Weaponize Capitalism
The Pentagon’s refusal to embrace profit, speed, and commercial software is a gift to our adversaries, but that is changing
Let’s say it plainly: government buyers are often obsessed with the wrong thing. They worship at the altar of “cost reasonableness” while letting real value slip through their fingers. They dig through invoices like forensic accountants, demanding to know the hourly rate of every developer, how much profit a company makes, and whether a screw should cost $3 or $0.03. Meanwhile, the actual mission—better decisions, faster action, winning the next fight—is treated like a side note.
Cost scrutiny isn’t wrong. Fraud, waste, and abuse are real. But a laser focus on cost doesn’t deliver outcomes. If anything, the fear of paying for profit or buying commercial software at market rates actively blocks the government from getting real value. It’s a lose-lose game. You get cheap tools that don’t work—or worse, expensive, custom-built major defense acquisition programs that arrive eleven years after they begin, if at all, and solve yesterday’s problem.
I was an economics major in college, which means I spent four years learning how incentives drive behavior. Government acquisition taught me the opposite: incentives don’t matter—checklists do. We’ve created a system where following the process is more important than delivering value. It’s like grading capitalism on form, not function. Economist Thomas Sowell sums it up well: "You will never understand bureaucracies until you understand that for bureaucrats procedure is everything and outcomes are nothing." This isn’t an exception. It’s a feature of the system and culture.
After Vietnam, Watergate, and the $640 toilet seat scandals of the ‘80s, Congress launched a wave of reforms to root out financial abuse and rein in acquisition power. Laws like the Truth in Negotiations Act (1962), also known as the Truthful Cost or Pricing Data Act, and the aftermath of the Packard Commission (1986) hardened a mindset that “cost control” is equivalent to “good government.” The goal was accountability. But the result was a system where minimizing spending and maximizing control became more important than delivering value. So we overbuild, over-document, and over-complicate, even when commercial companies have already solved the problem—just not the way the spreadsheet forms and cost templates expect. One thing we should be asking ourselves is why these approaches don't exist in the commercial world? How do commercial companies contain costs? They are incentivized to innovate!
Pete Modigliani illustrated this perfectly in Defense Tech and Acquisition, describing a scenario where a non-traditional defense company—Company B—offers to do the job for half the price of a traditional prime (Company A), but with a 50% margin. On paper, it should be a no-brainer: lower cost, likely faster execution, and a better business model. But in reality, Company B would face massive resistance. Why? Because their margin looks “excessive.” The source selection team would fear headlines, audits, and career risk. As Pete points out, even with logic on their side, the weighted guidelines and cultural fear of profit would make awarding that contract nearly impossible.
But you don’t win by over-analyzing profit margins. You win by outperforming. And that means measuring value (by, e.g., using things like WAMs): the speed, scale, and mission impact of what’s delivered. If we’re serious about competing, we need to stop handicapping the one weapon our adversaries fear most: capitalism. It’s time to weaponize it.
No one asks what Apple’s profit margin is before buying an iPhone. You care that it works, it delivers value, and it’s worth the price. Yet in government, we treat every purchase like a criminal investigation into the seller’s markup—then wonder why we end up with clunky tools no one wants to use. This is killing mission outcomes. Roughly 70% of DoD’s major IT systems have experienced cost and/or schedule issues. We are bleeding time while China builds faster.
If the U.S. is defending capitalism, democracy, and freedom, then we should act like it. You don’t beat authoritarian systems by mimicking them poorly. You beat them by playing to your own strengths. America at its best is a capitalist engine moving at software speed. It’s time to own it. Embracing capitalism doesn’t just deliver value—it attracts new entrants. High-margin contracts aren’t a threat; they’re a signal to innovative companies that their investment in speed, software, and outcomes is welcome here. If we want more competition, we need to stop scaring off the very firms that could make us faster, cheaper, and better.
Private capital is starting to come into defense tech—not waiting for government RFPs but seizing opportunities that bureaucratic processes are too slow to act on. As the Sagamore Institute noted, investors are betting on emerging defense technologies not out of patriotism but because they see a profitable market the government is missing. Since 2021, venture capital has poured $130 billion into defense tech—a striking 145% increase from 2017-2020. Why rely solely on taxpayer dollars to fund programs when private capital is ready to underwrite faster, commercially viable solutions? It’s not just a funding source—it’s a force multiplier.
This is exactly why firm-fixed price (FFP) contracts matter. They’re not just a cost control tool—they’re capitalism in action. FFP contracts reward performance, not paperwork. They give vendors the freedom to innovate and deliver faster with higher profits as a reward, while giving government buyers budget certainty. If you want to scale outcomes, attract serious players, and stop paying for inefficiency, FFP is the most powerful tool we have.
To be clear, not every acquisition is suited to FFP. There are real risks when FFP is forced into the wrong scenario—just ask anyone who worked on the KC-46 tanker program. But that’s not an argument against capitalism or outcome-driven models—it’s a warning against bad incentives and poor execution. When FFP is paired with smart structuring, it can drive innovation and cost discipline even in highly complex efforts. Just look at NASA’s partnership with SpaceX: fixed-price contracts delivered orbital capability faster and cheaper than legacy approaches—with billions in cost savings and a thriving commercial space market as a byproduct.
The takeaway isn’t that every program should be FFP. It’s that government can even buy complex, high-risk, mission-critical capability with commercial speed when it’s willing to rethink control, embrace market incentives, and prioritize outcomes over process.
While there has been progress, the DoD still acts like a Soviet planning agency when it comes to acquisition. And for the first time in decades, the federal government is acting like it knows that. This administration isn’t tinkering with acquisition reform—it’s going for the jugular. A new doctrine is emerging. In April, a sweeping executive order mandated faster defense acquisitions, required the use of OTAs and CSOs “to the maximum extent possible,” and made speed and commercial buying part of acquisition officials’ performance reviews. Risk-taking is now a job requirement. Follow-on orders went even further, targeting the 2,000-page FAR for cleanup and enforcing the commercial item preference with teeth. The default is commercial. Finally.
If implemented with conviction, this isn’t just reform. It’s a declaration of independence from our own bureaucracy. The fight has only just begun. But we’re witnessing the boldest challenge to the cost cult in a generation. If we follow through, we won’t just save money. We save time. We save missions. We win. We must weaponize capitalism.