Hegseth promises ‘transformation’ of how Pentagon buys weapons, tells contractors to get on board

The Pentagon will undertake a historic transformation in the way it acquires and delivers weapons to its warfighters, Defense Secretary Pete Hegseth said Friday, with a new emphasis on speed and the slashing of internal red tape that together mark one of the most significant overhauls in decades to America’s military-industrial ecosystem.

In a speech at the National War College in Washington on Friday afternoon, Mr. Hegseth delivered a clear choice to the largest contractors, or “primes,” in the nation’s defense industrial base: Get on board with the changes or be left behind.

“Speed and volume will rule,” Mr. Hegseth said, summing up the central message of his hourlong address, titled “The Arsenal of Freedom,” to an auditorium full of Pentagon officials and top defense industry leaders.

Mr. Hegseth said deeply ingrained problems inside the Pentagon’s acquisition process — inefficient procurement processes, risk aversion and others — have spread outside the military itself and into its private-sector partners, creating a dangerous feedback loop that has slowed progress, kept warfighting tools out of the hands of troops, and led to programs that too often run massively over budget and behind schedule.

“The department’s perverse process has in turn fostered a culture in today’s defense industrial base that makes it unlike any other American market — uniquely tailored to the Pentagon in the worst way,” he said. “Unstable demand signals, uncertain projections and a volatile customer base, has caused the defense industry to … adopt the same entrenched, risk-averse and lethargic culture that we have in government.”

Mr. Hegseth stressed that companies large and small, from the most established primes to the newest Silicon Valley upstarts, play a key role in defending the U.S. And he praised the commercial innovation that has led to huge advancements in the development of drones, among other areas, pledging that the Defense Department will buy commercial solutions whenever possible.

But Mr. Hegseth stressed that the nation’s largest defense companies must be willing to change.

“These large defense primes need to change, [to] focus on speed and volume, invest their own capital to get there,” he said. “If we do that, the Department of War is, of course, big time supporters of profit. We are capitalist, after all. But if they do not, those big ones will fade away.”

Officials across the Defense Department, which President Trump has given the secondary title “War Department,” want to see dramatic changes and new pathways created for drones, missiles, vehicles, software and other tools of war to get into the military’s hands faster.

The Trump administration also wants to change the incentive structure for defense companies, rewarding them for delivering on time and under budget and potentially steering contracts away from firms that deliver late and exceed cost projections.

For Mr. Hegseth, sweeping acquisition reform could become one of his signature issues. It also could help blunt criticism from those who have questioned whether Mr. Hegseth is too focused on theatricality and not enough on key nuts-and-bolts issues of concern inside the Pentagon, in the country’s defense industrial base and scattered throughout the Defense Department’s nearly $1 trillion budget.

Mr. Hegseth detailed how he intends to accomplish his promised changes. He said the Pentagon will award companies larger, longer contracts for proven systems. Mr. Hegseth said the Pentagon in some cases will accept a solution that gives it 85% of what it wants, rather than wait for a perfect, 100% solution that could add years to the time it takes to get the system into the hands of troops.

He said the Pentagon is canceling the Joint Capabilities Integration and Development System, or JCIDS, the traditional acquisition requirements system inside the Defense Department. In its place, the Pentagon will establish three new decision forums to speed up the requirements process, including the creation of a new funding pool to buy “promising solutions” and move them immediately to warfighters. He also said the Pentagon will eliminate “testing for the sake of testing,” potentially shaving months or even years off of the development process.

’Broad consensus’ for reform

Analysts say Mr. Hegseth is right to seize the moment when virtually all stakeholders recognize that major change is needed.

“There is a broad bipartisan consensus that the United States’ defense acquisition system is far too slow and not responsive to warfighter needs, and that the industrial base sorely lacks the capacity to meet today’s security challenges. This has been amply demonstrated in repeated cost overruns of major programs and in the inability to quickly surge production to meet the demand for munitions to support Ukraine and Israel,” Jerry McGinn, director of the Center for the Industrial Base at the Center for Strategic and International Studies, wrote in a recent analysis.

“What is clear is that this is truly the hour of the industrial base,” he wrote. “The United States should seize the moment and revitalize the United States’ industrial capabilities and capacities to better prepare to face its national security challenges.”

Key lawmakers voiced support for the new approach.

“By prioritizing commercial innovation and empowering our acquisition professionals, we are building a more agile defense enterprise,” Sen. Roger Wicker, Mississippi Republican and chairman of the Senate Armed Services Committee, said in a statement. “These reforms will be a game changer for U.S. defense, ensuring our military has the advanced equipment needed to deter adversaries like China and Russia. We look forward to implementing these priorities in the next National Defense Authorization Act.”

The U.S. defense industrial base in recent years has struggled to refill its weapons stockpiles after large, continued weapons deliveries to its allies, namely Ukraine and Israel. There’s also a recognition that new programs aiming to deliver a specific capability — such as small tactical drones in large numbers — cannot take years before that capability makes it into service members’ hands.

The Pentagon has tried to address that problem through some specific initiatives, such as the Defense Innovation Unit’s Replicator program. Friday’s speech from Mr. Hegseth emphasized change on an even larger scale.

Mr. Hegseth confirmed some of what was contained in a leaked Pentagon memo, first reported by Politico earlier this week.

He said the traditional “program executive offices,” the bodies that have overseen massive military initiatives such as the F-35 fighter jet program, will be reorganized into “portfolio acquisition executives.” Those executives will largely manage the Pentagon’s new acquisition process, overseeing numerous systems and shifting resources to support those deemed most essential.

Those executives are expected to have an opportunity to receive “incentive compensation” if they deliver weapons and systems to warfighters on time.

Portfolio acquisition executive appointments also will be extended, with executives expected to serve for a minimum of four years. The extension addresses a major concern about acquisitions, since the usual appointment length of two or three years was not enough to complete a project.

PAEs will use portfolio scorecards to track and grade the performance of an acquisition portfolio. The scorecards are expected to grade prototype development, operational capability, production ramps and schedules, according to the memo.

The new scorecards will be used to calculate business incentives for contractors, but only if they deliver on time. New time-indexed incentives will be used on contracts to reward businesses that deliver systems or platforms early.

Contractors that deliver late will face penalties, the memo said, but it did not provide further details on what those penalties would entail.

Some defense industry leaders welcomed Mr. Hegseth’s new approach.

“We’ve embraced and invested in commercial products and business models for decades, adopting open architecture, scaling production and rapidly fielding innovative technologies. We are committed to expanding the commercial business model within a streamlined and less bureaucratic acquisition framework,” said Chris Kubasik, chair and CEO of the defense company L3Harris.