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America’s defense industrial base stands on the precipice of massive, historic change. Given its access to a flourishing and dynamic private sector, the US defense industrial base should be a nimble, powerful engine of both creativity and lethality, capable of churning out the kinds of innovations that guarantee dominance on present and future battlefields — but decades of misguided regulation and complacency have left it more like a blind leviathan, extremely potent but with glacial reflexes, unable to identify emerging threats or capitalize on cutting-edge solutions that are sitting right in its own domestic, commercial marketplace.
Fortunately, both the Trump administration and Congress have recognized this crisis and are taking decisive action to fundamentally change how the United States equips its warfighters. What has resulted is the greatest opportunity to fix our nation’s broken defense procurement that we may get for years to come. It’s now or never.
The current defense procurement paradigm is unsustainable. To take just a few recent examples, the United States went through more than 100 of its high-end THAAD missile interceptors during the course of Israel’s 12-day war with Iran; last year, the US procured only 11 new THAAD interceptors and is expected to receive just 12 more this fiscal year.
In the Red Sea, the rate of fire needed to defend against Houthi-launched drone attacks matched that of battles fought in WWII, while the defense industrial base today can match only a tiny fraction of its production capacity during WWII. Similar shortfalls can be found across our military’s defense procurement apparatus.
Fortunately, Congress and the Administration are trying to change this — and they are doing so with more substance and rigor than we have seen in decades. With Congress having now passed the National Defense Authorization Act (NDAA) and the president having signed it into law, it is clear that a remarkable bipartisan consensus has emerged that will transform how our military acquires its defense capabilities.
The NDAA includes sweeping acquisition reforms that synthesize many of the best elements from both the Senate’s Fostering Reform and Government Efficiency in Defense (FoRGED) Act and the House’s Streamlining Procurement for Effective Execution and Delivery (SPEED) Act. These provisions represent the most comprehensive overhaul of defense procurement in decades.
Several sections of the NDAA stand out in particular for their transformative potential:
The NDAA establishes a comprehensive mandate requiring the Department of War to prioritize commercial products, services, and non-developmental items before turning to defense-unique procurement procedures. Section 1821 modifies the relationship of other provisions of law to procurement of commercial products and services, while Section 1822 updates the definitions and treatment of commercial products and services themselves.
Most critically, Section 1826 exempts nontraditional defense contractors from numerous defense business requirements, ensuring they can compete on equal footing without navigating complex defense-specific procurement requirements. Section 1828 requires a comprehensive review of the Department’s commercial acquisition approach, including examination of regulatory development processes and identification of implementation delays.
These commercial-first provisions offer a long-overdue correction. Our military’s defense acquisition practices have in recent decades led to the emergence of an anti-competitive market with convoluted barriers to entry, privileging companies with experience and connections over companies offering the best solutions for our warfighters. Commercial technology companies can now help ensure our soldiers have far better access to leading software and technology.
Fundamentally, these provisions aren’t about the companies; their purpose is to fix a broken system that wastes taxpayer dollars and shortchanges our warfighters. We triumphed in the Cold War only for our defense acquisition system to adopt a Soviet-style model, which has rewarded the same old primes that conduct their R&D with taxpayer money, then move at a glacial pace to deliver capabilities that are often outdated by the time they are capable of being fielded. These provisions are designed to destroy that model and introduce one that promotes competition, rewards risk takers, and gets results.
Section 1802 of the NDAA formally redefines Program Executive Officers as Portfolio Acquisition Executives (PAEs) and provides them with greater authorities and responsibilities for managing defense programs from conception to delivery. Previously, competing acquisition authorities within the Department presented significant obstacles to non-traditional firms. As PAEs become more established and effective, so too will the accountability measures and coordination surrounding the acquisition process, ensuring non-traditional contractors have a continuous, reliable, and transparent touchpoint.
Section 1812 places special emphasis on ensuring successful implementation of requirements reform, which means programs that are not effectively delivering on their mission can be more quickly identified and recompeted, while also placing more pressure on those who have not succeeded in executing previous guidance to streamline acquisitions.
Taken together, these sections are meant to ensure the DoD’s approach to acquisitions identifies commercial solutions when they are available and has the leaders in place to effectively shepherd the process.
The NDAA takes an aggressive approach to cutting red tape. Section 811 repeals or amends more than 100 provisions of statute to streamline the defense acquisition process, reduce administrative complexity, and remove outdated requirements, limitations, and other matters. This wholesale elimination of bureaucratic restrictions that have slowed innovation and increased costs represents a fundamental restructuring of how the Pentagon operates.
Although this represents a major step in the right direction, the conference process inevitably required some compromises. Notably, certain provisions from the original Senate bill — including Section 824, which would have further modified the treatment of certain products and services provided by non-traditional defense contractors as commercial — were not included in the final NDAA. This omission is particularly significant given the Pentagon’s long history of resistance to commercial procurement, particularly from new entrants. When Palantir won its landmark lawsuit against the Army in 2016, the court ruled that the Army had violated the Federal Acquisition Streamlining Act by failing to conduct proper market research into commercially available solutions. Yet that legal victory only helped one new entrant with a single contract. In the years since, procurement officials across the Department have too often continued to choose custom development over readily available commercial solutions, effectively ignoring both the law and the lessons of that case.
This is not a problem confined to the walls of the Pentagon; it is human nature to want to develop solutions internally. Indeed, every boardroom in America faces the challenge of ensuring that this tendency does not become an internal pathology. The difference is that for a corporation, the necessity of remaining competitive keeps this pathology in check. No such check exists in the Pentagon’s procurement apparatus, which is why the omission of Section 824 is concerning.
However, we are hopeful that the provisions which did survive the conference process, particularly when combined with Secretary Hegseth’s unrelenting focus on implementation and accountability, will finally break through decades of institutional resistance. This NDAA represents the strongest legislative framework for commercial procurement reform in the Pentagon’s history.
On November 7, 2025, Secretary of War Pete Hegseth delivered a landmark address at the National War College, outlining sweeping changes to the Pentagon’s acquisition system that he characterized as fundamentally broken. His remarks built upon a slate of Executive Orders and memoranda issued by the administration concerning acquisition reform. Speaking before defense industry CEOs and military officials, Secretary Hegseth laid out a clear objective: “Transform the entire acquisition system to operate on a wartime footing.” Accordingly, he announced plans to replace the existing Defense Acquisition System with a new Warfighting Acquisition System designed to do just that.
The Secretary of War’s central message was unequivocal: “The defense acquisition system as you know it is dead.” Secretary Hegseth criticized the current bureaucratic structure for being too slow to meet modern threats and characterized his remarks as “the beginning of an unrelenting onslaught” to destroy and reform it. He pointed out that urgent programs have historically succeeded only by circumventing official processes, and his solution focused on empowering acquisition officials, eliminating the Joint Capabilities Integration and Development System, and creating Portfolio Acquisition Executives with broader authority to make rapid decisions.
A key theme throughout the address was velocity. The secretary declared that “Speed to delivery is now our organizing principle,” emphasizing that timely capability delivery is essential for maintaining military advantage. Proposed reforms included establishing a Wartime Production Unit to accelerate manufacturing, embracing commercial technology as the default option, and accepting greater acquisition risk to reduce operational risk.
Perhaps most notably, Secretary Hegseth challenged the defense industry directly to transform its business model. The secretary’s blunt assessment captured the urgency: “We need acquisition and industry to be as strong and fast as our warfighters.” He warned that companies that fail to adapt to the new speed-focused environment would simply “fade away.”
Congressional leaders from both parties praised the initiative, with Senate Armed Services Committee Chair Roger Wicker calling the reforms “a game changer for US defense.” Now that lawmakers have finalized the FY 2026 NDAA, these acquisition reforms are poised to become central pillars of the Trump administration’s defense modernization efforts.
In the previous century, the incredible capacity of America’s private sector was leveraged first to win World War II, and then to outproduce and outcompete the Soviet Union in the Cold War. As Palantir’s CTO, Shyam Sankar, has highlighted, the vast majority of DoW spending prior to the fall of the Berlin Wall went to companies that had both defense and commercial businesses. Chrysler made missiles; Ford made satellites; and General Motors built tanks, aircraft engines, and ammunition rounds.
The strength of our commercial industry remains America’s greatest advantage as we face the threat posed by the Chinese Communist Party in Beijing. The technologies most important to economic prosperity and national security over the coming decades — especially those in the technology stack surrounding artificial intelligence, from hardware to software — are concentrated in the United States and its allies. American chip companies own the most advanced chip designs, and the best global foundries are located within our allies’ borders; proven commercial technology companies offer the best software platforms in the world, with applications ranging from commercial industry to the battlefield; and Silicon Valley is home to the most dynamic and creative technology seedbed in the world. The United States has what is needed, right here at home, to transform our defense industrial base so that it matches the prestige and power of the prior century. It just needs the political will to make this potential a reality.
Through Executive Orders, Department of War memorandums, and legislation, the Trump administration and Congress have signaled they recognize both the potential for and necessity of change. Next comes the hard part: turning this signal into action that better equips the United States to deter our adversaries and secure our vital national interests. The window for generational reform rarely opens this wide, and history shows it closes quickly. China’s defense industrial base is expanding at unprecedented speed, and our adversaries are racing to exploit the gap between American innovation and federal procurement. The choice before us is clear: we can seize this moment to rebuild the arsenal of democracy for the 21st century, or we can watch our competitive advantage erode as bureaucratic inertia triumphs over strategic necessity.
As Secretary Hegseth made clear, “Speed to delivery is now our organizing principle.” The key to unlocking the power of these reforms lies in implementation. While the FY2026 NDAA provides a legislative foundation, and the administration has provided executive instruction, American industry cannot deliver unless the necessary cultural change, driven by strong leadership, occurs to carry out this vision. Words on paper mean nothing without relentless execution and unwavering commitment to implementation. The threats we face won’t wait for us to get it right somewhere down the road. It’s time to shift from a reactive to proactive posture and embrace a new way of doing business.
A New Era of Defense Innovation was originally published in Palantir Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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