What "commercial" really means in defense acquisition
The Pentagon's push to "buy commercial first" has become a central feature of defense acquisition strategy, especially in fast-moving sectors such as space, software, cyber and artificial intelligence.
The logic is straightforward: private companies tend to innovate faster and more cheaply than traditional government programs. But as senior officials acknowledge, translating that idea into actual procurement choices is not as straightforward as it sounds.
Maj. Gen. Stephen Purdy, the Air Force's military deputy and acting assistant secretary — who also serves as the Space Force's acquisition executive — described the layered meaning of "commercial" in space programs. Speaking Dec. 12 at the Spacepower conference, he noted that the Space Force already buys rocket launches and satellite communications as commercial services. But on the hardware side, items typically aren't purchased straight off the shelf. "We do some modifications to meet Department of War requirements and needs, but we still call it commercial," he said.
A more appropriate definition is tied to how a product was created. A system developed with venture capital rather than government dollars counts as commercial in the Space Force's eyes — even if the military later asks for adaptations. "We're able to leverage that and go buy those slight modifications and procure those so we don't have to spend our R&D money," Purdy said. That shift effectively makes the private sector the front-end investor for defense innovation.
How it works in practice
New guidance for Space Force buyers requires program offices to first survey the commercial market for any product or service that might meet an emerging requirement. Only if no viable option exists should the service consider a bespoke development program.
The approach favors subscription models, open architectures and technologies that can be upgraded iteratively rather than via decade-long redesign cycles. The goal is to reduce cost, reduce risk and avoid locking in proprietary systems that age out faster than the threat environment.
Still, most military systems demand cybersecurity hardening, radiation tolerance, specialized communications links and verification regimes that go well beyond commercial norms. The question facing government and industry is how far from the commercial baseline one can stray before the label loses meaning.
Is SDA's PWSA really commercial?
The Space Development Agency's Proliferated Warfighter Space Architecture (PWSA) has become a test case for this debate. SDA leaders say their model exemplifies the commercial-first ethos: buying large batches of satellites, relying on fixed-price contracts, using commercial buses and refreshing technology every two years to force rapid iteration.
Those features have helped diversify the supplier base and shorten development timelines.
But many in the industry argue the payloads and mission requirements push the program well beyond commercial territory. The PWSA's tracking and communications satellites must host encrypted links, missile-warning infrared sensors, secure networking hardware, and radiation-tolerant electronics — capabilities unavailable in the commercial market. Even if the bus is commercial, the integration, testing and cybersecurity standards resemble those of traditional military spacecraft.
Jeff Hanke, president of space systems at L3Harris Space and Airborne Systems — one of the PWSA satellite builders — was blunt: these are not commercial satellites. "When people say commercial, there's a lot of facets to that," he said. A true commercial product, he suggested, would be something you could repurpose — like an iPhone — for military use with minimal change.
Instead, the Pentagon typically refers to commercial technologies as those that companies develop with internal investment. "In other words, the company took all the risk, not the consumer," Hanke said. The government's intent, he added, is for industry to "go use their own internal investment to go create products, mature products, quickly, without direction from the government, and bring that product to the government."
Industry's risk calculus
For companies, the shift to commercial-first procurement changes how early investment decisions are made. Hanke said firms must determine where to place "big bets" — technologies they believe will differentiate them in the market and align with emerging government demand. The challenge is that the military may not ultimately buy what industry develops.
The landscape is also shifting as venture-backed companies enter defense markets with significant private financing. Some can afford aggressive, high-risk development in ways that traditional contractors historically have not. "Time will tell, right?" Hanke said, noting that established primes have decades of experience navigating government processes and will adapt to the new expectations.
Still, he sees alignment emerging. "We think the government does need to go faster. We think we're ready to provide solutions quicker," he said.
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