The Pentagon must default to rapid acquisition processes when buying software, from business systems to weapons components, the defense secretary said in a Thursday memo. The move is a “big deal,” one expert told Defense One, because it will push the Defense Department to stop spending considerable money and time trying to build its own software and instead go to the marketplace for products that might already exist.
“While the commercial industry has rapidly adjusted to a software-defined product reality, DoD has struggled to reframe our acquisition process from a hardware-centric to a software-centric approach,” Defense Secretary Pete Hegseth wrote in the March 6 memo. “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 Pentagon must prioritize the Software Acquisition Pathway when buying software, the memo said—a set of guidelines the Defense Department rolled out to streamline the purchase of software, guided in part by the experience of the special operations community. But its implementation was slow across the Department, at least as of July 2023, according to a GAO report from that time. Contract officers weren’t sure how to apply it to current programs and worried about doing so incorrectly, undermining regulations and requirements.
Under that “pathway,” DOD buyers must default to using acquisition approaches called Commercial Solutions Openings, which allow the department to purchase commercially available tech, and Other Transaction Authority, which allow contracts outside of the formal federal acquisition regulations. Both tools enable faster procurement and easier work with non-traditional defense contractors.
The Defense Innovation Unit, or DIU, relies almost exclusively on OTAs and CSOs to bring commercial tech into the Defense Department. Since 2016, the unit has awarded more than 500 OTAs using the CSO process, a defense official told reporters Friday. Some 88 percent of those contracts went to vendors that were not traditional defense contractors, and 68 percent have gone to small businesses.
Hegseth’s new policy should bring “an uptick in sort of the demand for DIU projects,” the official said.
The memo will also spur DIU efforts to educate the military services’ program executive officers about using these authorities to speed up software acquisition.
So how will all this affect big-ticket programs of record, like the F-35 Joint Strike Fighter?
Another defense official said the change applies to any program that has reached the planning phase or is reaching a “natural transition point to adopt a new acquisition pathway”—essentially, a point where it makes sense to change up the program’s software or other tech providers.
There are limits to how the department can use OTAs. For instance, they aren’t suitable for the acquisition of massive platforms like ballistic missile submarines. Any contract over $100 million requires approval by the defense acquisition undersecretary.
But the nature of defense technology is rapidly evolving away from such big-ticket items anyway and moving toward efforts like Replicator, which seeks to field large numbers of low-cost, highly autonomous drones. As part of that program, DIU used CSO processes to hire Anduril to provide collaborative autonomy software that enables drones from a wide variety of vendors to work together. DIU got them under contract in 110 days, much faster than the time it takes to put out a traditional solicitation and make a contract award.
More reliance on OTAs does reduce congressional oversight on how the Pentagon spends money, since traditional solicitations give both the Defense Department and lawmakers more time to review potential programs. But OTA was created by Congress, whose members have since pushed the Defense Department to make more use of it.
Tara Murphy Dougherty, CEO of data and decision science company Govini, said the change is “a big deal.”
“DOD has been somewhat schizophrenic on how it buys software, and this is a big commitment to really get behind commercial software,” she said. This is a contrast to the Pentagon trying to build its own software, as it did with its data analytics tool Advana. Dougherty said Advana will become one of the first tests for the approach.
But, she said, there are still projects where the Defense Department is trying to build its own software, or contract for others to do so, rather than buy commercial software that could serve the same need.
“There are a lot of existing… IT development projects that the department never should have launched. Frankly, it’s against the commercial item preference statute that they started those projects to begin with. So the question is still open as to whether those will be stopped.”
