**FORT MCNAIR**—On Friday, Defense Secretary Pete Hegseth addressed hundreds of defense-industry executives at the National War College, urging them to “move faster and invest more,” emphasizing the need for reform in defense acquisition processes. He presented policy changes that aim to replace the Cold War-era system with one that prioritizes speed and flexibility over strict requirements.
During his over-hour-long speech, Hegseth stated that the defense industry must invest its own resources to meet long-term demand signals. He urged executives to utilize capital expenditures for upgrading facilities, enhancing workforce skills, and expanding capacity. He emphasized that if the industry does not take these actions, the Department of Defense is prepared to leverage presidential authorities to secure necessary resources to support military operations.
Following the speech, Hegseth’s office distributed three memos outlining significant changes: one to rename and transform the Defense Acquisition System into the Warfighting Acquisition System, another aimed at overhauling the joint requirements process, and the last focused on streamlining foreign military sales.
Hegseth stressed that defense companies should invest more in military technology development, asserting that those unwilling to take risks in collaboration with the military might need to seek opportunities outside of the Pentagon. He expressed a desire to revitalize defense contracting, making it more competitive.
**Expert Insights**
Steve Blank, a co-founder of Stanford University’s Gordian Knot Center for National Security Innovation, characterized Hegseth’s speech as a pivotal moment for the Pentagon’s acquisition system. He anticipates that major defense contractors may attempt to lobby against the proposed changes, as they may significantly alter their established business models. Blank noted that the focus on speed and commercial technology could push traditional contractors to compete more aggressively with new startups.
The upcoming reforms may also lead to a shift towards fixed-price contracts, which would require work to be completed at a predetermined price. Hegseth identified cost-plus contracts as a major issue within the current acquisition framework.
Deputy Defense Secretary Stephen Feinberg echoed Hegseth’s sentiments, stating that both the Pentagon and its contractors must evolve, warning that those resisting change would likely be left behind.
Hegseth’s speech found a positive reception among defense technology founders and investors, with one attendee noting that the new focus on meritocracy and transparency in the acquisition system is a step in the right direction.
In addition to streamlining purchasing and development processes, Hegseth dedicated part of his address to foreign military sales. He highlighted the need for improvement, citing long delivery delays for orders placed years prior. He emphasized the importance of arming allies with interoperable systems for better global defense collaboration.
One of the memos instructs the transfer of responsibilities for foreign military sales from the Pentagon’s policy office to its acquisition office, reflecting a renewed commitment to enhancing relationships with allies.
Experts agree that the planned changes could significantly impact the industrial base, with calls for a “war footing” approach to bolster overall defense capabilities. The successful implementation of these reforms is expected to require additional resources and attention to realize the desired outcomes effectively.
