The Pentagon’s ‘ROI Era’ Is (Finally) Here: How Innovators Must Respond

A decade ago, Elbridge Colby was just another think tanker at the Center for a New American Security (CNAS), and I was the PR flack for him and CNAS’ other experts. Part of the think tank creative process is complaining to one another about problems in our respective fields, and we got to the topic of America’s woeful defense industrial base. Looking at the fact that we struggle to even keep our ammunition bins stocked, I whined, “How is it possible that we spend $800 billion a year and get so little in return?” “That,” Colby answered wistfully, “is the question.”

There are a lot of answers to that question, but the biggest is simple: Since the infamous “Last Supper,” the Pentagon has been more focused on process and satisfying Congress’ parochial interests than bang for the buck. After 30 years, however, we are finally witnessing the beginning of the end of the “Process Era” and the dawn of the “ROI Era.” This presents a once-in-a-generation opportunity for scrappy companies that can build a better product and, just as importantly, talk about what they do the right way.

Startups and young companies that want to win defense contracts shouldn’t be subtle. They must make clear they are on “team change.” They must show that they not only care about ROI but can prove it. They must build success metrics into their RFPs. Most of all, they must walk-the-walk. They should say “if we fail, fire us.”

Yes, that's a bold statement, one most contractors would be terrified to make. Yet that's the point. That sort of statement shows you're just as committed to the acquisition reform movement as they are. You are "on the team.”

The impetus for scrappy companies to prove they’re on “team change” is simple: Members of that team include all of the main power players at the Pentagon, and they feel the need for reform in their bones. Pentagon reformers like Deputy Secretary Stephen Feinberg, Under Secretary for Acquisitions and Sustainment Michael Duffey, Department of the Navy Chief Technology Officer Justin Fanelli and, yes, Under Secretary for Policy Colby, have been pushing for this moment for years, and they refuse to let it fail. They eagerly embrace anyone who can help make it succeed.

What’s more, this isn’t a partisan Republican initiative. It’s a trend that it will continue into the next administration regardless of which party wins. During the Biden Administration, for instance, we started focusing on ROI, divesting from programs that were failing and instead putting money into critical technologies like AI and unmanned systems and initiatives like rebuilding our defense industrial base. Phrases like “divest to invest” became commonplace.

Tough as it is for a Democrat like me to admit, however, the Trump Administration has kicked the reform efforts into overdrive. It has launched countless promising initiatives to make ROI the driving metric of success. Secretary Pete Hegseth announced many of those changes, from stripping out unnecessary steps in the acquisition process to instituting a Portfolio Acquisition Executive system where someone is accountable for overall program performance and adopting a Portfolio Scorecard to measure that performance. This is on top of efforts like the Navy’s Innovation Adoption Toolkit and its Rapid Capabilities Office.

Reform is underway. Which means potential defense contractors will live and die by their ability to align themselves with it. So how can companies do that?

First, they need to put measurable ROI metrics into their proposals and, more importantly, into their executive summaries. Can their product get a ship off the dock faster? Companies should give a number for how much faster. Can it leverage AI to identify waste or automate mindless tasks? Companies should give a dollar figure for how much waste it can identify or an hour figure for how many hours per year it will save.

Second, they need to talk about those metrics publicly. They should do interviews with any defense journalist who will take their call and brief their members of Congress. They should write LinkedIn posts about success metrics and post them in LinkedIn groups like “Department of Defense” and “Defense and Aerospace” (and, of course, Mission Cultivate.) They should put metrics in the right context, of course; if the product gets ships off the dock more quickly, they should talk about those gains vis-à-vis the Navy’s maintenance backlog, not just brag about the product. But they shouldn’t be shy, either.

Finally, companies need to demonstrate that they are not only “on the team,” but understand the strategic context and urgency behind the reform push. Pentagon leadership believes America has, in China, a pacing threat like our nation hasn’t had since at least the end of the Cold War. Further, unlike Soviet Russia, China has the economy to back up its global ambitions. It will continue to innovate. Its military will continue to incorporate technological and commercial advances. If we don’t match or exceed their progress, we will fall behind.

We could lose a war.

America’s national security leadership will be damned if that happens on their watch. If decision-makers feel that urgency in their bones, then the people who want to sell to them better as well. Everything innovative companies say, publicly and privately, should treat that strategic context as its raison d’être.

The success of the “ROI Era” is a make-or-break moment for American national security. After decades of frustration, “team reform” is in the ascendancy and has the chance to make the changes it has been dreaming about. It believes it cannot fail and will gladly hold hands with any private sector innovator that can demonstrate it wants the same for our military.

Colby isn’t just another think tanker now. He’s a decision-maker in lockstep with a reform movement. Innovators can and should give him a better answer to why America’s military pays so much and gets so little in return.

Neal Urwitz is a former speechwriter for and advisor to the Secretary of the Navy. He is now the CEO of Enduring Cause Strategies.