Hegseth Pentagon Shake-Up Gives Defense Tech Upstarts New Momentum, Insiders Contend

New technology firms are geared up to take on titans in the defense industry as the Trump administration has signaled it wants more competition in contracting at the Pentagon.

War Secretary Pete Hegseth signed a batch of memos on Nov. 10 putting forward multiple reforms to the procurement, contracting and acquisition process for America’s war machine. The new directives, in addition to signals coming from various officials in the Pentagon, have given many new start-ups and existing tech giants new incentives to make their foray into the defense sector.

“I changed everything in my life because of the opportunity that this administration is providing,” Adam Lackey, Chief Operational Officer at OneBrief, told the Daily Caller News Foundation. “And we have to move damn fast in four years because we can’t take for granted what we have right now.”

The defense industry and the procurement process have a reputation for being notoriously slow and wasteful, as many of America’s prime contractors have been woefully behind schedule and overbudget on delivering America its weapons on the taxpayer’s dime. For example, Lockheed Martin’s contract for the F-35 multi-role fighter is over budget by $165 billion and a decade late on deliveries.

Moreover, the Government Accountability Office found in 2025 that Boeing spent nearly a billion dollars over eight years on the Orca Extra Large Unmanned Undersea Vehicle despite the program never making it to full production. Long-standing frustrations with the process spurred Hegseth to make the sweeping reforms, and increased the Pentagon’s appetite for new players to challenge traditional prime contractors.

Initiatives to incorporate tech and AI-based solutions specific to each branch of service have also been taken by leadership. Army Secretary Dan Driscoll, who said at the AUSA convention in 2025 that the Silicon Valley approach to defense innovation will be the guiding philosophy for the Army, is among those leading the way.

“After seeing the power of combining venture capital money and mentorship with startup culture, I can say unequivocally that the Silicon Valley approach is absolutely ideal for the Army,” Driscoll said, according to Breaking Defense.

The Trump administration has especially solicited tech companies to shore up its drone warfare capacity, which many military experts have lauded as the next evolution of the battlefield. Many industry experts have criticized the Pentagon’s fixation on large, expensive projects in a battlefield increasingly dominated by low-cost, low-tech modification of commercial and military drones.

Defense Innovation Unit (DIU) Acting Deputy Director Mike Dodd and Emil Michael have been two notable officials driving the bureaucratic push towards more tech and AI-based defense solutions. Consequently, the DIU has taken on a more prominent role under the Trump administration to address the modern battlefield.

“If you’re a small company with a great idea, and you’ve built a piece of software in the commercial space, you’ve just stepped over the smallest hurdle you’re going to have, right?” Lackey told the DCNF. “The hard stuff begins when you try to get it onto those networks and get it where it’s needed. For the DOD, what we’re seeing here, and with honorable Dodd, he gets this better than anybody I’ve talked to in the space.”

The push for more Silicon Valley representation in the military also came under the Biden administration, which asked multiple tech executives to enlist in order to help “solve our national security problems.” Four tech executives, including Palantir’s Shyam Sankar, Meta’s Andrew Bosworth and OpenAI’s Kevin Weil, were commissioned as senior officers in the Army on June 27.

Silicon Valley was slow to warm up to involving itself with defense, expressing hesitance in 2024 over the Pentagon’s bureaucratic nature as potentially clashing with tech’s high-flying ambitions. Other critics have alleged that further direct involvement from tech firms in the halls of the Pentagon could generate multiple conflicts of interest.

Private equity also plays a heavy role in many defense-oriented startups as a critical method to gain capital and scale solutions. One such company, MetroStar, was recently acquired by Veritas Capital.

Ali Reza Manouchehri, CEO of MetroStar, told the DCNF that he believes private equity allows his company to pursue more niche contracts that larger, publicly traded defense companies overlook. MetroStar, for example, is looking to overhaul how maintainers for aircraft do their jobs, as some of the equipment and technology they use is outdated by decades.

“I think that we have that advantage of a first mover over the largest, and private equity sees that,” Manouchehri told the DCNF. “Think about just the middle market that we live in right now, two out of the three acquisitions that are being done are shaped by private equity.”

“We believe in what President Trump and Hegseth are saying … I think the new portfolio acquisition model favors more companies that do system thinking right,” Manouchehri added.

Part of Hegseth’s new reforms involves adding more incentives for private equity firms to invest in defense. The reforms are generally guided by the central aim to implement “clear incentives and potential penalties” for lag or inefficiency in the acquisition process.

The Pentagon did not immediately respond to the Daily Caller News Foundation’s request for comment.