Pentagon’s New Procurement Playbook Could Be a Gamechanger for Small Contractors

The Department of Defense just issued a seismic shift in how it does business—and small businesses should be paying close attention. On April 9, 2025, President Trump signed an Executive Order titled “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base.” It’s a sweeping directive that reimagines how the Pentagon buys goods and services, with bold promises to slash red tape, speed up awards, and reward agility over bureaucracy.

If you’re running a government contracting business, this could be your moment—especially if you're certified as a women owned small business or hold disabled veteran small business certification.

The Executive Order lays out a blueprint to revamp government procurement into something faster, leaner, and more innovation-friendly. It mandates that the Department of Defense (DoD) prioritize commercial solutions and alternative contracting methods—namely Other Transactions Authority (OTA) and Rapid Capabilities Office channels. It also calls for a ruthless cleanup of bureaucratic clutter, using a “ten-for-one” rule: for every new regulation, ten old ones must go.

Another major shift? The workforce itself. Contracting officers and acquisition staff will now be judged based on how well they adopt commercial tools, meet end-user needs, and take calculated risks. A dedicated task force will help train acquisition teams on using these non-traditional authorities.

The goal is simple: deliver cutting-edge capabilities “at speed and scale,” not years behind schedule.

Here’s why this matters for small businesses: The new rules favor speed, agility, and commercial readiness—areas where smaller firms traditionally shine. No longer will you need five years of federal experience just to get in the door. The DoD is explicitly seeking off-the-shelf tech, modular solutions, and nimble partners who can deliver fast.

And with the focus on OTA agreements and streamlined acquisitions, many of the compliance-heavy hurdles that used to keep small vendors out of the running could be reduced or removed. You won’t be competing on who can navigate 400-page RFPs—you’ll be competing on innovation, speed, and relevance.

Better yet, the shift away from massive defense programs (known as MDAPs) could open the door to more bite-sized, modular contracts. If a big program is underperforming, the EO allows it to be canceled—and those requirements may be rebid as smaller components, creating fertile ground for new entrants.

But that doesn’t mean it’ll be easy. With fewer barriers to entry, competition is about to heat up. Small businesses will need to get smart on OTA vehicles, commercial-item contracting, and how to speak the DoD’s new language of “agility.” And if you’re part of a major program already, you’d better tighten your budget and timeline—programs that are 15% over cost or schedule could be cut.

Here’s how to stay competitive and capture more government contracting opportunities:

• Get certified: If you're eligible, pursue SBA 8a certification, women business certification, or disabled veteran government contracts programs. These federal contracting certifications can open doors as the DoD increasingly favors diverse and agile suppliers.

• Understand your NAICS code: Make sure your contractor NAICS code aligns with the type of work you’re targeting. Some of the best NAICS codes for small business right now are in cybersecurity, AI, logistics, and advanced manufacturing—all key focus areas for defense modernization.

• Invest in proposal writing: With faster awards and new contract types, your government contract proposal writing needs to be sharp, agile, and focused on outcomes. Highlight how your team delivers quickly, adapts easily, and meets mission-critical needs.

• Highlight your COTS value: Emphasize how your commercial-off-the-shelf solutions reduce risk and accelerate delivery. This is especially important for small businesses looking to stand out in government contracting certification processes.

• Join an OTA consortium: Many small businesses benefit from teaming up under OTA consortia to gain access to non-traditional contract vehicles. It's a great move for those just entering or scaling up in the defense space.

The bottom line: The DoD is retooling its acquisition machine to reward innovation over inertia. For small businesses with the right mindset and capabilities—especially those with the right federal contracting certifications—this is a rare opening to step into contracts that were once out of reach. But it’s also a test—those who cling to the old way of doing business may find themselves left behind.

Stay nimble. Stay informed. And make sure your solutions speak the new language of speed, adaptability, and impact.

Want to go deeper on targeting the right NAICS code for defense and state contracts? Read our latest post: The Best NAICS Codes for Small Businesses Wanting SLED Contracts in 2025.

If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.