Ministers are considering proposals under which the private sector could play a large role in the procurement of weapons and equipment for the armed forces.
The civil servant in charge of defence procurement, Bernard Gray, has submitted a report setting out options for bringing in private expertise, and a decision is expected in the New Year.
Defence officials stressed that no decision had yet been made, but the procurement minister, Peter Luff, said it was "unlikely" that he would stick with the status quo, under which multimillion-pound purchasing decisions are made by ministers and civil servants.
Ministry of Defence procurement has been the subject of damning reports for some years, after a series of projects came in late and over budget.
A report last year from the Commons public accounts committee blamed "organisational failings and a dangerous culture of optimism" at the MoD for purchasing decisions that led the department to overspend year after year.
The new report is part of a reform programme introduced under last year's Strategic Defence and Security Review to fill a £36bn black hole in MoD accounts, which meant the UK's aircraft carriers were left without jets and Nimrod surveillance planes were broken up for scrap.
Gray is understood to have identified three options for change, including the establishment of an independent body to run the £14bn procurement programme.
It would be run by outside contractors with the power to take purchasing decisions without prior ministerial approval and would be accountable to parliament but run as a semi-private operation, in a similar way to the Olympic Delivery Authority.
Other options include contractors running procurement on their own, under ministerial scrutiny, or a trading fund that would keep the budget within the MoD but allow private sector expertise to be brought in.
Gray and Luff will discuss the proposals on a BBC Radio 4 documentary called Buying Defence on 27 December.
Luff told the programme: "We will be as radical, as we need to be to achieve the changes we need to improve the performance of the organisation, and I think that will involve a greater involvement with the private sector in some way.
"I'm open-minded on the options. The only thing I'd say is that I think the status quo is unlikely to endure."
