In the wake of Hegseth’s software memo, experts eye further change

In the two weeks since Defense Secretary Pete Hegseth issued a directive requiring the use of rapid procurement methods and contracting tools for all software acquisition, military officials and industry executives have expressed a mix of optimism and angst about the mandate, while also calling for more sweeping reforms to how the Pentagon develops, tests and funds software-heavy programs.

The March 6 memo directs all Defense Department components to use DOD’s Software Acquisition Pathway, along with other authorities designed to speed up the buying process and better leverage commercial providers. The tools singled out in Hegseth’s order have existed for years, but a relatively small number of programs actually use them.

“The Department of Defense has been slow to recognize that software-defined warfare is not a future construct, but the reality we find ourselves operating in today,” Hegseth said in the memo. “When it comes to software acquisition, we are overdue in pivoting to a performance-based outcome and, as such, it is the warfighter who pays the price.”

Officials have attributed the Pentagon’s slow adoption of these processes to several causes but have primarily pointed to cultural inertia and risk aversion, both from DOD leaders and within military program offices. In interviews with Defense News and at events around the Washington, D.C., region in recent weeks, industry and Pentagon leaders said they were hopeful that Hegseth’s mandate could lead to change — if it’s enforced.

They also said they view the acquisition guidance as a first step toward broader reforms to how software is funded, tested and priced, as well as how acquisition officers and program managers are trained to manage software-heavy development efforts.

Steve Morani, the Pentagon’s acting acquisition executive, said Hegseth’s order sends a clear mandate for rapid transformation.

“That’s Secretary Hegseth’s way of, just six weeks into his tenure, introducing some change,” Morani said last week at the annual McAleese Defense Programs Conference. “It’s a sign that he’s determined to drive the system to operate differently. I think we’re all on notice that, again, we’re not going to do things business as usual.”

Adjusting to cultural change

In the immediate aftermath of Hegseth’s mandate, Morani said his phone was “blowing up,” as many in the defense acquisition world were concerned about how this new way of buying software could impact their programs.

“I think there was a lot angst up front,” Morani said.

That angst is indicative of the culture change that will be required to implement Hegseth’s direction, as well as the sense that there are more changes still to come, he added.

“This is not the exception,” Morani said of the software memo. “This is going to be the standard way of doing things.”

The Software Acquisition Pathway, created in 2020, has been regarded by the department as the recommended approach for buying software. The pathway offers a tailored acquisition mechanism, recognizing that software can’t, and shouldn’t, be procured under the same process as an aircraft or ship.

Today, around 82 programs representing each of the military services are using the pathway to buy a range of capabilities — from command-and-control systems to cyber. The problem, according to one official who recently spoke to reporters on the condition of anonymity, is that the pathway hasn’t been combined with other authorities designed to attract and take advantage of commercial capabilities.

Those authorities include an approach championed by the Defense Innovation Unit called a Commercial Solutions Opening, a type of solicitation that allows startups and non-traditional defense companies to sell products and services to DOD without navigating arduous requirements documents. DIU also leverages a contracting tool called Other Transaction awards, which isn’t subject to the same regulations as a standard contract.

When combined, these authorities allow DOD to award software contracts much faster than in the past.

Justin Fanelli, the Navy’s chief technology officer, said this shift may be jarring for some acquisition officers who are used to dealing with a rigorous source selection process that can include thousands of pages of meticulous requirements. For example, the need statement for a Commercial Solutions Opening, or CSO, can sometimes be as succinct as a paragraph.

“As you can image, not everyone’s comfortable with that, even inside the building,” Fanelli said March 19 during an Emerging Technology Demo Day in Reston, Virginia. “We’re saying, ‘Here are three sentences that are user-sponsored,’ and those serve as what we used to know as 3,000 pages of requirements.”

Speaking with Defense News after his presentation, Fanelli said the Navy is working to break down some of those barriers by offering examples of programs that have successfully used these tools and reaped the benefits.

“We are, right now, just using this opportunity to stockpile big success stories so that we can get more adoption and change our focus from risk avoidance when it comes to procurement to a focus on impact and outcomes and value-per-dollar,” he said.

Kori McNabb, a senior procurement analyst for the Air Force, told Defense News at the same event that while the shift to commercial-like buying is uncomfortable for some of the acquisition officials she works with, she’s noticed there’s been a greater sense of urgency to learn how to use these tools since Hegseth issued his directive.

McNabb highlighted the Air Force’s CSO Center of Excellence, which offers training opportunities for program officers who may have less experience with the source selection tool. In recent weeks, use of the center’s app has increased from around 200 users at a given time to close to 3,000, she said, adding that her team has upped its training webinar offerings since the memo’s release.

“We just slowly grab them and pull them along with us,” she said. “We’re like, ‘You have to come along because we’re all moving to this.’”

A new report from the Atlantic Council’s Software-Defined Warfare Commission identified workforce expertise — and the training required to achieve it — as a top need for DOD as it looks to better leverage software.

The report, released Wednesday, proposes DOD develop an “extensive, connected, layered and modular software-centric training program” that both raises awareness about the importance of software and establishes a foundational understanding of commercial best practices.

“While the DoD has taken steps to upskill its existing workforce for the digital age, a widely acknowledged software proficiency shortfall remains,” the commission found. “While the United States is the world leader in software talent and solutions, the DoD lacks the expertise to effectively acquire, integrate, and use software tools that are central to mission success.”

More reforms to come?

As acquisition officials prepare their workforces to implement the secretary’s software guidance, others in the defense community are looking ahead to further reforms — hoping that Hegseth’s initial memo is just the beginning of more sweeping changes.

Jason Brown, general manager of defense programs at software firm Applied Intuition, said he’s hopeful DOD is serious about enforcing the software directive, calling it a “long overdue” policy. But more reform is needed, he told Defense News in an interview.

Brown pointed to software pricing, workforce expertise and testing processes as areas that need further attention if the department wants to make progress in this area.

“Test and evaluation needs to be completely reworked,” he said. “It’s not feasible for the current, very bureaucratic, slow, cumbersome test and evaluation methodologies to also be applied to software. I think everybody recognizes that — even the test and evaluation community — the question is, what are they going to do about it and how do we get there?”

The Atlantic Council’s report offered a similar assessment of the software testing enterprise, pointing to lagging simulation capabilities and digital infrastructure.

Authored by a group of former U.S. military officials and defense experts, the report recommends the Pentagon empower and provide funding to the Test Resource Management Center to improve its digital testing capabilities.

Speaking with reporters Wednesday at a Defense Writers Group event in Washington, D.C., former acting Deputy Defense Secretary Christine Fox identified testing infrastructure as a key, near-term focus area for the department.

“The thing that the department has to grapple with is, in addition to buying the software, they need to provide the infrastructure to, particularly, the operating forces,” she said.

Along with those investments, the report suggests the department explore letting more mature software vendors self-certify some capabilities as a way to speed up software fielding and reduce bottlenecks in the testing enterprise.

The commission also recommends the Defense Department take a commercial-first approach to development and procurement, arguing that DOD too often chooses to develop software on its own when private-sector solutions already exist.

“When the DoD decides to develop custom software, this often results in higher costs, longer schedules, and increased risks,” the report states. “Commercial software is often updated continuously across a broad customer base, of which the DoD could take advantage. Instead, updating software to address threats and bugs or add functionality takes considerable time and funding.”