Unleashing the Warfighting Acquisition System
Unpacking the memos, plans, and bold reforms ahead.
Acquisition Fans, This Is A Pivotal Moment In History.
While acquisition reform isn’t new, this is the most comprehensive and high-energy push we’ve ever witnessed. For the first time, it’s a unified blitz from both the executive and congressional branches, supercharged by executive orders, NDAA provisions, Secretary of War memorandums, and bold statements from congressional leaders all backed by a massive reconciliation bill with serious funding to make it real.
The undeniable truth is this a rare convergence of ironclad support isn’t for tweaks and add-ons to the acquisition system. It’s a rare shot to fundamentally transform acquisition into a warfighter-focused, schedule-driven capability delivery system.
Setting the Stage for Transformation
In December, SASC Chairman Sen Roger Wicker set the stage with the FORGED Act to modernize the defense acquisition system by streamlining regulations, accelerating technology development, and improving efficiency.
In April, President Trump issued Executive Order 14265 - Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base and related EOs on commercial, procurement, and foreign military sales. This was the first time a President issued such an action to drive major acquisition reforms.
In June, HASC Chairman Rep. Mike Rogers and Ranking Member Rep Adam Smith published the SPEED Act to restructure, streamline, and modernize the defense acquisition system.
Collectively, this provided a bi-partisan, bi-cameral, and bi-branch push to transform defense acquisition - all driven by a common recognition that the fundamental failure of the current acquisition enterprise is its inability to deliver warfighting capabilities at the speed and scale demanded by today’s national security environment. The acquisition system today sees:
New weapon systems take decades to move from concept to fielding.
Costs for new programs regularly escalate, forcing the DoW to procure fewer units or cancel initiatives after years of development.
Emerging technology firms and established primes routinely demonstrate compelling prototypes—yet rarely see them transition into fielded capability.
Combatant commanders forced to rely on 30-year-old legacy systems with abysmal readiness rates (often below 50%).
Production programs continuing to be capacity limited due to exquisite supply chains and archaic processes, while adversaries mass-produce ships, aircraft, and munitions at an unprecedented pace.
To address these challenges, DoW issued three memos under the acquisition reform umbrella (Acquisition System, Requirements, and Foreign Military Sales). For this post, we will focus primarily on the acquisition elements which are captured in:
Acquisition Transformation Strategy (a glossy version of the second attachment to the memo).
This new strategy was the focus of the SECWAR’s big speech at NDU to Department and Industry executives outlining DoW’s bold proposals to transform defense acquisition. We unpack some of these proposals in more detail and assess what a successful implementation looks like and some of the challenges that will likely be encountered.
Disclosure: We were involved in shaping some of these reforms over the past year and many preceding commissions, panels, and recommendations.
Key Principles
Throughout the memo and SECDEF speech, several key principles are consistently reinforced. In our view, Department leadership should regard these principles as essential guideposts when implementing these important provisions.
Deliver warfighting capabilities at SPEED and SCALE.
Empower acquisition leaders, hold them accountable, and aggressively streamlines the bureaucracy - all the policies, processes, reviews, and documents.Rebuild the INDUSTRIAL BASE harnessing America’s entrepreneurs.
Low the barriers of entry so many more companies compete for longer and better deals and align private capital with the DoW to make strategic investments.Transform the culture of the workforce and industry to a WARTIME footing.
Pivot from compliance with endless regulations to an operational focus maximizing mission outcomes.
Key Actions
While there is a great deal of complexity and interdependency across the various reforms, we grouped them into seven major buckets.
Implementing Portfolio Management
Enabling Adaptive Acquisition
Incentivizing Commercial / Private Capital
Enacting Contracting Reform
Executing Deregulation Measures
Rebuilding the Industrial Base
Improving the Workforce
In addition to the actions in the first attachment of the memo, the Department’s strategy outlines 38 specific reform areas to support the stated principles and provide an action plan to achieve the desired end-state.
We unpack these in more detail and convey our understanding of the likely impact, the implementation challenges, and the key near-term steps.
Implementing Portfolio Management
This bucket is primarily focused on reorganizing the Program Executive Officers with a governance and portfolio structure that enables greater speed. It establishes Portfolio Acquisition Executives (PAEs) as the accountable officials for portfolio outcomes with improved authorities. It addresses the following reform areas:
Portfolio Acquisition Executives
Capability Portfolio Management
Capability Trade Councils
Accelerate PPBE Reform
Portfolio Scorecards and Data-Driven Acquisition
Integration in the Adaptive Acquisition Framework
Balanced and Flexible Technical Experts
What’s Included
PAEs will wield the authority needed to orchestrate dozens of siloed programs into cohesive, integrated capability suites—shaping requirements, budgets, and strategies to accelerate delivery and amplify mission impact. Where past acquisition executives prioritized “taking your time to get it perfect,” today’s imperative is rapid deployment and iteration, intelligently balancing acquisition and operational risks. This unlocks expansive trade space across the lifecycle, favoring the 85% solution delivered now over elusive perfection years down the line.
Rather than a PEO overseeing dozens of disconnected programs with minimal synergy, a PAE will curate a unified portfolio to drive integration and interoperability—powered by MOSA architectures, enabling tools, and proven strategies. By realigning the acquisition workforce toward portfolio and program outcomes, we dismantle the entrenched compliance- and process-driven culture in favor of agile, results-oriented execution.
The reforms also implement the recommendations from the PPBE Reform Commission on consolidating program elements and budget line items within portfolios. This provides the PAEs greater flexibility to shift investments to maximize portfolio mission outcomes. This can include investing in common infrastructure, platforms, and test ranges across acquisition programs driving efficiencies. It can stabilize funding for priority capabilities and be more responsive to changes in operations, threats, technologies, risks, programs, and priorities.
Likely Impact
We see this as one of the most critical reforms since it has the ability to address a wide swatch of legacy acquisition challenges. PAEs should be able to capture more emerging technologies and transition successful prototypes into their portfolio of capabilities, fueling greater competition, high/low mix of capabilities, mission thread performance, and supply chain resiliency. Portfolios should accelerate deliveries of integrated capabilities.
Implementation Challenges
While it is relatively easy to create new personnel structures, it is more complicated to build the supporting processes and shift the culture to support the new construct. This requires dedicated leadership and resources. PAEs must elevate most elements of acquisition, requirements, and budget domains from a program to portfolio level to deliver integrated suites of capabilities. Realigning contracting and technical authorities under the PAEs requires overcoming decades of cultural norms.
A key element of assessing the impact of portfolio management is the formulation of portfolio scorecards and performance measures that capture metrics such as time from validated need to initial and full operational capability (IOC/FOC). It will take some dedicated effort working with the right operational commands to draft and iterate on a series of measurable outcomes.
PPBE reforms require building trust with Congress — particularly the appropriators, who have historically resisted such flexibilities. This demands greater visibility and collaboration between the DoW and Congress on early strategies, priority initiatives, critical issues, and budget frameworks. Throughout the fiscal year, more frequent engagements and deeper insights into budget execution are essential for transparency and oversight. With that trust established, as PAEs shift funding within their portfolios, it should no longer surprise the Hill—and ideally, it will foster greater alignment and flexibility. Yet this is Washington, D.C., where recent history remains short on trust and transparency.
Near-Term Steps
The Services have proactively established new organizational structures, consolidating PEOs into fewer PAEs, defining their responsibilities, and designating initial PAEs. The Army publicized its changes, identifying six PAEs: Fires; C2 and Counter-C2; Maneuver Ground; Maneuver Air; Agile Sustainment and Ammunition; and Layered Protection Plus CBRN. The other Services are expected to announce their changes soon.
The Services should continue a series of discussions—facilitated by external change-management experts—among the PAEs and other key authorities to clearly define desired outcomes, articulate how roles and responsibilities will evolve, and enable the new paradigm. Similar engagements should occur within PAE portfolios, extending to subordinate organizations, including program offices, to establish common, repeatable processes; streamlined procedures; and alignment with portfolio outcomes.
PPBE reforms demand resolute leadership to drive bold changes to decades of entrenched and constrained financial management practices. This begins with confirming Jeffrey Bornstein, the nominee for DoD Comptroller, to lead these efforts. It requires Service Secretaries to champion changes alongside their Service Financial Management and Comptroller leadership, rebalancing authorities and processes in favor of the PAEs. Portfolio budget flexibility is just one of many PPBE reforms ripe for implementation.
Enabling Adaptive Acquisition
This bucket encapsulates a number of different elements that all contribute in our view to providing the foundations for an adaptive acquisition system that keeps ahead of the threats and delivers iterative capabilities to the warfighter that are smartly sustained. It addresses the following reform areas:
Middle-Tier Acquisition (MTA)
Rapidly Generate New Kill Chains
Modernize Systems Engineering
Improve Cost Estimation
Fixing the Broken Supply Chain
Open Systems Architectures
Modernize Test Infrastructure
Government Weapons Repair and Maintenance
Lifecycle Sustainment Plans
What’s Included
The Department must now scale MTA guidance, training, and resources to ensure innovation from industry can be used to shape novel warfighting capabilities. The Department will explore opportunities to establish a new acquisition pathway or amend current acquisition pathways to build, test, and deliver kill chains in a more agile, rapid manner aligned with operational demand.
Includes a focus on transforming how acquisition strategies are developed and approved. This involves a greater scaling of the MTA pathway supported by field training teams that have relevant expertise and lessons learned. This includes delegating approval down to the lowest level (possibly beyond what has already been done in this area) and making OSD involvement a by exception matter. As part of the rapid kill chain concept, the goal is to move even faster than the MTA pathway and be able to rapidly deliver commercial prototypes in 24 months or less. Most importantly is a push to move to mission-based analysis to inform resourcing decisions (this means a more data-driven process rather than a preferential or politically-driven one).
To support the acquisition focus, there is a proposed shift in supporting processes that can be a major hindrance to speed. These include systems engineering, cost estimation, supply chain, testing and interoperability processes.
The Department must continually modernize systems engineering processes and tools to provide the most modern capabilities and guidance, including driving value engineering early in programs and services to reduce lifecycle cost.
For systems engineering, it means making better use of digital tools (Model-Based and Mod/Sim) and integrating them with mission engineering kill chains to support making better requirement trades, driving better integration with industry and updating outdated processes that don’t comport with a digital paradigm (such as reviewing dozens of paper-based products).
The OUSW(A&S), working closely with CAPE and OUSW(R&E), will assess how to best apply cost estimates to program baselines, improve data collection practices, and leverage historical data more effectively when considering acquisition approaches, risk posture, and unique requirements.
For cost estimation, DoW is encouraging a more collaborative approach between PMs and estimators that allows for dialogue on key factors that can dramatically influence the final cost output (an analyst inputs an activity as high or lower risk). Today, much of this information is transmitted through documents and spreadsheets often with minimal discussion through the process.
Acquisitions often experience delays in delivering and sustaining weapon systems and realize capacity limitations due to weaknesses and constraints in the DIB.
For supply chain transparency and mitigation, DoW is encouraging a full mapping of supply chains at all levels that enables proactive risk mitigation and resolution at the enterprise level. This enterprise view is expected to provide an improved ability to identify where Defense Production Act investments may be needed and to pair government funding with industry investment.
The Department will fully implement MOSA in all acquisition strategies to the maximum extent practicable by leveraging open standards, pursuing software application programming interfaces, and asserting IP rights.
For interoperability, this involves continuing to reinforce the importance of MOSA and open standards to meet specific government goals (competition, tech insertion, lower lifecycle costs and performance updates).
The Department must resource and empower the Test Resource Management Center (TRMC) to provide the digital infrastructure required to accelerate and optimize access to and use of testing proving grounds.
For testing, this provision was focused on the Test Resource Management Center (TRMC) to robust their testing pipeline infrastructure by incorporating different commercial software products, configuring for joint testing events and system of systems integration activities. Most interestingly, the memo indicates TRMC will also pursue capabilities to provide third-party certifications.
The Department must continue to conduct necessary product support analysis early in the program lifecycle…and work to provide PMs the ability to simplify and tailor both the product support strategy and the LCSP for programs that are planned to have short operational lifespan.
Finally, adaptive acquisition must always consider the impacts of rapid fielding when it comes to sustainment and strive to minimize the burdens there. As part of that, the memo focuses on the government’s ability to execute depot repair and maintenance and the ability to tailor Lifecycle Sustainment Plans for systems that have shorter lifespans and are designed for rapid iterations.
Likely Impact
While fundamentally, there are not a lot of new concepts in this memo, there is a fresh refocus that is helpful for pushing forward and building on the work already started. This memo recognizes the larger universe of constraints that even MTA programs face - and that limit speed to fielding. Addressing the broader issues can supercharge the MTA pathway and bring it to its full potential - especially when paired with use of commercial tech, flexible contracting approaches and robust portfolio management.
The rapid kill chain pathway supports a similar goal and puts an emphasis on viewing promising prototypes as essentially urgent operational needs with a tight schedule for delivery. Having hyper-focused leadership attention on speed, enabling broad use of streamlined pathways and building the the supporting processes could be highly impactful in making rapid fielding the new acquisition model. This could also enable a much more streamlined approach for getting SBIR concepts into operator’s hands.
On systems engineering, an ongoing effort is underway to embed digital engineering practices into all new acquisition programs and to adapt them for legacy systems. Full adoption of digital system modeling and mission engineering across the acquisition enterprise would deliver a comprehensive system-of-systems understanding of technical challenges. This would enable far more precise engineering-level analysis of which investments yield the greatest operational impact—whether closing critical capability gaps or mitigating vulnerabilities. It could also strengthen requirements trade-off discussions by providing rigorous, data-driven insights into lower-value requirements that drive disproportionate cost across the kill chain.
Furthermore, integrating existing and in-development industry solutions into these digital and mission-engineering environments would greatly simplify the evaluation of emerging capabilities. It would also illuminate the high potential and superior cost-effectiveness of commercially oriented solutions—particularly when paired with innovative concepts of operation (CONOPs) that can be rapidly prototyped and refined through sandbox campaigns within the mission-engineering framework.
Finally, coupling this capability with the use of common mission threads—led by the Combatant Commands and adopted across the Services—would help enable a level of cross-Service collaboration that has long been aspirational.
The proposed reforms for interoperability and supply chains directly support this move to digital engineering as it enables a more transparent view (if complete) of the interfaces and subcomponents. Too often today, this type of information is scattered across numerous architectural views and bill of materials. Documenting these details in an authoritative source of truth where they can be dynamically refined would be a game changer. Mitigating supply chain challenges and ensuring interoperability even as systems continue to be modernized will require continued monitoring and proactive systems engineering - this reform helps progress those goals.
With respect to TRMC, the organization has historically focused on a limited set of highly complex programs requiring large test ranges like SCIFIRE the hypersonic test effort with Australia. However, TRMC’s potential to manage a far broader and more diverse portfolio is substantial (and it is likely pursuing initiatives not visible to us).
Evolving TRMC’s test pipeline to incorporate commercial products and leverage them in joint testing events, and provide third-party certification could be highly impactful. Smaller companies consistently cite the lack of validated test data as a major barrier to gaining DoW interest and contracts. Enabling TRMC to test and certify emerging commercial technologies could lower that barrier, accelerate adoption, and facilitate easier integration of innovative commercial solutions into operational capabilities.
On the lifecycle management front, having the ability to tailor plans that comport better with the envisioned operations of the system would help reduce the amount of upfront paperwork it takes to get a program going. The key to reform here will be to get program offices to think differently and devise an approach that ensures the best value for the government (this could be a recognition that the platform will never be maintained by the government but rather as part of a COCO model). When it comes to acquiring more attritable systems, a shift in mindset will also be needed.
Implementation Challenges
The primary challenge to any new accelerated pathway is that if bureaucrats in the functional communities continue demanding the same exhaustive planning detail, the transformation memo’s vision of speed will remain unattainable. Achieving real acceleration will require A&S, SAEs, and PEOs to forcefully counter status-quo resistance—most often seen in reflexive non-concurs on staffing packages. Current momentum and strong SECWAR top-cover provide a rare window to drive these changes within this Administration.
The continued challenge with building end-to-end digital environments is the willingness to share information across different stakeholders. Historically, it has been challenging for any one office to get access to the models that exist in hundreds of different offices. This will also require leadership to negotiate those accesses and potentially escalate. USW(R&E) seems well poised to help solve the mission engineering challenges but as each PAE needs to replicate this for their portfolio and needs access to information outside of their control, there will be hurdles to overcome.
Cost estimation reform is essential for faster acquisition cycles (as we did for the Software Acquisition Pathway). Although the strategy reinforces many legacy practices, we recommend moving beyond a prime-contractor cost models shaped by past cost and schedule overruns. A more effective approach would blend historical data with direct, current inputs from diverse industry sources—especially for elements transformed by commercial advances (modern manufacturing, software, digital testing). This broader, commercially informed cost baseline would yield realistic estimates that better enable more rapid execution cycles.
For interoperability, its easy to just slap MOSA into every contract however there are broader technical and business considerations that must be balanced in terms of level of openness, when a military vs commercial standard makes sense, understanding potential performance ramifications and the imposed cost. Equally important will be the validation process for ensuring the implementation actually achieves the goals.
Mapping supply chains means access to proprietary Bill of Materials which will undoubtedly be the biggest challenge to execute analyses across the enterprise. In many cases, there is a lot if nuanced information that is required to understand what a suitable replacement component would look like given the architectural progression of the system and specific design constraints. This is best done within a portfolio by staff that intrinsically understand the different systems and have access to the SMEs.
TRMC will only be successful in its quest for transforming the test enterprise if it can obtain buy-in from the different developmental and operational test authorities. This will require a level of reciprocity that its environment adequately replicates real-world operations as envisioned by the respective military service - otherwise an independent evaluation may not provide a notable difference in crossing the valley of death.
The challenges with the sustainment community are primarily driven by their focus on solving all issues up-front rather than as an iterative process through the design, development and tradeoff steps of a program. This will require PMs to incorporate Product Support Managers into the design process and collectively identify what is needed for the specific program. The default cannot just be government purpose data rights and organic depot maintenance for every system.
Near-Term Steps
All SAEs (or Service Secretaries) issue a memo reinforcing the key tenets needed for adaptive acquisition - related to MTA and Kill Chain approaches, the need to pivot from many status quo processes, the push to digital engineering, the need to leverage common mission threads (with R&E and CCMDs), the need for PMs to be more involved in the cost estimation process and to incorporate sustainment SMEs as key design principals. They should detail the specific steps that they are planning to build an end-to-end environment at the portfolio level.
A key element in this memo that reinforces what the SECDEF signed is the provision of top cover support at the Secretarial level for decisions made at lower levels. This clear indicator of support will go a long way in providing the motivation to try new approaches and shift from the status quo.
PAEs should establish specific guidance on supply chain reporting that would enable smart enterprise management of defense industrial base considerations -recognizing where their limitations are and focusing on the highest impact areas.
PAEs and their Chief Architects/Engineers should work with R&E and service counterparts to devise more detailed scenario-based training that demonstrates the different paths for MOSA implementation and where/when to use it based on the program’s objectives (and specific service goals).
PAEs should begin discussions with TRMC on how to leverage their ongoing efforts to build a third-party certification that they can honor as part of their prototype pipelines and to support their small business transition goals.
Incentivizing Commercial / Private Capital
This area implements multiple executive orders and themes from the FY26 NDAA bills reinforcing the statutory preference for commercial products and services. It is long overdue for the Pentagon to buy commercial already. It addresses the following reform areas:
Accelerate Commercial Preference
Accelerate Private Capital Investment
Common-Sense Accounting
What’s Included
Use all the authorities under the Adaptive Acquisition Framework with a focus on deliveries and volume.
This includes using the Middle Tier of Acquisition pathway for rapid prototyping and rapid fielding/production. It also requires reinforcing how to properly execute an MTA program and novel uses of the acquisition pathways to rapidly iterate on solutions, particularly by leveraging commercial products and services.
This includes scaling adoption of the Software Acquisition Pathway. Recall in March, SECWAR signed a memo directing modern software acquisition to maximize lethality. It directed using the SWP as the preferred pathway for software development. It also directed using CSOs and OTs as the default approach for software contracting.
It also includes rethinking and scaling the use of the Acquisition of Services pathway. Today it is a contracting process for more routine services. Going forward the DoW can acquire many more military capabilities as a service.
Non-Federal Acquisition Regulation-based procurement methods and instruments as preferred agreements, to the extent practicable.
Other Transactions enable rapid, flexible agreements with non-traditional and traditional defense companies for research, prototyping, and production. These offer exciting alternatives to lengthy, cumbersome FAR-based contracts that were often a barrier or disincentive for novel tech companies. DoD can also leverage Procurement for Experimental Purposes to acquire a few systems, including commercial, to explore how they can integrate into the DoW environment. There are an array of other agreements including CRADAs, PIAs, and TIAs to collaborate with industry, academia, and non-profits on R&D.
Use of all incentives to prioritize the timely delivery of capability; rewarding early delivery and penalizing delay proportionally.
Over the next year, expect clearer guidance for contracting officers and more innovative deal structures tailored to program managers, PAEs, and industry partners. Rather than relying on cost-plus contracts that inadvertently reward schedule delays and inefficiencies—driving up overall costs—future awards will emphasize schedule-driven incentives. Historically, the DoD used Cost-Plus-Incentive-Fee (CPIF) contracts to accelerate timelines (and control costs) by tying fee adjustments to performance targets.
Looking ahead, the Department may increasingly leverage progress payments linked to delivered capabilities, directly aligning contractor cash flow with milestone achievement. In competitive environments, the DoD can award multiple vendors for a common capability, rewarding the fastest performers—who meet rigorous quality and performance standards—with follow-on orders and expanded production share.
Commercial products and offerings, in whole or in part, as the preferred acquisition approach, with enhanced presumption of commerciality to expand qualifying vendors. Preferred usage of streamlined solicitation approaches including Commercial Solutions Openings (CSOs) across all acquisition tiers to the extent legally permissible, with CSO procured items designated items designated as commercial. If commercial solutions are not available, then look to modify a commercial solution, followed by new development if nothing exists.
DIU pioneered novel, rapid CSO processes for the department to competitive select vendors. Starting with a problem statement solicitation, often one page. Companies submit a 5-page white paper or 15-slide PPT deck solution. DIU and their DoW partners review and invite selected companies to pitch and demo their solutions and provide supporting details. From there they negotiate a final OT agreement with one or more companies.
Processes to evaluate and accept alternative solutions that achieve operational objectives through different technical approaches.
Historically, DoD RFP solicitations imposed overly prescriptive requirements that severely limited the solution space. In some cases, this stemmed from pre-selecting a favored vendor; more often, it resulted from inadequate industry engagement or from requirements managers and engineers over-specifying the system. Moving forward, the Department will adopt a more open posture, welcoming solicitations that invite novel, performance-based approaches to solving the mission need.
Provide clear incentives and potential penalties to industry: Within 180 days, publish new contracting guidelines to ensure clear incentives for timely delivery, increased production capacity, and investable demand signals for private capital. The Director of the Economic Defense Unit (EDU) will support the USW(A&S) by developing a play book deploying capital in various forms - grants, loans, options, purchase commitments, and investments - tied to pre-agreed performance metrics.
As evidenced by multiple deals this year, the Department is forging closer partnerships with industry to deliver speed and scale at unprecedented levels. This entails harnessing private capital, aligning with economic incentives, and tapping diverse funding streams to transform stagnant sectors into agile, high-output enterprises. The overarching vision: ReIndustrialize—a bold renewal of American defense manufacturing through targeted capital investments in shipyards, factories, and workforce development to accelerate production, expand capacity, and ensure robust surge capability in the face of major conflict.
Likely Impact
If done properly and boldly, these reforms can drastically pivot industry’s business models. The objective is rebuilding the industrial base so more companies compete on each contract to offer novel solutions at lower costs. As DoW scales use of commercial contracts and agreement for warfighting capabilities, companies will spend more their own capital on R&D and competition will pivot from paper proposals of promises to fly-offs, shoot-offs, and other exercises of prototype or operational systems and services. Instead of spending a decade or two overseeing analysis, design, development, test, integration, and production of a systems, the DoW can rapidly acquire capabilities from multiple vendors with continuous competition. If the DoW is acquiring commercial capabilities that has a large, established user base, they will benefit by regular performance upgrades and potentially lower costs. Ultimately, the warfighters get a regular cadence of new technologies in their hands.
As Secretary Hegseth laid out in his speech, the vision is “to inspire American industry to become a wartime industrial base that focuses on speed and volume, through reliable demand and adaptable business practices for current partners and new entrants alike…. For those who come along with us, this will be a great growth opportunity, and you will benefit. To industry not willing to assume risk in order to work with the military, we may have to wish you well in your future endeavors.”
Implementation Challenges
For many established companies in the defense industrial base, these changes will upend decades-old business models. Some will resist, claiming bias or favoritism toward new entrants. Last year, the five prime contractors spent far more on stock buybacks than on reimbursed IR&D— each far exceeding the total defense earnings of all non-traditional firms combined. A growing number of firms are already pivoting to new business models and redirecting investments to seize emerging opportunities.
Most acquisition programs—especially major weapon systems—are already in development or production, leaving limited room to adopt commercial models. Going forward, however, PAEs will acquire more capabilities through rapid commercial methods, including as-a-service approaches. This requires structuring programs from the outset—including requirements—to enable innovative acquisition strategies. As the DoD transitions beyond JCIDS, it must avoid reverting to overly prescriptive solutions in operational and contracting documents. Framing operational problems, challenges, and needs in broad terms empowers industry to propose a wide array of novel solutions. Organizations capable of rapidly experimenting, testing, and integrating commercial and defense technologies are essential to delivering decisive advantages to the warfighter.
Near-Term Steps
Contracting leadership across OSW and the Services must curate and publish clear how-to guidance to acquisition professionals on how to best leverage commercial acquisition. It should have workshops, training, and collaborative forums for the workforce to learn best practices and lessons to overcome challenges. There must be clear direction and expectations that acquisitions going forward must first consider commercial approaches, while doing otherwise requires justification and approval.
As part of PAE metrics and reporting, portfolios should track what percentage of spending and actions are commercial including recent trends and upcoming projections. Given the diverse set of capabilities in each portfolio, a PAE overseeing carriers and large ships may justifiably have low commercial adoption, whereas a digital PAE overseeing C2 solutions should have a considerably higher rates.
As for aligning private capital, this is where PAEs will be flexing new muscles to work with their pool of companies as well as the Economic Defense Unit to shape new deals on strategic investments in facilities, production, and workforce. Rebalancing risk sharing with industry will include more stable demand signals, longer-term contracts, and correct incentives for industry to raise and deploy private capital to drive growth.
Enacting Contracting Reform
It addresses the following reform areas:
Procure Industry-Driven Solutions
Maximize Flexible Contracting
Reform Bid Protests
FAR / DFARS Reduction
What’s Included
Traditional contracting solicitations with detailed government requirements for industry to build to will be rare. The new approach will focus on operational problems for industry to solve including gaps in kill chains for companies to propose and demonstrate solutions to close those gaps. This will fuel greater Department and industry collaboration on emerging tech and military solutions.
Use of Other Transaction Authority for rapid and flexible prototype and follow-on production agreements along with other non-FAR methods will be the preferred contracting practice and used to the greatest extent practicable. Contracts will incentivize timely deliveries of capabilities including rewarding early deliveries and penalizing delays.
Where appropriate, the acquisition leaders will maintain competition throughout the acquisition lifecycle including maintaining two qualified vendors for initial production. Contracts will further drive module-level competition through open approaches and shared interfaces.
As part of a federal-wide effort, the Federal Acquisition Regulation underwent a revolutionary overhaul. The FAR, and the Defense FAR Supplement (DFARS) were slashed to statutory must-haves and proven best practices. Thousands of pages of regulations were moved to guidance or eliminated.
Likely Impact
This will fuel increased participation and competition for many contracts which will decrease costs and increase innovation. Increased use of OT agreements will save months or potentially years from contracting processes and make it easier for thousands of companies to do business with the DoW. Thousands of hours of compliance in contract preparation to execution of contracts will be saved by the Department and industry resulting in faster awards and deliveries and realizing billions in cost savings.
Implementation Challenges
Our beloved contracting workforce has been strained for years with the contract files stacking higher than the number of qualified contracting officers to process them. With the various personnel reforms over the last year, the Department has lost thousands of contracting officers. Implementing flexible, rapid OT agreements requires experienced contracting professionals who understand what to include and exclude.
Similarly with the revolutionary FAR/DFARS overhaul, contracting officers will need to adjust to the new environment. Some will struggle without the comfort of many FAR clauses to reduce their risk. It will take time to digest all the changes and shape new norms within each organization on what right looks like with new contracts. There will be some failures on contracts that critics will point to, but the key is to share lessons and continuously improve to achieve the desired outcomes.
Near-Term Steps
With the annual churn in the contracting workforce, we need to rapidly train and develop the workforce on executing OT agreements. This will require boot camps, workshops, and other intensive efforts to get thousands up to speed quickly on the new paradigm. Contracting leaders up and down the chains of command will need to overly communicate with their workforce on best practices, expectations, and training opportunities to guide them through what will be a culture shock for many.
Executing Deregulation Measures
This bucket enacts the latest in a series of deregulatory initiatives across the federal government to enable greater speed, cost-efficiencies, and innovation. Congress is taking bold steps to streamline Title X, and federal agencies are streamlining procurement regulations, organizations, and processes.
It addresses the following reform areas:
Reduce Test Oversight
Replace Analysis of Alternatives
IT Acquisition
What’s Included
Within 150 days, update the DOD 5000-series of acquisition policies, the cumbersome 7,330-page Financial Management Regulation, Service level policies, and other relevant documents. It includes delegating decision authorities, reducing documentation, reviews, and analysis. Furthermore pivot legacy analysis of alternatives to more competitive prototyping.
Acquisition policies like the Middle Tier of Acquisition and Acquisition of Services can be revamped to remove low-value, bureaucratic elements to enable greater speed and flexibility. Service level policies could be streamlined or eliminated to avoid additive burdens and instead pivot to robust guidance outlining for acquisition professionals on Service-unique implementation measures.
What is very exciting is digitizing acquisition policies, processes, and pathways including harnessing AI solutions, to enable the workforce to operate with greater speed and success throughout the acquisition lifecycle.
Reducing test oversight started with the reduction of staff in the Director of Operational Test and Evaluation (DOT&E) office. It further seeks to align developmental and operational test. Test is still critically important to do, and that responsibility will shift more to the Service and PAE levels.
Likely Impact
After the initial confusion over what changes and how they affect your program or organization, the new streamlined, aligned, and digitized policies will enable greater speed, flexibility, and success. Rather than overloaded policies dictating every step, broader guardrails define the boundaries. Robust guidance equips the acquisition workforce with practical how-to instructions for navigating each phase, offering numerous tailorable options supported by a range of tools and resources.
This shift will foster a culture of managed risk and accelerated delivery of integrated solutions to warfighters. We can finally retire the checklists with 1,001 tasks before passing each milestone and collecting $200. Empowered acquisition professionals will apply critical thinking to their programs’ unique aspects, craft strategies for smart risk management and lifecycle navigation, and pivot as circumstances evolve.
Implementation Challenges
Having been a part of countless acquisition policy creation or updates, it is painfully slow and bureaucratic. Hated comment resolution matrices with hundreds of comments from dozens of organizations are torture unsuitable for our worst enemies.
The test community will take time to pivot to a new paradigm. One focused more on digital foundations, rapid/iterative/continuous testing — even after delivery — with greater alignment of DT and OT between industry and government. The regular integration of solutions from multiple vendors will be a challenge that must be met.
Near-Term Steps
DoW leadership must take bold strides to empower real reformers to take the pen on key policies and cut, tailor, and align to enable the desired transformational outcomes.
A strong leader is needed to coordinate efforts across a broad mix of acquisition pathways, functional areas (owned by different organizations), and balance OSW with Service policies. Mr. 5000, the leader who did that for the last 20-years, just retired a few months ago. With short timelines in SECWAR’s memo, there must be waivers to the traditional policy update processes.
Rebuilding the Industrial Base
This bucket is primarily focused on addressing key defense industrial base challenges that artificially limit DoW’s ability to scale production and address key supply chain issues that drive program delays, limit private investment and increase overall costs. It addresses the following reform areas:
FMS Reform
Increase Due Diligence
Go Direct-to-Supplier
Establish Industrial Base Consortium
Wartime Production Unit
What’s Included
The Department’s FMS reform efforts will address broad and impactful changes to the processes, organizations and people that execute the Department’s FMS system.
Includes a focus on reforming the FMS process to streamline the process and limit deltas in processing the requests and delivering needed capability. Concurrently, it also pushes a greater onus on PMs to design for exportability. When systems are designed for FMS and Direct Commercial Sales in advance, it streamlines the ability to sell to allies and partners and helps expand overall production capacity.
The Department will develop and implement an enhanced process to assess critical areas of each investment .
For provision of Defense Production Act (DPA) funds and Industrial Base Analysis and Sustainment support, establishes a more rigorous process for vetting companies / partnerships and imposes more performance monitoring requirements.
The Department will establish proper incentives and contractual mechanisms to ensure effective integration across the supply chain.
To minimize pass-through costs (which can be substantial on major contracts), creates a model where the Government procures more components and subsystems directly from suppliers. The idea here is that this approach will generate economies of scale and provide another avenue for managing key supply chain constraints.
The Department will leverage the existing Industrial Base Council (IBC), the Joint Industrial Base Working Group (JIBWG), and the Joint Defense Manufacturing Council (JDMC) to serve as the Department’s mechanism for coordinating industrial base initiatives across the Office of the Secretary of War (OSW), the Defense Agencies, and the Military Departments.
There is no detailed change in policy here but rather a broader set of responsibilities handed to the specified groups. The overall goal is to remove policy and procedural barriers for non-traditional defense contractors, maximize use of commercial standards, mitigate supply chain issues, expand production capacity and build workforce pipelines. It also includes a survey of current efforts in this space with the goal of consolidation to eliminate duplication and standardize governance.
The Department will take immediate action to transform how we rapidly accelerate the manufacturing and production of hardware and software capabilities to the Warfighter through the establishment of the Wartime Production Unit.
This change essentially merges the Joint Production Accelerator Cell with another team that is focused on improving how deals are accomplished to make them faster and more aligned with commercial practices. This is partly accomplished through what can only be termed more relational-type contracting practices. The new org is expected to be supported by an advisory team comprised of c-suite executives.
Likely Impact
Overall the memo represents positive reinforcement in various areas that have had reforms underway such as FMS, supply chain and scaling production. Standing up the Wartime Production Unit for instance hits the accelerator to support scaling munitions, a priority that the DoW has been pursuing over the last year.
On FMS, an Executive Order signed in April kicked off a DoW tiger team looking at streamlining opportunities (outcomes expected soon). On exportability, DODI 5000.01 (Defense Acquisition System) already has had that as one of the core tenets however this requirement has historically been counteracted by exquisite operational requirements and potential development cost increases. The DoW will prioritize the ability to sell overseas more than it has in the past.
In other cases, there are new processes added to the mix that seem likely to drive upfront processing time. On DPA/IBAS funding, the additional set of company, financial, economic, risk and compliance analyses seem likely to drive delays in getting awards processed. While it certainly makes sense to execute a level of due diligence, making it harder and more complicated does not comport with the tenor of the memo. In many cases, DPA invests in companies that are doing something no other entity is pursuing - and the national security business case is clear and not always financially compelling. Late in Sep, DoW awarded $43.4M in DPA award to Alaska Range Resources, LLC (ARR) to extract, concentrate, and refine extracted stibnite to produce military grade antimony trisulfide. This was an important award to onshore a material needed for the military that was produced and distributed by China.
The “direct to supplier” area which while admirable in its goals risks becoming a paperwork exercise (additional reporting) for companies acting in an integrator role (every OEM). While there are single points of failure, the best approach for addressing that is to award more contracts with broader requirements that allow other components to be used or to award DPA funds to bolster a struggling supplier. Having the Government serve as an intermediary, even if it saves some funding, is likely to add complexity and not achieve the desired outcomes…especially if it starts to into a GFE/P-type situation.
The most exciting development is the incorporation of senior industry executives into the production scaling planning. A major lesson from WWII (re: Freedom’s Forge) was that when it came to mass-production, having experts in key government advisory positions can make an enormous difference in how deals need to be structured and where the Government can best help to achieve key outcomes.
Implementation Challenges
Given that so many of these efforts are already well underway, there are no specific challenges in continuing their implementation. Ultimately when it comes to supply chain issues and production scaling, we still think the free market approach is the best solution. If the ordering patterns change (move to more low-end weapons and place larger and more consistent orders), then the supply chain will follow and resolve its own issues (in most cases).
When it comes to adding new onerous processes and having the Government serve as an arbiter for parts and components, there will likely be pushback from industry and other entities that will have to be managed.
On getting more involvement from the executive level to inform production strategies, there will likely be no shortage of interest - this may be the easiest effort to implement across the entire memo.
Near-Term Steps
The key step here is to provide industry with specific guidance on what will change and provide clarity on some of the areas mentioned above. It will be important to provide specific POCs that can be contacted to support the efforts.
Improving the Workforce
This bucket is focused on improving the performance of the acquisition workforce which is arguably the most important element of all the reforms since without the right people, experience and empowerment, all the other reforms become much harder. It addresses the following reform areas:
Acquisition Workforce Excellence
Accountable Program Leadership Terms
Warfighting Acquisition University (WAU)
Incentivize the Workforce
Digitize Acquisition
What’s Included
The Department will build and augment that workforce with a focus on recruiting, retaining, and training highly skilled and highly experienced operators and SMEs in key positions for our critical programs and industrial activities.
The key here is that the Government will prioritize real technical and operational expertise in acquisition hiring rather than just legacy DoD experience. The goal is to also establish more government to industry rotations so that expertise can be shared across the two sectors.
The Department will assess and make adjustments to program management slating and assignment processes to enable longer tenures for PEOs, PMs and other critical leadership and functional positions.
This will focus on establishing longer tenures for key leadership positions, issuing a more refined methodology on military versus civilian roles and establishing KPIs that enable improved performance measurement.
To cultivate the next generation of acquisition leaders, the Department will transition the Defense Acquisition University to the Warfighting Acquisition University, and institutionalize a modernized training methodology that emphasizes immersive, scenario-based experiential learning focused on portfolio management competencies.
This reform represents an important shift away from compliance only training and towards more scenario-based training that reflects more real-world situations. This shift also includes more focus on portfolio management and leadership competencies as well as working across functional domains. Critically, it also requires much greater focus on venture capital and commercial practices to give acquisition professionals the foundation they need to craft smarter business deals.
To ensure the Department is operating with speed and rigor, we must empower and incentivize PMs to take risks by providing performance incentives to those who take risks that result in successful outcomes.
This reform area focuses on how to improve the incentive structures for PM’s and other leaders to take more risk in executing novel acquisition approaches.
The Department will scale efforts to leverage digital and AI tools in preparing and reviewing program strategies to enable greater speed and quality, centralizing decision making within the PAE and PM structure, and accelerate approval authorities for most program documentation to the PM, the PEO, the SAE, or the Defense Acquisition Executive.
This reform area is focused on reducing the burden on PM’s using the latest in AI tools and reducing the bureaucracy associated with making decisions and gaining approvals.
Likely Impact
There is great potential in focusing more on the acquisition workforce, bringing in new skillsets and aligning incentives. Some of these efforts have been tried before while others have been desperately called for with little action such as conducting a major transformation of the Defense Acquisition University and incorporating more learning on commercial / venture capital operations.
This reddit post from a few years ago captures the general impression of DAU from most acquisition professionals (and we also have taken every PM course provided there). It should be noted there are some excellent faculty members there who have tried to make a difference (shout out to Dr. Ann Wong, Glenn Lamartin , Lynne Giordano, and Blair Stanford) but sadly the majority of the curriculum is outdated and the format is way too PowerPoint heavy, focused on policy, not practice. The reforms proposed will be welcome by many at DAU and across the acquisition enterprise. We strongly believe that new content needs to primarily be driven by outside organizations to provide a fresh rework of the curriculum and leverage more modern learning tools.
If DAU can model and scale some of the highly successful programs (such as Immersive Commercial Acquisition Program (ICAP) and Defense Ventures Fellowship) that have been used to support rotational assignments and bring an in-depth industry perspective to select program managers and contracting officers, then if no other workforce reform was implemented, this would result in major impacts. Anecdotal evidence shows that when acquisition professionals are exposed to other perspectives and given different experiences, they have an impact and they bring that back into their workspace.
Perhaps no one has done more to advance use of AI tools for acquisition inside DoD than the CDAO team (Ryan Connell, Bonnie Evangelista, and Cherish Lesko) who stood up Acq Bot and regularly brings awareness to the potential in blogs such as this one: How I use AI in my daily work as a DOD Acquisition Manager. Leveraging the work Ryan and others have done to advance the provisioning of these tools would be very impactful as program managers and other functionals often have to use very manual intensive processes to respond to taskers and execute basic management functions. Automating certain reporting functions and having easier approaches for developing contract documentation could free up valuable time for planning and strategy development.
If AI tools are paired with real streamlining efforts as outlined in the memo (reducing reviews and accelerating decisions), then there could be significant efficiencies gained that could contribute directly to faster contracts, better source selections and more rapid delivery of capability to the warfighter.
Implementation Challenges
When it comes to implementing workforce reforms, the greatest challenge comes from the inherent complexity and diversity of tasks. It is easy to develop KPIs on paper but it is often hard to isolate the results to a single person such that they can be easily attributed and rewarded. Acquisition is and will remain a team sport until all decisions are handed over to a single AI agent - so more often than not, a program that slips its schedule or overruns is an outcome driven by 20 different people throughout the system, including the industry performers. This will remain a challenge when it comes to offering serious financial incentives. Despite this fact, there should still be rewards for those try new approaches and are bold enough to go outside the box to find an approach that has potential to deliver capability at speed.
For acquisition civilians, the ACQDEMO personnel system was set up specifically to support setting goals, rewarding performers and punishing laggards. The observed challenge was maintaining consistency across the many different offices and over time it became a bastardized tool based on hierarchy rather than performance or novel thinking. This will have to be addressed.
The goals to increase tenure of acquisition professionals in a single job so that they have a greater chance of seeing the results of their decisions and being appropriately rewarded is contradicted by the military promotion system which still favors breadth over depth and generally punishes lack of career movement. Military members on the acquisition track should likely be given their own career path that does not require them to compete with operational personnel.
On a positive note, historically, hiring technology professionals from industry was a challenging endeavor given that government salaries were so low and working conditions often subpar compared to the plush environments in silicon valley (no bringing your dog to work days). However, with defense having a resurgence and there now being a sexiness to the industry, the DoW has a unique opportunity to exploit the interest and bring on some incredible talent. The next challenge will be retaining this talent which may require improvements in IT system operations, facility infrastructure and other reforms that often frustrate new private sector entrants to government service.
Building on the Deputy Secretary’s workforce memo in April to explore consolidated functions, flattened hierarchies, speed over process, fiscal discipline, and digital first operations - we understand that an Acquisition Workforce Transformation Plan will be issued separately in the coming months. We sincerely hope that it will take a pragmatic approach to this critical area and make the near-term changes that will result in significant outcomes (industry talent, transform DAU and education in commercial practices) while making some strides towards the broader systemic challenges that will not be immediately resolved.
Near-Term Steps
Form a tiger team of a few select service acquisition professionals, A&S personnel, and DAU faculty to develop a solicitation for a company or non-profit entity with deep expertise in defense acquisition to craft new curriculum for the program management career field.
Over time, do this for all of the career fields, continually modernizing the material without having to go through the onerous curriculum approval process that exists today.
Scale the Defense Civilian Training Corps which is already working to provide college student with modern acquisition training and internships.
Designate CDAO as the linchpin for AI acquisition tools and provide them an appropriate budget for fielding and maintaining a suite of different tools to support an array of acquisition functions and minimize workforce burdens.
Scale DIU’s Immersive Commercial Acquisition Program (ICAP) and restart the Defense Ventures Fellowship to begin a more robust industry-government rotational program. DoW leadership convey a request to tech executives for their support in executing the program.
Commission acquisition organizations to begin more intense recruiting activities at tech fairs and colleges to build interest in joining defense acquisition.
PAEs should solicit support from third-party entities to execute value-stream mapping exercises on their current processes and identify areas that deserve attention and reform.
Your Actions
Here’s how members of each of the key group can enable these transformations.
Acquisition Professionals
Continuously hunt for opportunities to deliver capabilities sooner. Whether by delivering an 80% solution two years ahead of schedule or by leaning every process, review, and document to shift IOC and FOC dates sharply to the left. PAEs should be executing continuous value stream mapping exercises to proactively identify streamlining opportunities and employee pain points.
PAEs must resource portfolio-level staff, resources, and tools. Effective portfolio management cannot be executed by an overextended, understaffed group. Build specialized expertise in industry engagements, portfolio strategy, enterprise architecture, test and evaluation infrastructure, and beyond.
Reimagine Career Paths. You are no longer a faceless cog in the acquisition machine. Embrace the reforms in the latest memos and strategies. Educate yourself on innovative practices, collaborate across the workforce to share best practices and lessons learned, and channel your energy into delivering mission-critical capabilities to the warfighter—faster and smarter.
Experiment. There is no one right solution to any acquisition problem. There is a reason that combatant commanders and S&T organizations are leaning more and more on demonstration events to understand the effectiveness of a solution. That’s because trial and error is what it takes. The same is true in acquisition. Value-based pricing is complex but only practice will bring the lessons learned that make it the new approach for pricing contracts. Value engineering requires detailed analysis but it could result in billions of TOA returned to warfighters.
Industry (Traditional and Non-Traditional)
Get smart on novel business approaches. Other Transaction agreements, non-FAR and other commercial acquisition and contracting practices. Explore how you can pivot your offerings to the Department by leveraging commercial models, As-a-Service model, and partnering more with commercial companies to deliver at greater speed and scale.
Invest more in R&D, workforce, and production capacity. This requires a series of frank discussions with boards, CFOs, and business center leaders on pivoting expectations on financials to operate in this new environment. Less R&D will be reimbursed by the government, but there are opportunities for greater growth and margins with more stable, longer-term production contracts.
Provide the DoW leadership with new ideas. There is no shortage of creativity inside the Department but its also easy to get bogged down in the minutiae of managing a large bureaucracy, so keep the ideas coming whether its a smarter way for them to buy something, a process that can be improved or a resource they are not using that could provide value.
Congress
Pass the FY26 budget. Seriously. The #1 thing you can do to support national security is pass the DoW budget on time. CRs and Shutdowns cost billions, delay warfighting capabilities, and drives high risks to the Department and industry.
Pass the FY26 NDAA. Include the key provisions aligned with the core intent of the FORGED and SPEED Acts, the Executive Orders, and Acquisition Transformation direction. Provide commander’s intent while allowing the DoW the flexibility on how to implement. Keep the pressure on the DoW to execute on these reforms.
Enable budget flexibility. Congressional appropriators and DoW leaders must rebuild trust by increase communications and transparency. Enable rolling up some of the 1,700 program elements and budget line items, especially the ~700 that are < $20M. Work out an agreement to enable flexibility within PAE portfolios if there are regular engagements and reports on budget execution.
Combatant Commands
Have hope that a brighter day is coming soon. New capabilities, in greater quantities, harnessing powerful software/AI prowess are coming soon to a theater near you.
Provide clarity to Joint Staff and other Pentagon officials on operational priorities, capability gaps, threats from adversaries, risks with legacy systems, and feedback on interim developments/prototypes and recent deliveries.
Provide representatives to regularly engage, and potentially assign to PAE portfolios to shape acquisition efforts. Providing insights on operations and feedback on developments enables rapid iteration with industry to maximize mission impactful solutions.
Execution
The legislation, executive orders, strategies, and directives lay a solid foundation for transformative reform across the Department and industry—yet they represent only 20% of the journey. The remaining 80% now rests with Pentagon leaders, Service acquisition executives, and Portfolio Acquisition Executives to execute with urgency. Secure early, visible wins to build momentum and win hearts and minds. Swiftly remove those wedded to the status quo or actively undermining progress to protect turf. Stay laser-focused on warfighter outcomes: accelerate delivery, maximize performance, and scale production. Together, we can build the Arsenal of Freedom.
In exciting personal news, we’ve left our jobs at defense tech unicorn companies to start a new venture aimed at enabling many of these transformational changes to shape the new enterprise. We’ll provide more Defense Tech and Acquisition Substack posts and release a powerful new platform among our offerings to the DoW and industry. Details coming soon.
We’ll cover the memos on JCIDS requirements, FMS, and potentially PPBE reforms in future posts. We welcome discussions below from you on these acquisition transformations. What are you most excited to see? What do you see as the biggest challenges? How can we collaborate on driving needed reforms?
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Awesome summary. What a time to be alive to see such acquisition reform! 🦅🇺🇸
Excellent analysis! The unified push for speed in acuisition is fascinating. What if this efficiency could spill over and model reform for other public sector procurement? Imagine the positive impact.