NDAA Ushers in Procurement Reforms to Break Pentagon Stovepipes

President Donald Trump signed the National Defense Authorization Act (NDAA) for Fiscal Year 2026 on Thursday, enacting the sweeping national security bill that modernizes Pentagon procurement, embedding sweeping reforms designed to shatter bureaucratic hurdles and accelerate the adoption of commercial technologies.

“This NDAA will make the most significant reforms to the way the Pentagon does business in a generation,” Senate Majority Leader John Thune said Tuesday. “These reforms will make our military stronger, more agile and more ready for whatever the mission may be … [and] to do whatever it takes to support American soldiers, sailors, airmen, Marines and guardians.”

Senate Armed Services Committee Ranking Member Senator Jack Reed said that the reforms and investments in the bill are necessary to counter peer adversaries.

“This year’s NDAA is a critical, bipartisan measure that ensures our military remains prepared to meet the growing and complex challenges of a dangerous world,” Reed said during the debate. “From rising tensions in the Indo-Pacific to renewed aggression from Russia and the persistent threat of terrorism and cyberattacks, the United States faces a global security environment unlike any in recent memory.”

Reed highlighted that the bill’s focus extends beyond just buying hardware for the military services. It also ensures the intellectual and digital edge of the armed forces, he said.

“This legislation invests in the servicemembers, technology and capabilities we need to deter our adversaries and defend our national interests,” Reed added.

Chairman of the Senate Armed Services Committee Roger Wicker noted that the bill modernizes the ways the War Department buys capabilities for the military, aligning with War Secretary Pete Hegseth’s recent reforms.

“The [NDAA] is a direct reflection of the severity of that threat environment, as well as the rapidly evolving landscape of war. My colleagues and I have prioritized reindustrialization and the structural rebuilding of the arsenal of democracy. Accordingly, we have set forth historic reforms to modernize the Pentagon’s budgeting and acquisition operations,” said Wicker.

The acquisition reforms in the bill move the Pentagon away from rigid, program-specific stovepipes by establishing Portfolio Acquisition Executives, empowering leaders to manage broad portfolios of capabilities — such as drone swarms or cyber defense tools — rather than overseeing individual hardware programs. This shift is intended to allow the department to pivot quickly to newer technologies without waiting for a new budget cycle.

Under Secretary of Defense for Research and Engineering (R&E) Emil Michael recently called for reforms to the procurement and research systems at the department.

“Reforms are critical. Transformation is really critical to the department and to our country, Michael said recently during a media roundtable. “We’re at a turning point. The nature warfare is dramatically changed now.”

Cracking the ‘Valley of Death’

Silicon Valley startups, non-traditional defense contractors and administration officials have warned that the department’s rigid budgeting cycles suffocate innovation.

“Part of the reason these small companies fall down in the valley of death is because it took too long. It took too long to get through for them to learn the procurement process and get through requirements process,” Michael said.

The NDAA mandates a “commercial first” approach to bridge the “Valley of Death” in research and development. Under new provisions, contracting officers are required to prioritize commercial products and services, forcing them to justify the use of non-commercial procedures with specific market research. To further incentivize commercial participation, the bill raises the threshold for the Truthful Cost or Pricing Data statute, formerly TINA, from $2.5 million to $10 million for future contracts, and significantly hikes the trigger for Cost Accounting Standards (CAS) compliance to $35 million. These changes are expected to drastically reduce the compliance overhead that often deters agile tech firms from doing business with the government.

The legislation also creates a new office dedicated to the rapid fielding and acquisition of “non-Programs of Record,” specifically to help authorized foreign partners and U.S. forces access cutting-edge tech that hasn’t gone through the years-long rigorous testing of traditional tanks or aircraft carriers.

“For too long, bureaucratic hurdles slowed production. They stifled innovation. This bill removes those barriers and accelerates the delivery of new technology,” Sen. John Barasso said in a statement.

AI and Cybersecurity

The NDAA mandates specific, rigorous standards for the technologies the Pentagon adopts. The bill includes aggressive provisions regarding artificial intelligence, requiring that all AI and machine learning systems acquired by the DOW incorporate “secure by design” principles from the initial concept phase through deployment.

The bill also strengthens supply chain security by directing the exclusion of covered AI — technologies deemed to pose unacceptable risks, particularly those originating from foreign adversaries — from all DOW systems within 30 days of enactment. This provision reflects growing congressional concern that the very tools meant to modernize the military could introduce vulnerabilities if not strictly vetted.

The bill also prioritizes the “Partnership for Indo-Pacific Industrial Resilience,” an initiative aimed at fostering collaboration on defense industrial base issues with allies in Asia. This complements the domestic focus on “reindustrialization” championed by Senator Wicker.

“My colleagues and I have prioritized reindustrialization and the structural rebuilding of the arsenal of democracy,” Wicker said on the Senate floor this week. “Accordingly, we have set forth historic reforms to modernize the Pentagon’s budgeting and acquisition operations.”