Navy contracting officers will soon see new incentives to ‘go commercial’

Navy leaders are preparing to roll out new procurement incentives as part of a broader campaign inside the department to confront challenges that are affecting how sailors and civilians buy and adopt commercial technologies for real-world missions.

“I think we’ve done a pretty good job of changing some of the incentive structures for our industry partner teammates. What we are now working through — and you’ll see quite a bit from the Department of the Navy on this in the next week — is changing the incentives for our acquisition teammates. We’re going to incentivize those contracting officers, those program officers, to go commercial,” Navy program manager Artem Sherbinin said Tuesday at the Special Competitive Studies Project’s AI+ Expo.

Sherbinin previously served as an engineering officer, navigator, and air defense planner onboard guided missile cruisers and destroyers. He was also the inaugural chief technology officer at the Navy’s Task Force Hopper.

After the panel, he told DefenseScoop that, in the current environment, acquisition program managers are assessed based on “cost, schedule, and performance” — and “performance refers to meeting requirements documents.”

Those input metrics being so sharply focused on compliance at times can prevent the Navy’s purchasers from taking on risks that are often associated with existing and emerging technologies. 

“We want to shift to an output- and outcomes-based approach for measuring success. We are going to outline some of those metrics in an upcoming ‘Commercial Acquisitions First’ memo, as well as subsequent trainings for the acquisitions workforce,” Sherbinin told DefenseScoop.

This new plan for procurement incentives is set to drop at a time when Navy officials are pursuing a large-scale modernization effort that prioritizes the optimization of strategic capability investments, and aligns with the Trump administration’s vision to position the government to operate in a more efficient manner.

At the AI+ Expo, Sherbinin also said the forthcoming acquisition incentives stem from two primary motivators: internal statistics and the pacing threat of China.

“We believe a conflict over Taiwan with China is likely inside of between 2027 and the early 2030s — we have publicly stated that, our service chief and our secretary of the Navy have reiterated that constantly. If we’re serious about that, the Navy is actually going to have 13 less warships between now and 2027, which means the only thing that’s going to come between now and then is new software. And so how we buy new software has to change, right? This is something that we’re going to buy off-the-shelf. It’s not something we’re going to create in a government lab,” he said. “And so we have to reincentivize how our acquisitions workforce thinks through procurement.”

He pointed to recent defense data that revealed the Navy accounts for the smallest percentage of new procuring capability from new entrants in the defense industrial base of any of the Pentagon’s departments. 

“We account for the smallest percentage of other transaction authority contracts, and so we’re looking to incentivize those numbers to go up,” Sherbinin said.