The Pentagon is implementing a new directive that emphasizes rapid acquisition processes for software procurement, including business systems and weapons components. This policy, outlined in a memo by Defense Secretary Pete Hegseth on March 6, 2023, aims to encourage the Department of Defense (DoD) to purchase commercial software instead of attempting to develop its own, which can be time-consuming and costly. An expert mentioned this shift is significant as it could streamline expenditures and enhance efficiency.
In his memo, Hegseth highlighted the necessity of adapting the DoD’s acquisition strategies to align with contemporary software development practices, stating, “Software is at the core of every weapon and supporting system we field to remain the strongest, most lethal fighting force in the world.” The memo specifies the priority for the Software Acquisition Pathway—an initiative meant to facilitate faster and more effective software purchase processes based on insights from the special operations community.
Despite the rollout of guidelines for the Software Acquisition Pathway, implementation has faced challenges. A GAO report from July 2023 indicated that contract officers struggled with applying these new processes due to concerns about adhering to existing regulations and requirements.
To facilitate this transition, the memo directs that the DoD utilizes Commercial Solutions Openings (CSOs) and Other Transaction Authority (OTA) for software procurement. CSOs enable the purchase of commercially available technology, while OTAs allow contracts to bypass standard federal acquisition regulations, which can expedite the procurement process and encourage collaboration with non-traditional defense contractors.
The Defense Innovation Unit (DIU) has been pivotal in this shift, relying heavily on OTAs and CSOs to integrate commercial technology into defense operations. Since its establishment in 2016, DIU has awarded over 500 OTAs with a substantial portion directed toward small businesses and non-traditional defense vendors.
The new policy by Hegseth is expected to increase demand for DIU projects and enhance educational efforts about these procurement strategies among military program executives. The changes will affect ongoing programs as they reach planning phases or transition points where software and technology adjustments are feasible.
While OTAs provide flexibility, there are limitations; major acquisitions, like ballistic missile submarines, are unsuitable for this method. Contracts exceeding $100 million require approval from the defense acquisition undersecretary. Nevertheless, the defense landscape is shifting focus from expensive platforms to projects like Replicator, which involves deploying a multitude of cost-effective autonomous drones. Notably, DIU successfully contracted for collaborative autonomy software from Anduril within 110 days—a process significantly faster than traditional methods.
Despite the advantages of relying more on OTAs, this approach may diminish congressional oversight of defense spending. Traditional solicitations offer both the Pentagon and Congress more evaluation time for potential programs. However, OTAs were established by Congress, which has encouraged their use within the DoD.
Tara Murphy Dougherty, CEO of Govini, remarked on the importance of the new policy, indicating that the DoD has historically been inconsistent in software procurement strategies. Dougherty pointed out that the Defense Department’s past attempts to develop its own software, such as the data analytics tool Advana, may face scrutiny as the department shifts toward a preference for commercial solutions. Concerns remain about whether existing IT projects that diverge from this directive will be reconsidered or terminated.
