By Fabian Shelton
Secretary of War Pete Hegseth announced the Department of War’s (DOW) Acquisition Transformation Strategy (ATS). The ATS is a response to U.S. President Donald Trump’s Executive Order 14265 “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base.” In E.O. 14265, President Trump articulates the importance of DOW overhaul in developing lethality in America’s warfighting capabilities. The ATS seeks to aggressively cut bureaucratic red tape to enhance the United States’ Defense Industrial Base (DIB) and limit the sluggishness of risk aversion. If done correctly, the ATS will lay a strong foundation to further improve the DOW’s warfighting acquisition effectiveness.
The ATS evolves America’s military-industrial complex. Currently, the DIB is dominated by an oligopoly of defense companies: Lockheed Martin, General Dynamics, Boeing, Northrop Grumman, RTX, and HII. There is no question on the quality of weapons systems that these defense contractors produce for the United States’ military (as seen with the success of Lockheed’s F-35 Lightning fighter aircraft); however, the defense oligopoly would deter potential contractors from seeking federal contracts, stagnating the DIB. Indeed, the ATS recognizes this dilemma, stating that the DIB is “building the world’s best and most exquisite weapon systems at low volume while relying on obsolescent parts, outdated manufacturing processes, and stale innovation.”
The DOW seeks to remedy this problem by encouraging new market entrants. The ATS outlines how the War Department plans to schedule growth by lowering barriers to entry and diversification of prime and subcontractor sourcing. With this, the DOW acknowledges the need to shift away from its overreliance on the defense oligopoly. America’s acquisition strategy leans toward more expensive weapons and platforms to further its national security, for example DOW receiving 15 billion USD for the Ford Class aircraft carrier program. Although it would be foolhardy to scrap such a critical program for its national security, the United States should push to diversify its portfolio to integrate both economical solutions (i.e. surge capabilities), and high-end solutions (like the Ford carrier program).
One of the novel initiatives in the ATS is establishing an ‘Industrial Base Consortium.’ Following the challenges of military-industrial communication, the DOW seeks to consolidate its networks in the industrial base council, the Joint Industrial Base Working Group and the Joint Defense Manufacturing Council. This clause within the ATS supplements the Pentagon’s commitment to improving market entrants for small businesses. By establishing the industrial base consortium, the DOW will be able to establish a formal body for industries involved in both military development and the Pentagon. This would allow them to coordinate and establish agendas to further the interests of those involved in the United States’ military industrial complex.
The ATS considers such a body imperative and critical to streamline the defense acquisition process, as the ATS commits the Pentagon to “map activities, eliminate duplication, and create a single, department-wide plan that aligns acquisition authorities, incentives and governance to bolster industrial base resilience.” The Industrial Base Consortium is a strong solution to the issue of weakening demand signals and lack of transparency within the military-industrial complex. Additionally, the consortium would attract small defense industries to contract with the Pentagon as they can be confident in their ability to have at least a platform to voice their projects and surge capabilities.
Of course, by expanding sellers in the defense market, communications and supply chain effectiveness would be hindered. Purpose, consistency and communication among the military-industrial complex are a core theme in this policy. Much like any bureaucracy, the DOW has experienced challenges in expressing its needs for defense companies when requesting specific armaments. Post-Cold War, this issue has been compounded on account of America’s weakening industrial capabilities and supply chain outsourcing. The DOW has introduced the Capability Portfolio Management (CPM) system as a measure to ameliorate communication and intentions in the defense ecosystem. In the CPM approach, Portfolio Acquisition Executives (PAEs) will work alongside management teams of non-traditional vendors and diverse performers when developing acquisition strategies, requesting and allocating funding, and negotiating contracts to protect vendor diversity.
The CPM strategy is beneficial for conducting many projects simultaneously. This is especially seen within the Department of the Army. In a Breaking Defense exclusive, Secretary of the Army Dan Driscoll has outlined the CPM strategy within the Army. Although the Army began implementation before the ATS, Driscoll outlines how the “acquisition, the contracting, and testing will all now report to each of [the PAEs] …we will be able to manage innovation as they push through different projects.” The goals of this overhaul align with the ATS’s themes of divorcing the DOW from risk-aversion, removing constraints, and honing acquisition processes. The CPM has been gradually implemented in the Department of the Army as seen with the consolidation of U.S. Army Training and Doctrine Command and Army Futures Command to form the United States Army Transformation and Training Command (T2COM). Although the formation of T2COM was a strong first step, Driscoll expects complete departmental overhaul to speed up as much as 30 percent. In the same Breaking Defense article, Driscoll places the value as “even greater than 50 percent on a lot of projects.”
With the CPM system, the DOW will endeavor to integrate portfolio scorecards to create a baseline for program health and relevance. While largely omitted in the unclassified release, the ATS classifies such assessments to determine whether the contract (and contractors involved) “deliver capability, scale production, implement commercial solutions, and other key performance metrics.” This is done in the hope of producing contracts that would develop appropriate weapons “in a threat-informed mission context.” This initiative is the correct approach in promoting DIB acquisition reform; indeed, many of the Pentagon’s contracts tend to be overinflated, logistically sloppy, or outright worthless. Whether by mistake or design, such contracts invite moral hazards between the Pentagon and defense industries. If left unchecked, flawed contracts would overburden the acquisition process and develop irrelevant weapons and platforms for America’s warfighters.
Many of the principles established in the ATS can supplement previous DOW policies. The scorecard system is flexible and could integrate several additional criteria to ensure defense industries are committed to developing mission-ready systems for America’s warfighters. For example, the DOW’s Cybersecurity Maturity Model Certification (CMMC) Program would fit neatly into the CPM scorecard system. The CMMC Program bolsters cybersecurity within DOW contracts, establishing rigorous guidelines for contractors and subcontractors to preserve federal contract information (FCI) and controlled unclassified information (CUI).
Assuring acquisition officials that contractors will guarantee the protection of both FCI and CUI would fall under the scorecards’ purpose of ensuring overall program health and efficiency. Without strong cybersecurity regulations in place in the DIB, data insecurity, such as sabotage and IP theft, would result in stalled acquisition orders, redesigns, and spiraling costs. Therefore, the Pentagon should consider CMMC integration within the planned CPM scorecard system as the CMMC safety guidelines such as annual cybersecurity assessments and compliance agreements would create standards within the DIB for contractors working for the Pentagon to avoid security breaches, allowing a more streamlined approach to acquisitions.
The ATS’s potential execution of Planning, Programming, Budgeting, and Execution (PPBE) reforms would marginalize congressional influence in DOW acquisition policy. The language of the ATS promotes efficacy and speed. Alongside this, the memorandum tacitly distances itself from congressional cooperation. Indeed, the PPBE reform challenges Congress’ role in acquisition policy. From observing the memo itself, it sometimes appears that the DOW fails to recognize Congress as the entity that ultimately funds the DOW. Indeed, this does align with Secretary of War Hegseth’s pugilistic approach to the DOW-Congress relationship, at one point clamping down on cooperation between both bodies. Secretary of War Pete Hegseth claimed this was expedient as “Unauthorized engagements with Congress by DOW personnel acting in their official capacity, no matter how well-intentioned, may undermine Department-wide priorities critical to achieving our legislative objectives.”
This aggressive approach increases friction between Congress and the DOW and ultimately exacerbates bureaucratic hurdles that Secretary Hegseth seeks to avoid. Many of the proposed policy shifts in the strategy would relate to DOW budget requests, a responsibility falling under congressional purview. However, if the DOW elects to continue its overhauls without congressional involvement, the Pentagon should be prepared to experience House and Senate opposition to most, if not all, of the ATS tenets. Any future discretionary spending bills would be stalled on the floor. If there is no spending bill and a continuing resolution is instead passed, the ATS would flounder before any of its structural reforms bore fruit.
By infusing ATS language within congressional legislation, the DOW would enhance ATS implementation. The NDAA is crucial legislation that frames America’s defense policy, including acquisition structure. With the ATS, the Department of War has already drafted a strong acquisition policy; rather than having it divorced from congressional interference, DOW could position ATS as a foundation for the upcoming NDAA, allowing some of ATS’ principles and tenets to be included in the act. With some of the ATS language within the NDAA, Congress would be more receptive toward both the ATS and future DOW policies. Consequently, not only would this satisfy many lawmakers’ concerns, but the DOW could frame such a result as a win for acquisition policy.
The Acquisition Transformation Strategy represents the Department of War’s push to revolutionize acquisition policy to deliver relevant and lethal weapon systems to America’s warfighters. Its focus on modernizing the military-industrial complex and ridding the risk-averse culture in the DOW is instrumental in ensuring the U.S. military is able to counter threats to the homeland. However, if not pursued with congressional transparency and bureaucratic realities, the ATS would simply compound the challenges faced by the DOW. If done correctly, the ATS will spur the Department of War to develop weapons and technologies more specific to the needs of America’s national security.
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