AFWERX’s private-sector collab program abruptly closes up shop

An effort to help the Pentagon understand the private sector has been shuttered unexpectedly for lack of funding, officials with the Air Force’s innovation arm have announced.

The Defense Ventures Fellowship program embedded officers, enlisted personnel, and DOD civilians with startups and venture capital firms to bring innovation to the Pentagon and make the department a better customer. The program was run by the firm Shift and the Air Force’s AFWERX.

The contract with Shift was awarded on September 29, 2020, with a base year and three option years. The first option year was delayed because of a continuing resolution, so it wasn't exercised until February 1, 2022, and the current (second) option year ended January 31, 2024, according to AFWERX spokesperson Rob Bardua. 

“AFWERX attempted to secure additional funding to exercise the final remaining option. However, due to fiscal constraints and expected funding cuts in FY-25, the FY-24-year option was not exercised,” Bardua said. 

The Air Force is facing tighter-than-expected funding. It had to construct its fiscal 2025 budget under defense-spending caps imposed by the Fiscal Responsibility Act. Additionally, Congress still hasn’t passed a budget for the five-month-old current fiscal year, so the Pentagon has been operating under a continuing resolution, which bars new programs and has frozen most spending at 2023 levels. 

“DVP was widely beloved within DOD,” Shift founder Mike Slagh told Defense One. “It was incredibly encouraging to see how many people in a wide variety of commands and functions got what we were doing and the unique value that the program and the ecosystem contributed to their missions. But, it was still very early days and we were reliant on a single command, AFWERX, to come up with the funds to keep the program alive.” 

Slagh said AFWERX had wanted to keep the program going, but just before the contract expired, Shift learned that they didn’t have the funding to renew. Shift searched for alternate funding sponsors but “between the tight timeline and the [continuing resolution], we came up short,” he said.

“Beyond DVP itself, I do worry that the loss of a program that was highly regarded within both DOD and industry circles and whose whole focus was to help DOD field better technology faster is a negative signal, both to early-stage companies and to the investors that back them,” Slagh said.  

However, Slagh said he’s hopeful that the sector will take this as a signal to renew efforts to bridge the gap between the Pentagon and the defense industrial base.