Understanding DOD DIU CSOs

Sarah Pearson, Commercial Engagement Director at the U.S. Department of Defense’s Defense Innovation Unit (DIU), joined the CET Sandbox to offer a behind-the-scenes look at how DIU bridges commercial innovation with military needs. With experience at Google, GE, and the U.S. Navy, Pearson explained how DIU sources, vets, and funds technologies that help deter and, if necessary, win future conflicts.

Overview
DIU is a central gateway for commercial tech companies aiming to work with the Department of Defense. As a facilitator–not an end-user or long-term customer–DIU brings together warfighter needs with private-sector solutions. Pearson’s remarks shed light on DIU’s three-part mission: sourcing and matching capabilities, accelerating prototyping, and catalyzing a broader defense innovation ecosystem.

What exactly does DIU do?
DIU acts as a matchmaker between the Pentagon and innovative tech companies. It aggregates needs from across DoD and rapidly sources commercial solutions to meet them. The unit also works to shorten traditional contracting timelines and reduce bureaucratic friction–especially for non-traditional vendors. This includes fast-tracking facility clearances, cyber assessments, and classified access for companies building sensitive tools.

DIU’s remit is global and expanding. Its mission is not just about sourcing U.S. tech, but also working with partners and allies. Pearson emphasized that Israeli companies–especially those with U.S. entities–can and should compete for DIU contracts.

How does the CSO process actually work?
The Commercial Solutions Opening (CSO) process is DIU’s primary contracting tool. It’s designed for speed, flexibility, and transparency. Each project begins with “problem curation,” in which DIU identifies a pressing DoD challenge. If a viable commercial solution exists, DIU posts a two-page solicitation publicly on its website.

Startups respond with either a 5-page narrative or a 15-slide deck–Pearson strongly recommends the latter. Submissions are judged based on technical merit, relevance to the problem, and level of innovation. Roughly 150 companies respond to each call; around a dozen are invited to pitch or demo. Multiple prototypes may be funded in parallel to determine the best-performing solution.

The end goal is always transition. DIU itself doesn’t hold long-term ownership of any prototype–it helps build and de-risk the solution before handing it off to a program office for broader procurement.

What are some of DIU’s biggest priorities today?
DIU focuses on seven core portfolios: autonomy, AI/ML, cyber, space, human systems, advanced energy, and advanced manufacturing. It also recently added an Emerging Technologies portfolio, covering areas like quantum sensing, semiconductors, and hypersonics. Notably, these priorities aren’t static–they reflect national defense needs as defined by both the Pentagon and the National Security Council.

In 2024, DIU also launched a “blue manufacturing” initiative to help portfolio companies scale production faster and cheaper. This signals DIU’s growing focus on industrial base resilience, not just breakthrough innovation.

What should Israeli companies know?
Pearson was clear: DIU does not discriminate against foreign-affiliated companies from allied nations. In fact, the unit is actively looking to deepen its ties with Israel and other partners. However, Israeli startups should set up U.S.-based entities and be prepared to meet U.S. contracting requirements.

She also encouraged founders to proactively engage DIU portfolio leads and to maintain contact–even if no active solicitation is underway. Startups that periodically share product milestones and new customer wins are more likely to stay top-of-mind when relevant programs open.

Key Takeaways

• DIU is a fast-track entry point for commercial tech companies into the DoD ecosystem.
• The CSO process is open, competitive, and geared toward rapid prototyping with real transition pathways.
• Non-traditional vendors–including Israeli firms with U.S. subsidiaries–are welcomed and encouraged.
• DIU’s priorities shift with national strategy; currently top areas include AI, autonomy, and emerging tech like semiconductors and quantum.
• Persistence and clear product storytelling matter. Stay in touch with DIU even if you’re not immediately selected.

Conclusion
DIU is reshaping how the Pentagon works with the private sector, offering a real opportunity for startups to break into defense. For Israeli founders navigating U.S. federal contracting for the first time, DIU offers a structured yet flexible on-ramp–one that rewards innovation, clarity, and long-term commitment. As Pearson made clear, the department can’t afford to wait. Neither should companies looking to make an impact.