Pentagon orders study of commercial AI and cloud access to classified networks

The Pentagon wants faster delivery of advanced software, but its next step is a study—not a deployment order. An October 27 memorandum directs its Science, Technology and Innovation Board to examine how commercial AI and cloud services can enter classified networks, alongside possible changes to the organizations responsible for engineering and delivering digital tools.

Emil Michael, undersecretary of defense for research and engineering, issued the directive, which was published October 30, according to MeriTalk. The assignment connects two questions: what commercial providers need to operate in classified environments, and whether the Pentagon’s own structures and authorities support faster software delivery.

Getting a commercial service onto a classified network

The review covers more than AI models. It will assess the strategic and operational benefits of commercial cloud applications, infrastructure, data services, AI and computing resources on classified networks. It also covers the practical requirements vendors face when building, certifying, selling and sustaining those services, including authorization, network access and accounts.

Technical questions include the physical facilities, computing equipment and networking infrastructure needed to support those offerings. The subcommittee will also examine mechanisms that let vendors access customer data across classified network environments. Those requirements sit alongside, rather than replace, the review of security approvals.

The study will assess whether reciprocal or common security authorizations are feasible for services used across military departments and defense organizations. That includes authority-to-operate processes—the security approvals allowing a system to run—and requirements for offerings serving several parts of the department, including defense intelligence organizations, simultaneously.

Organizational structures that are excessively siloed, hierarchical, or hidebound by cumbersome processes may prove unequal to this imperative.

Emil Michael’s October 27 memorandum, quoted by MeriTalk

Buying rules and smaller vendors

The purchasing review will ask whether two existing rulebooks adequately support commercial services: the Defense Federal Acquisition Regulation Supplement, which governs defense purchasing, and the department’s Financial Management Regulation. The board is tasked with examining their adequacy, not implementing a replacement purchasing system.

The assignment explicitly includes barriers facing small businesses and nontraditional defense contractors. The subcommittee must consider approaches that could help those companies compete, alongside the organizational roles and authorities needed to address adoption barriers.

A new agency is one option, not a decision

The board’s official study listing identifies Section 907 of the fiscal year 2026 National Defense Authorization Act as the legal basis for the organizational review. Its Permanent Subcommittee on National Security Innovation will conduct the work. The mandate is to evaluate and recommend a structure for aligning digital engineering and software delivery across the department.

The memorandum lays out four organizational paths for digital solutions engineering within the Office of the Secretary of Defense:

• Establish a new defense agency or field activity.
• Integrate functions into an existing organization.
• Consolidate development responsibilities within existing staff organizations.
• Improve current structures and authorities.

For each option, the study must weigh advantages, disadvantages, costs and resource needs, drawing on lessons from industry and academia. It will also assess what existing software delivery organizations are responsible for, what they deliver, limitations imposed by enterprise data management platforms, resource allocation and integration with departmentwide digital initiatives.

Recommendations must address governance, including AI model management, and purchasing authorities that could support faster engineering and deployment. The study is to begin by November 26, 2026, and conclude within 12 months unless an extension is granted.