The New Acquisition Landscape: Implications for the Defense Industrial Base (DIB)

By Andrew Park | 2025-11-13

On November 7, 2025, Secretary of Defense Pete Hegseth launched a sweeping transformation of DoD's acquisition and requirements systems in his address, "Rebuilding the Arsenal of Freedom." This marks the most significant shift in U.S. defense acquisition since the Cold War. The reforms are intended to shift power from prime contractors to defense tech startups and suppliers, in order to dramatically accelerate the pace of procurement. Multiple companion documents were also released that day, which I've analyzed alongside the speech to develop this summary of the new acquisition architecture and its implications for the Defense Industrial Base (DIB), the network of companies that supply the military with equipment, technology, and services [1–4].

Key Takeaways

• DoD's shifting from compliance-focused to speed-focused acquisition, making commercial products the default over custom-built systems.

• Defense tech startups gain direct access to DoD customers, while prime contractor roles as gatekeepers diminish.

• Years-long bureaucratic requirements processes are being eliminated and replaced with streamlined approaches designed to compress timelines from years to months.

• Success requires thousands of skilled Product Managers to execute software-centric, iterative acquisition at scale.

Program and Technical Execution Mandates

The new mandates are designed to force competition, accelerate execution, and improve software delivery outcomes.

Software Pathway as the Default DoD aims to accelerate software delivery by mandating that all military services (Army, Navy, Air Force, Marine Corps, Space Force) and defense agencies use the Software Acquisition Pathway (SWP) [10], a streamlined procurement process specifically designed for software products, leveraging Commercial Solutions Openings (CSOs, a simplified contracting method for buying readily available commercial technology) and Other Transactions (OTAs, flexible agreements that allow the government to work with companies without the typical federal contracting red tape) as standard tools. As I detailed in my article Hegseth Just Killed Waterfall & Mandated Agile + DevSecOps [7], this represents DoD's definitive shift away from traditional waterfall development methods toward agile and DevSecOps practices as the mandatory standard for all software acquisition. The intended benefit is faster, more iterative software deployment that can respond to threats more quickly than traditional development cycles.

• Defense Tech Startups: Highly positive. SWP, CSOs, and OTAs are designed for rapid, iterative software development, exactly where startups excel. These pathways reduce bureaucratic overhead and favor agile delivery over traditional waterfall approaches. The mandatory shift to agile and DevSecOps aligns perfectly with how startups already build software.

• Prime Contractors: Challenging. Traditional primes built their competencies around hardware acquisition and large systems integration, often using waterfall methodologies. The mandatory shift to agile and DevSecOps requires cultural transformation and Product Management capabilities many primes lack.

Talent Impact: There's a critical shortfall in Product Management talent within the Defense Industrial Base. As explained in my article Product Management Talent: The Critical Gap Agile and DevSecOps Can't Fix [8], the Defense Industrial Base will ultimately need thousands of skilled Product Managers to make these reforms work, a need that becomes even more acute with the mandatory adoption of agile practices. The supply of qualified Product Management talent is insufficient to meet this demand, forcing Defense Industrial Base companies to invest significantly in developing and growing their own Product Management capabilities through training, mentorship programs, and talent development initiatives.

Full MOSA Enforcement DoD seeks to increase competition and reduce lifecycle costs by making the Modular Open Systems Approach (MOSA) [11], a technical design philosophy requiring defense systems to be built with standardized, interchangeable components rather than proprietary integrated architectures, mandatory. It's viewed as key to interoperability (the ability of different systems to work together), continuous competition (allowing multiple vendors to compete for system components throughout the lifecycle), and lifecycle cost reduction. The intended benefit is breaking vendor lock-in (the situation where a company becomes the sole source for maintaining or upgrading a system because they control proprietary technology) and enabling continuous technology refresh without replacing entire systems.

• Defense Tech Startups: Positive. MOSA creates entry points into larger systems through modular, standards-based interfaces, allowing smaller firms to compete for individual components rather than entire integrated systems.

• Prime Contractors: Mixed to negative. While MOSA can reduce integration complexity, it also commoditizes proprietary architectures and forces open interfaces, reducing vendor lock-in and the long-term revenue streams that came from controlling system architecture.

Direct-to-Supplier Engagement DoD intends to reduce costs and accelerate timelines by engaging suppliers directly, bypassing prime-led bottlenecks. Traditionally, prime contractors (the large defense companies that win major system contracts) serve as intermediaries, hiring subcontractors and suppliers to build components, then integrating everything and charging the government for the whole package plus their own fees. Direct engagement means DoD will contract directly with component manufacturers and technology providers, cutting out the middleman. The benefit is eliminating pass-through costs (the markup prime contractors add when they subcontract work), reducing integration delays, and giving the government more direct visibility into supply chain issues.

• Defense Tech Startups: Major positive. Direct access to government customers eliminates the prime contractor intermediary, improving margins, accelerating decision-making, and giving startups visibility into requirements and feedback.

• Prime Contractors: Negative, as their gatekeeping and integrator roles are deliberately reduced.

Elimination of JCIDS DoD aims to compress requirements development timelines by officially canceling the Joint Capabilities Integration and Development System (JCIDS) [12], the formal multi-year process DoD previously used to define what capabilities it needs before starting any acquisition. New structures like the Mission Engineering and Integration Activity (MEIA, which will use modeling and simulation to define requirements faster) and the Joint Acceleration Reserve (JAR) replace it to streamline requirements and accelerate funding. The JAR is particularly significant, it's essentially pre-positioned funding that can be rapidly deployed to field promising capabilities without waiting for the next budget cycle. This means innovative solutions that demonstrate success can receive production funding within months rather than waiting years for traditional budget processes, enabling faster response to emerging threats.

• Defense Tech Startups: Positive. JCIDS added years to capability development cycles. Its elimination removes barriers to entry and accelerates the path from prototype to production. The JAR is especially exciting for startups, as it creates a fast path from successful prototype to funded production (becoming an officially funded, ongoing military program) without the typical "valley of death" between demonstration and program of record.

• Prime Contractors: Positive. While primes navigated JCIDS effectively, they still absorbed significant overhead costs and delays. Streamlined processes benefit all players.

Wartime Production Unit (WPU) DoD seeks to rapidly scale production capacity by creating a new office, also referred to as specialized "deal teams" or the Economic Defense Unit, dedicated to scaling production and modernizing contract execution through teams focused on accelerating manufacturing capacity. This addresses a critical concern: current U.S. defense production capacity is insufficient for sustained conflict. Recent conflicts have revealed that munitions stockpiles can be depleted within weeks of intensive combat, while current production rates would take years to replenish them. The Defense Industrial Base has atrophied since the Cold War, with limited surge capacity and fragile supply chains dependent on single sources for critical components. The benefit is achieving wartime production levels more quickly by removing contracting and financing bottlenecks.

• Defense Tech Startups: Mixed. While specialized deal teams could help startups scale production faster, many startups lack manufacturing infrastructure. This may favor those with production partnerships or vertically integrated capabilities.

• Prime Contractors: Positive. Primes typically have established manufacturing capacity and supply chains, positioning them well to leverage WPU resources for rapid scaling.

Strategic Shift: Speed, Risk, and Commercial Preference

DoD's transforming the Defense Acquisition System (the traditional set of policies, procedures, and organizations that govern how the military buys everything from aircraft carriers to software) into what it's now calling the Warfighting Acquisition System, pivoting from a culture focused on regulatory compliance to one focused on speed and execution.

Commercial First as Default DoD aims to reduce costs and accelerate fielding by explicitly prioritizing the purchase of commercial products and services (items already available in the commercial marketplace) wherever possible, rather than developing custom military-specific solutions. The intended benefit is leveraging commercial innovation cycles and economies of scale rather than bearing the full cost of custom development.

• Defense Tech Startups: A major positive, since commercial-first policies align with their existing go-to-market models.

• Prime Contractors: A negative pressure point, as it undermines traditional custom defense contracting.

Solutions Over Specifications DoD seeks to accelerate capability delivery by buying solutions that meet operational needs quickly, even if they fall short of every technical requirement, embracing "good enough now" over "perfect later." The benefit is fielding effective capabilities years faster by accepting solutions that meet 80% of requirements rather than waiting for 100% compliance.

• Defense Tech Startups: Highly positive, as their rapid prototyping and iterative delivery models fit perfectly.

• Prime Contractors: Negative, since this erodes the long-standing "100 percent compliance" model that justified lengthy development cycles.

Stable Demand Signals DoD intends to increase industrial capacity by implementing more multi-year procurements and long-duration, high-volume contracts to stabilize industrial planning. This addresses the production capacity concern by giving companies the confidence to invest in expanded manufacturing facilities, hire additional workers, and secure supply chains. Without predictable, multi-year contracts, companies are reluctant to make capital investments that might go unused if future funding doesn't materialize. The benefit is encouraging industry to invest in expanded production capacity by reducing the risk of sudden contract cancellations or year-to-year funding uncertainty.

• Defense Tech Startups: Positive. Predictable, multi-year revenue enables startups to secure financing, hire talent, and invest in R&D with greater confidence.

• Prime Contractors: Strongly positive, supporting capital investment and production scaling.

Structural and Oversight Implications

Empowered Portfolio Leaders DoD seeks to accelerate decision-making and enable dynamic resource allocation through the rise of Portfolio Acquisition Executives (PAEs), senior leaders responsible for entire capability portfolios (for example, one executive overseeing all air defense systems across multiple programs) rather than managing individual programs one at a time. PAEs shorten decision chains and enable outcome-driven collaboration with industry. Critically, PAEs will have the authority to rapidly reallocate funding within their portfolios, making it easier to cancel or ramp down less-needed capabilities while surging resources to higher-priority programs. The intended benefit is responding dynamically to changing threats and operational needs without lengthy bureaucratic processes.

• Defense Tech Startups: Positive. Shorter decision chains mean faster feedback loops and less bureaucratic navigation. Outcome-driven approaches favor innovative solutions over legacy relationships. The ability of PAEs to rapidly shift funding creates opportunities for startups with high-performing capabilities to capture increased investment, though it also introduces risk if a startup's capability is deprioritized.

• Prime Contractors: Mixed. While streamlined decisions benefit everyone, PAEs may be more willing to bypass traditional primes in favor of direct solutions from emerging companies. More significantly, PAEs have significantly enhanced authority to rapidly shift funding away from underperforming programs toward higher priorities within their portfolios, though outright cancellation of major programs still requires congressional and appropriations processes. Nonetheless, this represents a substantial threat to legacy programs that primes have relied upon for steady revenue streams. Conversely, primes with capabilities aligned to top priorities may see accelerated funding.

Reformed Foreign Military Sales (FMS) DoD aims to accelerate arms transfers to allies by shifting control of the Defense Security Cooperation Agency (DSCA, which manages arms sales to allies) and the Defense Technology Security Administration (DTSA, which controls technology transfer and export approvals) to the Under Secretary of Defense for Acquisition and Sustainment, streamlining arms transfer processes to strengthen allied industrial participation. The current FMS system is notorious for massive delays, with allies often waiting years for systems that U.S. forces receive in months. These delays weaken allied capabilities, strain relationships, and create opportunities for adversaries to offer alternative systems. The intended benefit is faster approval cycles and reduced bureaucracy, enabling allies to acquire American systems more quickly while expanding market opportunities for U.S. defense companies. Additionally, increased FMS volume creates economies of scale that lower per-unit costs for both U.S. forces and allies, making American systems more competitive globally while reducing the burden on U.S. taxpayers.

• Defense Tech Startups: Positive. Streamlined FMS processes open international markets that were previously difficult to access, expanding revenue opportunities beyond domestic contracts. Faster FMS timelines mean startups can reach international customers while their technology remains cutting-edge rather than becoming obsolete during years-long approval processes.

• Prime Contractors: Positive. Primes already engaged in FMS benefit from reduced administrative burden and faster approval cycles, plus higher production volumes that improve economies of scale and reduce unit costs. However, increased competition from foreign firms may offset some gains.

Regulatory Simplification DoD seeks to reduce barriers to entry and accelerate contracting by overhauling the Federal Acquisition Regulation (FAR) [14], the comprehensive rulebook governing all federal government purchases, and Defense Federal Acquisition Regulation Supplement (DFARS), the additional defense-specific rules layered on top of FAR, reducing the scope of the Truth in Negotiations Act (TINA), a law that requires contractors to disclose detailed cost data and certify its accuracy when negotiating certain contracts. The benefit is attracting more companies to defense contracting by reducing compliance costs and complexity, while also speeding contract negotiations.

• Defense Tech Startups: Highly positive, with fewer compliance barriers and lower administrative overhead reducing barriers to entry.

• Prime Contractors: Mixed. While reduced compliance burden helps everyone, increased competition threatens margins and market share. Primes built competitive moats around their ability to navigate complex regulations.

Product Management Hiring Wave As discussed in my article The Pentagon's Product Management Hiring Wave: Thousands of New Roles Coming [9], the reforms set the stage for a massive influx of new Product Managers across the defense ecosystem once DoD recognizes the need to fill this gap at scale. DoD is actively working to transform the acquisition workforce, including rebranding the Defense Acquisition University to the Warfighting Acquisition University as part of this cultural shift. The intended benefit is building the organizational capability to execute agile, iterative development at scale across the entire acquisition enterprise.

• Defense Tech Startups: Positive. Startups with strong Product Management cultures will have a competitive advantage. However, competition for Product Management talent will intensify, and even well-positioned startups will need to invest in developing talent internally as the market can't supply enough qualified performers.

• Prime Contractors: Challenging. Primes must rapidly build Product Management capabilities they historically lacked, competing for talent against commercial tech companies and well-funded startups. Given the shortage of qualified Product Management professionals, primes will need to make substantial investments in training and development programs to grow their own talent rather than relying solely on external hiring.

Conclusion

The November 7th reforms represent the most ambitious restructuring of defense acquisition in decades, with implications that will reshape the entire Defense Industrial Base. These changes are clearly intended to fundamentally alter the competitive landscape between defense tech startups and traditional prime contractors, driven by DoD's urgent need to transform capabilities from the age of counter-terrorism to the era of Great Power Competition.

We're entering what may be the most vibrant time for defense startups in our lifetimes. For defense tech startups, nearly every major reform creates new opportunities. The shift away from Waterfall methodologies, the elimination of JCIDS and its associated requirements processes, the commercial-first mandate, and direct-to-supplier engagement all align with how startups already operate. The regulatory simplification efforts remove many of the barriers that historically kept startups out of defense contracting. Most significantly, the empowered Portfolio Acquisition Executives can rapidly shift funding to high-performing capabilities, creating a pathway for successful startups to scale quickly. These are changes many of us have wanted to see for years, and they're finally happening because the strategic environment demands nothing less.

For prime contractors, the picture is largely negative. While some reforms like stable demand signals and the Wartime Production Unit play to primes' strengths in manufacturing and scale, most others directly threaten their traditional business models. MOSA enforcement commoditizes proprietary architectures. Direct-to-supplier engagement bypasses their integrator role. The shift from specifications to solutions undermines the compliance-focused approach that justified lengthy, expensive development cycles. Perhaps most significantly, PAEs have significantly enhanced authority to rapidly shift funding away from underperforming programs, even though outright cancellation of major programs still requires congressional approval.

The ultimate success of these reforms hinges on addressing the critical Product Management talent shortage. Without thousands of skilled Product Managers across both government and industry, the intended benefits of iterative deployment and rapid capability delivery will remain aspirational rather than operational. Defense tech startups with strong Product Management cultures start with an inherent advantage, while prime contractors face the challenge of rapidly building capabilities they've historically lacked. However, both will need to invest heavily in developing and growing Product Management talent internally, as the available supply of qualified professionals is insufficient to meet the scale of demand these reforms will create.

The coming months and years will reveal whether DoD can execute this transformation successfully. The reforms create the structural conditions for faster, more competitive acquisition that the strategic environment demands. Implementation will determine whether these changes deliver the accelerated procurement and enhanced warfighting capabilities they promise. The urgency is real, the direction is right, and the opportunity for innovation in defense has never been greater.

References

1. Rebuilding the Arsenal of Freedom, Live speech delivered by Secretary of Defense Pete Hegseth on November 7, 2025. Full recording available on YouTube.

2. Reforming the Joint Requirements Process to Accelerate Fielding of Warfighting Capabilities (Memorandum, November 7, 2025)

3. Unifying the Department's Arms Transfer and Security Cooperation Enterprise to Improve Efficiency and Enable Burden-Sharing (Memorandum, November 7, 2025)

4. Transforming the Defense Acquisition System into the Warfighting Acquisition System (Memorandum and Acquisition Transformation Strategy, November 7, 2025)

5. U.S. Department of Defense. Acquisition Transformation Strategy: Rebuilding the Arsenal of Freedom. Office of the Under Secretary of Defense for Acquisition & Sustainment, November 7, 2025.

6. Directing Modern Software Acquisition to Maximize Lethality (Memorandum, March 6, 2025)

7. Andrew Park. "Hegseth Just Killed Waterfall & Mandated Agile + DevSecOps." LinkedIn, November 2025. https://www.linkedin.com/pulse/hegseth-just-killed-waterfall-mandated-agile-devsecops-andrew-park-etole

8. Andrew Park. "Product Management Talent: The Critical Gap Agile and DevSecOps Can't Fix." LinkedIn, November 2024. https://www.linkedin.com/pulse/product-management-talent-critical-gap-agile-devsecops-andrew-park-i7the

9. Andrew Park. "The Pentagon's Product Management Hiring Wave: Thousands of New Roles Coming." LinkedIn, November 2025. https://www.linkedin.com/posts/andrew-park-edensoft_genai-generativeai-talentamplification-activity-7292654910116880384-709F

10. Defense Acquisition University. "Software Acquisition Pathway." DAU Guidebook. 

11. Office of the Under Secretary of Defense for Acquisition & Sustainment. "Modular Open Systems Approach (MOSA)." DoD Open Systems Architecture Data Rights Team. 

12. Joint Chiefs of Staff. "Joint Capabilities Integration and Development System (JCIDS)." CJCS Manual 3170.01. 

13. Defense Acquisition University. "Defense Acquisition System." DAU Glossary. 

14. Federal Acquisition Regulation (FAR). General Services Administration.