyber defenses that guard our networks from intruders, or biotech research in developing new materials that might be able to regenerate -- something never -- a kind never seen before in human-made substances; or smaller electronics that lighten the load of our troops in the field; or 3D printed micro-drones that can be kicked onto the back of a fighter jet moving at Mach.9, technology is a critical part of everything we do.  And it's critical to addressing every strategic challenge facing us today.

And that's why DIUx matters. It has to do with our protection and our security, creating a world where our fellow citizens can go to school, dream their dreams, live their lives, one day give their children a better future.

Helping defend your country and making a better world is one of the noblest things a business leader, a technologist, an entrepreneur, or a young person can do. And we're grateful to all of you for your interest in doing that with us.

Now, let me turn it over to DIUx's new Managing Partner, Raj Shah.