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Defense Secretary Pete Hegseth has announced major changes to the Pentagon’s acquisition process.

Some shit you should know before you dig in: Securing a contract with the Pentagon has traditionally been a lengthy, pain-in-the-ass process that is usually dominated by a handful of large and medium-sized defense contractors. The Department of Defense (DoD) relies on an acquisition system rooted in layers of regulation, oversight, and procedural reviews, often taking years from identifying a need to delivering a system. Typically, the Pentagon releases a Request for Proposals (RFP) outlining strict technical and operational requirements. Large contractors like Lockheed Martin, Boeing, Northrop Grumman, RTX, and General Dynamics are best positioned to respond, as they have the infrastructure, legal expertise, and experience navigating the intricate rules of government procurement. These companies also benefit from“vendor locks” (once a firm develops a system, it’s difficult and costly to switch suppliers), leading to repeat awards and limited competition. Smaller firms, even with innovative solutions, are frequently shut out due to the high cost of compliance, lack of insider knowledge, and an inability to scale quickly or manage complex contracting processes. Some say that because of this, the system has favored the bigger guys and discouraged broader participation, slowing innovation and responsiveness in defense technology.

What’s going on now: While speaking at the National War College in Washington, Defense Secretary Pete Hegseth laid out his plan to overhaul the Pentagon’s outdated acquisition system. The new system, dubbed the Warfighting Acquisition System, is designed to drastically speed up how the military buys weapons and technology, prioritizing speed, flexibility, and competition over traditional red tape. Hegseth said, “Every process, board, and review must justify its existence by demonstrating how it accelerates capability delivery to meet warfighter needs.” In simple terms: if a step in the process doesn’t help get gear to troops faster, it’s getting axed.

One of the biggest structural changes is the replacement of traditional Program Executive Offices (PEOs) with new Portfolio Acquisition Executives (PAEs) (individuals who will have direct authority to manage major defense programs without waiting for endless chains of approval). “These PAEs will be empowered with the authorities to make decisions on cost, schedule and performance tradeoffs that prioritize time-to-field and mission outcomes,” Hegseth said. That means if something isn’t working, they can ditch it, move money, or scale up a better solution quickly (no more waiting years for decisions). Hegseth also announced the death of the Joint Capabilities Integration and Development System (JCIDS), calling it “slow, bloated, and disconnected from reality.” Instead, new organizations will be formed to streamline requirements, resource alignment, and early-stage innovation, including a Wartime Production Unit and a Joint Acceleration Reserve to fund promising projects on short notice.

Hegseth’s plan also flips the script on how the Pentagon evaluates bids. He said the DoD will now prioritize commercial products and off-the-shelf solutions, even if they’re not perfect. “An 85% solution in the hands of our armed forces today is infinitely better than an unachievable 100% solution endlessly undergoing testing,” he argued. That shift opens the door for smaller, agile companies to compete, especially those that can deliver fast and scale quickly. Contract incentives will now reward early delivery and penalize delays. Hegseth made it clear that big defense companies no longer have a guaranteed seat at the table. “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, which would probably be outside the Pentagon,” he said. “We’re going to make defense contracting competitive again, and those who are too comfortable with the status quo to compete are not going to be welcome.”

Reactions from the defense industry have been mixed but mostly supportive. The Aerospace Industries Association (AIA) called Hegseth’s announcement “an ambitious, long-needed overhaul of warfighting acquisition.” AIA President Eric Fanning said, “For too long, red tape and outdated rules have slowed our ability to deliver for the warfighter. The Pentagon’s plan is exciting, and it’s what America needs to outpace tomorrow’s threats.”