The Pentagon is in the middle of overhauling the structure of its innovation organizations, shifting oversight, and formalizing reporting lines for several offices as part of a broader effort to consolidate the development and fielding of new technologies across the Defense Department (DOD) – rebranded as the War Department by the Trump administration.
According to a Jan. 9 memo by Defense Secretary Pete Hegseth, the overhaul will centralize the DOD’s technology and innovation efforts under the authority of Emil Michael, the department’s undersecretary of research and engineering and chief technology officer (CTO), eliminating several governance bodies and formally grouping key innovation organizations into one ecosystem.
“This new structure creates a stronger identity for our innovation ecosystem and gives industry a more direct path to move technology into the hands of the American warfighter,” Michael said in a statement.
Streamlining governance
Under the new structure, Michael will serve as the department’s sole CTO. He will set technical direction across the DOD, align research and innovation efforts among all components, lead the innovation ecosystem, and advise the secretary on whether the U.S. is gaining an advantage in the global technology competition.
Effective immediately, the Defense Innovation Steering Group, the Defense Innovation Working Group and the CTO Council have been disbanded. In their place, Michael will establish a CTO Action Group (CAG) to coordinate innovation efforts, address barriers, and track transition decisions across the department.
Creating an integrated ecosystem
The Defense Innovation Unit (DIU) and the Strategic Capabilities Office (SCO) have been designated as DOD field activities, a step that Hegseth said formalizes an organizational structure already in use – while establishing “commercial product innovation and operational capability innovation as core enterprise functions,” he wrote.
DIU focuses on technology scouting, rapid contracting, and adopting commercial technologies at the pace of industry. Under the new arrangement, it will work closely with the Mission Engineering and Integration Activity to connect operational problems directly to commercial solutions.
SCO is responsible for identifying and prototyping disruptive applications of new systems, unconventional uses of existing systems, and near-term technologies designed to create strategic effects.
As part of the realignment, the designation of the SCO director as a separate principal staff assistant has been rescinded. The directors of DIU and SCO will continue to work directly with the secretary and deputy secretary, while the CTO provides administrative and resource support and aligns their work with DOD mission priorities. Owen West has been appointed as the next DIU director, according to a Jan. 12 announcement from the department.
Both organizations will adopt term-limited appointments aimed at maintaining agility and bringing in personnel from the private sector and the operational force, according to the Jan. 9 memo.
Together, DIU and SCO will join the Defense Advanced Research Projects Agency, the Chief Digital and Artificial Intelligence Office, the Test Resource Management Center, and the Office of Strategic Capital as part of the DOD’s innovation ecosystem led by the CTO.
Reorganizing the R&E workforce
Under the revised organizational model, assistant secretaries of defense (ASDs) in the research and engineering directorate will develop implementation guidance and assess results across the department, with specific roles assigned by portfolio.
The ASD for science and technology will oversee technology innovation and foundational science, while the ASD for critical technologies will be redesignated as the ASD for commercial technologies, pending congressional notification, to lead policy for product innovation through commercial adoption. The ASD for mission capabilities will oversee operational capability innovation.
Aligning military innovation activities
The military services must reorganize their innovation activities and submit service innovation plans to the CTO within 90 days. Those plans will outline how research, experimentation, and acquisition efforts support technology, product, and operational capability development. Beginning in fiscal 2028, each portfolio acquisition executive will be required to include an Innovation Insertion Increment to enable rapid capability insertion.