What’s Next in Advancing US Acquisition Policies
by John Reardon
In a groundbreaking move that promises to reshape the defense industrial landscape, Secretary of War Pete Hegseth has dropped a trio of policy memorandums that fundamentally alter the acquisition process, prioritizing speed, modularity, and, crucially for the COTS (Commercial Off-The-Shelf) industry, a “commercial-first” approach. This isn’t just bureaucratic shuffling; it’s a paradigm shift designed to inject genuine competition into a market long dominated by a handful of established prime contractors comfortable with the status quo. The message from the newly branded Department of War is clear: adapt to the urgent demand for speed and innovation, or find your future endeavors outside the Pentagon’s gates.
The Dawn of the Warfighting Acquisition System (WAS)
The most significant change is the renaming and transformation of the antiquated Defense Acquisition System into the Warfighting Acquisition System (WAS). This semantic shift is intentional, signaling that acquisition is now a core component of the warfighting function, with “speed to capability delivery” as its organizing principle. Hegseth, in his address at the National War College, emphasized the urgency, telling industry executives that the Department is prepared to take on more acquisition risk to decrease operational risk. This philosophy directly tackles the Achilles’ heel of traditional procurement: the years-long, requirements-heavy process that often delivers a 100% solution for yesterday’s threats. The new approach is open to buying the “85% solution” now and iterating with the industry over time.
For the COTS sector, this translates into unprecedented opportunities. The memorandums enshrine a “commercial-first” policy, making commercially available solutions the default purchase path over custom-built, government-funded developments. This moves the COTS philosophy, first popularized by the 1994 “Perry Memo,” from a mere suggestion to a core directive. This is a massive win for innovative, smaller companies that lack the infrastructure to navigate the complex, bespoke Mil-Spec (Military Specification) environment, and often operate on different capital cycles than the primes.
Leveling the Playing Field for Non-Traditionals
The new policies are a direct challenge to the large prime contractors, many of whom have become too comfortable with “vendor lock” and the slow, predictable pace of the old system. Hegseth is intent on making defense contracting competitive again. The directives explicitly require maintaining at least two qualified sources for critical program content to ensure meaningful choice and drive down prices.
Furthermore, the emphasis on a Modular Open Systems Approach (MOSA) is a game-changer. By mandating open standards and interfaces, the Department is ensuring that different companies can compete to provide upgraded components, thereby preventing a single prime contractor from owning the entire lifecycle of a system. This enables smaller, agile COTS providers to plug their advanced solutions—whether in AI, high-performance computing (HPEC), or IoT technologies—directly into existing and future military platforms, something that was nearly impossible under the old, closed system.
The Department is also streamlining the use of alternative contracting approaches like Other Transaction Agreements (OTAs) and Commercial Solutions Openings (CSOs), which will be the default for all software development. These mechanisms are faster and less bureaucratic than traditional contracts, perfectly suited for the rapid development cycles typical in the commercial tech world.
A New Era of Investment and Innovation
Secretary Hegseth has signaled a willingness to use long-term contracts and other incentives to reward companies that invest their own R&D dollars and expand their capacity to meet the Department’s needs. This provides the clear, investable demand signals that the COTS industry has long craved, encouraging venture capital and private equity to back defense-focused tech firms.
The message to the COTS industry is clear: the door is open. The Department of War is actively seeking partners willing to move at the “speed of relevance” and provide the capabilities needed to maintain an advantage over our adversaries. This release and the underlying memos are not just procedural updates; they are a call to arms for the innovative, non-traditional defense industrial base to step up and deliver the future of warfighting technology, today.