To attract innovation, the DoD is shifting its procurement process. Instead of issuing rigid, 300-page requirement documents that favor incumbents, it now defines a problem and asks companies to propose their own novel solutions.

Industrial strategy is more effective when focused on solving big problems, like creating healthy school lunches or landing on the moon. This "mission-oriented" approach stimulates innovation across many sectors, unlike traditional policy that just hands subsidies to favored industries.

Navy CTO Justin Fanelli advises founders to stop asking to be paid for their time and instead price their solutions based on the outcomes and value they deliver. This aligns incentives with the government buyer, rewards impact over effort, and demonstrates a modern, software-defined mindset.

To combat inefficiency, the Pentagon is moving away from paying contractors for time and materials ('cost-plus'). The new model emphasizes business-oriented, fixed-price contracts where companies are paid upon successful, on-time delivery of a working product, introducing more risk and profit incentive for vendors.

An ideal procurement process identifies the most cost-effective known solution but also allows bidders to propose an innovative alternative. This alternative must be accompanied by a rigorous impact evaluation, turning procurement into a mechanism for continuous improvement rather than a static decision.

NASA is explicitly rejecting grand, single-shot proposals for a fully-formed moon base. Instead, the agency will use a step-by-step process, starting with smaller landers and rovers to build capabilities iteratively. This signals a shift toward a more agile and risk-managed procurement strategy for government contractors.

The agency's purpose is to tackle near-impossible challenges where no viable business case or revenue model exists, such as developing nuclear propulsion for Mars. Once a breakthrough is made, the technology can be handed off to the private sector for commercialization, product improvement, and cost reduction.

To combat slow, costly development cycles, the Department of War is shifting from hyper-specific requirement documents to stating clear, high-level objectives (e.g., 'I need a missile that goes this far'). This new model empowers innovative companies to propose their own solutions and moves to fixed-price contracts.

For the Artemis program, NASA is not building and owning lunar landers as it did during Apollo. Instead, it is contracting SpaceX and Blue Origin to provide landing as a managed service. This marks a fundamental shift from asset ownership to a services-based procurement model.