The Department of Defense is in trouble. During U.S. President Donald Trump’s second term, media attention has focused on military parades, high-profile firings, and lectures about haircuts. But since the 1980s, a less acknowledged but just as worrisome development has been progressively undermining the U.S. military: defense acquisition remains stubbornly slow and wildly over budget.
The United States is currently contending with different types of conflict and a wider range of adversaries than it has in the past. To keep up, the Defense Department needs to be as nimble as it is strong or it risks losing its ability to respond to global hot spots and to deter great-power conflict. But despite spending more than $1 trillion on defense, the U.S. military has yet to fully update its capabilities and align its acquisitions with the modern threat environment. It still lags behind China, for instance, in fielding hypersonic weapons and missile interceptors and in mass-producing autonomous technologies such as military robots and drone swarms. In fiscal year 2026, the U.S. military is spending $24.4 billion for Trump’s controversial Golden Dome missile defense system and $3.3 billion for the Sentinel intercontinental ballistic missile program—despite the fact that neither program will strengthen the U.S. ability to deter or prevail in a modern conventional conflict.
Neither the Defense Department nor Congress, which controls the department’s budget, wants to see such inefficient spending. In a rare case of bipartisan consensus, both parties recognize that the United States is paying too much for too little. Even the Trump administration’s so-called Department of Government Efficiency thought that the Defense Department needed to be more responsible with the American taxpayer’s hard-earned dollars, although it severely botched the opportunity for reform by focusing on partisan attacks on programs related to climate change and diversity, equity, and inclusion and succeeding in trimming only 0.59 percent of the Pentagon’s overall budget.
Only Congress, with its legislative authority and power of the purse, can truly improve the Defense Department’s spending habits. But the Pentagon has a role to play, too, especially in how it communicates with Congress. Indeed, in order to ensure that the U.S. military can capably meet tomorrow’s threats—and to free up money to spend on job creation at home—the Pentagon and Congress must meaningfully change how they collaborate and how each one does its job.
THE DEFENSE OLIGOPOLY
In 1993, Secretary of Defense Les Aspin and Deputy Secretary of Defense William Perry hosted leaders of the major U.S. defense contractors for a dinner that has come to be known as “the Last Supper.” At the dinner, the officials signaled to industry leaders that the government would not pursue antitrust action against defense firm mergers. The intent was to preserve key elements of the defense industry at a time of decreasing defense spending, but the messaging ended up driving sweeping consolidations, swiftly shrinking the U.S. defense industry from 51 firms to the so-called Big Five—Lockheed Martin, RTX (formerly Raytheon), Boeing, General Dynamics, and Northrop Grumman—by 1997.
This consolidation has produced a defense industry that is slower, less innovative, less accessible to new market entrants. Today, every major acquisition system, from the F-35 Joint Strike Fighter to the Ford-class aircraft carrier, is over budget or behind schedule. The United States spends approximately three times as much on its defense budget as China does and yet lags far behind China’s defense industrial base in critical categories. China’s navy, for instance, is projected to have 435 ships by 2030 compared with the U.S. Navy’s 297. China is also racing ahead in the production of unmanned autonomous systems and expects to build a staggering one million one-way attack drones this year. The Pentagon, by contrast, hopes to produce approximately 300,000 attack drones in the next several years.
The U.S. defense industry wasn’t always this slow. In 1989, nearly all U.S. defense contractors also enjoyed substantial commercial business, which allowed them to sustain a trained workforce, better integrate commercial innovation, and maintain resilient production capacity less vulnerable to swings in defense spending. Today, however, firms with little or no commercial business make up more than 60 percent of the Pentagon’s major programs by value. As a result, they are slow to incorporate the latest commercial technologies and lack surge capacity and economies of scale. The overall lack of competition has also driven up prices, delayed deliveries, and contributed to job losses, with the defense-related workforce falling from three million in 1985 to 1.1 million in 2021.
Congress’s role in authorizing and approving the defense budget and regulating support for the armed forces is enshrined in Article I, Section 8 of the Constitution. With its annual defense authorization bill and other legislative powers, Congress is responsible for determining the Pentagon’s overall budget and ensuring the U.S. industrial base is adequate for meeting the United States’ defense requirements. Congress has sought to stimulate competition among defense contractors by making reforms to the contracting process and enhancing its oversight of defense industrial base stakeholders. But these efforts are still in their infancy and have not substantially altered the basic structure of the defense acquisition landscape.
To address the roots of the United States’ defense industrial maladies, Congress must consider more aggressive oversight, potentially including antitrust actions. It should also pass the legislation I introduced in this year’s annual defense bill requiring the Pentagon to review the existing capacity of the organic industrial base, which is the government-owned segment of the defense industrial base, to identify sectors in which the federal government needs to expand its own production capacity and create new, good-paying manufacturing jobs. Finally, it should pass legislation banning stock buybacks and capping executive compensation for underperforming defense contractors, similar to a bill that was recently introduced in the Senate.
Congress can also help incorporate a wider range of companies into the acquisitions process. It has already seen success with its support of the Defense Innovation Unit, a Defense Department organization focused on fast-tracking new technology adoption in the military. Originally a Pentagon initiative, DIU was enshrined in statute by Congress in 2023 then turbocharged with funding, greatly increasing the Defense Department’s capacity to assimilate cutting-edge technologies. Between 2016 and 2023, DIU awarded 450 different firms prototype development contracts, 51 percent of which went into production, including several big successes, such as Shield AI drones.
Still, even after DIU develops a prototype, the military services often hesitate to assume the risk of fielding new platforms developed outside the traditional Pentagon bureaucracy, preferring instead to continue funding legacy systems. The Big Five also devote entire departments to ensuring compliance with the Defense Department’s overly rigid requirements while smaller companies that may be able to provide the same if not better capability faster and less expensively struggle to compete. Through its annual authorization bill, Congress could force the Department of Defense to make requirements less burdensome and institute budget caps for certain legacy programs to free up funding for new technologies.
There are other creative ways to encourage private-sector collaboration and break down the defense contractor monopoly. The B-21, a next-generation stealth bomber, represents an intriguing case study. In a break from its usual protocol, the Pentagon, beginning in 2015, sourced the B-21’s parts from a number of different companies using a so-called open systems architecture. The prime contractor for the B-21 was Northrop Grumman, but by not giving it permanent control over the plane’s technology, Congress and the Department of Defense enabled future modernization from smaller, more agile firms. The B-21 was also procured under rapid contracting authorities that cut bureaucracy and centralized decision-making, resulting in faster and cheaper development. Recognizing the success of this model, which the Defense Department had previously used only for smaller efforts, Congress mandated the use of open systems architecture for all major defense programs beginning in 2019 and expanded the requirement in 2021 to all acquisition programs. Going forward, both the Defense Department and Congress can similarly incentivize the Big Five to collaborate with competitors by enforcing open systems requirements and encouraging the use of speedier and more streamlined acquisitions processes.
CUT YOUR LOSSES
Congress can help rightsize the Defense Department’s budget in two ways: by approving divestments—shuttering outdated programs and technologies—and by expediting funding for more strategic initiatives. U.S. General Hap Arnold’s November 1945 declaration that “the weapons of today are the museum pieces of tomorrow” is growing truer by the day. Legacy platforms and systems that are becoming irrelevant not only capture critical funds; they also hold critical personnel hostage. Yet the Defense Department has often struggled to phase out legacy platforms. For example, the air force realized back in 2014 that the A-10—a twin-engine close air support aircraft created in the 1970s—cannot survive today’s battlefield environment and will siphon funds and personnel from platforms better designed for disputed airspace. But for more than a decade, Congress, which is incentivized to protect local jobs, argued that there was no adequate replacement and prohibited the A-10’s full retirement. As a result, the Pentagon spent billions of dollars and directed thousands of pilots’ and maintenance workers’ attention toward an aging platform in the ensuing years. Congress now wants to keep the aircraft flying and combat ready through 2030 while testing replacement autonomous systems.
A similar story played out with littoral combat ships (LCS), the notoriously controversial multimission platforms that faced criticism from the navy for costly production and maintenance issues. Officials in the navy sought to remove them from the 2021 budget request, but supporters in Congress viewed the ships as an opportunity to expand American jobs and shipbuilding and offset delays in other navy programs. Many LCS are now in the process of being retired, but a military analyst at the Government Accountability Office has predicted that the lifetime cost of the LCS program will amount to $100 billion or more.
Congress must work more collaboratively with service leaders and systematically review other legacy systems for potential cuts. It must also cut wasteful projects that cannot stay on budget. For example, current estimates suggest that the Sentinel intercontinental ballistic missile program will cost at least $140.9 billion and not reach initial operational capability until the early 2030s, an 81 percent increase over its original cost estimate and a significant timing delay. To put the scale of this spending in perspective, Washington is preparing to spend more than twice the inflation-adjusted cost of the entire Manhattan Project on Sentinel and the other components of the U.S. nuclear enterprise every year—turning what was once an extraordinary wartime mobilization into a routine annual budget item. A country facing urgent needs at home and complex threats abroad can’t afford to let this kind of extraordinary price creep happen.
MOVE FAST AND FUND THINGS
Silicon Valley executives often express their frustration that the Defense Department can’t just buy the new technologies it says it needs. In their view, Congress should get out of the way of the Pentagon’s budgeting process. The suggestion is unconstitutional, of course, but the instinct that defense acquisitions need to be sped up is right, and there are ways Congress can help innovations scale.
First, it can pass more multiyear procurement contracts. Historically, multiyear procurements have been used only for a handful of programs each year, such as the Virginia-class attack submarine and Arleigh Burke–class destroyer, because of the expected cost savings and benefits to national security and the defense industrial base. Because they give firms the security of future orders, they incentivize companies to invest in their workforce, production facilities, and upstream suppliers, which helps both boost production and save approximately five to ten percent on costs. In the wake of Russia’s invasion of Ukraine, for example, the United States realized that its munitions stockpiles were too low and that multiyear procurements provided a powerful tool to rapidly expand production capacity. Congress enacted multiyear procurements for 17 critical munitions to replenish depleted stockpiles and encourage investments in expanding production lines for munitions such as the Joint Air-to-Surface Standoff Missile and the Long-Range Anti-Ship Missile. As a result, production capacity for these two systems more than doubled from just over 500 missiles per year in 2023 to a projected 1,100 missiles per year in 2026. Congress should follow a similar path for scalable unmanned aerial, surface, and subsurface vehicles, particularly those best suited for strengthening deterrence in the Taiwan Strait.
Congress can also make it easier for the Defense Department to direct funding to the highest priority theaters and capabilities. Much of the defense budget seems fixed because the more politically and bureaucratically powerful military services routinely prioritize expenditures aligned with their own objectives over those of the combatant commands, which better understand the threats facing the United States in the geographic theaters of operations they are responsible for defending. The navy, for example, sought to decommission four amphibious ships and pause new purchases of large amphibious warfare vessels in 2022, despite the fact that the combatant commanders responsible for Africa, Europe, and the Indo-Pacific consistently identified the presence of these ships as essential for deterring and responding to threats in their respective theaters.
Congress attempted to address this issue with the 2021 Pacific Deterrence Initiative, which forced the Pentagon to better align service priorities with operational goals in the Indo-Pacific. But the initiative lacks dedicated funding; rather than receiving a separate pool of money set aside exclusively for the initiative, the Pentagon is required to report the portions of its existing appropriations that support Indo-Pacific goals. As a result, it has become more of a tagging exercise, with the department simply relabeling planned spending as compliant with the Pacific Deterrence Initiative. Congress should instead create a new Indo-Pacific deterrence fund that is similar to the European Deterrence Initiative, with dedicated funding and requirements set by Congress and the head of Indo-Pacific Command. U.S. Indo-Pacific Command, for example, has consistently requested additional funding for the development and construction of air defenses in Guam to counter the threat from China’s ballistic, hypersonic, and cruise missiles, but it has struggled to obtain the requisite support from the Pentagon’s annual budget requests to Congress. Better coordination and understanding between Congress and the Pentagon on such defense strategies would help address the military’s real-world problems.
GROUP EFFORT
Despite these considerable challenges, the National Defense Authorization Act and the defense appropriations bills represent some of the few consistently bipartisan pieces of legislation Congress has approved in recent years. As long as Congress acts—and acts boldly—it can institute many of the changes it needs to help the Pentagon. But when the government shuts down, as it did last year, appropriations bills become harder to pass, and Congress instead passes continuing resolutions, which are stopgap funding bills that generally renew the previous year’s budget. Stopgap funding bills have become more common in the past decade and a half, but they do real harm to national security. When Congress fails to pass appropriations bills on time, new programs are delayed, costs balloon, and training and readiness suffer. By kicking the can down the road and not addressing much-needed investments and divestments, continuing resolutions have cost taxpayers more in the long run and prevented the military from doing its job effectively.
Many lawmakers want to avoid this inefficiency and uncertainty and assert their constitutional power of the purse. But it may be time for both Congress and the Defense Department to recognize continuing resolutions as the new normal and seek to mitigate their most problematic elements, such as the delays to new programs. For the years when an appropriations bill is missing in action, Congress could allow the Defense Department to adjust budget tables and greenlight new programs based on the defense authorization bill, which has regularly been signed into law for more than six decades.
Such a move, however, would necessitate that the Pentagon responsibly use taxpayer dollars, which it could demonstrate by passing a clean audit. So far, however, most military branches and the Pentagon as a whole have failed to pass financial audits since Congress mandated them in 2018. Only the U.S. Marine Corps and the Defense Threat Reduction Agency deserve praise for their audits, and it is incumbent on the rest of the Defense Department to follow their lead—and quickly—if it wants to earn Congress’s trust.
Trust and good communication between the Defense Department and Congress is in short supply these days. During Trump’s second term, members of the House and Senate who serve on defense, intelligence, or foreign policy committees have not received consistent information on how the military is countering threats—including which capabilities, personnel, and training it requires. This lack of communication impedes a clear understanding of what steps need to be taken to ensure military readiness, and subsequent investments and divestments in the military’s budget often don’t make sense. Congress needs to hear senior Pentagon leaders outline the major operational problems that the military is tackling and what capabilities are required to counter them.
The security environment facing the United States grows more complex by the day. Increasingly, Congress and the Department of Defense have shared incentives to make meaningful change in how they fund and equip the U.S. military. By promoting innovation, taking the right risks, and institutionalizing some bold steps, the two can transform today’s military—and tomorrow’s force.
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