Justin Fanelli, the Department of Navy’s chief technology officer, has spent the last three and a half years trying to make the U.S. Navy easier to do business with. When we first talked to him last year, he described a shift away from what he called “your granddaddy’s government” — a “spaghetti chart” of entry points for startups — into something closer to a funnel, where companies that show strong results get pulled into the Navy’s technology base as enterprise services.
This week, we caught up with him again on a video call, and this time, he wasn’t just looking again to further streamline the procurement process, he was sprinting, literally, to catch a flight he’d just been ordered onto with no destination shared. And they were like, ‘We’ll figure [the logistics], we’ll tell you as you get there.’ And I’m like, ‘For more than overnight?’ And they were like, ‘Yes.’” As he was walking to his car, he was still unsure what he’d packed for or where he was headed. Fanelli reached out because the “demand signal” he sent to investors last year had only grown, and it was making an impact, he said.
When the Navy first published its longer-term technology priorities, investors told him it changed how they thought about the Navy’s buying plans, which is part of why he’s doing it again — sharing a fresh list of what the Navy wants to buy in the next several years, this time vetted by a handful of (unnamed) venture investors before release. How much money the Navy actually puts to work each year depends on what counts as spending, Fanelli said. Most of that spending still flows through traditional channels.
But Fanelli said the Navy is trying to shift toward what he calls co-investment — putting money behind companies alongside private capital rather than writing a check to an established prime contractor. Taking an equity stake, he said, is the most aggressive version of that and remains rare. More often, co-investment means the Navy waits for companies to mature a product on their own before buying it, rather than funding early research itself.
The stage of company the Navy buys from has shifted, too. It’s trying to hand that job to commercial investors instead, which is part of why the priorities document exists at all. As for recent purchases, Fanelli rattled off a handful.
A contract worth $562 million was awarded this month for the MQ-25 Stingray, an autonomous refueling drone that extends the range of manned fighter jets flying off carriers. The Navy has also been buying edge compute hardware from Armada, described loosely as shipping containers packed with servers meant for ship or remote deployment. It brought in Gecko Robotics to handle inspection work that used to be done manually and dangerously; Fanelli said the move drew little pushback because almost nobody wanted that job in the first place.
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