Modernization Playbook Offers IT Divestment Framework
Federal contractors should prepare for procurement shifts as agencies adopt this new framework for retiring legacy systems.
Updated on Oct. 23, 2026 in Remote Work
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A new modernization playbook from the IBM Center for the Business of Government and the Foundation for American Innovation outlines federal IT upgrade strategies modeled on U.S. Navy frameworks. The guide advises government agencies to adopt an acquire-while-divesting approach to prevent stacking new software onto obsolete legacy systems.
Why it matters
Federal agencies currently struggle with technology debt caused by layering new platforms onto outdated architecture. By codifying the Navy's transition tactics, this playbook offers a standardized path for contractors and agencies to replace legacy infrastructure while scaling modern pilot programs.
The U.S. Navy transitioned 10 pilot programs into enterprise services out of 25 active pilots in 2025, a significant increase from the few pilots conducted annually before 2025. There are currently 24 additional use cases in the queue for potential enterprise integration.
The players
U.S. Navy
The maritime branch of the U.S. Armed Forces that maintains large-scale IT and command-and-control operations.
IBM Center for the Business of Government
A research organization that analyzes management and operational practices within public sector agencies.
Foundation for American Innovation
A policy-focused nonprofit that supports the modernization of government technology and institutional processes.
Justin Fanelli
A key technology official who oversees frameworks for U.S. Navy digital acquisition and pilot execution.
The details
The playbook emphasizes mapping IT processes, data, and finances before integrating new systems, using metrics like user time and adaptability to evaluate success. To prevent legacy bloat, the Navy utilizes an acquire-while-divesting strategy, which requires retirement planning for old systems within project solicitations and funding models. Private sector partners further assist by using their own capital to pilot mature commercial technology, reducing upfront risk for the agency.
Timeline
Before 2025: The Navy executed only a few technology pilots annually.
2025: The Navy increased its annual pilot programs to approximately 25.
Summer 2026: The modernization playbook was published.
October 14, 2026: Justin Fanelli discussed the framework at a summit in Washington, D.C.
Market Landscape
This playbook aligns with the federal government's broader pivot away from monolithic IT contracts toward agile, modular acquisition. It follows the pattern set by OMB mandates for technology modernization by providing a granular, operational methodology for agency-level legacy divestment.
Government contractors should update proposal structures to include explicit retirement plans for legacy systems, aligning with the Navy's divestment-first model. Expect agencies to prioritize vendors who bring their own funding or commercial maturity to pilot programs.
The takeaway
Agencies aiming to modernize should prioritize the mapping of financial and data dependencies before deploying new pilots. Contractors should monitor the Project Dynamis documentation for future cues on how the Marine Corps handles command-and-control transitions.
Further reading
For broader trends in digital infrastructure, see Remote Work.
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Should government agencies be required to retire old systems when adopting new technology?
