On November 7, 2025, Secretary Pete Hegseth announced sweeping defense acquisition reforms that aim to accelerate delivery of capabilities and inject flexibility into the defense procurement process.¹ In a speech to defense and technology industry executives, Secretary Hegseth declared the Defense Acquisition System “dead” and announced a new Warfighting Acquisition System. Following the remarks, the Department of Defense/War (the Department or Pentagon) released the Acquisition Transformation Strategy² together with other directives (1) implementing the Warfighting Acquisition System transformation,³  (2) modernizing foreign military sales and direct commercial sales,⁴ and (3) reforming the Joint Requirements Process.⁵

The announced reforms mark a clear shift toward speed and risk tolerance in the Defense Acquisition System. While these changes may promise new opportunities for defense contractors and dual-use companies, they do not erase the complex legal landscape governing defense contracting. Underlying statutes and regulations remain in place, and companies can face significant penalties for noncompliance.

The combination of rapid changes to the acquisition system, together with largely static legal requirements, poses a significant challenge for companies. Making the most of opportunities while reducing risk down the road will require legal acumen and agility to help business units move quickly under new acquisition pathways while complying with existing laws and regulations.

This article outlines some of the most significant reforms and lays out key considerations for companies—and their lawyers—in evaluating next steps.

Streamlined Requirements and New Portfolio Scorecards

The reforms overhaul the requirements process by eliminating what the Administration views to be “unnecessary technical standards and compliance requirements” that slow capability delivery. Instead of focusing on whether proposed solutions meet all specifications—including metrics focused on safety and efficacy—the Department says it will now prioritize “mission effectiveness” and measure success by how quickly and reliably new capabilities are delivered. To track progress and measure performance, the Pentagon is implementing portfolio scorecards that track key metrics, such as delivery speed, production volume and operational availability across acquisition portfolios.

According to Secretary Hegseth, forthcoming guidance will provide clear incentives for industry to accelerate production and invest in new capabilities. Meanwhile, ongoing reforms to the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) aim to further reduce reporting burdens, accounting standards and testing oversight. This puts an onus on companies to closely monitor new guidance and regulatory updates to ensure ongoing compliance and to understand how changes affect current and future contracts.

Acquisition Policy Changes 

The reforms seek a shift in acquisition policy to emphasize speed and agility in practice.

Under the “commercial-first” policy, the Department’s acquisition approach will prioritize commercially available solutions over custom government requirements, favoring those that can be delivered quickly even without meeting all technical specifications. In an effort to encourage industry investment and expand manufacturing capacity, the Department will offer larger, longer-term contracts for systems that demonstrate reliability and effectiveness. To reduce “vendor lock,” other reforms will require at least two qualified sources for critical components and will maximize use of Modular Open System Architectures for critical system interfaces with government purpose rights to enable modular competition and supply chain resiliency. Alternative approaches to contracting—including Other Transaction Agreements and Commercial Solutions Openings—will be the default pathway for acquiring all software development components of business and weapons systems.

More broadly, the new strategy also encourages venture capital and private equity investments in firms in the defense and national security sector, an important source of support to early-stage, nontraditional defense contractors in recent years.

Portfolio Acquisition Executives Will Replace Program Executive Offices

The new reforms also replace Program Executive Offices with Portfolio Acquisition Executives (PAEs), consolidating authority for related programs. PAE portfolios will focus on common platforms, interfaces and shared test ranges, moving away from customized acquisitions pathways that slow delivery. PAEs can make trade-offs among cost, schedule and performance, with the flexibility to shift funding within their portfolios to prioritize urgent needs and accelerate delivery. However, contracting officers, now embedded within program teams, still have sole authority to bind the government or modify contracts.

Additional Reforms

Additional announced reforms include:

• Canceling the Joint Capabilities Integration Development System in favor of an approach that focuses on addressing joint operational challenges. Three new forums will guide this process: (1) the Requirements and Resourcing Alignment Board will fund top priorities, (2) the Mission Engineering and Integration Activity will drive innovation and early prototyping and (3) the Joint Acceleration Reserve will provide rapid funding to fast-track promising solutions.
• The Joint Production Acceleration Cell becomes the Wartime Production Unit (WPU), which will focus on rapidly expanding defense manufacturing capacity. The WPU includes a dedicated deal team empowered to negotiate innovative business agreements that accelerate production and overhaul contract execution.
• Seeking to accelerate delivery of US-made weapons systems to allies by giving the Under Secretary for Acquisition and Sustainment control of the Defense Security Cooperation Agency and the Defense Technology Security Administration—which were previously overseen by the Under Secretary for Policy. This realignment is intended to streamline the foreign military sales process and ensure US capabilities reach partner nations more quickly.

Implications for Defense Contractors, Dual-Use Companies and Industry Partners

The Warfighting Acquisition System reforms represent a major shift for defense contractors, dual-use companies and industry partners. In this new system, speed and meeting deadlines are critical, directly affecting bidding and contracting.

Despite the reforms, companies remain subject to a wide range of rules that carry significant legal and operational risks. While the reforms may seek to modify the application of certain statutes, such as the Truthful Cost or Pricing statute (commonly referred to by its legacy name, TINA), or reduce requirements under regulations such as the FAR or DFARS, these changes are not in effect yet. Other key enduring legal and regulatory regimes that impose requirements on contractors and subcontractors include:

• the False Claims Act;
• the “Major Fraud Act” (18 U.S.C. § 1031);
• the Procurement Integrity Act;
• export controls such as the Arms Export Control Act, International Traffic in Arms Regulations and Export Administration Regulations;
• bribery statutes, such as 18 U.S.C. § 201, the Anti-Kickback Act and the Foreign Corrupt Practices Act;
• post-government employment restrictions;
• industrial security regulations governing classified information; and
• controlled unclassified information rules, including the Cyber Maturity Model Certification regime for verifying implementation of required security controls.

Noncompliance with these obligations can result in civil and criminal penalties, suspension and debarment, reputational harm, and other consequences. Moreover, companies will continue to face congressional oversight and media scrutiny of potential fraud, waste and abuse. With increased attention on defense spending surrounding the reform rollout, negative publicity creates legal risks and can impact business operations and investment opportunities.

Overall, the rapid shift to the Warfighting Acquisition System layered over unchanged legal obligations creates unique challenges for companies, especially legal teams: 

• Business units eager to take advantage of new opportunities and leverage new acquisition strategies will benefit from guidance on ensuring compliance with existing laws and regulations that continue to govern.
• New acquisition models and accelerated timelines may present novel legal questions that have lasting consequences, and, given the scope of the new changes, counsel may have little precedent to guide decisions.
• It will remain important to proactively identify, manage and mitigate legal risks in daily operations, even as the regulatory environment changes and may shift again with future administrations.
• Ultimately, how much of the promise of these reforms will be realized may depend on companies’ operational and administrative agility. They will need to quickly interpret new frameworks, adapt  compliance programs and manage risk without slowing the pace of innovation.