March 7, 2025-- Accelerating commercial technology is core to the mission of the Defense Innovation Unit. In line with the Department’s priority to deliver faster, more flexible, and commercially aligned acquisition processes and scale the use of the Commercial Solutions Opening (CSO) process, pioneered by DIU, across a broader range of DoD users - today’s announcement on Software Acquisition Reform is a critical step.
“The Software Acquisition Pathway demonstrates how the Department is building new muscle to break down barriers to adopt the very best tech with the focus, speed, and scale required to deter major conflict or win if forced to fight,” said DIU Director Doug Beck. "We look forward to working with partners across the Department to help scale DIU’s proven Commercial Solutions Opening (CSO) solicitation process, combined with Other Transaction (OT) authority, to software acquisition across the Force. This will make it easier for our teammates everywhere in the Department to dramatically accelerate the best technology to the warfighter, at the speed the mission requires.”
The CSO is a competitive process to obtain solutions or new capabilities that fulfill requirements, close capability gaps, or provide potential technological advances. This approach opens doors for innovative companies, particularly those without deep experience in traditional defense contracting, to work with the Department.
Maximizing these tools is essential to removing unnecessary bureaucracy, accelerating development and fostering even greater collaboration with commercial partners. The following are resources that DIU has compiled based on our experience conducting more than 500 CSO-OT awards over the past eight years.
DIU CSO Process
All DIU projects begin with a problem statement that can be solved by commercial industry from the mission partner. After market analysis, DIU delivers leading commercial technology to our partners quickly through our CSO process and by facilitating prototype contracts between selected companies and DoD entities. After a successful prototype, any interested DoD entity has the authority to enter into non-competitive follow-on production contracts or agreements to procure the prototyped solution(s).
DIU’s Commercial Solutions Opening (CSO) process is designed to competitively solicit proposals for innovative solutions that meet the needs of our DoD partners. DIU leverages Other Transaction authority (10 USC 4022) to award prototype agreements in as few as 60-90 days, although our current average is closer to 120 days. More importantly, after a successful prototype, the company involved and any DoD entity can enter into a follow-on production contract or agreement just as easily.
Frequently Asked Questions:
How does DIU purchase commercial technology?
DIU developed a solicitation process called the Commercial Solutions Opening (CSO). The CSO enables DoD to work with nontraditional defense contracts in a fast, flexible, and collaborative manner and results in the award of an Other Transaction (OT) agreement. The authority governing OT agreements is 10 U.S.C. § 4022. Work performed must meet a few basic requirements:
it must be a prototype relevant to enhancing mission effectiveness of personnel of the DoD;
competitive procedures, to the maximum extent practicable, shall be used; and
unless a nontraditional defense contractor or small business is participating to a significant extent, one-third of the cost must be borne by someone other than the federal government.
What is a “prototype”?
DIU uses the DoD OT Guide to define a prototype project. "The definition of a 'prototype project' in the context of an OT is as follows: a prototype project addresses a proof of concept, model, reverse engineering to address obsolescence, pilot or novel application of commercial technologies for defense purposes, agile development activity, creation, design, development, demonstration of technical or operational utility, or combinations of the foregoing. A process, including a business process, may be the subject of a prototype project."
What are some of the benefits of using DIU’s OT-based Commercial Solutions Opening instead of the traditional FAR-based process?
Negotiable payment milestones, terms and conditions, and intellectual property and data rights
No requirement to adhere to government accounting standards
Not subject to protest as understood by FAR part 33
If the DoD partner wants to deploy the prototype solution, OT authority allows for a follow-on production contract without the need for further competition
DIU does NOT use a consortium model: any commercial entity is able to compete for a contract