Start with what changes—and who must change it
The department's September 15 announcement of Deputy Secretary Steve Feinberg's Fostering One Strong Industrial Base initiative describes a proposal to the Cost Accounting Standards Board to make exemption the default and narrow remaining coverage. It also directs use of higher FY2026 NDAA thresholds, senior approval before bringing a new business unit under full coverage, quicker commercial determinations, and risk-based audits. These are different actions with different implementation mechanisms. A direction to propose a rule is not the final rule. Department announcement, reproduced in full
Existing CAS rules already contain exemptions, including for small businesses and qualifying commercial acquisitions. It is therefore too broad to say that every commercial software or AI supplier must construct a CAS compliance operation before competing. The relevant question is which requirements attach to the contemplated contract, subcontract, or business unit. CAS coverage rules
That distinction improves the market-access argument. A firm may be technically well suited to a requirement yet find a particular contracting structure difficult to support. Buyers should examine whether those burdens are necessary for the work and risk involved. Suppliers should identify the actual obstacle instead of treating all government business as one compliance category.
Executive Order 14402 supplies another part of the policy context: fixed-price contracting as the default, with exceptions and approval requirements for other arrangements. The order does not make technical uncertainty disappear. A fixed price can encourage cost discipline, but an unrealistic allocation of development risk can still undermine performance or deter capable bidders. Executive Order 14402
Less duplicated oversight should mean better decisions
The initiative favors market evidence where a usable market exists and cost information where it does not. It also emphasizes reliance on existing independent audits and oversight proportionate to risk. Its stated objective is to keep several performers engaged into production and reward delivery with real orders. Department announcement
Those principles are commercially important. A supplier can justify capacity investment more readily when there is a credible route from evaluation to paid production. Conversely, winning a demonstration without a follow-on buying mechanism does little to expand dependable industrial capacity.
The government still needs evidence sufficient to understand price, performance, and risk. Reusing a company's existing financial information can reduce unnecessary translation work; it does not remove the need to examine whether the evidence answers the particular acquisition question. Clear requests, a defined purpose, and a documented decision are more useful than either collecting everything or assuming a commercial label settles the analysis.
Open interfaces determine whether entry is practical
Accounting reform and modular architecture address different barriers. Even an accessible solicitation can leave a new supplier unable to insert its capability into a closed host system.
A Modular Open Systems Approach is an established business and technical strategy for adaptable acquisition and sustainment. Its practical elements include modular boundaries, defined interfaces, suitable standards, and the intellectual-property arrangements needed to use them. MOSA predates this memo and provides an established way to turn broader competition objectives into specific acquisition and design choices. Department MOSA guidance
For an AI inference service, command-and-control application, or edge computing component, a meaningful insertion opportunity requires more than the word “open” in a requirement. A prospective competitor needs enough interface information, access to test conditions, and a workable approval path to demonstrate interoperability without purchasing the incumbent's entire architecture.
Program teams should ask:
- Can another supplier obtain the necessary interface information? Identify the applicable rights, restrictions, documentation, and access process.
- Can it demonstrate conformance at a reasonable cost? Establish test criteria and responsibility for integration before promising easy substitution.
- Who absorbs a change? Allocate responsibility for configuration management, cybersecurity, regression testing, and host-system effects.
- Does the buying plan preserve future entry? Schedule actual opportunities to compete for modules or production work rather than relying on a one-time aspiration.
This is where engineering and acquisition have to work together. A technically separable component may still be commercially inaccessible if licensing, test access, or integration responsibility makes replacement uneconomic.
Measure whether competition reaches production
Continuous competition is an attractive objective, but it costs money to qualify and sustain multiple suppliers. The appropriate number of performers depends on demand, industrial capacity, qualification expense, and the consequence of a supplier failure. Splitting a small production quantity among too many firms can weaken the very capacity the buyer intends to build.
For FY2027 and FY2028 decisions, a useful review would track:
- Which unnecessary compliance requirements were removed from actual solicitations or contracts.
- Whether capable new suppliers submitted offers and what prevented others from doing so.
- How many evaluated technologies reached funded production or operational use.
- Whether component changes became easier, with measured integration cost and time.
- Whether competition improved delivery, quality, resilience, or price after accounting for qualification costs.
These measures make implementation visible without assuming that every existing prime relationship is inefficient or every new entrant is ready to scale.
The reform presents a serious opportunity to broaden defense participation. Realizing it requires contract-specific judgment, usable technical interfaces, and orders that reward dependable performance. The signatures establish direction; the next buying decisions establish whether that direction changes the market.
Sources and further reading
- Department's September 15 release, reproduced unaltered
- Original department release
- CAS contract coverage rules
- Executive Order 14402
- Department MOSA guidance
Spartan X's program execution and engineering work brings the commercial and technical sides of market access together: clear requirements, credible integration plans, and decisions grounded in delivery risk. Those disciplines turn policy changes into opportunities a capable supplier can actually execute.
