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US defence secretary Pete Hegseth demanded major defence contractors speed up weapons development and production or “fade away”, as he declared a new era of procurement competition.
In a speech on acquisition reform on Friday, Hegseth also called for unprecedented private investment in the defence industry and announced the formation of a specialised “deal team” to bolster the Pentagon’s weapons purchases.
As the secretary detailed plans for the Pentagon to speed up its notoriously slow and expensive acquisition process, he invited new companies to compete against defence heavyweights such as Lockheed Martin, RTX, Northrop Grumman, Boeing and General Dynamics.
“These large defence [groups] need to change the focus on speed and volume and invest their own capital to get there . . . if they do not, those big ones will fade away,” he told industry executives at the National War College in Washington.
Hegseth also called on legacy aerospace and defence companies to invest more of their own capital instead of “saddling taxpayers with every cost”.
He said the Pentagon’s move to slash contract requirements and regulations would increase competition. Quoting a speech by former defence secretary Donald Rumsfeld, Hegseth declared the Pentagon’s bureaucracy an “adversary”.
Consolidation because of post-cold war Pentagon budget cuts shrunk the pool of major contractors from 51 in 1990 to just five companies that dominate the production of the US military’s weapons and other technologies.
The secretary’s changes aim to unleash more private sector investment in defence production capacity by stabilising the Pentagon’s commitment to purchase certain systems over time.
The new “deal team”, which would be part of a recently established acquisition unit known as the Wartime Production Unit, would be “empowered to forging [sic] groundbreaking business deals that revolutionise production capacity and completely overhaul contract execution”.
Hegseth also said the Pentagon would take on more “acquisition risk” so that no bid would be considered non-compliant. The defence department would also slash certain reporting requirements, accounting standards, testing rules, oversight and study and analysis regulations.
“This is the beginning of an unrelenting onslaught to change the way we do business and to change the way the bureaucracy responds,” he said.
Jerry McGinn, director of the centre for the industrial base at the Center for Strategic and International Studies, said Hegseth was “right to focus on changing incentives to drive better outcomes”.
He added that while there are dangers to gutting regulations and requirements, “We are definitely too far in the other direction.”
Hegseth also vowed to speed up sales of US weapons to allies and partners, calling it a “top priority” for his team given President Donald Trump’s efforts to secure deals for American hardware.
The secretary said foreign military sales are “critical to our strategic vision on the global landscape”.
McGinn said he was “pleased” by the secretary’s “strong emphasis on allies and partners”, because such focus “runs counter to some of the narrative of the administration”.
Josh Kirshner, managing director at Beacon Global Strategies, said Hegseth’s speech reflected long-held concerns of traditional players and defence start-ups, and echoed what the Pentagon has been telling the companies in recent months.
“I think longtime defence companies and ones new to the Pentagon agree with many of the frustrations the secretary laid out,” he said. “They’re just as eager and invested in seeing the department move more quickly.”
But Kirshner warned the changes would take time, which Hegseth also acknowledged.
“The challenges in implementing this will be far-reaching and significant, likely taking far longer than leadership expects,” Kirshner said.
