Lawmakers said the fiscal 2026 defense policy bill that became law earlier this month would deliver “the most significant acquisition reforms in a generation.” But some of the more sweeping proposals introduced in the House and Senate versions of the bill were ultimately scaled back or dropped entirely from the final version of the legislation.
A similar dynamic played out inside the Pentagon. A draft acquisition memo circulated prior to Defense Secretary Pete Hegseth’s speech to defense executives and senior military acquisition officials outlined a far more aggressive overhaul of how the department would develop and buy military capabilities than what emerged in the final version of the memo and the Acquisition Transformation Strategy.
But a number of provisions from the House’s SPEED Act and Senate’s FoRGED Act that survived negotiations are still expected to be impactful, including measures aimed at streamlining prototyping, accelerating the transition of technologies into production and expanding opportunities for small businesses and new entrants.
Easing regulatory burdens for nontraditional contractors
The bill, for example, exempts nontraditional defense contractors from some of the Pentagon’s accounting, audit and compliance requirements, lowering barriers to entry for new defense technology companies. A nontraditional defense contractor is defined as a contractor that hasn’t held a Cost Accounting Standards-covered contract in the last year, which is the vast majority of the defense industrial base — George Mason’s Baroni Center for Government Contracting estimates that only 7.5 percent of the defense companies fall outside that definition. The Senate also pushed to expand the definition of nontraditional defense contractors, but the provision was dropped from the final version of the bill.
The legislation also expands the type of past performance that may be considered — the department is required to issue guidance on when it should accept a wider range of past performance, including commercial or non-government work as valid past performance. It also requires the Defense Acquisition Regulations Council to “identify and eliminate specific, unnecessary procedural barriers that disproportionately affect the ability of small business concerns and nontraditional defense contractors, to compete for contracts with the Department of Defense.”
Small and medium-sized Defense Department contractors will also gain access to an online platform offering digital resources, training and services aimed at increasing awareness of and facilitating compliance with defense acquisition requirements.
Faster paths from prototype to production
The bill also expands the Pentagon’s ability to use Commercial Solutions Openings — a competitive process used to acquire innovative technologies. CSOs are typically difficult to transition, but the legislation allows the department to move successful CSOs into production, including through sole-source contracts. The provision also expands CSOs to include commercial products, commercial services and nondevelopmental items instead of limiting their use to “innovative” technologies.
Another provision raises the minimum award for the Accelerate the Procurement and Fielding of Innovative Technologies program to $10 million.
The bill also gives combatant commanders the authority to experiment with, prototype and demonstrate new technologies and allows a successful experimentation to serve as justification for moving directly into production.
Stan Soloway, president and CEO of Celero Strategies and federal acquisition expert, said the provisions aimed at accelerating the transition to production and giving officials clearer authority to favor small businesses and new entrants reflect the department’s long-standing effort to work around traditional program processes and system integrators. But given the complexity of many programs, “it remains to be seen how much it actually changes on major systems, but it could definitely impact smaller ones” he told Federal News Network.
Data rights and IP
At the same time, there is a seeming contradiction in the bill.
Despite broad bipartisan support, right-to-repair provisions were stripped from the final version of the bill, but “provisions like the one that talked about DoD having the authority to re-engineer components when it thinks doing so will be quicker and less expensive than having additional units produced by the original equipment manufacturers, is sure to raise hackles,” Soloway said.
“IP and technical data rights are hugely important issues. And it is fair to say that both government and industry have tended to view them as zero sum games. But if DoD wants to build meaningful bridges to emerging (and existing) firms and technology, the answer lies in both sides being willing to negotiate, at the very beginning of a program, how those questions will be handled. It is hard … but simply stating that DoD can do this when they think it is in their best interests, is probably not the most balanced path forward,” Soloway said.
Workforce largely absent
Despite some of the significant acquisition changes, the legislation barely addresses the workforce — a gap Soloway said could undermine the reforms.
The success of these reforms will hinge on whether the department can equip its workforce with the skills needed to operate differently. Otherwise, the system can quickly revert to its old ways.
“Without an aggressive, broad-based and sustained workforce initiative, it is hard to see the workforce having the tools or the confidence to take the kind of reasoned risks the legislation, and Secretary Hegseth, claim to want them to take,” Soloway said
“Overall, workforce morale and trust in leadership is at a very low ebb. If change is going to happen, dealing with that reality is job one. But, to date, nothing this administration has done would suggest they have any plan on how to do that,” he added.
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