Defense Industry

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.Continue Reading Pentagon Releases Artificial Intelligence Strategy

Among the most challenging areas of regulatory compliance for federal contractors are cost accounting and cost and pricing data disclosure requirements.  Indeed, many companies place guardrails on the nature and scale of their business relationships with the U.S. government precisely to avoid the application of these requirements.  In a move that seems consistent with the federal government’s push towards expanding the defense industrial base and working with more commercial companies, Congress recently released the final negotiated language of the FY 2026 National Defense Authorization Act (“NDAA”).  The draft text, currently awaiting a full Senate vote, contains impactful changes to reduce the applicability of federal Cost Accounting Standards (“CAS”) and the Truthful Cost or Pricing Data Statute (formerly the Truth in Negotiations Act, commonly referred to as “TINA”). Continue Reading FY26 NDAA Aims to Raise the Dollar Thresholds for the Applicability of CAS and TINA

On November 7, 2025, Secretary of War Pete Hegseth used a speech at the National War College to unveil a Department of War (“DoW”) memorandum titled “Transforming the Defense Acquisition System into the Warfighting Acquisition System to Accelerate Fielding of Urgently Needed Capabilities to Our Warriors.”  This memorandum, referred to throughout as the “WAS Memo”—formally redesignates the Defense Acquisition System (“DAS”) as the Warfighting Acquisition System (“WAS”), places the acquisition enterprise on a “wartime footing,” and sets forth the governance, structural, and process reforms that will shape how DoW capabilities are acquired and fielded. 

This post is the second in a three-part series analyzing these reforms.  In our first post, we examined the WAS Memo’s new emphasis on commercial products and offerings as the preferred acquisition approach.  This post turns to the broader restructuring initiatives contained in the WAS Memo and its accompanying Acquisition Transformation Strategy.Continue Reading From DAS to WAS:  Secretary Hegseth’s Acquisition Overhaul and What It Means for Industry

Massachusetts aims to be the “cornerstone of the defense industry,” with Governor Maura Healey announcing nearly $47 million in government funding for defense-related projects.  Last year, the Department of Defense ranked Massachusetts ninth out of the top ten states in total Defense spending in FY2023, and the state is aiming…

Continue Reading Massachusetts Seeks to Expand Defense Footprint with Nearly $47 Million in New Projects

On August 20, 2025, the Department of Defense (“DoD”) issued a sweeping memo that tears up and rebuilds the way the military decides what new weapons and systems it needs.  The Military Services appear to be wasting no time translating the memo into action.  Acquisition leaders at last week’s Association of the United States Army conference emphasized that “Transforming in Contact” will serve as the framework for redefining requirements and reprioritizing programs—demonstrating that reform is already underway.  For its part, the Air Force has begun reorganizing its A5/7 directorate to assume greater responsibility for requirements generation, while the Chief of Space Operations has publicly outlined the Space Force path to driving requirements and resourcing.  

This “requirements process” is the first step in acquisition—it defines the problem and tells the rest of the system what to buy, build, or develop.  Change the requirements process and you change the entire defense marketplace.  For decades, DoD has used a system called the Joint Capabilities Integration and Development System (“JCIDS”).  JCIDS was paperwork-heavy and checklist-driven:  the Military Services (Army, Navy, Air Force, Marine Corps, Space Force) would write lengthy justifications for new programs, and those proposals would wind their way through layers of approval at the Joint Staff in the Pentagon.  Critics said JCIDS was too slow and too rigid for modern threats, especially as China and other adversaries innovate quickly.

The August 20 memo blows up that model.  In its place, DoD is putting forward a problem-focused approach that aims to:

  • Define the biggest operational challenges first(not just collect Military Service wish lists)
  • Tie priorities to moneyso “important” projects actually get funded
  • Bring industry into the process earlierthrough experiments, not just proposals
  • Cut out layers of low value review

Below we unpack the memo and offer five practical takeaways for industry.Continue Reading JCIDS, Rewired:  What DoD’s New Requirements Memo Means

Two cornerstone authorities for federal contracting quietly expired on September 30, 2025, creating ripple effects that contractors—small and large—cannot afford to overlook.  The Small Business Innovation Research/Small Business Technology Transfer (“SBIR/STTR”) programs, commonly known as “America’s Seed Fund” for their role in fueling early-stage innovation, and the Defense Production Act…

Continue Reading Expired:  SBIR/STTR and DPA Authorities in Limbo

On Friday, August 22, 2025, the Small Business Administration (“SBA”) released a proposed rule to increase the size standard for what it considers to be a small business across 263 industries. The proposed rule principally covers receipts-based size standards.  These proposed increases stem from SBA’s periodic review of size standards…

Continue Reading SBA Proposes Increasing 200+ Receipts-Based Size Standards

This is part of an ongoing series of Covington blogs on the AI policies, executive orders, and other actions of the Trump Administration.  This blog describes AI actions taken by the Trump Administration in July 2025, and prior articles in this series are available here.

White House Issues AI…

Continue Reading July 2025 AI Developments Under the Trump Administration

The Defense Production Act (DPA) has long been viewed as the primary federal mechanism for managing and supporting defense production.  Since it was enacted in September 1950—just months after the Korean War began—the DPA has armed the President with wartime-style powers to prioritize contracts, allocate scarce materials, and finance surge defense production capacity.  These DPA industrial authorities are subject to periodic reauthorization, with the current sunset set for September 30, 2025.  While the reauthorization of the DPA remains pending, the Senate Armed Services Committee (SASC) has advanced a new NDAA provision that would convert the extant Industrial Base Fund (IBF) (10 U.S.C. section 4817) into a Pentagon-controlled toolkit that closely mirrors—but is not identical to—DPA’s Title III authorities.  The introduction of section 849A of the FY 2026 NDAA suggests that the SASC is no longer willing to entrust the re-armament of the Pentagon and revitalization of the Defense Industrial Base (DIB) solely to reauthorization of the DPA—a process that lives or dies in other committees’ jurisdictions. Continue Reading Forging a Modern Strategic Production Base:  Senate Proposes Stand-Alone Defense-Production Powers for the Pentagon

On July 23, the White House released its AI Action Plan, outlining the key priorities of the Trump Administration’s AI policy agenda.  In parallel, President Trump signed three AI executive orders directing the Executive Branch to implement the AI Action Plan’s policies on “Preventing Woke AI in…

Continue Reading Trump Administration Issues AI Action Plan and Series of AI Executive Orders