Silicon Valley Wins Few Government Contracts (wsj.com) 54
The federal government has spent $22 billion in recent years on technology from the top 100 national-security startups, a paltry portion of overall contract spending and less than half of what venture capitalists have invested in those same companies. WSJ: The gap underscores the discrepancy between the surge of venture capital funding for defense technology and the U.S. government's spending on substantial contracts to startups. The new numbers come from a report released Thursday by Silicon Valley Defense Group, a nonprofit that started a decade ago with the aim of bringing more startup innovation to the Defense Department.
According to the report, the top 100 venture capital-backed national security startups have raised a combined $53 billion in private funding since their inception, $11 billion of which has come in the past 12 months. Those same startups have collectively earned $22 billion in revenue from federal awards, $6 billion of which came from the Defense Department. The organization ranked the startups based on head count growth, total capital raised and other factors.ÂTraditional defense contractors receive hundreds of billions in awards every year.
According to the report, the top 100 venture capital-backed national security startups have raised a combined $53 billion in private funding since their inception, $11 billion of which has come in the past 12 months. Those same startups have collectively earned $22 billion in revenue from federal awards, $6 billion of which came from the Defense Department. The organization ranked the startups based on head count growth, total capital raised and other factors.ÂTraditional defense contractors receive hundreds of billions in awards every year.
Got to be in NoVA (Score:4, Interesting)
Most of the fed tech contracts go to the contractors in Northern VA. That's why smart tech companies establish fed. liaison offices there. Fed works the old way - it takes personal connections (and a paid lunch or two, or may be a nice trip to a conference in Hawaii).
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Re:Got to be in NoVA (Score:4, Insightful)
Large tech is unwilling to make the sacrifices required to work with government. That's the bottom line. You have to forget the rules of the commercial space and do things differently to satisfy the DoD, in particular. It's like taking a step back into history technologywise, and also a lot of the conveniences you take for granted, like unfettered internet access, are not available to you. Govt employees will expect follow-through in ways the corporate world left behind a long time ago, and just keeping the top person happy is insufficient. Every petty official in the chain has the ability to shank your effort.
There's a lot to it, and most of the bigger firms realize it isn't worth their effort and leave it to partners who are small enough to be willing to go through all of this effort.
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All true..... but big companies usually set up a siloed division specifically for government services, with access to the main division's tech but separate facilities/policies/personnel to meet government requirements.
Also... this article is specifically discussing -startups-
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Silicon valley tech companies also usually take a "ship it fast, collect the revenue, maybe patch it later if we can charge extra for the patch" mentality for developing software. This might work OK for games and streaming services, but not so much for things like military hardware and tax auditing software.
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These contracts shouldn't exist. Their abusing $$$ (Score:1)
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Nope, but sure define words how you want. Like Nazi just means anybody who disagrees with you. You're using the wrong axis, it's not right vs left, but libertarian vs authoritarian, after all there are plenty of leftists who like to tell people what to do, how to live, etc all in the name of the people, or social democracy or to save mother Gaia.
Ever since Bitcoin & the AI boom (Score:2)
And yes, finance scams are way, *way* more profitable than honest work. Especially when the gov't's regulatory framework is in shambles.
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And yes, finance scams are way, *way* more profitable than honest work.
Always have been. And today they come with massive amplifiers if done right.
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"Silicone Valley is increasingly about jumping on bubbles for quick cash and less about innovation"
Been like that since the late 90's.
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they are rewarded for this behavior because those with disposable cash can make a killing in the boom/bust
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Whenever somebody makes the "Silicone Valley" typo, it always makes me think of fake cleavage.
surprising that startups don't win contracts? (Score:3)
This isn't surprising at all. Government generally isn't in it for the short run. Startups often don't last. Systems protected by intellectual property laws are likely going to remain the purview of well established firms because those firms are likely to remain solvent or else their product offerings bought out by a competitor if they should run into hard times.
If you were selling a physical thing not controlled by proprietary software then you'd probably have a better shot at getting that contract if only because they wouldn't necessarily need you in order to maintain that physical thing. But if your system requires you, and you are unproven, it's hard to justify the risk that you won't be there to keep the thing working.
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So, the Federal Government usually buys things one of two ways: Products by Category, or Services by Contract.
To sell a product (shrink-wrapped or otherwise,) to the non-DoD parts of the Federal Government you pretty much have to get listed on the GSA Schedule. This ia long, very involved and painful process. Not something a start-up could do in a few months. So, advantage established providers. DoD has something similar, with additional requirements (ITAR) which is even more difficult.
To sell a servic
Re: surprising that startups don't win contracts? (Score:2)
Plus in my experiences with procurement on the buyer's side, it causes major headaches when an upstart that doesn't actually know what they're doing gets awarded a contract that they cannot fulfill. It usually involves bringing in lawyers, pulling their bond, plus all sorts of reams of paperwork documenting their deficiencies and their failure to take corrective actions after receiving warnings. And once they're finally thrown off the job one still has to go find another vendor that not only can do the jo
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So, the Federal Government usually buys things one of two ways: Products by Category, or Services by Contract.
To sell a product (shrink-wrapped or otherwise,) to the non-DoD parts of the Federal Government you pretty much have to get listed on the GSA Schedule. This ia long, very involved and painful process. Not something a start-up could do in a few months. So, advantage established providers. DoD has something similar, with additional requirements (ITAR) which is even more difficult.
To sell a service to the Federal Government, a company typically has to respond to a Request for Proposal (RFP.) This is just the first step, and is also extremely time consuming and expensive. Then the accepted service proposal goes out for Invitation/Request for Bids (RFB.) At this point, any company may bid on the accepted proposal regardless of who proposed it, but all bidders must demonstrate an ability to complete the proposed services, and in many cases, must already have the infrastructure in place. Again, this is an extremely difficult, time consuming, and expensive.process.
Short of having a revolutionary product or service, it would be very difficult for a start-up to directly sell to the Federal Government. In most cases, it's far easier to partner with one of the established companies.
I have a startup that plays the procurement game (not federal, but industrial and municipal) and it's nasty.
Even when they're looking for an innovative solution they also want a list of similar projects you carried out, and small pile of certs, and enough existing revenue to guarantee you'll be around in 5 years.
It makes sense from their perspective, better to get an expensive decent solution from an established supplier than a pile of magic beans from a startup that might fail entirely and turn into a "gov
Exactly (Score:2)
The Department of Defence is not about to replace planes and tanks with apps or replace soldiers with gig workers. Wall Street might be dumb enough to fall for that but the military is not.
idiots (Score:4, Informative)
Also, the general way in which we give contracts is to first put our requirements into a posting on the federal contracts solicitation website, then companies bid on those contracts and there is then some back and forth, and you then select one of the bidders... I am not supposed to go direct to ONE company and solicit them, unless I can prove that they are the only ones who can fulfil the requirement that I have stated.
Wine and Dine???? trips to Hawaii? No, those percs are reserved for the top level SES, Appointees, or elected officials, not the guys at my level who do the actual work. we are what some MAGAmorons call the 'deep state' and we are bound by a whole bunch of laws as to how we do business....
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I have a much better idea. You're fired. (Score:1)
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The President is elected.
They have something like 2000 or more appointees they can either appoint or replace and appoint. The SecDef is one of those appointees.
Congress has written laws which we citizens must obey, there is a whole section of those laws which apply only to me and people in my same type of employment. I must follow them.
Mostly the appointees are po
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You think that level of person is just hanging around the street corner, waiting for the President to fire me so he/she can take over my job ???
No, definitely not. I think your job shouldn't be done at all by the US government. Since it sounds like you're working in military tech, I personally probably wouldn't replace your job, your team, or your department after firing the lot of them. In some cases, the government FTE's I'd like dismissed may need to be replaced by private sector contractors, but only in some very special cases.
Despite being a lefty, which is unfortunately, I think your engineering talents would b
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well, gee. I am a lefty, who knew?
The overton window has shifted. Your political views are now classified as "Left". Get used to it.
It's ok. By current measurements Ronald Regan, and John Wayne are also leftists.
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it was too many characters with the link
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But... but... Project 2025! Supreme Court! Immunity! Pardons!
The president can just "reclassify" all the GS as political and fire 'em all.
Then he can appoint new yes-men toadies who will do whatever he says.
If there is any problem with violating petty "laws" the president can pardon his henchmen.
Remember: "when the president does it, that means that it is not illegal!" -Richard Nixon (now affirmed by the Supreme Court)
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Yep, and when you break those laws what happens? nothing [politico.com] but a slap on the wrist. And sometimes not even [politico.com] that much. So please go back to your Northern Virginia suburbs and continue to look down upon those of us outside the beltway.
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What does SV offer the government? (Score:3, Interesting)
Governments want results. Stuff that is actually effective and works when needed. Making software to aim a mortar shell is a lot different than making a cloud based Web app, because actual military victories matter, as a decisive loss or victory can stave off WWIII, or it can encourage the bad guys to move in.
Not all, but most of SV area doesn't know how to tackle this sort of stuff. They know how to get a bunch of offshored developers, a Scrum Master (who is also the PM), and get some type of barely functioning codebase to a state that was sold to customers previously, saying various features were present when they were not. SV knows how to throw ads, slurp analytics, snarf telemetry and run a user through 20,000 data broker, click tracking sites with every button they use. They speak Bitcoin, subscriptions, and developers being fungible, and exponential price hikes to existing customers. In general, the SV area does not know how to make stuff that works, because working things don't make money for the equity companies.
If you want businesses able to make stuff that works, you are going to have to look elsewhere, or have companies that are designed from the ground up to ensure that when the bang switch is pressed, a bang happens. This means reliability and means stuff works right the first time. It also means actual security, and not hiring the cheapest guys from whatever country, no matter how hostile they are.
This means going to states that value hard work and honesty, which is ironic, but Virginia, Texas, and other "flyover" states have that in spades. If you want people who have work ethics, you are going to put a business in Abilene or the Research Triangle area... some city where drug-crazed hobos have not caused the city downtown to become abandoned, and cities that won't hamstring their police force because the city planners fell shoplifting and strong-arm robbery is an okay thing.
This is a good thing, assuming the DoD has the ability to give the middle finger to companies that don't do what is asked of them, and follow InfoSec procedures.
Hell with SV. They produce nothing that people need anymore. Want real cool stuff? You have to go to Hong Kong or business spots in China. Maybe having the US government create a new generation of businesses will make like suck less.
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"Governments want results. Stuff that is actually effective and works when needed."
clearly you have never worked on a govenment project.
eh (Score:2)
Also a history of actually delivering. The fed contracts folks are going to trust the company that actually delivered over some 2-month old startup headed by a narcissistic 22-year old Stanford dropout with delusions of competence.
Boeing is a "greeeeaaaat" big govt contractor (Score:2)
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Was going to post SpaceX vs Boeing. Found this. Left satisfied.
Selling to the government is a skill (Score:3)
Government work is not (very) profitable (Score:2)
Unless you are big contractor, or a cloud provider getting multi billion dollar contract, for most Silicon Valley companies government work is not profitable. You get more value by making a simple mobile game, or an AI tool.
It also comes with additional requirements, which makes life difficult. For example, at one point they demanded Google to turn over all employee data, since some were working on government contracts. Meaning, even if you were working, say at YouTube customer service, they wanted to publi
Risk (Score:2)
SV types want to make a (Score:2)
The days where someone could make stupid-high profits off of government contracts is mostly gone. Government people have actually gotten fairly wise to companies squeezing fat profits from tax dollars. For some reason, voters and taxpayers get really pissed off about that sort of stuff. Companies that do a lot of government work are generally allowed to make "decent" profit but rarely much more.
The US government, at least, is actually t
Is it cultural? (Score:2)
Silicon Valley is arguably left-wing in ideology which is usually associated with being opposed to defense spending. So is it case of Silicon Valley not winning contracts or not bidding on them in the first place?