Bloomberg Government regularly publishes insights, opinions and best practices from our community of senior leaders and decision makers. This column is written byMarc Van Allen and Umer Chaudhry, who both work inJenner & Blocks DC Office.
Quantum computers are nearing market-readiness and all signs point to the U.S. government as a major buyer. After decades of research, blue-chip companies, defense contractors, and start-ups have begun actively testing quantum based devices, algorithms and techniques. Early assessments of quantum computing show promising results, with potential applications in machine learning, artificial intelligence and cybersecurity.
As companies with quantum computing solutions identify U.S. government customers, they must carefully navigate the federal procurement system, ensuring their technology is protected, while complying with numerous procurement and export/import control regulations. For non-traditional government contractors, leveraging special procurement vehicles such as Other Transactions (OTs) and Technology Investment Agreements (TIAs) could be attractive tools to sell this advanced technology to the U.S. government. Both OTs and TIAs allow for negotiations outside the framework of federal regulations.
Beginnings of the Long-Awaited Transition
Quantum computing is transitioning out of research labs and into the marketplace. Recognizing this technologys potential, defense contractors, leading technology companies and government institutions have invested billions in quantum research and devices. Blue-chip companies with well-funded programs, including Intel, Google, IBM, Hewlett-Packard, Microsoft, and defense contractors Lockheed Martin and Raytheon, were previously in stealth mode but are now strategically positioning themselves to capitalize on their quantum investments.
Quantum Computing Versus Traditional Computing
Quantum computing is the science of harnessing and exploiting the laws of quantum mechanicsat times counterintuitive, but considered the greatest triumph of modern physics. In a July 2016 report, the National Science and Technology Council noted that [quantum computing] is far more than a new approach to computing or a collection of technological applications. It is a scientific paradigm in its own right. Where a traditional computer uses long strings of bits, encoding either a 0 or 1, a quantum computer uses qubits. A qubit is a quantum system that encodes the 0 and the 1 into two distinguishable quantum states. This means that a qubit can be a 0, a 1, or both simultaneously (0 and 1) at any point in time.
From Grants to Contracts
Since 2011, the government has awarded more than $105 million in federal grants for quantum computing research. The research effort has focused on stabilizing quantum systems, and identifying quantum applications for specific industries, including aerospace science and engineering. Universities across the country have received significant funding to support research on quantum technologies and solutions. Some have even partnered with government agencies. For example, the Joint Center for Quantum Information and Computer Science is a partnership between the University of Maryland and the National Institute of Standards and Technology. The goal of such partnerships is to facilitate the transition of quantum-based technology from labs to the real world.
As the U.S. government has become more familiar with quantum technologies and attempts to keep up with international competition, especially from China, contract opportunities related to quantum computing are being released more frequently. So far, approximately $100 million in contracts have been awarded for quantum computing, and related technologies.
It will be important for companies offering quantum based solutions to become familiar with the governments data rights framework. Defense-wide initiatives, including Better Buying Power, drive agencies to acquire data rights more aggressively in order to facilitate competitive procurements. However, this can result in the government demanding certain rights, and deliverables that it may not actually need.
Business development and strategy professionals can play an important role in shaping data rights packages linked to individual request for proposals (RFPs). Likewise, proposal professionals could play a more active role in marking and validating trade secrets, formulas and other proprietary material to ensure non-disclosure and non-delivery, whenever appropriate.
Investments Flow in as Companies Identify Quantum Solutions
With quantum patent activity continuing to increase, investors are looking to quantum computing. Even the CIA, through In-Q-Tel, invested $30 million in D-Wave, a provider of commercial quantum computers. Private investors have also jumped in, channeling considerable funds into start-ups tackling problems that leverage the power of quantum computers.
For government contracts strategy and business development professionals, the time is now to understand the basics of quantum computing, and to educate customers about potential areas where quantum technologies can either supplement or displace existing solutions.
Areas where quantum computing has already been leveraged include: machine learning, software development, and encryption.
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