Pentagon pushes ahead with plan to overhaul US weapons buying

WASHINGTON – The Pentagon is gearing up to invest in defence companies and offer grants, loans and other incentives as way of speeding up weapons development and attracting more competitive bids for contracts, according to a draft memo.

The undated and unsigned memo, a copy of which was obtained by Bloomberg News, is the latest step in the administration’s goal of fixing a decades-old problem: the painfully-slow procurement process in which weapons are often over-budget, years late and sometimes obsolete by the time they debut. 

The proposed moves may please tech companies and startups that are eager to tap the hundreds of billions of dollars that have in years past largely gone to defence behemoths such as Boeing, Lockheed Martin and General Dynamics.

Companies such as Anduril Industries have sought to challenge that dominance, calling for a more nimble Pentagon that adopts new technologies more quickly.

But it also sets a list of tight timelines, including a 60-day deadline for each military department to present a plan for how to carry out the order. New contracting guidelines seeking “clear incentives for timely delivery” must come within 180 days.

“The memo’s timing targets may be a bit too ambitious given the amount of information, programme data, and contracting data required to meet the timelines,” said Mr Wayne Sanders, senior defence research analyst at Bloomberg Intelligence. 

“Precedence says these timelines will not hold,” he added, citing other unmet deadlines around a defence pact with Australia and the UK and on Mr Trump’s push for a Golden Dome missile-defence shield.

According to the memo, Defence Secretary Pete Hegseth will overhaul procurement starting with a name change, replacing the Defence Acquisition System with the Warfigthing Acquisition System. The initiative promises to eliminate bureaucracy, give precedence to speeding up procurement and circumventing “environmental and other compliance requirements” where possible. 

The Pentagon didn’t immediately respond to a request for comment on the draft memo. But Mr Hegseth is expected to draw on it when he delivers a speech entitled “The Arsenal of Freedom” before defence industry executives on Nov 7. Politico reported its contents earlier.

Most tantalising to companies looking to enter the market will be a section under the subhead “Modernise contracting with clear incentives to industry.”

It sets a 180-day deadline for a new Economic Defence Unit to give new contracting guidelines and a “playbook of modern commercial contract and agreement structures” under which the Pentagon will deploy capital with grants, loan options, purchase commitments and investments.”

That’s in keeping with a recent push by the Pentagon and the administration more broadly, such as taking equity in Intel and purchasing a US$400 million (S$521 million) stake in rare-earth producer MP Materials.

Much of that work has been led by Deputy Defence Secretary Stephen Feinberg, a private equity billionaire who co-founded Cerberus Capital Management.

President Donald Trump highlighted the problem of slow weapons procurement earlier in 2025 in a series of Executive Orders. The memo says the department will “structure deals that unlock private capital through advance market commitments, risk-sharing mechanisms and commercial-like incentive structures.”

While the move will cheer those who argue weapons development is far too slow, it may attract criticism over its push to minimise the need for independent operational testing. It notes a need to “streamline test and evaluation requirements.”

Democrats and some Republicans criticised Mr Hegseth’s plan, announced in May, to slash staffing at the Pentagon’s independent Operational Test and Evaluation Office, which oversees testing of major weapons systems. The office isn’t mentioned in the memo. BLOOMBERG