Can Procurement Reform Fix the Pentagon’s “Backwards Culture”? Pete Hegseth’s Bold Bet
Why the new Defense Secretary’s commercial-first revolution might succeed where decades of reform have failed—and why it still won’t be enough
When Defense Secretary Pete Hegseth stood before a room of defense industry CEOs in November 2025, his message was blunt: “We’re going to make defense contracting competitive again. Those who are too comfortable with the status quo to compete are not going to be welcome.”
It was a declaration of war—not against America’s adversaries, but against the Pentagon’s own procurement culture. And if you’ve been following defense acquisition for any length of time, you might be forgiven for rolling your eyes. After all, we’ve heard this song before. Multiple times. For decades.
But here’s what makes Hegseth’s reform push different: it’s not just another bureaucratic reshuffling. It’s a frontal assault on what he calls the Pentagon’s “backwards culture”—one that rewards schedule overruns, prioritizes paperwork over battlefield needs, and has turned defense contractors into risk-averse partners more focused on process compliance than delivering cutting-edge capabilities.
The question isn’t whether the Pentagon’s procurement system is broken. Everyone agrees it is. The question is whether Hegseth’s commercial-first revolution can succeed where Robert McNamara, David Packard, and countless others have failed—and whether fixing procurement is even enough to solve the deeper cultural rot.
The Backwards Culture Problem
Let’s start with what we’re actually trying to fix. The Pentagon’s procurement culture isn’t just inefficient—it actively rewards the wrong behaviors.
Consider this stunning admission from Lockheed Martin CEO Jim Taiclet earlier this year: “We don’t have any must-win programs with Lockheed Martin anymore.” Think about that for a moment. The nation’s largest defense contractor is openly saying it won’t take on programs where failure could be catastrophic for national security, simply because the Pentagon’s contracting approach makes such programs too risky.
This is the backwards culture in action. When your biggest suppliers are more concerned about protecting their margins than delivering critical capabilities, you’ve created a system that prioritizes financial security over mission success.
The root of the problem lies in decades of what experts call “pendulum swings” between different contracting philosophies. Fixed-price contracts were supposed to shift risk to contractors and save taxpayer money. But as Northrop Grumman’s CEO Kathy Warden explained in a recent earnings call, her company has “passed on some high-profile programs as a result of the risk balance that the customer put forward.” Boeing’s $7 billion in overruns on a $4.9 billion KC-46 tanker contract shows why contractors are gun-shy.
Meanwhile, cost-plus contracts—which guarantee contractors their costs plus a fee—remove the financial incentive to control expenses. It’s a classic Catch-22: fixed-price contracts drive away bidders, while cost-plus contracts eliminate cost discipline.
But the cultural problem runs deeper than contract types. As Hegseth noted in his reform memo, the current system rewards “schedule overruns and backlogs” while prioritizing “process and paperwork over the urgent and evolving needs of forces in the field.” When program managers get promoted for following procedures rather than delivering results, you’ve created a culture where compliance matters more than capability.
Hegseth’s Commercial-First Revolution
Enter Hegseth’s radical prescription: flip the entire incentive structure by defaulting to commercial solutions and commercial-style competition.
The core insight is elegant: instead of assuming military requirements are so unique that only bespoke, defense-specific solutions will work, start with the assumption that commercial technologies can meet most needs faster and cheaper. Only deviate from commercial solutions when absolutely necessary.
This isn’t just about buying more commercial products. It’s about fundamentally changing how the Pentagon thinks about requirements and acquisition. Hegseth’s reforms include several game-changing elements:
Portfolio Acquisition Executives will replace the traditional Program Executive Office structure. Instead of managing individual programs in isolation, these new executives will oversee entire capability portfolios, with authority to shift funding between programs based on performance and urgency. Their compensation will be tied to delivery speed, competition levels, and mission outcomes—not process compliance.
Speed as the primary metric represents a philosophical revolution. For decades, the Pentagon has optimized for cost control, risk mitigation, and regulatory compliance. Hegseth’s approach explicitly accepts trade-offs in cost and perfection to accelerate fielding timelines. The new mantra: “good enough now” beats “perfect eventually.”
Time-indexed incentives will reward contractors for early delivery and penalize delays. This creates a direct financial incentive for speed—something notably absent from traditional defense contracts.
The Economic Defense Unit represents perhaps the most innovative element: a new organization designed to deploy capital through grants, loans, and investment partnerships, blurring the lines between government procurement and venture capital. This could unlock private investment in defense technologies while reducing government risk.
The early signs are promising. Even before formal implementation, the Space Force has demonstrated the potential of this approach, using fixed-price contracts and commercial competition to dramatically reduce satellite costs and delivery times.
Space Force Leads, Congress Follows
The Space Force has become the poster child for acquisition reform, and for good reason. Frank Calvelli, the service’s acquisition chief, has championed fixed-price contracting as a way to “add a level of discipline, prevent the constant rethinking of programs and scope changes with each yearly budget build, avoid changes from cost re-estimating, stop requirement changes and promote competition from more commercial-like/non-traditional space companies.”
The results speak for themselves. Space Force programs are consistently delivering faster and cheaper than traditional acquisition programs, largely because they embrace commercial technologies and processes from the start.
Congressional alignment provides crucial political cover for Hegseth’s reforms. The bipartisan SPEED Act (Streamlining Procurement for Effective Execution and Delivery) includes provisions for requirements process overhaul, commercial technology emphasis, and efficiency over regulation. The Senate’s FORGED Act (Fostering Reform and Government Efficiency in Defense) goes even further, calling for the elimination of dozens of obsolete regulations and requiring commercial-first acquisition strategies.
This bipartisan support is significant because it addresses one of the key failure modes of past reform efforts: lack of sustained political backing when things inevitably go wrong.
Arnold Punaro, a former Senate Armed Services Committee staff director, calls Hegseth’s plan “without question, the most sweeping reforms and changes in the way the Department of Defense determines requirements, acquires those requirements, budgets for those requirements, and deals with the industrial base of any we’ve seen in 50 years.”
The Ghost of McNamara’s Failures
But here’s where history offers a sobering lesson. Every generation of Pentagon leaders discovers the acquisition system is broken and announces sweeping reforms to fix it. Most fail—not because their diagnoses are wrong, but because bureaucratic systems have remarkable immune responses to change.
Robert McNamara’s experience is particularly instructive. In the 1960s, McNamara centralized defense management, introduced the Planning Programming and Budgeting System (PPBS), created rigorous source selection processes, and established new oversight organizations. Sound familiar?
Many of McNamara’s innovations survived—PPBS remained virtually unchanged until 2001, and the organizations he created (Defense Contract Audit Agency, Defense Contract Administration Service) persist today, albeit with different names and missions. But the reforms didn’t solve the core problems. McNamara’s own tenure saw massive overruns on programs like the C-5A and F-111.
The pattern is depressingly consistent: well-intentioned reforms get “severely modified” over time until they’re “virtually unrecognizable from their original form.” McNamara’s Total Package Procurement policy, designed to control costs through fixed-price contracts, was abandoned by the Nixon administration when engineering change proposals and implementation failures made the fixed-price constraint meaningless.
The bureaucratic survival instinct is powerful. As one Pentagon veteran noted, “Only the agencies and organizations that McNamara created survived, though the latter in many cases with different names—which is a testimony to the tenaciousness of the bureaucracy when it comes to matters concerning its ongoing existence.”
This suggests that Hegseth’s reforms, however well-designed, will face the same institutional resistance that has neutered previous efforts. The question is whether the current reform push has elements that can overcome this historical pattern.
Why Procurement Reform Isn’t Enough
Even if Hegseth’s reforms succeed beyond all historical precedent, they won’t be sufficient to fix the Pentagon’s strategic problems. Procurement is a symptom, not the disease.
The deeper issue is what defense strategist Andrew Marshall identified decades ago: “Technology makes possible the revolution, but the revolution itself takes place only when new concepts of operation develop.” In other words, buying better widgets faster doesn’t matter if you’re still thinking about warfare in outdated ways.
The mismatch runs deep: The Pentagon’s structure remains “frozen in a Cold War mold—built for regional conflicts, linear escalation, conventional force-on-force fights, and prolonged procurement and modernization time horizons.” Meanwhile, today’s adversaries operate across geographic boundaries, coordinate below the threshold of war, and exploit the convergence of nuclear, cyber, space, and conventional capabilities.
Consider the current threat environment: Chinese satellites enable Russian targeting in Ukraine, Iranian drones support Russian operations, North Korean troops deploy alongside Russian forces, and all of this coordination happens in real-time across multiple domains. The U.S. response? Geographic combatant commands that can’t easily coordinate across regions, acquisition programs optimized for single-domain solutions, and decision-making processes designed for Cold War threat timelines.
Strategic culture matters as much as procurement culture. As military historian Brent Ziarnick observed, “the strategic culture of the service is every bit as important as its weapons or operations.” You can’t procure your way out of conceptual obsolescence.
The Pentagon needs what some experts call “DoD 3.0”—a fundamental restructuring that goes beyond acquisition reform to address command structures, authorities, budgeting processes, and strategic concepts. Without these broader changes, even the best procurement reforms will be constrained by outdated operational concepts and institutional structures.
The Verdict: Necessary But Not Sufficient
So can procurement reform fix the Pentagon’s backwards culture? The answer is nuanced: it can catalyze meaningful change, but it can’t complete the transformation alone.
Hegseth’s commercial-first approach has several advantages over previous reform attempts:
Clarity of vision: Commercial-first is easier to understand and implement than complex bureaucratic reorganizations
Measurable outcomes: Speed and competition are concrete metrics that resist bureaucratic gaming
External pressure: Market forces and commercial competition provide ongoing pressure for efficiency
Congressional support: Bipartisan backing reduces political risk
But the historical record suggests three critical success factors:
Sustained leadership commitment: Reforms fail when leadership changes and successors revert to old patterns
Cultural reinforcement: New processes must be reinforced by training, personnel policies, and organizational incentives
Operational integration: Procurement changes must be tied to new operational concepts and strategic frameworks
The good news is that Hegseth seems to understand these requirements. The transformation of the Defense Acquisition University into the “Warfighting Acquisition University” signals attention to cultural change. The emphasis on portfolio management and operational integration shows awareness that procurement can’t be separated from strategy.
The ultimate test will come when something goes wrong—and something always goes wrong in defense programs. Will senior leaders provide top cover for program managers who took smart risks that didn’t pay off? Will Congress resist the temptation to impose new oversight requirements after the first high-profile failure? Will the bureaucracy resist the urge to add “just a few more” process requirements for “better oversight”?
If Hegseth’s reforms can survive their first major crisis, they might actually stick. Combined with broader institutional changes—new operational concepts, updated command structures, and strategic culture evolution—they could represent the beginning of a genuine Pentagon transformation.
But if history is any guide, the bureaucracy is already working on ways to preserve the status quo under the guise of implementing change. The revolution in military affairs requires more than revolutionary procurement—it requires revolutionaries willing to keep fighting long after the first victory declarations.
The Pentagon’s backwards culture took decades to develop. Fixing it will require not just new processes, but new ways of thinking about warfare, competition, and institutional change. Procurement reform is a crucial first step. Whether it becomes the foundation for broader transformation or just another failed reform attempt will depend on leaders’ willingness to keep pushing when the bureaucracy pushes back.
The stakes couldn’t be higher. With China, Russia, Iran, and North Korea increasingly coordinated in their challenges to American power, the U.S. can’t afford another generation of incremental procurement tinkering. The question isn’t whether the Pentagon needs to change—it’s whether it can change fast enough to matter.