The Center of Gravity in Defense Procurement is Moving Earlier Than Most People Realize

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President Trump’s April 30, 2026, Executive Order designating fixed-price contracts with performance-based considerations as the default and preferred method of procurement continues to signal a clear policy push toward greater cost predictability and shifting performance risk where requirements can be clearly defined. In doing so, it focuses the importance of participation in early-stage procurements to mitigate that risk.

When pushed too early, companies under fixed pricing must often absorb uncertainty that are difficult to quantify. That can lead to inflated pricing, reduced participation, or disputes later. When fixed pricing is introduced after capabilities have matured, it tends to function as intended without constraining early innovation.

Over the past several months (some would argue longer), a pattern has been emerging across defense and space procurement that becomes clearer when viewed across agencies rather than through any single program.

Programs are increasingly taking shape through means such as Defense Innovation Unit’s Commercial Solutions Openings, AFWERX solicitations, and other prototype-oriented pathways. These tools are being used more deliberately to define capabilities before a traditional FAR-based program of record is established.

The Defense Innovation Unit has been direct about its desire to move from problem identification to prototype award in a matter of months, often using Other Transaction authority and iterative selection rounds rather than a single, fully defined competition.

The Air Force’s AFWERX and related SpaceWERX efforts follow a similar approach, creating a pipeline that moves companies from early concept work into more operational stages through phased funding and continued evaluation.

What this means is, if you are only engaging when a formal solicitation is released, you are often arriving after key decisions have already been shaped without your cost and risk input.

Many of us in this sector have championed the use and availability of SBIR and STTR pathways and they are increasingly being used to identify companies positioned for transition. Even where enterprise AI is the stated goal, implementation is trending toward layered, mission-specific systems. As a result, requirements are being formed earlier and with more industry input, resulting in solicitations that are intentionally broad and structured to allow the government to learn from the market rather than evaluate against a fixed specification. 

In practice, this points to early phases continuing to rely on flexible instruments such as Other Transactions and prototype pathways. Later phases can then move toward more structured contracts where firm fixed price becomes viable. This matters because success for companies depends less on responding to a final solicitation and more on being present during the earlier stages where problems are being framed (and uncertainty quelled). For legal and compliance teams, data rights, intellectual property, and transition terms should be addressed during prototype phases rather than deferred.  For investors, the question shifts from whether a company can win a program to whether it can enter and move through an earlier pipeline that would give it better positioning.