CHANGE: Trump budget targets ‘valley of death’ with new military contractor accountability model.

Secretary of War Pete Hegseth told the House Armed Services Committee that funding alone will not solve the problem – the procurement system itself must change.

“The historic, generational, and transformational changes we implement will move us from the current prime contractor-dominated system defined by limited competition, vendor lock, cost-plus contracts, stressed budgets and frustrating protests – to a future powered by a dynamic vendor space that accelerates production,” Hegseth said.

At the center of that shift is a new multi-year procurement model – contracts lasting up to seven years for critical munitions – designed to give manufacturers the certainty needed to build new facilities rather than add shifts to existing ones. Under the model, contractors fund their own capital expenditures up front and face financial penalties if they fail to meet agreed-upon production ramp rates.

Jules “Jay” Hurst III, performing the duties of Under Secretary of War Comptroller, said the previous approach, in which the government financed capacity expansion, had produced marginal results.

“We’re making them put skin in the game,” Hurst said at an April 21 Pentagon budget briefing. “We’re giving them a multi-year order, and we expect them to meet the ramp rates that they agree to, and if they don’t, there’ll be penalties for them.”

Accountability in procurement would be a helluva legacy.