Clearing the Path: Reforming Procurement to Accelerate Defense Innovation

House Subcommittee on National Security, the Border, and Foreign Affairs

2025-06-11

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Source: Congress.gov

Summary

This meeting of the Subcommittee on Military and Foreign Affairs convened to address the critical challenges within the Department of Defense's (DoD) procurement system [ 00:16:57 ] . Discussions highlighted how outdated and cumbersome processes impede innovation, threaten national security, and result in significant waste [ 00:20:32-00:20:53 ] . Witnesses and members emphasized the urgent need for comprehensive reforms to accelerate technology acquisition and foster a more agile defense industrial base [ 00:20:53 ] .

Themes

Challenges in DoD Procurement

The current DoD procurement system is described as outdated, cumbersome, opaque, rigid, and often punishing [ 00:20:32 ] . It is fundamentally designed to eliminate risk, resulting in a lengthy process where major acquisition programs take an average of 11 to 12 years to deliver capabilities . This process is governed by a maze of burdensome statutes and regulations, including the Federal Acquisition Regulation (FAR) and its DoD supplement (DFARS), which together span over 5,000 pages . Despite efforts and pilot programs, the system remains too slow, rigid, and costly, often leading to capabilities becoming obsolete by the time they are delivered . The issue is not a lack of innovation in the U.S., but rather the DoD's problem with acquisition and adoption .

Impact on Innovation and Industry

The current procurement system deters promising companies and creates a "valley of death" where transformative technologies often fail to transition from prototype to production due to bureaucratic red tape [ 00:21:15 ] . Small businesses, which are crucial for innovation, are disproportionately underrepresented in defense contracts and struggle with budget uncertainty and inflexible acquisition processes [ 00:25:05 ]

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. Many promising startups either pivot away from national security or fail because the DoD's procurement cycle is too slow to match the private sector's tempo . From 2011 to 2020, approximately 40% of small businesses decided to leave the DoD market, and many suppliers, particularly commercial ones, walk away when faced with government-unique requirements . This shrinking industrial base means the DoD often receives second or third-generation technologies, rather than the most advanced innovations .

Proposed Reforms and Solutions

To address these issues, several reforms were proposed, including adopting a "commercial first" acquisition framework to capitalize on private sector research and development . Recommendations included streamlining regulations, investing in manufacturing and workforce development, and confronting the national security talent crisis by avoiding cuts to basic research funding . An "all of the above" approach was suggested to empower new entrants, streamline access for small and mid-sized businesses, and address obstacles for established vendors . The implementation of iterative development, where products are built and improved continuously with real-time feedback and modern digital tools, was emphasized as a crucial shift . Furthermore, modernizing DoD's IT systems was highlighted as critical for auditability, logistics, and readiness, as current systems often hinder efficiency and information sharing . Attracting and retaining talented personnel requires creating an environment where employees feel they can achieve meaningful work and are not excessively micromanaged .

Financial Accountability and Waste

The DoD has a persistent issue with financial accountability, having failed every audit since they were required to in 1990 [ 00:21:57 ]

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. This lack of accountability extends to an estimated $10.8 billion in documented fraud . Continuing Resolutions (CRs) were identified as a major problem, preventing new contract awards, capping funding, increasing costs, and pushing program timelines, which particularly harms small businesses lacking cash reserves . It was argued that budget stability and consistent demand signals are essential for the defense industrial base . Fixing the DoD's procurement process could save hundreds of billions of dollars, deliver capabilities faster, and secure access to better technology [ 00:55:51 ]

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.

Tone of the Meeting

The overall tone of the meeting was one of bipartisan concern and urgency . Members and witnesses expressed significant frustration with the slow pace of change, the bureaucratic inertia, and the continuous financial mismanagement within the DoD . There was strong agreement on the problems and the critical need for comprehensive reform to safeguard national security and ensure the warfighter receives the best possible equipment [ 00:20:38 ] . While some skepticism was voiced about Congress's ability to drive change, there was a collective desire for concrete legislative and executive actions to move beyond discussion to actual implementation of solutions .

Participants

Transcript

M
Mr. Moshe Schwartz
This hearing of the subcommittee on military and foreign affairs will come to order.  I want to welcome everyone.
Without objection, the chair may declare a recess at any time.  I recognize myself for the purpose of making an opening statement.   Good morning and welcome to the Subcommittee on Military and Foreign Affairs.  I want to thank you to all of our members for being here today to examine the future of our defense procurement system.  It's not lost on me the irony of starting a hearing five minutes late when I'm trying to get the DOD to do things more efficiently.  Today's hearing will focus on a critical challenge, the outdated, cumbersome process by which the Department of Defense acquires new technology and how that process slows down the pace of innovation.  The stakes could not be higher.   If we want to outpace strategic competitors, we must modernize the way we identify, test, acquire, and scale cutting edge defense technologies.  South Carolina plays a vital role in our national defense industrial base.  In my own district, Lockheed Martin builds the F-16 Fighting Falcon in Greenville,   a cornerstone of American air power.  Across the state, defense companies manufacture everything from aircraft to submarine components, but we must do more to ensure the next generation of innovators are inspired.  We should be just as excited to see startups take root and thrive in our defense ecosystem.   Unfortunately for too many of those innovators, the path to partnership with the federal government is blocked by a procurement process that is opaque, rigid, and often punishing.  The risk of entering the defense market, both in time and cost, deters even the most promising companies.  And for those who try, many never make it past what many in the industry have called the, quote, valley of death, where transformative technologies die on the vine between prototype and production, often because of bureaucratic red tape.   To be fair, there have been efforts to fix this, from alternate contracting authorities to pilot programs, but most reforms have been short-term, ad hoc, or have traded speed for oversight.  What we need are lasting, transparent, and commercially available, viable solutions that enable agility without sacrificing accountability.  Our witnesses today bring a wealth of experience, from frontline military service to deep knowledge of defense contracting.
They understand both the promise of innovation and the bureaucratic inertia that holds it back.   As we'll hear, innovation thrives in environments that reward speed, flexibility, and calculated risk-taking, the very qualities the current defense procurement system too often discourages.  A culture of risk aversion has led to seven consecutive failed audits and spiraling cost overruns in even our most critical programs.   But this is not a hopeless story.  Reform is possible.  Through modernization of our procurement system, we can remove barriers to innovation and foster collaboration between government and industry.  I look forward to today's discussion and to exploring actionable steps to move our procurement system into the future, not only to keep pace, but to be leaders on the world stage.  Thank you again to each of our witnesses for participating today, and I look forward to your testimony.  I now recognize Ranking Member Subramanian for the purpose of making an opening statement.
Thank you, Mr. Chairman.  Thank you for holding this hearing.  I'm proud to represent Virginia, especially Northern Virginia is home to some of the most innovative companies that do really important work with the Department of Defense to support our national security, protect our country.   keep women safe who are in uniform.  Our district in particular builds the chips that power many of the military vehicles and the circuit boards they sit on, the military components crucial to allowing soldiers to communicate and fight and defend our nation.  And we build state-of-the-art technologies, products that prepare us for the future threats and the future of warfare.  We're getting prepared for it because of the work being done by our contractors in Virginia.   especially proud of all the small businesses as well that work with the DoD to try to bring innovation, because a lot of times innovation comes from small businesses who are trying to do things differently than the bigger businesses and the major players.  But we need both.  We need everything.  And these technologies are so important to our national security, and they actually have a lot of applications in the civilian world as well.  A lot of industries have developed because of   investments that DoD made.  The Internet's a good place for a good example of that, for instance.  And so I've spoken with many of these companies and actually visited them.  And, you know, one of the things that I keep hearing is about wanting to to see if we can sort of fix the procurement process and make it better.  It's anywhere   been close to perfect right now.  And there's a lot of things that a lot of these companies have to face when it comes to DOD procurement, whether it's workforce challenges, budget uncertainty, and long and inflexible acquisition processes.  These are especially true for the smaller businesses that don't have

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