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President Donald Trump signed the Fiscal Year 2026 National Defense Authorization Act last week. At more than 3000 pages, the document reflects a series of negotiated changes to Defense Department policy, contracting authorities, compliance, and new opportunities.

While the bill contains many exciting new provisions and increased compliance burdens, its true impact will depend on the department’s follow-through. Beyond the headlines, what does industry need to know?

Acquisition Reform, in Context

Industry may first notice that some of the more ambitious reforms to acquisitions and industrial policy in prior House and Senate drafts were dropped from the final version of the bill. Several reforms, like right-to-repair, strengthened government data rights, the creation of the Economic Defense Unit, an expanded definition of nontraditionals, and dozens of statutory repeals, did not make the cut.

This bill is the latest in a pattern of initially ambitious reforms that are later weakened in subsequent iterations. Secretary of Defense Pete Hegseth’s November draft acquisition transformation memo was certainly more ambitious than his subsequent speech and follow-on Acquisition Transformation Strategy.

Many FoRGED and SPEED provisions did survive, but were blunted. The bill advances FoRGED-style acquisition reform — commercial-first buying, portfolio-level decision authority, requirements governance changes, limits on flow-downs, and industrial mobilization — but drops more disruptive ideas, including capstone requirements, expanded other transactions authority, and redefining nontraditionals. From SPEED, it adopts workforce and targeted industrial base measures, while dropping broader proposals to overhaul reporting and pricing, strengthen data rights, and fully formalize acquisition-requirements integration.

The drafting process has shown that the committees generally seem to be more committed to incremental change, while maintaining oversight.

Broad Shifts in Defense Department Policies

The bill formally introduces several ambitious acquisition reforms proposed by Hegseth and lawmakers in the last several months, centering its policies around an incremental, collaborative, and competitive defense acquisition system aligned with warfighter needs (Section 1805). Yet while promising, many of these reforms are ultimately policy guidance rather than statutory change. Their success will depend on the Defense Department’s ability to implement them.

Most prominently, the bill statutorily establishes the role of portfolio acquisition executive as the senior acquisition official, signifying a potential future shift from a program-centric acquisition system to a portfolio-centric one (Section 1802). While these executives are granted responsibility over a broad set of programs and are given flexibility to approach acquisition iteratively and make trade-offs, they still operate within existing service budgets and legal constraints. As the number of executives and even portfolio scope is left to the department, the burden of change will fall on the Pentagon and even the appropriators.

The product support manager role is now statutorily elevated to be made coequal to the program manager, with both reporting to the portfolio acquisition executive (Section 1803). This points to a more fulsome prioritization of the program’s life cycle, sustainment, and cost.

The bill also institutes a mixture of re-scoping and the establishment of statutory authority in requirements reform. The Joint Requirements Oversight Council is not abolished, yet the bill narrows its role and moves it away from approving or validating individual service-level requirements (Section 1811). The council is now redefined to focus on joint operational and cross-domain gaps and strategic trends, and provide context to portfolio acquisition executives. Although this will likely be a positive step for those who believe the council is a barrier to faster service-level acquisitions, it may also drive the services apart, particularly in programs with joint capabilities or shared sustainment.

Earlier reforms, such as the Mission Engineering and Integration Activity Requirements and the Resourcing Alignment Board, were not codified, which may paradoxically lead to more flexible requirement authorities.

As industry is well aware, the acquisition workforce’s education will be central to this transformation. While Congress stopped short of mandating comprehensive reforms to the long-embattled Defense Acquisition University, Congress did require the Defense Department to conduct a review assessing its effectiveness (Section 825). The Defense Department is also ordered to reassess the effectiveness of civilian personnel by introducing key performance objectives, although it cannot yet be determined whether this will change behavior (Section 826).

Programs must now comply with a strengthened definition of the modular open systems approach, which now requires systems to be available on non-proprietary, machine-readable interfaces (Section 1832). Although it ties this approach to competition, it falls short of requiring it across programs.

There were additional compliance updates to the test and evaluation frameworks spread out throughout the bill. The bill requires assessments and planning related to digital engineering in test and evaluation environments, but does not mandate it. Lawmakers also introduced more oversight into certain test and evaluation programs (Section 224). Certain software programs and fast-moving capabilities are given access to, although not guaranteed, alternative pathways (Section 218).

Small and mid-tiered companies will receive access to the new Project Spectrum, an online platform to facilitate awareness of the defense acquisition system’s requirements through digital resources and training (Section 1807). Whether it can meaningfully help new entrants understand the complex acquisition system remains to be seen.

A critical step that Congress took was in repealing several legacy acquisition statutes in Title X and dozens from former National Defense Authorization Acts, ensuring that new reforms are not trapped in statutory layering that blunts their effectiveness (Section 811).

New or Expanded Contract Authorities

Heavily influenced by SPEED and FoRGED, Congress significantly revamped contracting authorities. These shifts to contracting authorities are more prescriptive than in acquisitions.

Commercial effectively becomes the procedural starting point of the Defense Department, as opposed to just a preference (Section 1822). The existing procedural default is strengthened by requiring senior-level documentation before choosing a non-commercial vendor. While this may prove extremely beneficial for commercial vendors, it will likely slow contracting for non-commercial contractors in the end.

Nontraditional defense contractors are granted further exemptions from complicated cost accounting standards and other compliance and audit requirements (Section 1826). While less ambitious than the Senate’s initial provision to automatically classify nontraditionals as commercial vendors, granting them blanket exemptions, the expanded exemptions are still meaningful.

The bill also statutorily requires the department to identify defense-specific laws that can be applied to commercial vendors ahead of contracts (Section 1821). Yet in practice, whether this actually yields relief will depend on how narrowly the department defines the applicable list and how risk-averse contracting officials remain in interpreting it.

These defense-specific rules will also no longer automatically flow down to subcontractors to large primes, reducing primes’ abilities to shift their compliance burdens to smaller companies (Section 1824). This, however, depends on enforcement.

The bill grants the Defense Department the authority to expand commercial solutions openings, typically difficult to transition (Section 1823). Similarly, other transaction authorities, traditionally used for procurement, are to be expanded to include additional allowable uses like experimentation (Section 1831).

Consumption-based authorities, typically reserved for pilot or temporary programs, are now given permanent authority (Section 1825). This opens the door for long-sought-after metered and consumption pricing, more typical in software fields, but does not necessarily guarantee it.

The bill expands eligibility for multi-year procurement authorities, which are currently reserved for certain large-scale projects such as aircraft and ships, but similarly does not guarantee it (Section 804). However, the extension makes it easier to pursue multi-year procurement authority for systems like munitions, likely with the intent of enabling a more stable demand signal.

Perhaps one of the more interesting contradictions of the bill is that while Congress has, in places, engineered the system for speed, it has also reinforced competition requirements (Section 824). While this section does not generally make follow-on awarding more difficult, sole-source awards, which have become a useful tool to move faster, must be more thoroughly justified, which may slow processes.

Compliance Burdens

Congress largely increased compliance burdens, particularly related to de-risking critical supply chains. While these compliance burdens may be welcomed by some in industry and government, they may lead to slower acquisition timelines if utilized improperly.

The bill does place requirements on the department, requiring it to identify supply chain vulnerabilities and prioritize secondary source qualifications to mitigate them (Section 832). Critically, it also authorizes the department to invest in mitigating these vulnerabilities (Section 867).

While many defense companies have already begun to take steps to de-risk their supply chains, the bill codifies some restrictions on certain suppliers of critical materials. The bill introduces a mixture of prohibitions and phased-in prohibitions on certain critical materials in the defense supply chain, including limitations on optical glass (Section 834), computer displays (Section 835), batteries (Section 842), power inverters (Section 847), critical minerals (Section 848), and certain light detection and radar systems from covered nations (Section 162). While it more strongly prohibits certain materials from covered countries, companies may apply for discretionary waivers if they proactively identify covered country sourcing or non-compliant sections of their supply chain (Section 833).

Congress also directs the Defense Department to work towards accelerating the qualification and integration of compliant materials into the defense supply chain, which will ideally make it easier for compliant suppliers to enter (Section 1843). The same goes for second-source suppliers in particularly severe areas of critical minerals vulnerability (Section 832). This is an area where implementation choices will matter, as missteps could slow processes significantly.

Companies that voluntarily register compliant or non-compliant products in their supply chains are incentivized to and may be subsequently connected with resources if they are not yet compliant (Section 836). This new domestic clearinghouse offers additional consistency across programs and may reduce the paperwork burden for new contracts from the same cleared supplies. The clearinghouse and accelerated qualification timelines can be a helpful step towards de-risking China from the defense supply chain if continuously maintained and updated.

While Congress generally added compliance requirements, the bill requires the Defense Department to do its best to eliminate inconsistent or duplicative cybersecurity requirements across contracts, but doesn’t guarantee those efforts (Section 866).

Opportunities

While the bill establishes several new programs, it points towards (although it cannot mandate) significant Congressional investment in some new or revamped strategic priorities.

Congress grants the Defense Department more flexible and expanded authorities to invest in the defense industrial base, from machine tools and the workforce to advanced manufacturing and power sources (Section 867). With digital twin authorities expanded in test and evaluation architectures, there will likely be a future demand for these systems, particularly in engineering and supply chains. Several traditional programs will be reprioritized, including munitions and shipbuilding. Biomanufacturing, a significant priority of both the National Security Strategy and this bill, will also attract priority investment. Congress also laid out statutory authority for the Civil Reserve Manufacturing Network, allowing the Defense Department to develop agreements with pre-vetted suppliers who can provide surge capacity during times of industrial stress (Section 1841).

This bill also codifies sections of the Golden Dome Executive Order 14186 (Sections 1651 and 1652). Congress established an Office of Golden Dome for America and modified U.S. code to reflect homeland missile defense as a priority. However, Congress is clearly wary — it does not create a singular Golden Dome (or Golden Dome-like) program of record or guarantee long-run production runs. It also requires the Pentagon to submit reports to Congress each year until full capability is reached.

As mentioned above, there are several sections throughout the bill, in Golden Dome most prominently, where Congress tacks on reporting and accountability requirements despite signaling an intent to move faster.

A Proving Ground

While Congress may not have implemented all the reforms that industry and defense leaders have championed, this National Defense Authorization Act offers a meaningful step forward. The bill has the potential to positively shape the direction and culture of the Defense Department for years to come, but only if it is embraced. Throughout this next year, Pentagon leadership should not only reflect upon and assess its existing processes, but also encourage its professionals to fully utilize these expanded authorities. The stakes are too high for this year’s progress to become just another cycle of reform.

Madeline Field is the assistant editor of Cogs of War, a vertical at War on the Rocks focused on defense technology and the defense industrial base.

**Please note, as a matter of house style, War on the Rocks will not use a different name for the U.S. Department of Defense until and unless the name is changed by statute by the U.S. Congress.

Image: Midjourney