Army open to replacing Microsoft as prime under ‘IVAS Next,’ industry sources say

WASHINGTON — Tech companies are preparing to jump into the US Army’s IVAS Next competition after receiving briefings from the service about a decision to recompete the prime contractor position on its futuristic mix-reality goggles, according to multiple sources.

Over the past year, Army leaders have teased a “IVAS Next” initiative, focused on improving issues in its Integrated Visual Augmentation System (IVAS) system. But what was not clear was how much of a recompete that would be, and whether the focus would be on minor tweaks and upgrades or the creation of a full-on new system, including new headsets.

After attending Army-led industry days and one-on-one meetings with the government over recent months, a trio of industry sources independently told Breaking Defense they are now expecting a new open competition to decide who wins a lucrative contract to produce a new headset suitable for combat. And as they wait for the Army to release a formal solicitation, companies are beginning to line up their own tech offerings in hopes of becoming a prime contractor or partner up with a company that is.

A spokesperson for the Program Executive Office Soldier, which runs the IVAS program, did not respond to Breaking Defense’s request for comment as of publication.

The current version of IVAS is based on a militarized version of Microsoft’s HoloLens 2 heads-up display. But the program has suffered through a series of issues for half a decade, and service leaders have repeatedly threatened to cancel the program — which initially had a ceiling value of $22 billion — if the issues were not fixed. While Microsoft has managed to keep the effort alive, the fact the service is indicating to industry it would be open to a new prime contractor on IVAS Next is a sign of potential trouble for the tech giant and its high-dollar production deal.

For its part, Microsoft said it is going all in on the new competition, even though it has downsized its mixed-reality department — a team whose work includes the HoloLens 2 heads-up (HUD) display.

“Microsoft fully intends and is prepared to compete for IVAS Next,” a company spokesperson told Breaking Defense on Wednesday. “We remain committed to delivering the industry’s best capabilities for our warfighters.” (The company referred other questions to the Army.)

Microsoft will not be alone in that field, with a total of 80 companies showing up to learn about IVAS Next plans at a December industry day, according to an Army roster. Among the notable names: defense tech darlings Anduril and Palantir, as well as L3 Harris, the US arm of Israeli heavyweight Elbit, and the US arm of Britain’s BAE Systems. (One firm on that list, augmented reality goggle-maker Magic Leap, has since announced plans to pivot away from making its own headsets.)

Massachusetts-based Kopin, which builds display technology used in the F-35 helmets, was on that event list from December and is preparing to bid on the revamped program as a prime, company CEO Michael Murray told Breaking Defense on Monday. From his vantage point, Murray said he anticipates Microsoft will remain a key IVAS player because they “own the cloud software, the connectivity software and the soldier connectivity software.”

But Murray and his team are working on a plan to snatch away production from Microsoft for the hardware, including the display system and heads-up goggles, he said. That plan includes the introduction of a “NeuralDispay” — a bidirectional display with integrated imaging pixels designed to track a user’s eye movement. 

“As you look at the micro display, it’s looking right back at you and trying to figure out what is the best brightness and contrast,” he explained. “As you hit fight or flight and your pupils dilate, we turn down the brightness, because it’s too bright because your eye has changed, we turn up the contrast because your pupil is so large it can no longer see the size of the shape.”

While Murray said this technology is currently not ready for prime time — he pegged it at a technology readiness level four— the company is hoping to continue developing it for a IVAS heads-up display to alleviate past complaints of cyber sickness, and begin shrinking the display down towards the size of sunglasses.

System Of The Future?

Pitched as a game changer for the service, IVAS was billed as a single device soldiers could use both in combat (including under the cover of darkness) and for virtual training. Reports began emerging in 2021 about problems with the device, and a scathing Pentagon inspector general report followed that included soldiers complaining of discomfort, dizziness, nausea, and system reliability.

While service leaders publicly stood behind the program at first, they have been slowly tempering expectations and opted to split the program up into three initial versions — the 1.0, 1.1 and 1.2 iterations of the goggles. (The service has acquired 5,000 1.0 units, with plans to acquire an additional 5,000 1.1 units for limited use.)

The Army has billed that new 1.2 version as the make-or-break upgrade — an iteration to correct past problems, in part, by transitioning the device from a helmet-like display with a 70-degree field-of-view, to a hinged, flat design with a 60-degree field-of-view that soldiers can flip up. A computer puck on soldiers’ chests in the earlier versions is also moved to the back of the helmet, a cord connecting the puck to the HUD is shorted and moved to the back of the HUD, and a new low-light sensor from Canon is included.

This year kicked off with a squad-level assessment of the new setup, with an Army spokesperson saying in February that “design objectives” had been achieved. Additional 1.2 goggle testing was slated to continue throughout 2024 and lead up to a company-level user assessment in calendar 2025, designed to help determine “whether or not” the Army proceeds with a large-scale 1.2 buy, head of Army acquisition Doug Bush told senators in May alongside Army Futures Command head Gen. James Rainey. (In a statement this week, Microsoft said 1.2 development and testing remains on track, as does version 1.1 deliveries.) 

“As a former infantryman, I realize the potential [of IVAS] … if it works; It is a legitimate 10 times upgrade to our most important formations,” the four-star general told members of the Senate Armed Services airland subcommittee.

“But if it does not work, then I think we would have to take a very hard look at whether we continue down that path or use that money for other critical aspects of our night-vision strategy, because we have to make sure the entire Army can own the night,” Rainey added.

It’s currently unclear what effect, if any, the 1.2’s potential success could have on the Army’s envisioned IVAS Next project, and it appears the service is in the early days of feeling out that program. Industry sources previously told Breaking Defense they expect a solicitation for IVAS Next later this year, at which time the Army’s next-generation vision may be clearer.