In 2025, several major shifts hit the federal marketplace all at once.

• A new administration arrived with a radically different operating style and vision.
• The Department of Defense was renamed the Department of War (DOW).
• The government experienced mass layoffs and a historic shutdown.
• Artificial intelligence accelerated across both the commercial and federal sectors.

As a government contractor, you may think the disruption is limited to the GovCon ecosystem. But it is not.

The entire global marketplace is adjusting to economic pressure, restructuring, supply chain concerns, and AI-driven change.

What we see in the federal space is simply our local view of a much larger shift.

As government contractors, our job is to adapt and learn the customer’s language.

For now, this means learning the vocabulary, priorities, and expectations being set by the Department of War’s Acquisition Transformation Strategy, guided by Under Secretary for Acquisition and Sustainment, Michael Duffy and shaped by Executive Order 14265 under the Trump administration.

“The Department of War (DOW) is rapidly transforming our antiquated acquisition processes and revitalizing the atrophied Defense Industrial Base (DIB) by prioritizing speed, flexibility, and rigorous execution. The Secretary of War has placed the Department on a war footing, and the Warfighting Acquisition System (WAS) is aligning with urgency and velocity, balancing speed with rigor in execution to ensure we rapidly deliver relevant and effective solutions at scale to address warfighting needs.

Executive Order (E.O.) 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Industrial Base, directed the Department to prepare this strategy, consistent with President Trump’s direction to transform the current defense acquisition system to ensure delivery of capabilities to the American warfighter at pace to deter and, if necessary, defeat our adversaries.”

• FROM Introduction: DOW Acquisition Transformation Strategy

The message is unmistakable: our federal customer has changed. The federal acquisition system is changing with it. Industry must change as well.

In my LinkedIn live training this week, I walked step by step through the Department of War’s published strategy and direction of the Under Secretary for Acquisition and Sustainment. My goal is to help small businesses understand exactly where they fit so you can continue to grow and thrive. Watch the full training below for my insights.

Three Primary Outcomes | Department of War’s Acquisition Transformation Strategy

The strategy outlines three outcomes the Department of War expects from its transformed acquisition system. These outcomes communicate what the customer needs industry to deliver and the pace at which it must happen.

Outcome 1: Field Technology and Modernize Systems at Speed

(video)

The first outcome calls for fielding technology and modernizing systems at a rate that outpaces America’s adversaries. This applies not only to weapons systems but also to:

• Cybersecurity
• Logistics
• Training
• Program support
• Sustainment
• IT tools
• AI-enabled solutions
• Commercial services

DOW needs capability faster than adversaries can innovate . Small businesses are positioned well here because we are inherently built for speed, able to make decisions quickly, pivot without layers, and move like a speedboat rather than a cargo ship. If your company helps DOW move faster, you are strategically valuable.

Outcome 2: Increase Production Capacity and Deliver Wartime Surge

(video)

The second outcome focuses on increasing capacity across the entire mission: services, cyber defense, sustainment, training, analytics, logistics, and contracting support.

The underlying message is direct:

If you can scale people, processes, tools, or technology, DOW needs you (see small business tip). 

Every company should be asking how it demonstrates surge capacity and how it ties itself to essential mission functions.

Outcome 3: Place the Acquisition System and Industrial Base on Wartime Footing

(video)

The third outcome for the Department of War’s transformed acquisition system is to operate on a wartime footing, which means:

• Speed of Urgency
• Speed of Relevancy
• Speed of Action

This includes less bureaucracy, shorter documents, more commercial solutions, more direct-to-supplier buying, more OTAs and rapid pathways, and more willingness to take smart risks with small businesses.

Small businesses that reduce friction, communicate clearly, and show up early can become go-to partners for the Department of War.

The Five Strategic Pillars

The strategy then introduces five strategic pillars that guide how the Department of War will buy, build, and deliver capability. These pillars show where the customer is going and where industry must align.

Pillar 1: Rebuild the Defense Industrial Base (DIB)

(video)

Rebuilding the DIB is the first priority, and it extends well beyond factories and munitions. The Department wants more companies delivering capacity in:

• Cyber
• Logistics
• Training
• Professional services
• Supply chain support
• Sustainment
• Commercial software

If your company strengthens capacity, speed, resilience, or innovation in any part of the mission, you are part of rebuilding the DIB. Small businesses remain the backbone of the Department of War.

Pillar 2: Elevate and Empower the Acquisition Workforce

(watch video)

This pillar reflects a major shift. Program managers and acquiring activities are being given more authority, greater flexibility, more speed, and fewer bureaucratic layers. This allows the Department to make decisions faster and move money more efficiently.

When PMs are empowered, they choose vendors who solve problems quickly.. That is where small businesses excel.

Pillar 3: Maximize Acquisition Flexibility

(watch video)

The Department is working to increase the number of ways it can buy from industry. That includes:

• Cutting unnecessary reviews and paperwork
• Using Other Transaction Authorities (OTAs)
• Using Commercial Solutions Openings (CSOs)
• Relying on commercial off-the-shelf and commercial-ready solutions
• Pushing decisions downward for speed
• Holding program offices accountable for rapid execution

If your company shows up with clear commercial offerings, is easy to contract with, and fits into these flexible buying tools, you become the flexibility the government needs. Small businesses are the flexible side of the industrial base.

Pillar 4: Develop High-Performance Systems

(watch video)

This pillar focuses on improving the performance of everything the Department buys. High performance includes:

• Better software
• Better data
• Better logistics
• Better training
• Better sustainment
• Better cyber
• Better integration
• Better reliability

The Department wants to use digital engineering, AI, modeling, and faster prototyping to get working capabilities into the field without years of delay.

If your offering improves speed, reliability, usability, integration, or mission effectiveness, you belong in this pillar.

Pillar 5: Improve Effective Lifecycle Risk Management

(watch video)

The Department is clear: it cannot afford fragile systems or fragile supply chains.. Lifecycle risk management includes:

• Better sustainment planning
• More reliable repair and maintenance
• Stronger supply chain visibility
• Eliminating single points of failure
• Designing systems that are maintainable and cost-effective over time

This includes the long-term cost of ownership, not just the initial purchase. Contractors must be prepared to communicate how their solution reduces risk, stabilizes sustainment, or extends system life.

Where New Opportunities Will Emerge for Small Businesses

The strategy and broader market shifts open several pathways for small businesses.

Opportunity 1: Direct-to-Supplier Buying Expands

(watch video)

The Department is seeking more ways to buy directly from manufacturers and critical suppliers. If your company produces key parts, components, or systems, this shift reduces barriers and accelerates access.

Opportunity 2: Commercial Technology Becomes the Default 

DOW is leaning toward a “buy before you build” mindset. If a commercial solution exists, the Department prefers to purchase it, configure it, and move quickly rather than fund a multi-year custom development effort.

This directly supports CSOs, OTAs, and commercial-ready solutions. Understanding these paths is essential.

Opportunity 3: More New Entrants Are Wanted 

Although thousands of small businesses appear in DSBS/SBS, the true defense industrial base is much smaller. The Department wants more suppliers, more competition, more American manufacturers, and more companies operating within the United States.

This is a welcome mat for firms ready to learn the federal process and align with the new priorities.

Opportunity 4: Strengthening the Supply Chain Requires Thousands of Vendors 

Supply chain resilience is now understood as national security. The Department needs more reliable domestic suppliers, more diversified sources, and greater resilience across critical items.

This is a significant opportunity for small businesses in manufacturing, logistics, warehousing, and sustainment.

Opportunity 5: Rapid Prototyping and Solution Marketplaces

This reflects the Department’s desire to test working solutions quickly. Paths include OTAs, CSOs, SBIR (when active), and solution marketplaces where vetted solutions are made available to multiple buyers.

Any company with a finished or near-finished solution can benefit from these rapid access channels.

How to Position Your Company for 2026

The final section focuses on how small businesses should show up to match the Department’s direction.

1. Tie Yourself to the Outcomes and Pillars

(watch video)

Start with the three outcomes and the five pillars. Ask:

• Which outcomes do we support most directly?
• Which one or two pillars authentically align with our company?

Small businesses do not need to align with everything. They need to align clearly with the right areas.

2. Lead With Commercial, Not Custom

Show the Department what already exists:

• “This is built.”
• “It is 80% ready.”
• “We only need to configure the last 20% for your environment.”

This is the commercial mindset the Department is asking for.

3. Show Speed and Risk Reduction

Focus on what you can deliver this month, not “in a year.” DOW is operating at the speed of urgency. Your messaging should reflect:

• Quick wins
• Reduced risk
• Faster implementation
• Lower administrative burden

4. Fit Into Open, Modular, Interoperable Systems

Explain clearly:

• How your solution plugs into what they already have
• How it avoids creating friction
• How it complements existing systems
• How it prevents conflicts or rework

This is essential for technical and service offerings alike.

5. Demonstrate How You Strengthen the Supply Chain

Supply chain stability is a priority. Come to the conversation understanding:

• Their challenges
• Their bottlenecks
• Their vulnerabilities

Then show how your company strengthens those areas.

Final Reminder

Watch the replay. Download the strategy document. Learn the customer’s vocabulary and direction. Align your company accordingly.

The Department of War has made its expectations clear. The task now is to respond with clarity, capability, and speed.

FAQ: Department of War’s Acquisition Transformation Strategy (2026)

1. What is the Department of War’s Acquisition Transformation Strategy?

It is the Department’s plan to transform the defense acquisition system to deliver capability at the speed required to deter or defeat adversaries. It prioritizes speed, flexibility, and rigorous execution while revitalizing the Defense Industrial Base.

2. How does this strategy under the Trump administration impact small businesses?

It increases opportunity for firms that move quickly, deliver commercial-ready solutions, reduce lifecycle risk, support supply chain resilience, and align with one or two strategic pillars.

3. What are the three overarching outcomes?

The three overarching outcomes are:

• Field technology and modernize systems at speed
• Increase production capacity and deliver wartime surge
• Place the acquisition system and industrial base on wartime footing

4. What are the five strategic pillars?

The five strategic pillars are:

• Rebuild the Defense Industrial Base
• Elevate and empower the acquisition workforce
• Maximize acquisition flexibility
• Develop high-performance systems
• Improve effective lifecycle risk management

5. How should a small business choose which pillar to align with?

Choose the one or two pillars your current work already supports. Overreaching dilutes your credibility. Clear, focused alignment strengthens it.

6. What does “commercial preference” mean for contractors?

The Department prefers to buy solutions that already exist and can be configured quickly, rather than fund custom-built systems that require long development cycles.

7. What does “open, modular, interoperable” mean?

Open means usable by many and compatible with standard tools. Modular means built in smaller, pluggable components. Interoperable means your solution works cleanly with existing systems without conflict or rework.

8. How can a company demonstrate it moves at the speed of urgency?

By showing what it can deliver in the next day, week, or month; removing administrative burden; and presenting clear, commercial-ready solutions that reduce risk.

9. Why is lifecycle risk management so important now?

The Department cannot afford fragile systems or unstable supply chains. Contractors must think in terms of longevity, sustainment, total ownership cost, and supply chain visibility.

10. What should small businesses do now to prepare for 2026?

Study the strategy, choose your pillars, tighten your commercial offerings, document your surge capacity, and update your DSBS, SAM.gov profile, capability statement, and website to reflect clear alignment with DOW’s outcomes and pillars.