The Department of Veterans Affairs is preparing to issue what’s likely to become one of the largest service contracts in government history as it restructures its arrangements, aiming for rigorous management of the department’s role as a health care payer and greater competition among health care management firms.

The massive contract vehicle represents only the second time VA has signed large contracts with health plans to coordinate private sector care for veterans. The first was shortly after the MISSION Act was signed in 2018. Those contracts are now expiring, and in their place, VA is preparing one large indefinite delivery/indefinite quantity contract with a total potential value of $700 billion over the next ten years.

Among the changes the department is aiming for is a much more rigorous approach to program management in its “community care network,” said Richard Topping, VA’s assistant secretary for management and chief financial officer.

“This program has been unmanaged since its inception. None of the tools, none of the controls that we are talking about introducing here have been available,” he told the House Veterans Affairs Committee on Thursday. “VA had no ability to manage this program, to drive quality, to focus on the outcomes for veterans, to focus on cost. We’ve now got the ability to do that in this contract. The way we designed this unmanaged program also made it very difficult for industry to partner with us. It made it very difficult for community providers to serve our veterans, because it didn’t operate like any other payer program.”

The new contract, called Community Care Network Next Generation, is meant to change much of that. VA says the department intends to cast a wide net for vendors — creating an indefinite delivery/indefinite quantity contract that doesn’t only attract large, national health insurers.

“We are very intentionally not limiting it to the large vendors. The intention is to open this up to competition, to non-large vendors, to those who might bring regional capabilities, regional capacity, and that would not be able to operate on a national or semi-national scale,” Topping said. “They will incur a cost to bid and be awarded a spot on the vehicle. But once they do that, the vendors who are on the vehicle with us, large and small, have a seat at the table with VA, with our program management team to design the task orders. There are two initial task orders in the initial award, those look a lot like what we have now. But we are going to immediately partner with the vendors on the vehicle to begin to build the next more regional, more adaptable, more local models in our task orders.”

Value-based payment models and utilization management

VA plans to use the ID/IQ for its purchased health care for up to ten years. The contract includes a three-year base period, followed by three two-year option periods, and a final one-year option period. During that time, the department plans to use on-ramps and off-ramps to bring new vendors onto the contract — and remove ones that aren’t meeting performance standards.

And contract performance will be overseen and measured by VA program officials who plan to start implementing measures that value quality care over numbers of procedures performed, Topping said.

“VA will implement a comprehensive quality program for community care providers based on nationally recognized measures from the Agency for Healthcare Research and Quality. Contractors will track patient safety events, identify veterans at risk of avoidable visits and readmissions through predictive analytics, and while respecting their choice, guide veterans towards higher performing providers,” he said. “Next Gen will modernize how VA pays its contractors for the care furnished to veterans by implementing value-based payment models. We will begin with episode-based payments for lower extremity joint replacements. As we gain the data and the expertise to manage alternative payments, we will introduce at least three additional models over the performance period of the contract to continually improve care. These models will shift payment away from volume and toward outcomes and total cost of care, which aligns contractor incentives with veterans’ health and system sustainability. We will introduce utilization management. This includes active management of inpatient admissions, emergency department use, concurrent hospital reviews, and high cost drugs administered in clinical settings. This will reduce unnecessary hospitalizations and inappropriate care while protecting veterans’ access to medically necessary services.”

Questions from Congressional overseers

But the department faced bipartisan skepticism during the hearing, partly because VA officials have been slow to detail their plans for the CCN Next Gen effort to members of Congress. VA’s overseers on the House Veterans Affairs Committee say they found out the details of the contract at the same time vendors did — when the request for proposals was released a little over a month ago.

“I understand the VA finds it unprecedented to hold a hearing on an active contract solicitation. I appreciate the sensitivity of the contract, but it is also unprecedented to avoid Congress’s oversight of $1 trillion of spending,” said Rep. Mike Bost (R-Ill.), the committee’s chairman. “My staff and the ranking member’s staff have been told that some topics are off limits because of the sensitive nature of the contract and solicitation. We’ve tried to create a venue in which VA would feel comfortable to speak candidly to our members, but unfortunately, VA failed to assure us of such candor.”

Meanwhile, Democrats on the committee also worry that the new contract will serve as a way to further privatize VA health care — pointing out that more than 40% of veterans’ care is already delivered by private providers through the existing contracts.

Rep. Morgan McGarvey (D-Ky.) said he worried that the contract will lead to large, vertically-integrated conglomerates driving veterans into facilities they control, and away from smaller community-based providers.

“I don’t trust big insurance companies to take care of anybody. The sole thing that motivates them is profit. It’s not people, and it’s certainly not our veterans,” he said. “We have the right to be skeptical when we are talking about private insurance companies taking care of people, because right now they don’t.”

But Topping said the department believes it can avoid problems like the ones McGarvey is worried about through strong oversight and program management.

“The vendors, our health plan partners on this, don’t make the clinical referral from the direct care system to community care. VA does that,” he said. “They don’t make the referral to the provider or determine eligibility [for community care], VA determines that. VA drives where and how our veterans receive care, and we want to know what we’re buying. We want to steer our veterans to the highest quality, lowest cost providers. That goal is not unique to VA — it’s new to us, but we’re bringing this into this program.”

Vendors hoping for a spot on the contract have until March 16 to submit their proposals.

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The Small Business Administration suspended more than 1,000 companies in the 8(a) program. SBA made the decision after it deemed those small businesses non-compliant with its financial data request from December.

“Suspended firms have 45 days to appeal the suspension,” said Maggie Clemmons, an SBA spokesperson in an email to Federal News Network. “SBA will release further information on the suspensions in the coming days.”

The suspension comes after SBA sent a letter to more than 4,300 8(a) firms in December seeking 13 different data, ranging from a list of the company’s employees to bank statements for the last three fiscal years to a copy of all 8(a) contracts, as part of its ongoing audit of the program.

Data compiled by GovContractPros, an advisory services firm specializing in federal procurement, found that SBA admitted 753 companies into the 8(a) program in fiscal 2024. Of those 753 firms, the company says SBA suspended 156 of them.

In fiscal 2025, SBA says it admitted only 65 companies into the 8(a) firm. GovContractPros says SBA suspended 10 of those firms, including nine which joined the program after the Trump administration began leading SBA.

Lawyers that represent small businesses say SBA issued the suspensions on Wednesday based on the fact that the 8(a) firms either failed to submit their responses on or before the Jan. 19 deadline or submitted incomplete responses.

“At least some firms that submitted complete data call responses only one day late — on Jan. 20, and before any suspension notices were issued — often due to errors in the government-operated MySBA Certifications portal, nonetheless received suspension notices, indicating that SBA is taking a strict approach to alleged non-compliance with the filing deadline,” wrote Meghan Leemon and Matt Feinberg, partners with the law firm Piliero Mazza, on a blog post. “Firms subject to 8(a) suspension are not permitted to receive new competitive or sole-source 8(a) awards. However, firms are required to complete existing 8(a) contracts, and federal agencies may exercise options on those contracts, even while a firm is suspended, unless otherwise prohibited by statute or regulation.”

SBA’s new clarifying guidance

The suspensions are part of a broad Trump administration effort to audit the 8(a) program and address allegations of fraud and abuse. SBA’s data call was one of several ongoing audits to now include the Treasury Department, the General Services Administration and, as of last week, now the Department of Defense.

“The Biden administration expanded and then abused the 8(a) program to hand out billions in taxpayer-funded government contracts to favored minorities at the direct expense of honest small businesses, which is why we ended the practice on day one,” said SBA Administrator Kelly Loeffler in a press release. “Since then, the Trump SBA has been working to reverse the damage – and today, we’re reiterating one simple fact: the Biden-era practice of discriminating against white Americans is over, and reforms to enshrine that fact are well underway. The SBA is ending diversity, equity and inclusion (DEI) in federal contracting – and our programs will remain open to all eligible job creators in compliance with federal law.”

In addition to suspending nearly a quarter of the 8(a) program participants, SBA issued new guidance today clarifying that the small business development program “is open to job creators of every race – consistent with court orders, notices from the U.S Department of Justice (DOJ), and President [Donald] Trump’s broader effort to eliminate DEI across the federal government – and that any race-based presumptions of social disadvantage have been inoperative since 2023.”

The guidance outlines new ways the SBA will manage the program.

It says it will administer the 8(a) program based on race neutral requirements and there will be no presumptive preference given to anyone.

SBA also will no longer approve the use of “socially disadvantage narratives” as a way to get into the program. It removed from its website the Biden-era “Guide for Demonstrating Social Disadvantage.”

Finally, SBA will consider several factors when determining eligibility for the 8(a) program, including whether the individual has been a “victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides or hiring targets, in each case by government and non-government actors.”

SBA says these steps are in reaction to the “dramatic expansion” under the Biden administration of companies in the 8(a) program.

Since January 2025, SBA accepted just 65 new 8(a) firms into the program, compared to over 2,100 who were accepted during the four years of the Biden administration.

Undermining the 8(a) program?

Jackie Robinson-Burnette, a former SBA associate administrator in the Office of Government Contracting and Business Development during the Biden administration, wrote on LinkedIn that this change isn’t a small tweak, but it’s re‑anchoring of the program’s foundation.

“It’s important to reform the 8(a) program without crushing the firms the program was designed to help,” wrote Robinson-Burnette, who now is the CEO of Senior Executive Strategic Solutions. “Are we dismantling and putting a sledgehammer to the program to curtail spending $20 million-plus on 8(a) sole source contracts or is it about something else?”

John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, said the SBA and now DoD’s audits are part of a concerted effort to undermine the confidence in the 8(a) program.

“It seems to be one initiative after another initiative, sort of in a very sequenced flow of events to undermine the program and sort of put the brakes on the program,” he said. “I think there’s a perception, and, it’s the wrong perception, that the 8(a) program is, at its core, a DEI program. I honestly don’t think that the administration believes there is significantly more fraud in the 8(a) program than any other contracting program. In fact, the data shows, if you look at inspector general cases or if you look at Department of Justice cases, the instances of fraud in the set-aside programs and particularly the 8(a) program, are actually significantly lower as opposed to across the entire federal government. So when we focus on fraud, waste and abuse in the 8(a) program, I think it’s just raising the flag. They can’t really say we want to kill this program because it’s DEI, they need to identify some sort of red flag to point to and say, ‘Ah-a, we told you this program was fraudulent, and therefore we need to terminate or put the brakes on this program.’”

Leemon and Feinberg, from the law firm Piliero Mazza, said companies caught up in the suspension should consider sending an informal appeals to SBA to lift the suspension.

“If informal channels are unsuccessful, a suspended 8(a) company may — and should — appeal SBA’s decision within 45 days of the date of the Notice of Suspension to SBA’s Office of Hearings and Appeals. This process can be time consuming, and appeals decisions can be delayed for months or even years,” the lawyers wrote.

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The 8(a) small business contracting program is coming under the microscope of its biggest user.

The Defense Department is joining a growing list of agencies auditing the use of sole source contracts through the 8(a) program.

Experts warn that DoD’s decision to launch this new audit signals that this 40-year-old small business development program is teetering further on the edge.

“It’s not a death knell, but it’s absolutely going to leave a mark. It’s absolutely going to hinder our ability to bring some of that new technology, that new manufacturing capability to the federal marketplace. That’s probably my bigger concern,” said Norm Abdallah, executive vice president at Hui Huliau, a Native Hawaiian-owned firm in the 8(a) program, in an interview with Federal News Network. “We’re behind in terms of the ability to manufacture here in the U.S., and have outsourced that beyond what one should in the defense of their own country, and so hindering the ability for us to help bring some of that to bear in the U.S. marketplace is probably the biggest concern.”

Abdallah said the 8(a) program is an avenue for companies to enter the market, obtain past performance experience in the federal sector and learn the ropes so DoD, and really every agency’s, ongoing distrust and scrutiny of the program is likely going to impact the government in bigger ways than expected.

Secretary Pete Hegseth posted a video on X on Friday explaining that the Pentagon is worried about two main things: The 8(a) program is a diversity, equity and inclusion (DEI) program, and it’s wrought with fraud.

We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program. pic.twitter.com/c9iH8gcqG7

— Secretary of War Pete Hegseth (@SecWar) January 16, 2026

“Providing these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here’s the worst part, in many, many instances, these socially disadvantaged businesses, they don’t even do work. They take a 10%, 20%, sometimes 50% fee off the top, and then pass the contract off to a giant consulting firm, commonly known as beltway bandits. For decades, this program, 8(a) has been a breeding ground for fraud, and this administration is finally doing something about it,” Hegseth said. “Effective immediately, I’m ordering a line-by-line review of every small business sole source, 8(a) contract that is over $20 million, and we’ll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it’s going to be 10 times tougher.”

DoD’s audit will include two phases. Hegseth said if a contract doesn’t make meet the DoD’s goal of increasing lethality, they will terminate it.

“We have no room in our budget for wasteful DEI contracts that don’t help us win wars, period, full stop. Second, we’re doing away with these pass through schemes. We’ll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,” he said. “This approach is, of course, not meant to hurt small businesses, and that’s not the point. America is full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century.”

An email to DoD seeking more details about the audit and a timeline for the audit wasn’t returned.

Experts say Hegseth’s decision to review sole source contracts worth at least $20 million is directed at Native American, Alaskan Native, Hawaiian Native and other tribal companies. Congress raised the sole source threshold for these firms to $100 million from $22 million in 2020. Firms not belonging to one of these groups have a sole source threshold of $5.5 million for manufacturing and $8.5 million for non-manufacturing contracts. These non-tribal or native firms can receive a sole source contract up to $20 million with certain justifications and approvals.

While experts say Congress may not act to change the law, the ongoing audits by the Small Business Administration, the Treasury Department, the General Services Administration and now DoD are sending signals that, at least for sole source contracts, the program doesn’t work.

A former DoD acquisition executive, who requested anonymity because their current company still does business with DoD, said he believes federal small business goals are at risk across the board, and while they may not be affected this year, in two to four years, agencies will see a huge reduction in their industrial base.

The former DoD executive said the administration is sending an inconsistent message to the federal contracting community. The audits and the reduction of staff in small business offices are sending one message that small businesses aren’t important. But then the White House, and DoD particularly, are expressing the desire to attract new participants to the federal market, including non-traditional companies. The executive said these companies typically depend on small business offices and programs like 8(a) to help them get a foot in the door.

John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, an advisory services firm specializing in federal procurement, said DoD’s audit is part of a concerted effort by the administration to undermine the 8(a) program.

“I think if you look at the dollars in the 8(a) program, especially at DoD, some will point to the fact that they actually went up in 2025. But the challenge that we saw across a lot of our clients was that offer letters that have to go through the district office in order for a sole source award to happen were being held up and or never being processed. So we saw a slowdown in sole source awards,” he said. “I think given what we’ve seen with respect to the SBA audit, given what we’ve seen with respect to the number of 8(a)s being approved, in 2024 there was something like 500 plus 8(a)s approved. In 2025, I think the last count I saw was 66 approved. So given the audits, the slowdown in processing, I think contracting officers are looking over their shoulders. I think in the short term, given the current administration and the current congressional makeup, if you will, we will see a trend away from the 8(a) program.”

DoD’s decision to audit the 8(a) program comes after Treasury and SBA announced similar audits earlier this fall. SBA is looking at the entire program and companies had to submit data to the agency by Monday.

The SBA general counsel’s office is driving the audit, which is unusual because usually these things are either done by the inspector general or program office.

Fraud, DEI concerns unfounded

Shoraka said while the questions being asked by SBA, and now eventually DoD, are legitimate questions, the approach is causing some chaos.

“A lot of our clients reached out to their district office and the district office was actually unaware that those letters had originally gone out with respect to the audit, so there was a disconnect there. The field offices aren’t sure how the data is going to be used, or who’s going to use it, or what they’re looking at,” he said. “From my perspective, given the types of questions that were asked, I think it leads to the question, are there pass throughs happening? Because there was a lot of questions with respect to, who are your subcontractors, who are your vendors, et cetera. So the question is, and I think what SBA was looking at is, are there pass throughs and who’s really in control? Is the disadvantaged individual really owning, operating and benefiting from the 8(a) company? And I think those are legitimate questions. But again, there are legitimate processes and mechanisms to monitor that, including the annual review, which occurs every year on every single 8(a) company.”

The former DoD acquisition executive said while there are concerns about the use of sole source awards over $20 million to tribal companies, the allegations of fraud and the belief that the 8(a) program is a DEI program are unfounded. He said DoD should go to Congress and change the law to reduce the risk of large sole source contracts turning into pass throughs.

Experts agreed that while no program is perfect and there probably are some challenges, the 8(a) program is typically well overseen and maintained.

In fact, Abdallah, from Hui Huliau, said most 8(a) firms spend a lot of time meeting the compliance requirements. But he said it’s also a shared responsibility for oversight with the government.

“There are several folks that have responsibility in there. The first one is the contracting officer. In some cases, they’ve got to approve subcontracts. But more basically, with SBA, we go through a review every year where we have to submit our financials, what work did we do and what work happened?” he said. “They worry about the business mix, how much of your work was set aside versus not set aside? Quite honestly, what means you got the work by some means other than the 8(a) program, be that a subcontractor to another straight commercial, et cetera. So there are lots of hooks to watch it. Do they audit the books, per se, to check for percentages? That’s less common. But it’s part of your overall review.”

Shoraka added there are a significant number of regulations or requirements to mitigate the risk of pass throughs, and most rules allow for legitimate subcontracting.

One thing all of the experts pointed out is that the program is set up to help the 8(a) firm grow and learn, but they still have to do at least 51% of the work under services contracts and 15% of the work under construction contracts.

Shoraka said what is being lost in this entire discussion is there is more fraud in non-small business socio-economic programs across government than there are in the 8(a) and other small businesses initiatives.

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Congressional appropriators are backing the Pentagon’s push to speed up weapons buying, but warn that speed “must be factored alongside cost, performance, lethality and scalability.”

The House released the final 2026 minibus funding package early Tuesday, which includes money for the Departments of Defense, Homeland Security, Labor, Education, Housing and Urban Development, Transportation and Health and Human Services. If passed, the bill would increase defense spending to more than $839 billion — roughly $8.4 billion above the White House’s fiscal 2026 request. House leaders plan to vote on the package later this week. 

Congressional negotiators said they “strongly support” the Defense Department’s acquisition reforms, but pushed back on the Pentagon’s efforts to seek additional authorities or changes to its budget and appropriations framework until it fixes its internal processes. 

“Rapid delivery of ineffective weapon systems at exorbitant cost will not serve the warfighter well,” the appropriators wrote. 

Lawmakers also raised concerns about joint requirements process reform and deep cuts to the department’s acquisition workforce that could jeopardize its ability to carry out Defense Secretary Pete Hegseth’s acquisition reform agenda.

Budget flexibility

Hegseth recently unveiled a plan to overhaul the department’s acquisition system — some of those reform proposals made it into the fiscal 2026 defense policy bill, which became law in December.

At the very end of the document, Hegseth instructed the department to “improve budget flexibility.” 

“Where additional authorities are required, the [undersecretary of defense for acquisition and sustainment], in coordination with the military departments, shall develop a legislative engagement plan to ensure Congress is informed of and aligned with proposed reforms requiring any statutory change,” Hegseth wrote. “All actions will comply with applicable statutes, appropriations law, and procurement integrity requirements.”

That language was likely to become a friction point with Congressional leaders, and now appropriators are saying that reforms laid out in Hegseth’s memo are “internal in nature,” and that the Defense Department needs to “demonstrate progress on these internal procedures and administrative measures” before pursuing additional budget flexibility.

For instance, lawmakers said above-threshold transfer and reprogramming requests are often slowed because “a significant amount of the subcommittees’ time is consumed by waiting for the department to provide requested additional details and justification for these requests.”

“Providing this information alongside the submission of the request would accelerate consideration and create a nimbler process without altering existing authority or reprogramming thresholds,” the appropriators said.

Congressional leaders urged the department’s comptroller and the services’ assistant secretaries to work with the House and Senate Defense Appropriations Subcommittees to improve the amount of detail and justification provided in reprogramming submissions.

Congress gave the department some budget flexibility in 2024 but stopped short of granting broader authorities the department and reform advocates have been seeking that would allow DoD to move money more freely within its accounts without explicit congressional approval.

The Defense Department has also been pushing to change the hardware-centric budgeting model Congress uses to plan and execute the Pentagon’s spending by moving away from the traditional “colors of money” tied to different phases of weapons development. And while DoD has run several pilot projects to test the idea, lawmakers have been hesitant to authorize broader adoption of the approach due to the department’s inability to provide Congress with sufficient data showing the new approach would be more effective than traditional appropriation practices.

“To date, the agreement observes no new or compelling justification or quantitative analysis to support proposals that would alter the current appropriations framework, including with respect to reprogramming thresholds, notification requirements, new start guidelines, or consolidation into a single color of money,” the appropriators said.

“Consideration of legislative changes to the appropriations structure is premature until the Department has demonstrated full and effective use of its existing flexibilities and addressed persistent internal delays,” they added.

Army’s agile funding request rejected

While appropriators approved all 13 budget line-item consolidations requested by the Army in its fiscal 2026 budget, they flatly rejected the Army’s “agile funding” request to raise notification threshold for reprogramming or transfers from $15 million to $50 million for procurement programs and to $25 million for research and development efforts.

“The Department already has sufficient authorities to restructure its internal programming and budgeting processes, and many current challenges with execution can be solved by actions within the Department and do not require statutory change or congressional intervention … Increasing reprogramming thresholds alone is unlikely to improve program execution. Decisions to unilaterally move funding in the year of execution without sufficient oversight introduce uncertainty to both the programs impacted and the industrial base, increasing the risk of development and procurement delays,” the appropriators said.

“The House and Senate Defense Appropriations Subcommittees discourage the secretary of defense and the service secretaries from submitting future requests of this nature,” they added.

Joint requirements reform risks

The Defense Department kicked off the process of dismantling its decades-old Joint Capabilities Integration and Development System (JCIDS) process last year — and Hegseth ordered the Joint Requirements Oversight Council (JROC), which oversees the process, to stop validating service-level requirements to the “maximum extent permitted by law.”

House and Senate appropriators said they support the reform but want more detail on how defense officials plan to mitigate potential risks, such as the military services potentially prioritizing service-specific solutions over joint ones or top-down decision-making stifling bottom-up innovation.

The deputy secretary of defense, vice chairman of the Joint Chiefs of Staff and service secretaries have 60 days to brief appropriators on how they plan to address those risks. 

Workforce is the linchpin of acquisition reform

DoD leaders have long warned that the depth of this administration’s workforce cuts could cripple the department’s ability to execute Hegseth’s acquisition reforms.

Appropriators echoed those concerns, saying they are “concerned that recent reductions to the acquisition workforce, the effects of which have yet to be realized, will negatively affect the Department of Defense’s ability to achieve the initial speed and agility sought by this reform effort.”

Lawmakers directed the defense secretary along with service secretaries to submit an acquisition workforce strategy, including a comprehensive assessment of the personnel needed to execute Hegseth’s and Congress’ proposed acquisition reforms.

If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.

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Interview transcript:

Terry Gerton I want to start with Secretary Hegseth’s Arsenal of Freedom tour. He’s taking his pitch on the road and recently spoke at the Lockheed Martin Air Force plant in Fort Worth, Texas. I know you’ve been following this, the developments in defense procurement for quite a while. What are you hearing at this point?

Stephanie Kostro So Terry, this “Arsenal of Freedom” is a month-long tour, and it really is Secretary Hegseth going around to various places. He started out in Newport News, here in Virginia, talking with shipbuilders about what it means to be part of the team, right? Being part of the arsenal of freedom and in making things faster, more efficiently, etc. He then went out to California and spoke with folks, and then most recently, just last week in Texas, visiting Lockheed Martin as you mentioned, but also SpaceX. And so talking to folks about, what does it mean to be part of the arsenal of freedom? This is building on his November 7th Arsenal of Freedom speech that he gave here at Fort McNair in the D.C. area. And it is really about reviving this team mentality of, “we are in this together.” Against that backdrop, of course, we have recent activity in acquisition transformation, but also an executive order that came out earlier this month about limiting executive compensation for defense contractors, limiting dividends and also share repurchases or stock buybacks. And so this is a very interesting time to be in the defense industry.

Terry Gerton Stephanie, with all of the changes in the FAR and the DFAR and now the Defense Appropriation Act that’s in law, do you think that DoD has the policy tools it needs and wants to accomplish its transformation?

Stephanie Kostro There are two elements of the answer here. One is, with the fiscal year 2026 National Defense Authorization Act, which was just signed into law last month, they received a lot of new authorities, a lot of a sense from Congress about the ways in which this should be tackled. There is language there about technical data rights and intellectual property. There were things in there about how to define a nontraditional defense company, etc. But I don’t think that was sufficient; we still have work to do. And so does the department have all of the authorities and resources it needs to move forward? I think we’re going to see a lot of legislative proposals come out of the department for this next round of the NDAA, the fiscal year ’27 NDAA. And I think we’ll see things about acquisition workforce. We’re going to see things about working outside of the Federal Acquisition Regulation way of doing contracts. That is code for things like Other Transaction Authority or commercial solutions openings, etc. I don’t think they have everything they need. Part of the Arsenal of Freedom tour and the rollout of this acquisition transformation is to look at how the department can buy things more effectively and more efficiently. That’s time, not having cost overruns, etc. And so all of this is sort of coming together, in a way, to ultimately really transform the way the department buys. And I’m very excited to be part of this.

Terry Gerton Having the rules and authorities is only one piece. What’s your sense of whether the acquisition culture and workforce are aligned to actually accomplish the goals?

Stephanie Kostro Culture is the hardest element of any kind of transformation, right? I do think they’re trying to empower contracting officers and other key members of the acquisition workforce, program managers, contracting officer representatives, etc. This is a longer-term issue, and I think they are trying to tackle it through training programs, etc., letting folks know tools are at their disposal and giving them the authority to go ahead and use those tools. Now, folks don’t get into acquisition within the civil service because they’re risk-loving. A lot of times they get into it because they want to do things very smartly, very efficiently and oftentimes they look back on precedent to see how things were done before. Layer over that, Terry, the fact that we lost a lot of contracting personnel through deferred resignation programs, voluntary early retirement programs and reductions in force. So we are trying to rebuild the workforce in numbers as well as in training. I don’t think they’re there yet; I do think there’s a path to get them there. I’m eager for industry to work with the Department of War and others about how to train effectively and to let industry folks sit in the same training as the government folks, so everyone’s hearing the same thing.

Terry Gerton Stephanie, before we leave this topic, you touched on the executive order about defense contractors and compensation and buybacks. There’s a lot of unknowns still in how that will play out, but what are you hearing from your members?

Stephanie Kostro Our members were very eager to hear how the Professional Services Council would summarize that EO. So we did put out — based on the fact sheet from the White House, based from some interactions we’ve had with administration officials — our interpretation of it. That said, we’ve also asked our member companies, and we have 400 member companies and the majority of them do business with the Department of War and the intelligence community, “hey, what questions for clarification would you like us to ask?” And that list is growing. It is very long. It’s things like, is this really just for publicly traded companies? What about privately owned, or S corps and LLCs? The reason I mentioned that, Terry, is S corps and LLCs will often pay out a dividend to an executive at the company so that executive can pay taxes. They pay out of dividend, so it’s not only a dividend payment, it’s executive compensation, but it’s really just to go ahead and pay federal taxes. What do people do in that regard? How do they explain this? If they have a parent company that is overseas in Europe or elsewhere, how do they explain this executive order to those folks? And that executive compensation, there’s a limit if the company is underperforming, and all of this is predicated on the company’s underperforming — either cost overruns or schedule overruns. How do they explain this to folks? And is it really just about government contracts, or what if you’re a commercial and a government company and your executive compensation is based usually on both elements, commercial and government? So how do you go ahead and limit compensation there? This is a fascinating area to be engaged with the government on. We are all learning this together.

Terry Gerton As Secretary Hegseth tries to walk this tightrope between encouraging defense contractors to be on the team and work with us, and at the same time kind of tightening the screws on enforcement and compensation, the president has said he wants to spend $1.5 trillion on defense next year. That’s a lot of money. How is that going to get spent, do you think?

Stephanie Kostro Oh, it is an eye-catching number, right? $1.5 trillion when we are roughly $1 trillion now are just under, and it is a huge increase. Now, we’ve had large increases in the defense budget in other times in U.S. history. In the early 1950s with the Korean War, the Reagan buildup that some of us remember from the ’80s. Some of us who are listening may not remember it. They may not have been born yet, and that’s okay too. You know, there is some precedent for huge increases in the defense spend. The question here becomes, if the department and the military services are going for commercial-first mentality to prioritize speed of award and innovation, etc., they certainly can spend that money throughout the defense ecosystem. The question that we have is really, what is the organizing construct for this? What would we be spending the money on? Would it be shipbuilding, combat aircraft, the logistics piece, which always tends to be an issue? We also know operations and maintenance accounts are sometimes used and reprogrammed away if they’re not spent by a certain time, because it’s one-year money at the department, it gets reprogramed away. It’s going to be an interesting mathematical problem to tackle. In addition, I would mention, we had the reconciliation bill, the One Big, Beautiful Bill Act that passed and was signed into law last July. That infused a bunch of cash into both the Department of Defense and the Department of Homeland Security. I understand some of that money hasn’t been apportioned and provided to the departments yet, but we are now at this point in January of 2026 talking about, what would a reconciliation bill look like for 2026? Congress can pass one per fiscal year. The one that was passed last July was the one for fiscal ’25. What happens this year? There are a lot of different mechanisms to get that money through Congress and over to the government to apportion to the department.

Terry Gerton Well, speaking of 2026 appropriations, it looks like Homeland Security and Defense will be two of the last bills out, hopefully before the end of this month. What are you hearing from folks on the Hill?

Stephanie Kostro I’m hearing that they’re trying really, really hard to avert a shutdown. And I think we’re going to get there. I’m not a betting person, Terry, you know, I’ve talked about that in the past. And I’m not in this case, either. The chance for a shutdown is never zero. That said, the experience that we all had back in October and November last year would indicate that there really is no appetite for a shutdown this year. The National Defense Appropriations Act and the DHS [bill] I think are probably the last because they want to get everything done before they tackle those. Those are the two departments that received the lion’s share of the money from the reconciliation bill, One Big Beautiful Bill Act last year, and they are looking to get more money in a reconciliation bill this year. So I’m not surprised to hear that those are last, but I actually don’t think that indicates that they’re very far apart on the numbers.

Terry Gerton And on those two departments, PSC is sponsoring a trip in January to the border to do some on-site research. Tell us about that plan.

Stephanie Kostro I am so excited about this. PSC has not typically done this. I do know other entities have done this, I used to be at a think tank where we would do things like this. We are bringing almost 30 different companies out to California next week, Jan. 28 and 29, to do a behind-the-scenes access with the Customs and Border Protection folks who are out there. And the ports of LA and Long Beach, the ports at entry, the land ones over at San Ysidro and Otay Mesa, really talking with folks on the ground there about what their requirements are. This is really focused on technology. How do we use technology and the art of the possible to protect our borders? Now, I would hasten to add, Terry, border security is not a partisan issue in many, many ways. The Biden administration, the Obama administration, the previous Trump administration all focused on border issues in different ways. Our companies really want to mention to folks on the ground, here is technology that you may not have experience with that is up-and-coming. How can we leverage it to better secure our borders? Talking about cargo screening, etc. I think this is a really good opportunity for companies to sit down with folks who are in the field and hear about what they need.

The post Can key visits to cities anchoring U.S. national security spur a new American “arsenal”? first appeared on Federal News Network.

© The Associated Press

Diligent Robotics is a startup that builds robots designed to assist in hospitals by delivering lab samples, supplies, and other tasks. The deal values Diligent's common stock at $29 million.

Bitcoin Magazine

Mastercard Eyes Bitcoin and Crypto Infrastructure Firm Zerohash Investment After Acquisition Talks Fall Through

Mastercard is reportedly considering a strategic investment in blockchain infrastructure firm Zerohash after the company rejected an outright acquisition, sources familiar with the matter told CoinDesk reporters.

Late last year, Mastercard was reportedly in advanced talks to buy the infrastructure company for up to $2 billion. The company offers custody, settlement, and fiat on- and off-ramps, enabling fintechs and brokerages to offer digital assets without building the underlying infrastructure. Ultimately, Zerohash chose to remain independent.

“We are not entertaining an acquisition by Mastercard. We respect the Mastercard team and look forward to scaling commercial partnerships,” a Zerohash spokesperson said, according to CoinDesk. “Remaining independent best positions Zerohash to continue innovating for our customers.”

While the acquisition is off the table, discussions about a strategic investment are ongoing. 

Such a stake would allow Mastercard to gain exposure to Zerohash’s technology and client base without taking full control, aligning with a broader push by traditional finance into digital assets. Mastercard declined to comment.

Zerohash’s influence in the crypto space

The move comes as crypto merger and acquisition activity ramps up. Industry insiders note that investors now favor established infrastructure companies over speculative tokens. 

Recent deals include CoinGecko exploring a $500 million sale and other fintech firms offering custody, staking, or instant market access.

Morgan Stanley also has a partnership with Zerohash giving the bank direct access to crypto market infrastructure, including liquidity, custody, and settlement services. 

By investing in the company, which recently achieved a $1 billion valuation, Morgan Stanley also secured a strategic foothold in the backend of digital asset markets. 

Mastercard has also been linked to potential acquisitions in the crypto sector, including BVNK, a London-based stablecoin payments platform. 

For Zerohash, retaining independence while potentially securing a strategic investment from a global payments giant could provide capital and credibility while preserving some independence. 

Last April, Mastercard announced a major partnership with Kraken to enable Bitcoin and crypto payments at scale across the UK and Europe. 

The collaboration allows Kraken users to spend digital assets at over 150 million Mastercard-accepting merchants via physical and digital debit cards. Kraken’s recent feature, Kraken Pay, has already seen over 200,000 users activate their “Kraktag” for fast, borderless payments in crypto and fiat. 

Representatives from either company have yet to publicly comment on this reported news.

This post Mastercard Eyes Bitcoin and Crypto Infrastructure Firm Zerohash Investment After Acquisition Talks Fall Through first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

Ed Forst never served in the Navy, but the metaphor he uses to describe the role the General Services Administration would make any admiral proud.

Forst, who has been at the helm of GSA since late December, believes agencies, like ships, have two distinct compartments. One is to focus on the mission. The other is the engine room that makes the mission run.

“I think in every business, every enterprise, every agency, every department, and what I think makes great sense, and I believe the President does too, is, let’s advance mission and let’s have the engine room, what’s behind the curtain, consolidate and get even better. That’s where I see GSA in the federal government. We’re the engine room,” Forst said at the Coalition for Common Sense in Government Procurement winter conference on Jan. 14. “Now, interestingly, GSA is its own agency, so we happen to have both. We’ve got mission and the engine room as well. So I think because of that, we really do appreciate the mission piece of that and serving our stakeholders and our constituents.”

For GSA, being that engine room in part means making acquisition less burdensome, cheaper and more agile so agency customers can meet their mission needs more quickly.

GSA has been pursuing several initiatives over the last year to fine tune the acquisition piece of the engine room.

Laura Stanton, the deputy commissioner of GSA’s Federal Acquisition Service, said between the Office of Centralized Acquisition Services (OCAS), the OneGov initiative and the implementation of changes from the Federal Acquisition Regulation rewrite, GSA is delivering speed to acquisition like never before.

For example, OCAS now centrally buys for three agencies: the Office of Personnel Management, the Small Business Administration and the Department of Housing and Urban Development. Stanton said GSA brought on OPM and SBA in about a month.

Stanton said OCAS is using an opt-in approach to help agencies and trying to relieve some of the burden on GSA’s Assisted Acquisition Service.

“We’re having conversations with a number of agencies about what are their needs. One of the things that we set up OCAS to be able to support is the buying of common goods and services,” Stanton said. “We also recognize that there are mission critical items that and there’s common things that are mission critical that can be used for governmentwide contracts, and then things where there are specialized contracts. So we’re having those types of conversations with a number of agencies at this point.”

Under the OneGov program, GSA has signed 18 agreements to reduce the price of commonly used software across government. Additionally, 45 agencies have taken advantage specifically of the enterprisewide agreements for artificial intelligence tools.

“This is a radical shift in how we think about it, and how we think about how we come to market, and also how we want you to treat us as a customer,” Stanton said at the conference. “This requires changes, not only on the government side, but it’s also going to require changes on the industry side to make that happen. We want to be better aligned when it comes to terms pricing and performance, when it comes to all aspects of that.”

Forst said he was especially focused on the performance aspects of the equation for GSA.

Measuring performance against peer groups

He said measuring performance, and holding organizations and people accountable are among his key focuses areas.

“We’re putting out some priorities for having deliverables. I’m committing every quarter and I’m going to report on ourselves on that,” he said. “I think we’re all better if we find a way to talk about measurement or metrics, whatever you want to call it. There’s a common language and vocabulary about that, so I am a big proponent.”

Forst said he will be looking at both the performance of FAS in terms of “revenue,” as well as their performance relative to peer organizations.

“If you had a record year, you’d probably beat plan. All that should be good. That’s absolute measurement. That’s you versus you. And I think that’s important. I think it’s also really important to accompany that with who’s in your peer group and how did they do? I think the relative performance matters a ton as well,” he said. “You could be down 7% and on an absolute basis, angst to death over down seven if your peer group’s down 15, that’s a home run. So I think it’s important. But if you had a record year and you’re up 6% and your peer group’s up 12%, I’d say good record, but you underdelivered versus the other side. I think we have to be honest with ourselves and look at both us versus us over the time series, and look at us versus a peer group. That seems to make sense.”

Forst said GSA plans to bring in a peer group analysis to raise their awareness and their overall performance.

The third piece of moving bringing speed to capability is the FAR rewrite. GSA will begin implementing the FAR changes within its own acquisition regulations in the coming weeks. It already issued deviations to the current FAR to begin the process.

Jeff Koses, GSA’s senior procurement executive, said in a post on LinkedIn that they have “limited the issuance of mandatory acquisition policies to my office, the Office of Acquisition Policy. Legacy mandatory policy will have to be reissued at the agency level, converted to discretionary guidance, or cancelled.”

Koses said GSA will begin culling down 500 pages of its acquisition manual, 300 pages of office policy, 500 pages of FAS policy and another 500 pages of Public Buildings Service policy and then 1,000 pages of real property leasing policy.

Reviewing the GSA schedule catalog of items

Larry Allen, the associate administrator in the Office of Governmentwide Policy, said at the CGP conference that GSA, in helping out the FAR Council, is working closely with OFPP to get all of the rulemaking completed by the end of the fiscal year.

“It may be delayed a little bit because we had a little shutdown in the fall, but that tells you exactly what type of timetable we are on. It’s aggressive, and you will see change, and we want you to be part of that change,” Allen said.

Stanton added that GSA understands the FAR rewrite has moved quickly and is addressing complex acquisition issues that will take time for government and industry to wrap their arms around.

“When we think about this year, it’s going to be a year of both adopting and adaptation, and acceleration all at the same time, and that becomes really challenging to do,” she said.

Stanton said another key initiative kicking into gear this year is GSA’s review of its multiple award schedule catalog. She said the driving theory is how can the agency operate it more efficiently and deliver more value to agency customers.

“I look at the at the catalog that we run for the multiple award schedule and it has over 100 million items in it. Only 1% or fewer of those items sell, and so this is putting burden on all of you, making sure that you’re meeting all of our terms and conditions, that those items are Trade Agreements Act (TAA) compliant, that they meet the government standards, and that the pricing is fair and reasonable,” she said. “We have contracting officers who have to evaluate those items, and what is the value that either you or the government is getting for that work? I think that this is a big opportunity for us to truly assess where is the government’s demand. As we’re also moving into making transactional data reporting mandatory, how do we effectively have a catalog that delivers on what the government needs? How do we meet those needs effectively? How do we move quickly if we have something that’s not in the catalog? It’s a lot easier to move quickly if we’re not burdened by putting things in there that are not actually being used.”

The post Forst: GSA is the ‘engine room’ that runs government first appeared on Federal News Network.

© AP Photo/Jacquelyn Martin, File

Professional mountain bike racing is a rather bizarre sport. At the highest level, times between podiums will be less than a second, and countless hours of training and engineering go into those fractions of seconds. An all too important tool for the world cup race team is data acquisition systems (DAQ). In the right hands, they can offer an unparalleled suspension tune for a world cup racer. Sadly DAQs can cost thousands of dollars, so [sghctoma] built one using little more then potentiometer and LEGO. 

The hardware is a fairly simple task to solve. A simple Raspberry Pi Pico setup is used to capture potentiometer data. By some simple LEGO linkage and mounts, this data is correlated to the bikes’ wheel travel. Finally, everything is logged onto an SD card in a CSV format. Some buttons and a small AMOLED provide a simple user interface wrapped in a 3D printed case.

Analyzing the data is a rather daunting task. The entire analysis framework is neatly wrapped into a web server. The DAQ can automatically sync with the web interface, and provide suspension metrics in conjunction with action camera footage and a GPS track for further analysis.

However, not all is as it seems when it comes to correlating the suspension data into such a nice UI. A key issue is that with four bar, or even six bar, mountain bike linkage designs, the leverage ratio applied to the shock changes through the wheels travel. That means, when measuring shock travel, it needs to be adjusted to find wheel travel according to manufacturer specifications.

You need to be a bit of a suspension wizard to make sense of the charts. Nevertheless, for the mountain biking hackers out there, everything is available on Github, so if you wish to analyze suspension performance, make sure to check it out!

This isn’t the first time we have seen mountain bike data loggers, make sure to check out this simple Arduino build next! 

The Army is updating its software directive and scrapping its existing policy on software funding that has routinely hindered software projects across the service. 

Michael Obadal, the service’s undersecretary, said the new software directive will be released “in the coming weeks.” The service plans to revise the document annually to keep pace with the rapidly changing environment. 

Meanwhile, canceling its existing policy governing how the service pays for software will allow the Army to “apply the appropriate type of money to the applicable use case.” 

“For many years, as many of you know, we’ve been trapped by the color of money. We try to buy modern, agile software with rigid funding authorities. Predictably, it doesn’t work,” Obadal said during the AFCEA NOVA Army IT Day event on Thursday.

This shift will give the Army greater flexibility in how it uses its operations and maintenance, procurement and research, development, testing and evaluation funds for software.

While flexible use of different colors of money will offer the service some relief, it is still not “the most effective method” for funding software. Obadal said the Army ultimately plans to pursue Budget Activity 8 (BA-8), which will allow program managers to move away from the hardware-centric budgeting model and instead draw funding from an appropriations category specific to software.

“We’re going to pursue Budget Activity 08 for our software, which would realign funding from various appropriations to new software and digital technology in its own budget activity,” Obadal said.

The Defense Department has long struggled with software acquisition for a number of reasons, but the rules that govern how the department pays for software have possibly been one of its major obstacles. The model Congress and the Pentagon have used to plan and execute the Pentagon’s spending was originally built for long-term hardware acquisition. But this structure doesn’t apply well to the agile software development model. 

The department has been experimenting with using a separate appropriations category for software. The idea started to gain traction in 2019, when the Defense Innovation Board found that “colors of money tend to doom” software programs. “We need to create pathways for “bleaching” funds to smooth this process for long-term programs,” the board wrote in its report. 

But lawmakers have been hesitant to authorize broader adoption of this pathway beyond a small number of pilot programs until the Defense Department is able to produce data comparing this approach to traditional appropriation practices.

“Agile funding … we have to have that in the right focus area to be able to apply it to modern software, and it’s a little more difficult than we think because it involves Congress … But these are the steps we’re taking,” Obadal said.

Obadal also urged industry to “build [systems] to scale, don’t build it to demo.”

“What we’re asking from industry as we tackle those things is the confidence in your solution to scale, not just demo … That means that you have to take extra steps, and you have to think about what happens in a year or two years for you. Open architectures, interoperable designs, secure by design software, not bolted-on cybersecurity. That’s another incredibly important one, is your design and a willingness to align with Army timelines and with our operational realities,” he said.

The post Army to update its software directive, pursue new funding category for software first appeared on Federal News Network.

© Federal News Network

Seattle-area startup Included announced Wednesday that it has been acquired by Phenom, a global human resources company based in Pennsylvania. Terms of the deal were not disclosed.

Included launched five years ago in the wake of George Floyd’s murder and the widespread move by companies nationwide to better support racial and ethnic diversity throughout their operations. The startup initially focused its data analytics on DEI-related efforts, but expanded to support employee retention and engagement, faster hiring timelines, and managing performance evaluations.

Raghu Gollamudi, Included’s co-founder and CEO, called the acquisition “a major accelerator for our vision.”

“By integrating Included into Phenom’s Applied AI platform, we’ll bring more Native AI and Agentic AI into people analytics — so teams can move from static dashboards to insights that are timely, actionable, and embedded in how work actually happens,” Gollamudi said on LinkedIn.

Included has less than 15 employees, according to LinkedIn data. Jennifer Lyons, spokesperson for Phenom, said via email that “a majority of Included employees have become Phenom employees.”

She added that Included will not continue as a standalone brand. “Phenom has a successful history of natively integrating acquisitions into our broader Applied AI platform,” she said. “This approach helps existing customers of both companies succeed.”

Included was created by a trio of co-founders:

• Gollamudi, who won Startup CEO of the Year at the 2022 GeekWire Awards, previously co-founded privacy tech startup Integris Software, which sold to OneTrust in 2020. Earlier in his career, he was a principal development lead at Microsoft for nine years.
• Chandan Golla, the company’s chief product and customer officer, was vice president of products at Integris and worked at eBay for more than a decade.
• Laura Close, the startup’s chief business development officer, previously worked in career consulting and in support of labor organizations. Close is now CEO of Close Cohen, a job search and executive coaching firm.

Included raised $7.3 million from investors that include FlyingFish, SignalFire, Ascend, Trilogy Equity Partners and Alumni Ventures.

While Phenom would not provide details on the deal, Lyons said, “Investors are pleased.”

Editor’s note: Story updated Jan. 15 to correct the funding total and include comments from Phenom regarding the status of former Included employees, Included’s integration and investor response.

News of the move to acquire Seraphic comes less than a week after CrowdStrike announced an agreement to acquire identity security startup SGNL for $740 million.

The post CrowdStrike to Acquire Browser Security Firm Seraphic for $420 Million appeared first on SecurityWeek.

Bitcoin Magazine

Strive ($ASST) Gets Green Light on Semler Scientific Acquisition, Boosts Bitcoin Holdings to Nearly 13,000 BTC

Strive, Inc. announced today that stockholders of Semler Scientific, Inc. approved its acquisition by Strive, marking a landmark deal in publicly traded Bitcoin-backed companies.

The all-stock transaction includes Semler Scientific’s 5,048.1 Bitcoin, significantly expanding Strive’s digital asset holdings.

In addition, the company said they purchased 123 more Bitcoin for its corporate treasury at an average price of $91,561 per coin, for a total cost of approximately $11.26 million, inclusive of fees and expenses, the company said. 

These purchases bring the company’s total Bitcoin holdings to 7,749.8. Following the Semler Scientific acquisition, the combined entity will hold 12,797.9 Bitcoin, surpassing corporate holders such as Tesla and Trump Media & Technology Group to become the 11th largest corporate Bitcoin holder globally, according to the company. 

BREAKING: Vivek Ramaswamy's Strive acquires #Bitcoin company Semler Scientific in an all-stock transaction. pic.twitter.com/aHSjcy34ND

— Bitcoin Magazine (@BitcoinMagazine) January 13, 2026

$ASST also disclosed plans to monetize Semler Scientific’s operating business within 12 months of the transaction’s close and explore opportunities to retire Semler’s $100 million convertible note and $20 million Coinbase loan, subject to market conditions. 

Shares of Strive ($ASST) are down over 17% on the day, but are up over 15% on the month.  

Strive as a bitcoin-focused company

These strategic moves reflect the company’s continued focus on Bitcoin operations and a simplified, preferred equity-focused corporate structure.

“I’m proud of the execution the Strive team has delivered for our shareholders, making history towards completing the first acquisition of a publicly traded Bitcoin treasury company,” said Matt Cole, Chairman and CEO. “The Semler Scientific deal will continue Strive’s leading yield generation since the inception of our Bitcoin strategy, boosting our Q1 2026 Bitcoin yield to over 15%.”

The company also highlighted its successful November 2025 preferred equity IPO, SATA, which was upsized from $125 million to $200 million and received more than twice the subscription demand.

The company plans to issue additional SATA over the next 12 months to fund debt retirement and maintain amplification exclusively through preferred equity.

Jeff Walton, Strive’s Chief Risk Officer, emphasized the unique risk profile of SATA, noting that “the balance sheet is comprised of a transparent, digitally native asset, allowing risk to be observed and measured in real time, unlike traditional illiquid assets.”

As part of the merger, the board approved a 1-for-20 reverse split of Class A and Class B shares to align with institutional investment standards. 

Semler Scientific Executive Chairman Eric Semler will join the Board of Directors post-closing.

This post Strive ($ASST) Gets Green Light on Semler Scientific Acquisition, Boosts Bitcoin Holdings to Nearly 13,000 BTC first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

Coinme, a Seattle-based cryptocurrency startup that got its start more than a decade ago with a network of bitcoin ATMs, has agreed to be acquired by blockchain payments company Polygon Labs.

Polygon said it also plans to acquire wallet provider Sequence as part of a combined acquisition valued at more than $250 million.

Coinme CEO and co-founder Neil Bergquist told GeekWire that Coinme’s portion of the deal was in the nine-figure range.

Founded in 2014, Coinme lets people buy crypto with cash at kiosks and says it runs the largest crypto cash network in the U.S. through partnerships with MoneyGram and Coinstar. The company holds money‑transmitter licenses and compliance infrastructure that allow it to operate in 48 U.S. states. Last year, the company surpassed $1 billion in transaction volume and became profitable for the first time.

The acquisition effectively plugs Coinme’s U.S. licenses, compliance stack, and cash‑to‑crypto distribution network into Polygon’s global blockchain payments rails. It gives the Seattle startup a new home inside a larger push to make stablecoin payments a standard part of the broader financial system.

The acquisition comes less than a month after Coinme was hit with a cease-and-desist order from Washington state regulators. The Washington state Department of Financial Institutions had ordered Coinme to stop transmitting money for customers, alleging the startup improperly claimed more than $8 million in customer funds as its own income.

On Dec. 30, Coinme said it reached an agreement with regulators to pause the temporary cease-and-desist order, clearing the way for the company to resume operations in the state. The company had called the original charges an accounting dispute over a discontinued voucher product.

Bergquist said the acquisition deal with Polygon was brokered before the cease-and-desist order.

The acquisition is expected to close in the second quarter of 2026. Coinme will continue operating its regulated exchange, wallet, and crypto-as-a-service platform while contributing its licensing, compliance and payments infrastructure to Polygon Labs’ Open Money Stack.

“As a wholly owned subsidiary of Polygon, Coinme will remain true to who we are, with the same team and mission, now with the resources and reach to take it even further,” Bergquist said in a statement to GeekWire. “We’ll keep doing what we do best: making digital assets accessible to everyone, now at an even greater scale.”

Polygon, which raised a $450 million round in 2022 from investors including Sequoia Capital and SoftBank, said it supports millions of transactions daily for large banks, enterprises, and consumer apps.

In a LinkedIn post, Bergquist said a “shared vision and the need to build faster” led to the deal with Polygon.

“Coinme has tackled the regulatory requirements and crypto infrastructure, but the customer application layer must catch up,” he wrote. “Combined with clear federal regulatory support for stablecoins, including the GENIUS Act, consumers want an alternative to dollars trapped in bank accounts, and they want it now.”

Coinme raised more than $40 million, including a $10 million round in 2021. Investors include Pantera Capital; Digital Currency Group; Coinstar; Circle; and MoneyGram. The company has 53 employees.

“A big THANK YOU to Seattle-area Angels,” Bergquist wrote in his post. “You’re the reason we have a vibrant startup ecosystem (and the reason Coinme exists).”

Interview transcript

Terry Gerton You know, our timing on this topic is pretty lucky since the president’s management agenda just dropped. One of its three goals is to deliver results and buy American. It specifically has an objective to rebuild American industry through prioritizing and enhancing “made in America” execution. But right there, we see a conflict. One is buy American, and the other is made in American. And you’re an expert in this space, talk to us about the difference between those two concepts and what makes it so confusing.

Julia Ensor Yeah, that’s a great question and one that I’ve heard many times. So when we’re talking about Buy American, we’re generally talking about federal procurement. We’re talking about if government is the buyer and you’re supplying goods to the government in accordance with a contract, there are very, very specific requirements that you have to fulfill in order to be Buy American compliant. When we talk about “made in America” or “made in the U.S.A.,” in general, we are talking about an advertising claim. We’re talking about how you position your product, how you market your product to consumers. So the standard for making a “made in the U.S.A.” or “made in America” claim, it’s very different. It’s tagged to how reasonable consumers understand your claim, and it’s aimed at preventing consumers from being misled, completely different from the very formulaic requirements of responding to a government contract for Buy American purposes.

Terry Gerton Could you give us an example of a product that might meet one requirement, for example, Buy America, but not “made in the U.S.A.” or vice versa?

Julia Ensor Yeah, so when we talk about “made in U.S.A.” as a marketing claim, in general, the Federal Trade Commission is going to expect products to be all, or virtually all, made in the U.S.A., all the way back to raw materials. So that means to advertise a product to consumers without misleading them, your product needs to have no more than de minimis foreign content in it. That’s very from a product that could be supplied to the government in response to a contract that is covered by  Buy American, where you can have a fairly significant proportion of the products attributable to foreign costs. So under Buy American you only need about 65% of a manufactured product’s cost to be attributable to U.S. Costs. So it’s different from the “all or virtually all” standard.

Terry Gerton That 65% threshold under the Buy American Act, that content threshold is going up to 75% in 2029. Does that change compliance strategies for contractors?

Julia Ensor It’ll mean that everybody needs to continue to review their supply chains. So you need to be in continuous contact with your suppliers. You need to understanding where all of your components are coming from and monitoring to make sure that you are ready to meet that 75% when it snaps into place, if you’re supplying products to the federal government.

Terry Gerton Supply chains have been under such pressure since the pandemic and continue to be shifted and realigned. Do you think that suppliers and supply chains are ready for that shift?

Julia Ensor That’s a great question. I think that supply, because supply chains are so constantly in flux, certainly when I was at the Federal Trade Commission, we saw problems arising from this all the time. I think it’s incredibly difficult for marketers, for suppliers to stay on top of what’s going on. That’s why it’s so important to have open lines of communication, to have procedures in place for routine audits, for routine certifications that you’re seeking from your suppliers to really understand where every part of your supply chain is and what’s going on.

Terry Gerton I’m speaking with Julia Ensor. She’s counsel at Reed Smith and former “Made in the U.S.A.” program manager for the Federal Trade Commission. We talked about Buy American, and we talked about “Made in the U.S.A.” In the Defense Department, there’s the Berry Amendment that plays a role in these kinds of considerations as well. Talk to us about how that fits into this picture.

Julia Ensor Yeah, so if you are supplying to the Department of Defense, the standard that you have to meet is even higher when it comes to certain products like food, clothing, fabric, specialty metals. In the case of those products, if you’re supplying to Defense, your products must contain exclusively U.S. Content. So that means that a product that could be compliant with Buy American that could very potentially not be sufficient under the Berry amendment.

Terry Gerton So contracting officers have a lot to watch out for here, as do suppliers. You’ve warned that sourcing changes can trigger compliance problems. And so what should companies be proactively disclosing? What should contracting officers be sure they’re asking to make sure that everybody is on the right side of these laws?

Julia Ensor So you need to be going back and talking to every person in that supply chain. Make sure that your suppliers are providing reliable certifications and that they have all appropriate documentation of where components are coming from, that they understand early inputs to the manufacturing process, which is where problems can occur. And then have a process in place to communicate routine supply chain changes. Don’t just restrict this to annual review. Make it a term of your contract with your suppliers. Require them to notify you as soon as possible if something changes so you in turn know whether you need to talk to your contracting officer, whether you to make supply chain changes to bring your products into conformance.

Terry Gerton Sometimes in spite of everybody’s best efforts, there are mistakes. Are there any safe harbors, little loopholes for places where they report 70%, but it’s 65% or something like that?

Julia Ensor I don’t know about loopholes per se, but open lines of communication are always the best policy. Make sure that you are reporting issues. Don’t wait for an insider to report an issue to the government. Significant penalties can be on the line if you make mistakes in this area. So have open lines and communication. Be just talking when changes happen so that you can remediate issues as they occur.

Terry Gerton You mentioned significant penalties. What actually could happen if a company is in violation of any of these laws or restrictions?

Julia Ensor Right, so the government can sue you directly. You can be liable for significant penalties under the False Claims Act. And then the False claims Act also allows whistleblowers to file confidential lawsuits on the government’s behalf and receive a percentage of any resulting recovery. So that means that if there’s an insider who sees your issue, those insiders are incentivized to let the government know if compliance falls through the cracks. So, potentially significant penalties on the line.

Terry Gerton How common are those whistleblower cases?

Julia Ensor Fairly common and increasingly common.

Terry Gerton And what kind of incentive are we talking about here?

Julia Ensor So it’s a percentage of the recovery and recovery could be in the millions.

Terry Gerton Wow, so everybody really does need to pay pretty close attention. Certainly given your experience here, if you could rewrite the rules, are there things that would make compliance clearer or maybe disentangle some of the rules that seem to conflicting?

Julia Ensor So certainly consistency across the board would make it a lot easier for everyone. I mean, right now you have a system where marketers and contractors are having to comply with so many different standards, so many different laws, and it makes it really, really challenging. And marketers that think that they’re doing their best, that know that they are, for example, compliant with Buy American, and wanna go out and tell that story about their US manufacturing to consumers, can find themselves in trouble with the FTC, can find themself the subject of a consumer protection action. And that’s a real challenge. So if there were an opportunity to harmonize the rules and the regs, it certainly would make things better for marketers. On the other hand, that could lead to additional consumer confusion or deception, so it’s a really hard place to be. And to some extent, that tangled regulatory web is somewhat necessary to harmonize the joint goals. You have the government and the administration on the one hand wanting to prioritize buying American goods, wanting to incentivize marketers to reshore manufacturing. And on the other hand, you have a push and pull with consumer protection authorities whose job is to make sure that consumers are not being deceived or misled by claims. So while it would be great if there were some harmony across the board, while it would be very helpful to marketers and to businesses, there’s also some tension here in the competing goals that the different laws and regulations are on the books to serve.

Terry Gerton Do you see any interest or momentum in Congress or amongst the regulatory community to actually move towards that kind of streamlining or simplification?

Julia Ensor So over the years, I’ve seen movement in all directions. And then the problem is that there are really strong arguments for harmonization. You know, it’s helpful to business, may result in reshoring of more jobs and encouraging more US manufacturing. But on the other hand, when you look at consumers, when consumers see claims that products are “made in U.S.A.,” they have really high expectations for what that means. They expect that the thing that they pick up is all or virtually all, is no more than de minimis foreign content. And so on the one hand, while there is a great argument toward streamlining and fostering the development of U.S. Manufacturing, it’s so important to make sure that consumers are getting the product that they bargained for. So for now, the best balance that I think that we’ve been able to strike is, on the one hand, having those technical requirements in place on the procurement level to help businesses and manufacturing on the margin where we can there, but at the same time recognizing that when you’re marketing to consumers, we have to protect consumers and impose that higher standard. So that’s really tricky for marketers, for businesses, but, at the moment, it may be the best we can do.

The post The President’s PMA push to “Deliver Results and Buy American” meets a thicket of rules first appeared on Federal News Network.

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Interview transcript

Terry Gerton Let’s start with talking about Hive. You’ve positioned yourself really as a disrupter in the federal contracting space. Are there specific technology or process innovations that have helped you most transform your organization?

Will Fortier Well, I think that that’s something that every organization is going through at this moment and time. I think some of the enablers that we’ve certainly benefited from would be the cloud service providers. That has completely revolutionized how we interact with our solutions. When I entered the GovCon space, we were still on print and file servers and version control was a huge issue and Just moving towards collaborative tools like Google suites and Microsoft Teams has allowed us to actually collaborate on the artifacts that we’re building for our clients and communicate. Could you imagine going through a pandemic without those cloud service providers? That has been a big game changer for us in how we affect our clients’ missions. But what we’ve been focusing on are things like improving decision support systems across our clients’ platforms, enabling them to just — getting the right information into the decision-makers hands and enabling that decision-making process much faster and much more efficient. Trying to take out errors, trying to increase automation and reliability of that data.

Terry Gerton Do you find that your innovations are driven more by your client demands or by Hive anticipating what they will want?

Will Fortier Yeah, I think it’s always a mixture of both. I think that just in our name itself, Hive Group, we’ve got a lot — our people are in the field, our labs are in field, we’re responding to client demand. But we also have this collection of subject matter expertise in house. All of our leadership are practitioners in the industry, meaning they’ve delivered solutions to clients themselves. And so when we’re brought into discussion, with our teams on the delivery side, what we end up doing is synthesizing what they’re doing and then using our experience to then pull that information in-house and try to build something on top of that that might be useful to the clients, might give some benefit. And not only that, but sharing from what we’re doing on one client engagement on other client engagements as well. So we’ve developed things like Hexacore, which is a delivery excellence framework that we employ in all our delivery teams. And then HiveIQ, as well, as something else that we’ve instituted, which is really information sharing and getting best practices from what one team is doing into another team’s skillset.

Terry Gerton You started to talk about some of your specific products there. It’s a crowded federal contracting space. How do you use those kinds of products and other techniques or strategies to differentiate Hive?

Will Fortier Yeah, that’s interesting. So there’s been a lot of innovation in this space, and certainly there’s been a lot a top-down pressure, which is really making it — a lot of people taking stabs at trying to innovate. Whether we’re building the tools themselves, or we’re developing partnerships with those that actually have really good tools as well, it’s a mixture between both of those sides of the coin. A lot of what we do is focused around the reinvestment of what were doing. I mean, we’ve had a quick and fast growth trajectory since the start of the company. And so what we’re doing is taking that money and it’s allowing us to reinvest into what we’re able to offer as far as our solutions to our clients. That allows us to also get deeper and specialize in some of those areas that we’re focusing on.

Terry Gerton You talked about that rapid scaling and growth. Are there any particular critical decisions that have enabled you to scale without losing your quality control?

Will Fortier Yes, scaling. That is something that, as a practitioner in the field, I think a lot of us don’t really get faced with those kinds of questions until you’re either in the C-suite or in the ownership seat, yourself. And so what we do, I think it’s kind of two-part. One is internal, it’s making sure that the right people are in the right seats on the bus. Because what got you to 50 people isn’t necessarily the same configuration that’s gonna work when you’re scaling up to 200. And so you gotta keep that in mind. And that’s something that you learn when you are actually sitting in that seat. And then the next is externally. I think that looking at your support providers is a real game changer and getting the right support providers can be a real force multiplier. And making those mistakes can also cost you a lot of effort and time down the road. And there’s certainly some examples of that, one would be getting good advice. Not surprising to anybody, but having good legal advice is a really obvious thing to have, but one that kind of caught me by surprise was banking relationships. And so, when you start out a company, whoever will give you a line of credit and some treasury is usually who you end up starting with. But as you start to scale up, your needs do change. And so I remember our CFO, Ryan Fuller, came to me and said, hey, I think it’s time that we kind of look at some other options, got into that, got into the why. We ended up going with JP Morgan Chase. Once we did that, I really started realizing how important banking relationships are. Bringing people, hearing from the SMEs on what direction the market is going, getting to meet with other business owners and sort of collaborating with them on what they’re going through — all those kinds of, those offerings that the right support provider can provide is just, it certainly has affected who we are as a business and how we operate.

Terry Gerton That is such important insight, and it sounds like a lesson learned maybe the hard way through experience.

Will Fortier Yeah, you can start your QuickBooks as a great tool, probably not going to get you to, it’s probably not something you want to scale on. But yeah, I mean the tools that you start out with are great and they certainly have a place, but the partnerships, they need to evolve along with how you scale.

Terry Gerton You also mentioned the importance of having the right people in the right seats on the bus, everybody’s favorite leadership analogy. But what are your tricks of the trade in terms of making sure that you have the right people in those right seats, especially in cleared positions, and how do you maintain culture as you’re growing your organization?

Will Fortier The culture question is, we could spend an hour on that alone and that has certainly faced some challenges with COVID and the separation of a lot of folks going remote. But when it comes to talent retention, I think it’s one of the most important things that we’ve focused on. It’s important not to just drop your team member off at a client’s site and say good luck. When our employees look around, what we focus on is putting an emphasis around lifting our people. This is actually one of our core pillars as an organization. And in doing that, we try to focus and work with our client sets on finding opportunities for people to have a growth path. And when we do that, it’s more than just a sales pitch. I mean, the employees that are coming in can take a quick look around and see some folks who might have joined our organization at an entry level and are now a part of the leadership team. Finding those kinds of candidates is certainly what we strive for, and that’s the kind of culture that we want to build and support. Then really a part the secret sauce is how you hire, which is very different depending on the organizations that you go to. I think that what we try to focus on is more the total picture. I mean, some bigger mistakes that we see both on the government side as well as the industry side is making a hiring decision just because the person has done the work, similar work before, instead of focusing on the culture fit: is this person professionally curious? Are they gonna emulate the qualities and the core values that you’re trying to establish throughout the organization? And look, nobody bats a thousand in doing that, but it is something that we consciously try to keep in mind when we’re building out our team.

Terry Gerton So we’ve talked a little bit about what makes Hive different, your scaling strategy or your workforce strategy, but there’s a lot that’s changing in the GovCon space right now. So if you’re looking forward five years, how do you think Hive will change to continue to be competitive in the market?

Will Fortier Yeah, so to say that things are changing right now doesn’t feel like a strong enough phrase. But one of the things that we want to focus on, and we could go on about all the different kinds of capabilities that we’re trying to implement for clients, but one that’s near and dear to my heart is certainly the acquisition process. You’re seeing a lot in that discussion nowadays, and certainly with the revolutionary FAR overhaul, you’re seeing lot of recommended change for how the government goes about procuring things. So I think that there’s a lot of discussion that needs to happen, and there’s certainly a lot of innovation that we can work towards. In that realm, one of the things that we’ve started at Hive Group is the Industry Partner Council, and that is a collection of really the big 20, and altogether there’s 200 businesses all throughout the GovCon space that are in varying degrees participating, and what we’re aimed to do is really just strengthening that conversation between contracting activities and industry, and trying to find ways to educate each other, you know, break down those barriers, get us talking more, and there’s certainly, with as much change that is going on right now, we’ve got to also keep those avenues to talk and discuss what’s working and what’s not working. So that’s one avenue that we’re hoping continues to stick and certainly getting more contracting activities on board with it.

The post In a crowded federal contracting space, Hive Group bets on innovation first appeared on Federal News Network.

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Bitcoin Magazine

Adam Back-Linked H100 Moves to Buy Bitcoin Treasury Future Holdings

H100 Group AB, a Swedish health technology and Bitcoin treasury company, has signed a letter of intent to acquire Future Holdings AG, a Zurich-based bitcoin treasury firm. 

The agreement, announced today to Bitcoin Magazine, would give H100 full ownership of Future and mark its first major expansion outside of the Nordic region.

The proposed acquisition aligns with the company’s goal to strengthen its Bitcoin treasury capabilities and engage more directly with European institutional investors. 

Switzerland is seen as a strategic market, known for its strong currency, deep capital markets expertise, and sophisticated fixed-income investor base. 

Adam Back became involved with H100 through an investment agreement last year, providing a SEK 21 million convertible loan with the option to expand to SEK 277 million to support the company’s Bitcoin treasury strategy.

In recent years, low interest rates have driven institutional investors to explore alternative treasury strategies, including digital assets like Bitcoin.

Future Holdings has carved out a niche in Switzerland for institutional Bitcoin treasury management. The company’s governance structures and capital market experience are tailored to local regulations, and it has previously explored a public listing. 

While that process did not move forward, the company said combining Future with its listed Swedish platform creates a new opportunity for regulatory and operational alignment, potentially appealing to institutional investors seeking transparent exposure to Bitcoin.

H100’s deal terms and timeline

Under the terms outlined in the letter of intent, H100 would acquire 100% of Future’s shares for CHF 375,000 plus the company’s cash balance, currently bringing the total to approximately CHF 600,000. 

The purchase price is expected to be paid through newly issued H100 shares, priced based on the most recent trading day prior to signing. Completion remains subject to due diligence, regulatory approvals, and final transaction agreements, with both parties anticipating simultaneous signing and closing in January 2026.

H100 holds 1,046 BTC on its balance sheet, according to the company, making it the largest Bitcoin treasury company in the Nordics. The company also operates in the health technology sector, offering AI-driven solutions and platform tools for health and lifestyle providers. 

The acquisition of Future is intended to broaden H100’s public-market footprint while deepening its institutional expertise in Bitcoin treasury strategies.

Sander Andersen, H100’s chairman, touched on the strategic importance of Switzerland and Future’s local experience. “This transaction supports H100’s expansion into Switzerland. Future brings relevant local experience, and we see Switzerland as a key market as institutional investors continue to evaluate new approaches to capital allocation,” Andersen said.

Richard Byworth, chairman of Future, emphasized the value of combining the two companies’ capabilities. “Combining Future with H100 creates a public-market platform and governance framework that we believe is essential for building long-term institutional credibility in the Swiss market,” he said.

This post Adam Back-Linked H100 Moves to Buy Bitcoin Treasury Future Holdings first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

The record-breaking deal has already received a green light from the US government.

The post EU Sets February Deadline for Verdict on Google’s $32B Wiz Acquisition appeared first on SecurityWeek.

President Donald Trump took aim at defense contractors Wednesday, announcing new restrictions on executive pay and stock buybacks as part of the administration’s push to speed procurement and revitalize the defense industrial base. 

In an executive order issued late Wednesday, Trump said companies “are not permitted in any way, shape, or form to pay dividends or buy back stock, until they are able to produce a superior product, on time and on budget.”

The order directs Defense Secretary Pete Hegseth to identify defense contractors providing critical weapons, supplies and equipment that are “underperforming, not investing their own capital into necessary production capacity, not sufficiently prioritizing U.S. government contracts, or whose production speed is insufficient as determined by the Secretary,” while simultaneously engaging in stock buybacks or corporate profit distributions. 

Contractors identified under the review must be notified and given an opportunity to submit a remediation plan within 15 days to address performance issues. 

If disputes over underperformance issues cannot be resolved within 15 days or the remediation plan is deemed inadequate, the defense secretary “may initiate immediate actions to secure remedies for the secretary that will expedite production, prioritize the U.S. military and return the contractor to sufficient performance, investment, prioritization and production, to the maximum extent permitted by law.”

The executive order also directs the Defense Department to ensure that future contracts with new or existing defense contractors include provisions prohibiting stock buybacks and corporate profit distributions during periods of underperformance, contract noncompliance, insufficient investment, or “insufficient production speed as determined by the secretary.”

The government already has a whole set of tools in its toolbox to incentivize, reward or penalize companies based on their performance, and the executive order relies in part on mechanisms the Defense Department already uses. What is different, however, are the remedies the administration is focusing on — and the main challenge in implementing this executive order will be defining the key parameters contractors are going to be held accountable for, Protorae Law member Alan Chvotkin said.

“The remedies of no stock buybacks and caps on executive compensation — that’s not a remedy that the government already has available to it,” Chvotkin told Federal News Network. “It’s not so binary to say it’s 100% of contractor’s problem or zero of the contractor’s problem, and that’s where the hard work is going to come on each of these major programs — defining the specific parameters that the department is expecting.”

Stan Soloway, president and CEO of Celero Strategies and federal acquisition expert, said the executive order seems to presume that any cost overrun is the fault of the contractor without recognizing that “not all cost overruns are created equal.”

“The [executive order] is full of vagaries and ambiguity. It is going to be very interesting to determine how they measure whether a company is performing … There’s no mention about the responsibility the Defense Department has for cost overruns and program delays. While companies are far from perfect, all too often, the delays are driven by changing requirements, by requirement rigidity, lack of flexibility in the requirements and by budget uncertainties,” Soloway told Federal News Network. 

Back in 2007, the Defense Science Board, for instance, examined three troubled programs — the Littoral Combat Ship, the presidential helicopter and the Army’s Comanche helicopter — and found that constantly changing government requirements were a major driver of cost overruns and schedule delays. The Packard Commission reached the same conclusion two decades before the Defense Science Board issued its report.

“Accountability is key here, but there is a shared responsibility between the government and contractors. There are many tools to hold contractors accountable, but way fewer tools to hold the government accountable. This EO doesn’t do anything to make the government more accountable,” David Berteau, former president and CEO of the Professional Services Council and now president of David Berteau & Associates, told Federal News Network.

“The disconnect of this EO is if the desired outcome is better contract performance, how can implementing this EO produce better results? That isn’t clear to me. Someone will have to write implementation guidance that does that. I spent a lot of my career writing implementation guidance, and I have a hard time seeing implementing this in such a way that it produces better performance quickly,” he added.

If the goal of the executive order is to push companies to invest in production capacity and capability rather than shareholder returns, that approach only works if there are returns on that investment, Berteau said.

Lockheed Martin’s recent deal with the Pentagon to increase Patriot missile interceptor production to about 2,000 missiles a year is a significant step toward that approach, Berteau said. Lockheed agreed to fund an expansion of its Patriot missile factory in exchange for a seven-year commitment from the Pentagon.

“We have to wait to see the implementation guidance to get a sense of what the real goal is, better contract performance leading to faster deliveries or what,” Berteau said.

“It is critical that the relationship between the government and contractors be one of shared responsibility and partnership, particularly around defining and deciding what the contract will give you and the structure of the contract to make sure the government will get what it needs. There is a lot about this EO that doesn’t seem to be about strengthening that partnership. It seems to be more about punishing one side of the equation,” he added.

The Defense Department did not respond to questions about whether contractors should expect formal guidance in the coming weeks or how many underperforming contractors it has already identified.

“After numerous years of failing to meet contractual obligations, under President Trump’s order, defense contractors will no longer be allowed to leave our warfighters behind while giving themselves massive payouts from stock buybacks. This will give Department of War the ability to meet national security objectives and ensure efficiency and accountability. Our obligation is to our warfighters; not Wall Street,” Chief Pentagon Spokesman Sean Parnell told Federal News Network in a statement. 

Executive pay

In one of his Truth Social posts, Trump said no executive should be allowed to make more than $5 million, but the figure did not make it into the executive order.

Instead, the president directed the defense secretary to ensure future contracts require executive compensation to be tied to performance — such as on-time delivery, increased production and “all necessary facilitation of investments required to rapidly expand the United States stockpiles and capabilities” — rather than short-term financial metrics like cash flow or earnings per share driven by stock buybacks.

If a contractor has “engaged in underperformance, non-compliance, insufficient prioritization of the contract, insufficient investment, or insufficient production speed,” the department could cap executive base salaries at current levels.

Executive compensation was a contentious issue in 2013, when President Barack Obama called on Congress to cap executive pay at $400,000.

A cap on executive compensation already exists in some form — contractors can pay their executives whatever they choose, but the government only reimburses costs up to a certain limit.

The executive order, however, goes a step further — it’s shifting from how much the government will reimburse the contractor to limiting how much the company can pay its executives.

“Pretty significant difference, but maybe they’ll fall back on the same mechanisms. I don’t know that yet. Nobody in the department is talking yet about how they’re going to implement this. I’m sure they’re still trying to work that out,” Chvotkin said.

“I think there’s a fair question, broadly speaking, in commerce, generally, not just in the government market, about executives having the right incentives to drive long-term performance and excellence. But I don’t know what the standards are going to be, what the metrics are going to be.  There’s a ton of ambiguity in here,” Soloway said.

Who does the EO apply to?

While the executive order targets contractors that provide “critical weapons, supplies and equipment,” it doesn’t clearly define the term “critical.” 

Chvotkin said new contracts could easily specify which vendors qualify as critical suppliers or require all new contracts to include the provisions laid out in the executive order.

And while the executive order is broadly aimed at “all contractors,” Chvotkin said its likely target is traditional defense contractors rather than the commercial firms the Pentagon has been trying to attract. 

“I think it’s all contractors, but fixed-price contractors — less likely, they’re going to have binary decision. Commercial contractors, where the effort is to bring more of them in, but probably not as many of them have the triggers, the buyback, the sort of where the government is reimbursing for executive compensation as they do for many of the traditional defense contractors,” Chvotkin said. 

What’s next?

Chvotkin said the Defense Department is likely to issue general guidance to programs on how to carry out the secretary’s review.

“I think they’ve already done quite a bit of that, but I would expect [the undersecretary for acquisition sustainment office] to lead a fair amount of that responsibility to describe what those contracting provisions are relating to critical weapon systems and supplies and equipment. They’ve got to identify those first, then catch up with everybody else on a rolling basis,” Chvotkin said. 

“From the contracting folks, I would expect a broad set of contract provisions, both modifications to existing contracts, as well as provisions to go into new solicitations and new contracts to be awarded. That includes the identification of the key performance parameters for each solicitation and new award, the requirement for the company if notified by the Department of Defense or the contracting officer of the failure to adequately meet the performance objectives, the requirement for the remediation plan and then the additional remedies that the department might ask for as part of either the failure of the contractor to meet the original contract performance of projections or the remediation plan,” he added.

Jason Miller contributed to this report.

If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.

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Comprehensive acquisition reform proposed by the Trump administration has broad and bipartisan backing. Designed to strengthen both the military itself and its supporting defense industrial base (DIB), the initiative as outlined in Defense Department documents issued in November has been long in gestation.

Among those championing the reforms: Mac Thornberry, the former chairman of the House Armed Services Committee and advisor to Amazon Leo for Government. The Texas Republican retired from Congress a few years ago but remains active in defense and procurement reforms – issues he pushed for during his congressional days.

Looking at the community of suppliers to the Defense Department, Thornberry said in a recent interview, reform must do more than ease a few Federal Acquisition Regulation rules. That’s because of the mass of what constitutes the DIB.

“I think that the defense industrial base is far broader than we’ve thought about before,” he said. That is, it goes wider and deeper than the large, prime contractors who make airplanes, ships and tanks.

“Now it includes everything from communications and batteries and minerals to space and cyber. There are more players than there have ever been before,” Thornberry said.

More than the breadth of the DIB favors reform, though, according to Thornberry. A perhaps more important factor is the innovation coming in so many technologies from the private sector – innovation often aimed at commercial use but which also proves essential for the deterrence and lethality of U.S. forces.

“It used to be that the government would be the leader in making the best tank or the best ship or the best fighter jet,” Thornberry said. “But now it’s often private industry that is the best at artificial intelligence or quantum or a lot of things in space.” Ergo, “If private industry is the best at making a lot of the stuff we need to protect the country, relationships have to evolve between government and industry and also among allies.”

Add in the speed at which the technology front is moving, and the need for faster, more streamlined acquisition becomes more pronounced. In the Cold War era, much innovation was sparked by defense needs in the first place – things like stealth coatings, radar guidance and revolutionary energetics. Now, Thornberry points out, innovations occur whether the Defense Department takes two weeks or two decades to acquire them and turn them into capabilities for troops.

Thornberry cited still another factor in favor of acquisition reform: “How interconnected it all is. We tend to think of the separate military services, separate domains, separate theaters around the globe,” he said. “In a way, it’s all interconnected, one global theater right now, especially when you talk about space and cyber.”

The result? “We can’t just fall back on the way we’ve done things in the past,” Thornberry said. “We’ve got to change. Partnership is the key word. It must not just be a label. It’s got to be a reality for us to take advantage of everything that the best in the country can produce.”

Make room for space

Among the policy updates the administration emphasizes is greater use of the very commercial technologies driving the economy. Much commercial innovation occurs in space, specifically in the burgeoning technologies of low earth orbit (LEO) satellites. Competing vendors, including Amazon Leo, have launched hundreds of small LEO satellites that robustly fill a missing link in the worldwide communications network.

As for defense, Thornberry said, “The only way we can do a lot of what needs to be done for the country’s national security is in and from space.” The LEO capacity stands as a case in point for the need to more readily adopt commercial technologies.

“If you’re going to provide the best that the whole country can produce for the benefit of the war fighter,” Thornberry said, “you’ve got to take advantage of that commercial part of space.”

He added, “I’ve been surprised, as I have left government, at how much investment is going into space, from both the companies and the investment community.”

Two advantages of technology pursued by multiple companies are the resulting levels of competition and the resiliency of not depending on a sole supplier.

“That is true in space as well,” Thornberry said. “If you’re going to rely on commercial space providers, as we must, then you’ve got to make sure you have the resilience of multiple providers.”

In fact, he said, the Defense Department needs greater supplier diversity in all of the domains in which it operates.

“We’re not going to have one company or two or three companies that are going to solve all our national security issues,” Thornberry said. “We need to have this diverse ecosystem with partnerships of various kinds.”

He added, “And that’s especially true, I think, in space.”

Within the ecosystem of suppliers and technologies in space, Thornberry said, the government will require disparate systems to interconnect. He cited Defense Secretary Pete Hegseth’s reference to modular, open systems architecture.

That means, Thornberry said, “you can have different capabilities, but they have an interface that means you can put a plug in whatever sort of capability you need to; and that interface is something that’s available to everybody.”

The open systems approach, which he said Congress tried and ultimately failed to codify a few years back, is now needed for projects such as the Combined Joint All-Domain Command and Control (CJADC2) project and the Golden Dome missile protection program. Both Defense initiatives are essentially integrations of multiple existing systems and capabilities.

Acquisition for speed

Space has become a highly contested environment, Thornberry said.

“Anything that is valuable is threatened and gets under attack,” he said, “and we see adversaries doing that. They have demonstrated anti-satellite weapons. We’re seeing a whole variety of capabilities to deny us the advantages of space.”

Moreover, this is happening “at an incredibly fast rate,” he said. It all gets to a key goal of acquisition reform. Hegseth “talked about the importance of speed, and I do agree that that is a characteristic we have not placed at the top of the pecking order, but we have to now.”

That includes the speed at which commercial technologies get adapted and turned into capabilities. Thornberry called Ukraine and its war with Russia a masterclass in agility afforded by speed of adaptation.

“Ukraine can adjust their drones with a week’s time,” he said. “We’ve got to get better at adapting to meet the circumstances and working through commercial providers is the only way that can happen.”

Ukraine shows what’s possible and needed everywhere.

“A few years ago, it became clear that adversaries were moving at an incredible rate to improve their capability,” Thornberry said. “At the same time, technology in general was advancing at an amazing rate.” He noted that the Pentagon had programs here and there to speed technology adoption. These include the Defense Innovation Unit and the Air Force’s Kessel Run.

Thornberry said those efforts produced results, but not systemically. He said there’s evidence of resistance deep within the bureaucracy then and now. Therefore, he said, the latest effort to reform acquisition throughout the Defense Department requires comprehensive adoption to succeed.

“The tendency is to do things the way we’ve always done them. If we do that, we will not be able to defend the nation,” he said.

Besides speed, the acquisition system must produce a market attractive to companies in the first place, Thornberry said.

The old-line defense companies have learned the existing system, “and they’ve done some pretty innovative things in limited spheres,” he said. “But they’re oriented towards the rules and requirements that the current process gives them.”

By expanding use of other transactional authority (OTA) and, as Thornberry put it, letting off some of the procurement shackles, more defense-focused innovation would flow from commercial companies and startups.

Equally crucial, the Pentagon must find a way to send clear and consistent demand signals to maintain the attractiveness of the defense sector to the investment world.

“They need to have some wins. It doesn’t mean everybody wins, but these folks need to see that there is the potential for a profit in making these investments,” Thornberry said.

He added, “The purpose of all this is to get the very best that the whole country can produce into the hands of the war fighters so they can defend the country.”

As for acquisition reform, Thornberry said, “Will the investors continue to invest? Will the commercial companies be willing to work in defense? Is there a chance for startups to earn enough business to stay in business? All of that is yet to be determined.”

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