The past month has marked a series of announcements from the Department of War (the “Department”) emphasizing rapid deployment of artificial intelligence (“AI”) industry partnerships.  These announcements signal opportunities for not only the defense industrial base, but also nontraditional defense contractors focused on technology and data.

On January 9, 2026, the Department released two key memoranda: (1) Artificial Intelligence Strategy for the Department of War, setting out measurable pace-setting projects, barrier removal authorities, and mandated data access; and (2) Transforming the Defense Innovation Ecosystem to Accelerate Warfighting Advantage, which aims to unify the defense innovation ecosystem under the Under Secretary of War for Research & Engineering as Chief Technology Officer (“CTO”).  

Shortly after, on January 12, Secretary Hegseth delivered a speech, presenting an overhaul of the Department’s innovation and acquisition ecosystems.

The January 9 memoranda and Secretary Hegseth’s speech signal the Department’s intent to formalize a single, CTO-led innovation operating system designed to produce three outputs: next-generation technology, scalable products, and new ways of fighting—and to do it at “wartime speed,” with AI as the first major proving ground.

We provide additional details on each of these developments below.

1. January 12 Speech

In his January 12 remarks, Secretary Hegseth framed the ongoing strategic competition as a race in which the fastest innovator and iterator wins, rejecting the legacy “linear” model that moves from lab to program of record over many years.  The speech focused on reshaping the Pentagon’s approach to innovation, signaling to nontraditional defense contractors that barriers to rapid technological development and adoption will be removed.  Three elements of the speech are especially relevant to defense industry stakeholders:

• A single CTO with decision authority.  The Secretary designated the Under Secretary of War for Research & Engineering as the Department’s “single CTO,” with commensurate decision authority and accountability for outcomes.  This change is part of the rethinking of the existing ecosystem in which entrepreneurs must “run endless laps” around the Department looking for the right office to engage. 

• AI-first as a Department-wide execution standard.  The Secretary described an “AI acceleration strategy” built around pace-setting projects, execution-speed benchmarks, and a dedicated “barrier removal” team empowered to waive non-statutory requirements and escalate impediments to the rapid deployment of AI capabilities to the Deputy Secretary for resolution.

• Private capital and industrial capacity as warfighting inputs.  The Secretary clarified that private capital, in partnership with the Office of Strategic Capital, will be integral to the Department’s operating model moving forward.

2. The AI Strategy Memorandum

Artificial Intelligence Strategy for the Department of War outlines the plan to create an “AI first” warfighting force by leveraging asymmetric advantages in compute, data, capital markets, and operational experience, while driving rapid experimentation with leading AI models.  This memorandum is the first major effort to execute the Pentagon’s vision for embracing a “test, fail, adjust” culture and pursuing innovation at “wartime speed.”

The memorandum outlines two primary initiatives: execution of seven “Pace-Setting Projects” (“PSPs”) that will demonstrate accelerated project execution and AI infrastructure development, and elimination of bureaucratic barriers to deeper AI integration.  A companion memorandum from Deputy Secretary of War Feinberg, Transforming Advana to Accelerate Artificial Intelligence and Enhance Auditability, underscores the view that data platform modernization and auditability are not back-office concerns, but rather prerequisites to deploying warfighting AI at scale.

Pace-Setting Projects

At the heart of the Department’s AI strategy are seven AI-focused PSPs across warfighting, intelligence, and enterprise missions:

• Swarm Forge: a mechanism for iteratively discovering, testing, and scaling new ways of fighting with and against AI-enabled capabilities;

• Agent Network: development of AI-enabled battle management and decision support;

• Ender’s Foundry: AI-enabled simulation capabilities;

• Open Arsenal: acceleration of weapons development from intelligence;

• Project Grant: transformation of deterrence from static postures to dynamic pressure;

• GenAI.mil: utilization of AI models by civilian and military personnel at all classification levels; and

• Enterprise Agents: development of the playbook for rapid development and deployment of AI agents to transform enterprise workflows.

Each PSP will be led by a single program leader partnering with a sponsoring organization.  Progress will be reported on a monthly basis to the Deputy Secretary of War and Under Secretary of War for Research and Engineering. 

AI Enablers and Data Access

The memorandum tasks the Chief Digital and AI Office (“CDAO”) with operationalizing the new AI vision.  The CDAO will ensure that all “AI enablers,” defined as “infrastructure, data, models, policies, and talent,” developed through the PSPs are made available for other projects within the Department.  To facilitate this rollout, each military department, combatant command, and defense agency and field activity must identify within 30 days at least three priority projects to follow the PSPs in the AI-enabled, accelerated execution effort. 

In addition, the CDAO will enforce the “DoD Data Decrees.”  Under these decrees, military departments and components will deliver their federated data catalogues to the CDAO within 30 days of the memo.  The CDAO can direct release of any Department data to cleared users with valid purpose, such as developers and operators.  Any denial of CDAO requests must be justified to the Under Secretary of War for Research and Engineering within seven days.  The CDAO will also work with the Department’s Chief Information Officer to accelerate the delivery of AI capabilities, including by facilitating cross-domain data access and rapid Authorization to Operate (“ATO”) reciprocity.

AI Investments and Barriers

The memorandum discusses various approaches to increasing the adoption of AI within the Department.  These include investing “substantial resources” into datacenters used by the Department, as well as strategies to reduce the perceived barriers to the Department’s access to the latest AI models.  Also, planned new criteria for future model acquisitions will ensure the Department’s access to the latest AI model versions within 30 days of public release.  Further, the memo calls for reducing the time required to obtain ATOs for AI systems and to conduct evaluation and certification. 

Finally, the Department has clarified that it views “responsible AI” to mean that AI systems will be free from “ideological ‘tuning’” that interferes with their ability to provide responses and that there should be no usage policy constraints for those systems beyond those imposed by statute.  In support of this view, the Department intends to include new language in contracts—not yet publicly released—that will permit “any lawful use” of AI systems by the Department.  As stated by Secretary Hegseth in his January 12 speech, “responsible AI at the War Department means objectively truthful AI capabilities employed securely and within the laws governing the activities of the department.  We will not employ AI models that won’t allow you to fight wars.”

The policies set out in this memorandum signal the approaches the Department may take to implementing certain legal requirements relating to AI acquisition and use promulgated in the Fiscal Year 2026 National Defense Authorization Act (“FY26 NDAA”).  For example, Section 1513 of the FY26 NDAA requires development of a risk-based framework for implementing cybersecurity and physical security standards and best practices relating to certain AI systems.  Section 1533 requires a cross-functional team to develop frameworks for, among other things, compliance with ethical principles in the development and procurement of AI models.  The memorandum suggests that the Department may take an approach to compliance with these requirements that favors speed and fewer constraints on use. 

Transforming Advana to Accelerate AI and Enhance Auditability

Deputy Secretary of War Feinberg’s companion memorandum, Transforming Advana to Accelerate Artificial Intelligence and Enhance Auditability highlights that platform modernization is essential to AI adoption; Advana, the Department’s aging enterprise data and analytics platform, will be restructured into a centralized War Data Platform capable of standardized data access for “agentic AI and other applications” and a dedicated financial management track for achieving clean audit results.

3. The Transformation of Defense Innovation Memorandum

The Transforming the Defense Innovation Ecosystem to Accelerate Warfighting Advantage memo seeks to unify the innovation ecosystem under a single CTO, to facilitate three outcomes: (1) technology innovation, which aims to focus on highly differentiated, often classified, defense‑unique breakthroughs; (2) product innovation, which emphasizes commercial and dual‑use technology adoption from American entrepreneurs and capital markets; and (3) operational capability innovation, which includes focusing on integrating technology with new warfighting tactics to create an asymmetric advantage.

Key execution features include:

• Governance simplification.  The memorandum replaces the Defense Innovation Steering Group, the Defense Innovation Working Group, and the CTO Council with a CTO Action Group, empowered to “make decisions, clear bureaucratic blockers, [and] hold leaders accountable.”  Designed as a small, decisive body, the Action Group will support the CTO with rapid issue resolution, portfolio alignment, and accelerated delivery of innovations to warfighters.

• Defense Innovation Unit (“DIU”) and the Strategic Capabilities Office (“SCO”) are elevated and stabilized.  With DIU and SCO designated as Department Field Activities, the memorandum reinforces lean governance and clarifies DIU’s role to lead commercial product adoption/transition and SCO’s role for cross-Military Service operational capability innovation.

• Military Service-level accountability and “last mile” funding.  Beginning in FY 2028, each portfolio acquisition executive must establish, manage, and actively use an Innovation Insertion Increment to fund rapid capability and modular upgrades, which are intended to overcome “last mile” barriers to fielding innovation.  Secretaries of the military departments must also brief the CTO on how they will organize their innovation communities around the framework outlined in this memorandum.

• Two clear engagement channels for industry.  The Mission Engineering and Integration Activity (“MEIA”), discussed in our prior blog post here, will communicate operational, problem-driven demand signals to industry, while DIU will focus on product-driven engagement to help program offices adopt capabilities industry has already built.

4. Key Takeaways

These developments focused on innovation and private partnership pose significant opportunities for the defense industrial base and nontraditional data-focused and technology companies alike.

Following the release of these memoranda, Cameron Stanley, the newly-appointed Chief Digital and AI Officer, called on the private sector to partner with the Pentagon on AI efforts, encouraging active use of flexible contracting vehicles, such as Other Transaction Authority, or OTAs, to reach industry partners, including nontraditional partners, with innovative approaches to solving problems.  As we have seen in the past year, the current administration has demonstrated an unprecedented degree of flexibility in engaging with industry on areas of critical importance, and we expect that to continue in the AI field. 

For companies already doing business with the Pentagon, these memoranda foreshadow a market in which cycle time, integration readiness, data discipline, and demonstrable adoption paths will matter as much as past performance and legacy program history.  For companies seeking to break into defense contracting, these memoranda signal the vision to make defense contracting easier to navigate—by consolidating the AI procurement structure, sending clearer demand signals, allowing faster decision-making, and strengthening the internal mandate to adopt commercial capabilities at scale—as long as contractors can meet the Department’s requirements for data-driven, AI-enabled, and iterative systems.

In all cases, companies will likely need to ensure that they are providing the Department with new models on a timely basis and that those models align with the Department’s views on model outputs.