The System is Broken. Here’s How to Survive.

For years, we’ve known the Planning, Programming, Budgeting, and Execution (PPBE) process was broken. We talked about reform, we commissioned studies, and we tinkered at the edges. What we are witnessing now is something far more profound. The system is no longer just broken; it is no longer recognizable.

Consider the evidence:

• The FY25 Budget Fiction: The budget justification books (J-books) submitted with the FY25 budget bear little resemblance to what actually passed via a chaotic, full-year Continuing Resolution (CR). That long-term CR amounted to a placeholder for a time and still allowed billions to go unobligated by September 30, 2025.
• The $150B Shadow Budget: The reconciliation process injected $150 billion in mandatory defense spending that bypassed the entire appropriations process, with spending plans that remain largely classified or not yet decided by DoD.
• Failed Reforms: The PPBE Commission offered 28 recommendations for reform, which were largely ignored.
• Strategic Chaos: The Pentagon appears to be at war with its own leadership. Secretary of Defense Pete Hegseth is launching major initiatives (acquisition reform, border security) that seem disconnected from any adopted strategy, while his policy chief, Elbridge Colby, is publicly excoriated by Congress.

This is not just another cycle of budget gridlock. This is a systemic breakdown. Waiting for clarity is not a strategy; it is an admission of defeat.

A Wake-Up Call for the Hidebound

Let me be blunt. Many companies are hidebound in their longstanding structure or product offerings, refusing to admit the environment has changed. They are organized to sell aircraft carriers to a Navy that may have ordered its last one. They are structured to respond to 500-page requirements documents in a world that now demands 90-day sprints.

Ask yourself these uncomfortable questions:

• Is our business development team still organized around legacy platforms and traditional PEOs?
• Are we doing any of our own development of new products and services, or are we just waiting for the next RFP?
• Are we uncovering the new program offices and decision-makers responsible for the future, or are we still calling on the same old contacts?
• If you don’t know who Under Secretary of the Navy Hung Cao is, you should. Confirmed in October and arguably closer to President Trump than the service secretary, he’s been given a brand-new portfolio to “supercharge warrior ethos and quality of service.” He is now the “one quarterback” for a massive portfolio that includes the Navy’s $2.6 billion enterprise IT modernization and touches its $12 billion annual IT budget. He is a new power center that did not exist last year.

If you don’t know who VADM Seiko Okano is, you should. As the Principal Military Deputy for Navy Research Development & Acquisition, she has immense influence over the Navy’s $25.7 billion RDT&E budget. Her background is in information warfare and integrated systems—her last command managed a $5.3 billion portfolio of sensors, electronic warfare, and combat systems, not traditional platforms.

These new leaders represent a fundamental shift, and these shakeups are not limited to the Navy. Secretary Hegseth’s acquisition reform memo directs every military service to stand up similar new portfolio-based organizations. If your team isn’t tracking these new power centers, you are already behind.

The Hegseth Acquisition Revolution:
What You Need to Know NOW

Just this past week, Secretary Hegseth unveiled the most sweeping acquisition reforms in a generation, detailed in a memo titled “Transforming the Warfighting Acquisition System to Accelerate Fielding of Capabilities.” This is not another incremental change. It is a complete overhaul designed to prioritize one thing: speed.

Here are the key changes you must track:

• Portfolio Acquisition Executives (PAEs): The traditional PEO structure is being replaced by PAEs who will manage portfolios of interrelated programs. They will have the authority to shift cash and make trades to prioritize speed to the field. Timeline: Services must submit their proposed portfolio lists within 60 days.
• “Commercial First” Contracting: Commercial products will now be the default acquisition approach. The Pentagon will issue guidance on using Other Transactions and Commercial Solutions Openings within 90 days.
• Portfolio Scorecards: To grade the performance of these new portfolios, the Pentagon will publish scorecards within 180 days. These will measure delivery schedules, prototyping, and production ramps. Standby for public shaming that could be based on incorrect data; are you ready for crisis communications?
• New Contracting Guidelines: Within 180 days, the Pentagon will issue new guidelines with “clear incentives for timely delivery, increased production capacity and investable demand signals for private capital.” This includes “proportionally” penalizing contractor delays.
• DoD 5000 Overhaul: The foundational document of acquisition policy will be updated within 150 days to reduce documentation and eliminate redundant reviews.

This is happening now, and it is happening fast. Companies that are not prepared for this shift will be left behind.

A word about these changes: It does not matter whether you agree with them or not. Your opinion on the merits of these reforms is irrelevant to your business success. What matters is that the environment into which you are selling just became exponentially more difficult to navigate. Would you attempt to cross unknown territory without a GPS? Of course not. Yet many companies are doing exactly that—operating with old maps in a landscape that has fundamentally transformed.

We will re-live lessons from the past, no doubt. You can’t change that. But you can prepare now to act in this new environment. It will be unstable for the forseeable future.

Five Survival Tactics for the New Reality

Here are five things you must do to navigate this new, unrecognizable landscape.

1. Understand the Shadow Budget:

Follow the Reconciliation Money

The most significant event of the past year was the $150 billion in mandatory defense funding passed via reconciliation. This is the “shadow budget” driving major investments while the public-facing process is paralyzed. Your first priority must be to determine if your programs are funded by the shadow budget (reconciliation) or the broken one (appropriations).

2. Adapt to the New Rules:

The Hegseth-SPEED Act Revolution

Both the bipartisan SPEED Act and Secretary Hegseth’s own acquisition reform memo prioritize one thing above all else: speed. As HASC Chairman Mike Rogers put it, “Our military is saddled with a bureaucratic acquisition system that is so dysfunctional that the process between identifying a need to deploying it in the field can take more than a decade.” Ranking Member Adam Smith was even more blunt: “Our current system is paralyzed by bureaucracy.” Your company’s processes must be re-engineered for rapid, iterative delivery.

3. Navigate the Internal Power Struggles:

The Pentagon is Not a Monolith

The dysfunction at the top cascades down to the service level, where leaders are waiting for clarity that isn’t coming. This makes congressional hearing testimony more important than ever. It is one of the few remaining sources of public intelligence where witnesses must go on record. When uniformed leaders start pushing back on oversight the way political appointees now do, that will be the tell that the breakdown is complete.

4. Bet on the Bedrock:

The Industrial Base and Readiness

In an environment of strategic confusion, the one thing everyone can agree on is the need for a strong industrial base and a ready force. The Senate Appropriations Committee made this clear with billions in plus-ups for industrial base facilitization, munitions, and operational readiness. Reframe your value proposition around these tangible, crisis-driven needs.

5. Find Your Niche in the Chaos:

Drones, Counter-Drones, and Bipartisan Priorities

Even in this chaotic environment, pockets of bipartisan consensus exist. The most obvious is the drone and counter-drone fight, where Congress added funding beyond what the services even requested. Focus your efforts on these targeted areas where you can provide a clear solution to a universally acknowledged problem.

The Path Forward: A Call to Action

The old maps will not help you. In this environment, congressional engagement is an essential survival tool. Here is the paradox: Congress appears weak, unable to pass appropriations bills and seemingly rubber-stamping the President’s reconciliation agenda. Yet the defense and intelligence committee staffs maintain unique access to the classified spending plans and unprecedented influence over what actually gets funded. As Chairman Wicker publicly complains:

“I’ve noticed an unsettling trend this year at times, “I’ve noticed an unsettling trend this year at times, in accord with President Trump’s orders.”

Even as he says this, his staff is being briefed on the shadow budget that the rest of the world cannot see. They are the gatekeepers to the intelligence that matters. Of note, Republican and Democrat staffs no longer receive the same briefing materials.

Now is the time to conduct a hard-eyed review of your government affairs and business development teams. Are they equipped for this new reality? Do they have the access and intelligence to navigate a classified shadow budget and a dysfunctional Pentagon? If not, you must act.

Most of my new clients come to me at the end of the calendar year when they realize things aren’t going their way—when negative decisions are piling up, or they lost something that should have been theirs. Don’t wait until the damage is done. Consider bringing in short-term, specialized help to steady the ship, bridge the gap, and ensure your voice is heard by the people who are actually writing the checks.

If you are ready to build a new map and ensure your team is prepared for the fight, I know a guy!