Overhauling the Innovation Ecosystem
and Transforming the Navy to a Manned / Unmanned Fleet
Welcome to the latest edition of Defense Tech and Acquisition.
SECWAR Overhauls the Innovation Ecosystem around USW(R&E)
DoW Makes a $1B Investment in L3Harris for SRMs
Army pursues flexible software funding and accelerates FLRAA.
Navy’s goes all in on unmanned systems and acquisition transformation.
Air Force beefs up the F-22 for extended life and embraces zero trust.
Space Force expanding competition with potentially less predictability.
Ukraine shows power of UGVs. China goes full production on J-20 & 35.
Congress has two weeks to pass defense bill - Members are hopeful.
The War Department Overhauls Innovation Ecosystem to Accelerate Technology to the American Warfighter
SECWAR issued a memo: Transforming the Defense Innovation Ecosystem to Accelerate Warfighting Advantage highlighting we must transform how the Department fights, buys, and builds.
We must organize to deliver innovation in three ways:
Technology Innovation: Sustain investment in defense unique innovation and convert discovery and ideas into protected advantage.
Product Innovation: Harness American entrepreneurs, capital markets, and commercial tech to adopt and scale faster than our adversaries.
Operational Capability Innovation: Combine tech and weapons with tactics and doctrine in new ways of fighting to create asymmetric advantage.
Directed Actions
USW(R&E) is the sole CTO
CTO CAG is the senior forum for the innovation ecosystem – Eliminates the DISG, DIWG, etc.
DIU and SCO are field activities – along with DARPA, CDAO, TRMC, and OSC will comprise the DOW Innovation ecosystem led by the CTO
ASW Critical Technologies redesignated to ASW Commercial Technologies
Within 90 days, Service Secretaries will brief CTO on Service Innovation Plans and how they organize their communities around the three innovation outcomes.
Beginning in FY28, each PAE shall include an Innovation Insertion Increment (III) for rapid capability insertion.
Service innovation leads shall participate in quarterly CAG reviews.
Mission Engineering and Integration Activity (MEIA) will execute problem-driven engagement organized around the Joint Forces top Operational Problems
DIU will execute product-driven engagements in support of its mission and CTO adoption priorities helping PAEs and PMOs better adapt what industry built. This will replace the fragmented outreach with a coherent system.
Service Implementation Plans
How they organize, enhance, reduce overlap/duplication, and accelerate its innovation communities – labs, RCOs, SW factories, and experimentation units.
How portfolios are organized to rapidly onramp innovation and connect to Service and Joint Operational Problems (JOPs) and MEIA campaigns.
Industry engagement
Related News Release:
Owen West named new DIU Director starting in March. He is currently leading the Drone Dominance initiative.
Cameron Stanley named new CDAO.
Our Take: These vital initiatives align organizations, resources, and efforts to harness technologies for military superiority. The innovation ecosystem has evolved through distinct phases. Historically, it centered on DoD Labs, DARPA, and the traditional defense industrial base. DIU and AFWERX then sparked a new ecosystem that embraced commercial and dual-use technologies while actively engaging Silicon Valley and broader tech sectors to connect them with DoD needs. This proliferation created hundreds of organizations, each with its own mission, scope, and focus. Though it expanded reach, it diluted talent, funding, and bandwidth, undermining effectiveness.
The current phase aims to consolidate around a core set of organizations with sharply defined missions. Beyond OSW, the Services must now align their ecosystems to this streamlined model. Clear entry points for industry engagement must persist, matched by DoD’s provision of precise operational insights and demand signals. Stronger alignment should prioritize commercial-first solutions, leverage industry’s tech strengths, and focus defense S&T on areas of unique advantage. While balancing short- and long-term research remains essential, large production contracts will always be key to attracting private capital and accelerating R&D to rapidly deliver capabilities to the warfighter.
DoW Launches AI Strategy to Secure American Military AI Dominance
The DoW launches a transformative AI Acceleration Strategy that will extend our lead in military AI deployment and establish the U.S. as the world's undisputed AI-enabled fighting force.
The catalyst for this acceleration will be seven Pace-Setting Projects (PSPs), each with a single accountable leader and aggressive timelines. These PSPs will establish a new AI execution standard for the entire Department:
Warfighting
Swarm Forge: Competitive mechanism to iteratively discover, test, and scale novel ways of fighting with and against AI-enabled capabilities – combining America’s elite warfighting units with elite technology innovators.
Agent Network: Unleashing AI agent development and experimentation for AI-enabled battle management and decision support, from campaign planning to kill chain execution.
Ender’s Foundry: Accelerating AI-enabled simulation capabilities - and sim-dev and sim-ops feedback loops - to ensure we stay ahead of AI-enabled adversaries.
Intelligence
Open Arsenal: Accelerating the TechINT-to-capability development pipeline, turning intel into weapons in hours, not years.
Project Grant: Enabling transformation of deterrence from static postures and speculation to dynamic pressure with interpretable results.
Enterprise
GenAI.mil: Providing Department-wide access to frontier generative AI models, like Google’s Gemini and xAI’s Grok, for all DoW personnel at Information Level (IL-5) and above classification levels.
Enterprise Agents: Building the playbook for rapid and secure AI agent development and deployment to transform enterprise workflows.
Acceleration Expectations
Speed Wins
AI Model Parity
Wartime Approach to Blockers
Competition > Centralized Planning
AI-Native Warfighting
Modular Open Architectures
Clarifying Responsible AI at DoW
Becoming an AI-First Department
Related Stories:
Transforming Advana to Accelerate AI and Enhance Auditability
The Advana program has become a cornerstone of DoW’s efforts to exploit our extensive data assets - not just for enterprise efficiency but for military advantage.
However, the evolution of Advana's data platform and application ecosystem over the last six years has led to a complex technical and programmatic architecture that we now must rationalize in order to capitalize on the full potential.
Effective immediately, the USW(R&E) and CDAO will restructure the Advana program into three distinct program components each with a clear focus:
War Data Platform (WDP) program team, focused on expanding the core data integration layer of Advana to provide standardized data access that streamlines secure, rapid development and integration of agentic AI and other applications Department-wide.
Advana for Financial Management program team, focused on supporting the Comptroller Audit Remediation Teams in our critical mission to achieve a clean audit opinion on the FY27 Defense Working Capital Fund financial statements and FY28 agency-wide financial statements.
WDP Application Services program team, focused on rationalizing all other existing (non-audit related) Advana application environments, supporting migrations to the new WDP architecture, and supporting self-service integrations of new agentic AI and other applications by DoW organizations.
RTX Buybacks and Dividends
On January 7, 2026, the White House issued a sweeping Executive Order (EO) titled Prioritizing the Warfighter in Defense Contracting, which marks a profound shift from a shareholder-first financial model to a production-first model.
While the government has been a terrible customer these last few years by not providing steady demand signals to build confidence in these investments, the data shows this is only part of the problem.
RTX (Raytheon) is currently sitting on a $251B backlog, yet it takes upwards of 24 months to secure parts for a single Patriot radar unit.
RTX is not alone - the “Big Five” are failing across every major strategic domain.
Lockheed Martin: The F-35 TR-3/Block 4 upgrade is five years behind schedule and $6B over budget.
General Dynamics: Submarine production is stuck at 1.2 boats annually against a requirement for 2.0.
Northrop Grumman: The Sentinel ICBM program is 81% over budget ($141B total) and years behind schedule.
The government’s new stance is simpler: if you have the balance sheet capacity to fund a $10B accelerated buyback during a technical crisis (as RTX did in 2023) you have the capacity to fix your own production lines without a taxpayer bailout.
RTX has returned over $44B to shareholders through dividends and buybacks, more than 3X its investment in manufacturing (CapEx) over the same period.
Lockheed Martin represents the pinnacle of this “financialized” defense model.
The company has not only paid dividends for over 40 years but has increased that dividend for 23 consecutive years.
This streak became a sacred cow for institutional investors, but it created an impossible internal hurdle for management - as it becomes it becomes near-impossible to reallocate capital toward long-term, risky industrial projects without decimating the stock price.
The forced pivot to CapEx is a massive tailwind for the sub-tier supply chain. When RTX is forced to spend $5B on “industrial capacity” instead of buybacks, that money flows to advanced manufacturing, robotics, and energetic suppliers.
Advanced Manufacturing: Firms providing automated composite layup and 3D-printing for aerospace will see a surge in orders.
Defense-Tech Startups: Smaller, more nimble firms can now partner with primes who are suddenly desperate to show “production innovation” to the Pentagon to get their dividend licenses back.
Domestic Sourcing: The “Golden Dome” missile shield and other 2026 supplemental bills favor companies that have already invested in American jobs rather than offshore arbitrage.
Matthew’s Hot Take: Before, any defense tech start-up aimed at solving a pain point or bottleneck for a prime would have a hard time getting a meeting with their corporate venture teams, but after this announcement, expect to see a flurry of activity out of these entities.
Our Take: While there are some egregious examples that show the primes not taking their responsibilities seriously enough, it’s too simplistic to place the blame only at the feet of the primes. DoD built this system that rewards low-risk behaviors (cost-plus contracts and reimbursable IR&D) coupled with very low profit margins. This system forced defense contractors who get most of their funding from the government to adapt and reward shareholders in the best way possible. Corporate compensation boards structured executive incentives around efficient execution, cash flow, and work backlog which rent-seeking investment funds rewarded. There was no reward for huge outlays of cash towards expanded manufacturing that the government may not place orders against or change its mind in one year (which happened often). So, while this shift is desperately needed and defense primes need to adjust their risk calculus, DoW will have to reward big investments (not just with the primes but new entrants too) with some degree of stability. The multi-year contracts approved in the FY26 NDAA go a long way. Dependence on reconciliation dollars does not however and maxed out SM-6 orders in FY26 can’t lead to min sustainment rate orders in FY27! FYI - the $1.5T FY27 superbudget is contingent on another reconciliation package.
DoW Announces $1B Direct-to-Supplier Investment to Secure the U.S. Solid Rocket Motor Supply Chain
The DoW working in partnership with L3Harris, today announced the signing of a letter of intent outlining agreed-upon investment terms pivotal to expanding the production capacity of U.S. solid rocket motors. The announcement marks the first direct-to-supplier partnership of this kind, with the DoW committing to a $1B convertible preferred equity investment in L3Harris’ Missile Solutions business, which will become a separate company as part of this transaction.
This partnership positions the DoW and L3Harris to negotiate multi-year procurement framework agreements for solid rocket motors, vital to several critical munitions, pending Congressional authorization and appropriations.
An Initial Public Offering (IPO) is planned in the second half of 2026, providing the US government the opportunity to benefit on this unique investment framework.
This investment will expand production capacity of a critical node to national security and the munitions industrial base.
This is a direct outcome of the Department’s new Acquisition Transformation Strategy and its Go Direct-to-Supplier initiative. The strategy calls for the Department to negotiate and invest directly with critical suppliers to save money and time, while proactively managing the single points of failure.
Under the framework of this unique strategic investment model, the DoW will make a $1B convertible preferred equity investment as the anchor investor in L3Harris’ new Missile Solutions company.
“We are fundamentally shifting our approach to securing our munitions supply chain. By investing directly in suppliers we are building the resilient industrial base needed for the Arsenal of Freedom. This direct-to-supplier model is a crucial step toward replenishing stockpiles, rebuilding our military, and reestablishing deterrence by ensuring the availability of critical components.” Michael Duffey, USW(A&S)
“We’re taking action to build today’s ‘Arsenal of Freedom’ by launching a pure-play missile solutions provider. Recent Trump administration actions have placed renewed emphasis on strengthening the defense industrial base and reinvigorating competition following a 30-year wave of consolidation. Building on several years of sustained investment and operational improvements by L3Harris, this new company will serve as a key partner to the DoW in supporting efforts to deter and defeat America’s adversaries.” Christopher Kubasik, L3Harris Chairman and CEO
Related Stories: Pentagon to invest $1B in L3Harris rocket motor business, shares surge
L3Harris shares were up 11.4% in pre-market trading. The deal represents the latest U.S. government investment in Corporate America, which has included a 10% stake in chipmaker Intel and investments in critical mineral producers.
The investment in a defense contractor is not a total surprise after Commerce Secretary Howard Lutnick last August said the Trump administration was weighing equity stakes in major defense contractors, including Lockheed Martin.
The investment in Intel has been a boon for the company, whose shares have more than doubled since the announcement.
The transaction structure—combining a government convertible preferred security with a planned IPO while maintaining parent company control—is highly unusual in the defense sector and may face scrutiny from regulators and lawmakers concerned about conflicts of interest and market competition.
Our Take: This is a massive new paradigm for the defense industry. L3Harris stock is up 25% in the last month. The administration and DoW are very critical of the primes and others for not investing enough in production capacity and are forging new deals for fuel billions in new investments to rapidly scale and modernize weapon system production. Having experienced industry leaders from finance to tech in key Department leadership positions have proven vital to forging these novel strategies. Time will tell to see how these direct investments and equity in major companies play out to align Department and Industry interests while fueling a competitive defense ecosystem and free market capitalism. As the demand and backlog is so high for rocket motors, it is interesting to see this L3Harris deal given than the primes who were told to invest their earnings in infrastructure and not stock buybacks especially when L3Harris actively does stock repurchasing and their 3Q25 earnings show generous free cash flow?
Budgeting to Transform Military Force Structure
For the first time in several decades, the U.S. is on the verge of a real transformation of its military force structure.
The true collective commitment to achieve results will be measured not just in speeches and statements, but in real dollars — from this year’s appropriations act, as well as the forthcoming FY27 president’s budget request.
Those dollars should go to achieve a true high-low mix of systems.
The Pentagon has also taken a significant leap in accelerating defense procurement with its initiatives aimed to rebuild the Arsenal of Freedom.
However, there is much to change to achieve this vision. From 2012 to 2025, Pentagon spending was subject to a continuing resolution 46% of the time — meaning billions in dollars lost and years of delays for new programs.
And the color of money matters too: Pentagon budgets continue to favor RDT&E funding over procurement dollars.
This situation is inadequate for meeting the challenges of the highly volatile threat environment - the military needs new capabilities much sooner!
The Pentagon can no longer constrain velocity-focused high-tech programs to a small number of special purpose accounts; these programs must comprise a core part of the military services’ base budgets (that pass Congress in a timely fashion).
The combination of forward-looking legislation and new defense tech afford our leaders a generational opportunity to get the “rebuild-and-reform” agenda right.
Our Take: Amen! The Arsenal of Freedom only happens when real production dollars (stabilized over a reasonable time period) are balanced across high-end and highly scalable portfolios. Ordering more of the same (or slightly different) is very unlikely to get us there.
The Last Supper Is Over
History will look back on Pete Hegseth’s speech at Starbase, TX and the reforms it unveiled as an inflection point for the Pentagon in how it acquires new technology and uses autonomy to fight and win wars. Let’s hope we remember this as the moment the long hangover from the Last Supper ended and the table was set for the First Breakfast, with plenty of seats for new entrants, innovators, and heretical heroes.
Dismantling the paperwork-driven joint requirements process was the first step. Creating the Mission Engineering and Integration Activity to interface with industry was a second. The reforms announced this week are another giant leap in the right direction.
The big announcement at Starbase is an AI acceleration strategy to transform our Armed Forces into an AI-first warfighting force across all domains, from the back offices of the Pentagon to the tactical edge on the front lines.
It’s an aggressive effort to bring cutting-edge AI technology (and technologists) from the commercial sector into the military fold where it can be put to good use.
The AI acceleration strategy is leaning heavily on the private sector to close the gap between commercial and government AI capabilities. It sets an aggressive standard for accreditation: new models should be deployed “within 30 days of public release.”
The AI acceleration strategy acknowledges that “the person is the program.”
We’ve moved beyond comprehension to action. This strategy has the ambition to overhaul the Pentagon for the AI age: a full gut renovation, not a shiny coat of paint on the old system. Now we have to execute.
Our Take: Kudos to Shyam for tirelessly setting the table for First Breakfast.
SBIR Reauthorization Update
This is the latest on where the future of the SBIR program:
Negotiations are moving forward much more quickly than in prior months. All sides say they want to get to 'yes' and are acting accordingly.
Sen. Ernst offered a compromise proposal on Jan. 8 in response to a proposal by Sen. Markey in mid-December.
Sen. Ernst's counter proposal sidesteps the commercialization benchmark ("SBIR Mill") issue by instead directing agencies to set a limit on proposals per year by a given company and its affiliates.
This is a good solution. It allows everyone to remain in the program on even footing, and it's simple to administer.
Any reasonable proposal limit (to be selected by the agencies) would only impact a handful of companies that submit very large volumes of proposals.
Unfortunately for folks who want a swift reauthorization, that handful has considerable influence with Sen. Markey’s team.
The Strategic Breakthrough (Phase III transition program) is included in both Ernst and Markey proposals. ✅
The Open Topic Definition is included in Markey proposal but omitted from Ernst’s proposal. ❌
This is needed to prevent gamemanship by legacy program offices that resist commercial innovation by appending the word "open" to legacy narrow topics
The FFP Contracting Preference is omitted from Ernst and Markey proposals. ❌
This is needed to prevent Navy from excluding commercial innovation by requiring all Phase II awards have a DCAA-approved cost accounting system.
The Opportunity to Correct the Record for Erroneous Foreign Risk Denials is included in Markey proposal but only partially included in Ernst proposal. ✅
SECWAR Taking Sledgehammer to 8(a) Program
DoW is investigating 8(a) program, the Small Business Administration program. 8(a) has morphed over the decades to add non-value added fees for many contracts then handed off to “beltway bandits”. DoW awards roughly $100M sole source 8(a) contracts daily. Law requires the DoW to spend $100B per year to small business including 8(a). Doing line-by-line review of all 8(a) contracts >$20M. They must increase lethality. They must do away with pass through schemes and require the 8(a) awardees to do the work.
Federal Workforce Changes
Per OPM, the federal workforce declined 219,922 since Jan 20, 2025. This includes 65,758 from DoW. Of those, 44,468 were separations, 31,689 retirements, 8,212 expired appointments, 3,883 transfers out, and 4,075 other separations with 26,573 accessions. The number of DoW contracting officers declined by 3,100.
Our Take: The gutting of the contracting workforce should be viewed as a DoW emergency. Without the ability to execute contracts and agreements (and right now only COs can process and sign awards), all the initiatives around speed of delivery and expanding the industrial base are put at grave risk. Recommend the DSW or USW(A&S) to establish a task force to focus on this issue ASAP.
The $1.4B APFIT Cycle
APFIT = Accelerate the Procurement and Fielding of Innovative Technologies. It is a DoW program designed specifically to transition mature, production-ready technologies into operational use by funding the purchase of initial production units.
The program has evolved significantly from its $100M pilot in FY22. For FY26, the program has a total authority of approximately $1.4B.
APFIT funding has historically generated 3.4x leverage downstream with the $935M in APFIT awards to date producing $3.2B in follow-on contracts.
To access the $1.4B APFIT funding pool, companies must align their SAM.gov registrations with the specific NAICS and PSC codes that dominated the FY26 Cycle 1 awards.
The data confirms that while the program is open to all, funding flows disproportionately to five specific technology vectors.
While APFIT has its own line, these PEs represent the primary “feeder” accounts where innovation funding is concentrated in the FY26 budget:
PE 0901388D8Z (Procurement, DW): Major Equipment, OSD (Item 4: APFIT) - The core APFIT checkbook.
PE 0604250D8Z (RDT&E, BA 4): Advanced Innovative Technologies (SCO) - $1.16B total authority (Base + Recon).
PE 0603680D8Z (RDT&E, BA 3): Manufacturing S&T (ManTech) - $409.5M target for biomanufacturing.
PE 0604331D8Z (RDT&E, BA 4): Rapid Prototyping Program (RPP) - $235.3M.
There are some notable and consistent big winners:
Marine Corps (Force Design 2030 Priorities): The dominant winner of Cycle 1 ($160M+ awarded), driven by aggressive divestment of legacy systems.
Army (Tactical C2 Modernization): Secured the largest single award ($49.7M) by leveraging massive growth in network modernization accounts.
Space Force (Space Domain Awareness): The fastest-growing service budget (+40% RDT&E growth), heavily focused on resilient architectures.
Out-year funding is the only truth. In the APFIT selection process, a compelling slide deck cannot overcome a lack of budgeted demand. There are however a mix of different eligibility criteria that are worth paying attention to.
Feedback from the USW(R&E) APFIT Program Manager (Devin Bohanan):
We now have two cycles per year. If they miss the current cycle (26-2), the next cycle (27-1) will open up over the summer, so teams don’t have to wait a full year.
Many of our ‘requirements’ are more flexible than presented. Other than what’s in statute (small/non-traditional, $10M-$50M, PROC only), we may be able to help teams make their project work if they engage early. We don’t want good projects to self eliminate. We treat each project as unique and can talk through nuances based on mission needs.
Our Take: Ross smartly identifies some interesting trends and offers some sound advice to industry partners who are mature enough to pursue an initial production contract. Our advice to industry is to bring something that materially moves the needle operationally, work with your operational folks and Devin to pull the other pieces together. R&E has a lot more clout than past administrations and OSW will make more budget decisions, so there may be opportunities to press from above if there is no program office immediately stepping forward.
US Hypersonic Missile Range Could Extend With New Rotating Detonation Ramjet Engine Tests
GE Aerospace and Lockheed Martin revealed the results of a new propulsion demonstration that could reshape the future of hypersonic flight. They showed how a liquid-fueled rotating detonation ramjet, paired with a new tactical inlet, could tackle one of the biggest problems in hypersonic systems. That problem is efficiency at extreme speeds above Mach 5, or more than 3,800 miles per hour.
The test effort brings together two advanced aerospace ideas that have matured rapidly in recent years. Hypersonic vehicles promise faster response times and longer reach for future defense systems.
Yet major technical hurdles remain. By combining a rotating detonation engine with a dual-mode ramjet inlet, engineers aim to close what is often called the efficiency gap that limits the performance of current hypersonic missiles.
Many hypersonic missiles rely on ramjets for sustained high-speed flight. A ramjet has no moving parts and depends on forward motion to compress incoming air. Yet that requires boosters which add weight, complexity, and cost.
GE Aerospace is addressing this challenge with a rotating detonation engine. Instead of steady burning, this engine uses a continuous supersonic detonation wave that travels around a cylindrical chamber.
Rotating detonation engines can be about 25% more efficient than conventional combustion systems.
They are also smaller and lighter. Unlike traditional ramjets, they can operate at lower speeds, even before reaching supersonic flight.
Together, the rotating detonation ramjet and the tactical inlet point toward more compact, affordable hypersonic propulsion. Fewer parts and smaller boosters could reduce costs and enable large-scale production.
The Pentagon Must Ignore Contractors Whining About New Scorecards
Defense contract incumbents and entrenched interests will whine the new portfolio scorecards are not fair.
Even if there is a kernel of truth to their complaints, our defense acquisition system is so broken, our need for reform so acute, and the proposed solution so obvious that we cannot let quibbles over methodology grind progress to a halt.
Portfolio scorecards would capture programmatic performance to deliver capability, scale production, implement commercial solutions to allow Department leadership to assess portfolio and program health.
Such portfolio scorecards can and should be a game changer. In the short-term, they can alert leadership when contractors (or government employees) are not performing and need more attention, new leadership, or deserve penalties that can better align incentives and protect the taxpayers’ interests.
In the longer-term, they could empower the defense acquisitions system to at least gain parity with private-sector processes. Portfolio scorecards could demand continuous improvement of contracting partners.
Entrenched interests will also try to poke holes in the initial version of the portfolio scorecard. If they are making genuine recommendations that the Pentagon can implement immediately to make the scorecard more rigorous, we should listen.
People serious about acquisition reform – which should be everyone concerned about America’s ability to deter great power conflict – must see such complaints for what they are: mere roadblocks designed to prevent changes to the status quo.
Abundance for Defense: Why It’s So Hard for America to Build for Mass
Beyond policy prescriptions I think the US has specific values that are a part of what we might call the American Way of Building Stuff Today, and these tendencies are very important to identify.
We are very good at talking about sensors, shooters, and decision loops, but less comfortable discussing the broader questions about the challenges of building a robust defense industrial base in the US.
Most people in the defense space already recognize that the old theory of victory using exquisite platforms and high technology is being rejected.
The pivot to mass, attritable systems, and distributed architectures reflects a consensus that technological superiority alone will not deter peer adversaries.
The rise of China’s military and the shift to mass means our technology is no longer enough.
Building for abundance means building for attrition, and building for attrition means accepting losses at a scale that American political culture has not had to confront since 1945.
The political lessons of the 1991 Gulf War was American wars could be quick and American casualties could be kept low, as long as technological superiority was maintained.
The discussion about mass, which I contend should be part of an Abundance for Defense agenda, is an implicit admission that the Third Offset strategy has broken down. We can no longer control the battlespace well enough to protect expensive, low-density platforms from peer adversaries.
Even with robot armies, we will be fighting wars of attrition. This is the truth of Abundance for Defense that will make it hard to implement. Mass is inseparable from attrition. In wars, there will be human attrition. Political will to fight may run out far sooner than our ability to manufacture.
Capitalism has made our economy the most dynamic in the world, and it makes sense that in defense tech circles, founders and financiers who rely on capitalism for a living believe in it so much. In their view, if we just let startups disrupt the prime contractors, the market will naturally provide the speed and scale we need. Again, this is somewhat true.
Defense itself is a monopsony where the state is the only customer, the primary regulator, and the final judge of what gets built. To build an abundant defense industrial base, there will be major elements of a non-free market.
Capitalism is designed to be efficient, which means it is designed to eliminate waste and idle capacity.
War rewards speed, mass, and the ability to act. It requires collaboration and strategy, but it also requires an executive who can listen to stakeholders and then decide. To build an abundant defense industrial base, we will have to accept that some domains require a different set of values, ones that prioritize outcomes over process and give leaders the authority to build.
Defense Tech Capital Deployment
Emerging Defense has a 2025 Defense Tech Market Report coming out next week and offered some very interesting previews on LinkedIn.
Top 5 Categories:
Neo Primes: Anduril Industries and Helsing captured $3.2B
Communication: Driven by CHAOS Industries Series C & D ($785M) captured ~$800M in funding
Maritime: Saronic Technologies ($600M), HavocAI ($85M), and Blue Water Autonomy Inc. ($64M) raised huge amounts as the sector snagged ~$775M
Rockets/Hypersonics: Castelion ($450M), X-Bow Systems ($105M), and Cambridge Aerospace ($100M) raised the most amongst the 7 deals tracked
Software: Led by Govini ($150M) and Auterion ($130M), the sector raised ~760M. This sector saw the most individual rounds (31 total).
Hadrian Raises Again at $1.6B Valuation
Hadrian, at its core, is a software-defined precision manufacturing company.
In particular, the company focuses on those high-tech, tricky components that can slow down production and delivery—from engine components to spaceflight hardware.
The company uses high-tech robots and process automation to, essentially, make high-tech manufacturing a whole lot faster and cheaper.
In addition to their own factories, the company operates what the spokesperson called a “factory-as-a-service” model which allows partners (like Lockheed Martin) to “rely on [them] for components, assemblies, and finished products as part of a scalable production system that can grow with program needs.”
DIU Offers $100M in Prizes for Voice-Controlled AI-Enabled Drone Swarm Orchestrator
DIU is offering up to $100M dollars in prizes for companies to prototype new user-friendly “orchestrator” control software for whole formations of unmanned air, ground, and water vehicles.
If selected, performers must be able to begin Sprint 1 testing within 10 days of selection notification,” says the detailed guidance for interested companies, with successively more complex stages following fast over the next six months.
The project aims to move beyond the current, labor-intensive model in which each drone requires at least one trained human operator to constantly direct it by remote control during all but the most basic tasks.
Instead, DIU wants to develop an Autonomous Vehicle Orchestrator, an AI mediator between human and machine that turns plain-English instructions into detailed machine-readable commands the robots can execute.
AI Applied to Tackle Energy Conundrums for Modern Battlefields
Government and private sector entities are pursuing AI solutions that would work in the energy-constrained environment of the modern battlefield.
The goal of DARPA’s Mapping Machine Learning to Physics, or ML2P, program is to “redefine power as a first-class citizen in machine learning workflows and throughout the machine learning lifecycle.”
In a situation where an operator has limited battery power, “you want to optimize the systems running the various machine learning models for performance.”
To evaluate how different systems balance power and performance, ML2P is utilizing a framework called the Pareto frontier, which shows the best possible trade-offs between things you care about when you can’t improve one thing without making another worse.”
Once DARPA selects performers, work on the program will occur over two years, with experimentation after an initial six-month set-up period.
One company, Spartan Forge is working on lightweight, specialized models that can run in the field and don’t depend on any significant infrastructure.
Our Take: This is really key since contested environments will play havoc on any heavy energy demands (solar will provide limited output, fuel will be prioritized for combat platforms and programs like Project Pele while very interesting may take years to operationalize at scale).
Joint Team Conducted the First Kinetic Drone Swarm
Executing a kinetic drone swarm is a notable milestone in the Pentagon’s effort to experiment with unmanned systems that communicate across a common operating network to accomplish various tasks.
A drone swarm can refer to multiple unmanned systems being used at once, but the phrase specifically implies that these platforms are coordinating with each other across a shared network to fulfill a specific military objective.
The exercise was part of a Pentagon project called Swarm Forge, which intends to test and scale “ways of fighting with and against AI-enabled capabilities.
Technology from several UAS-centric companies participated in the demonstration, specifically Auterion, Kraken Kinetics, and SINE Engineering.
Our Take: While I’m sure the Ukrainians would snicker at this demonstration given their increasing combat use of AI-controlled drone swarms, this is an important step for the U.S. in getting soldiers more comfortable with its use, perfecting CONOPS for employing them and getting feedback to the developers who make them.
The Agentic Revolution in War
The first nation to fully operationalize agentic systems in military decision- making will shape the course of the 21st century.
This defining shift moves beyond the development of large language models toward agency: systems capable of not only responding to human prompts but actually executing and accomplishing complex tasks at paradigm-shifting speeds.
Agents are proactive, goal-driven systems that combine AI capabilities—like memory, tools, and control logic—to perceive, reason, and act with some degree of autonomy, performing tasks guided by human intent and oversight.
While today’s narrow and brittle AI capabilities have performed, at best, like a clever junior staffer, agentic systems unlock the full potential of AI to act as a genuine mission partner.
Genuine strategic advantage in this new era will not come from stealthier jets, faster missiles, or larger drone swarms alone; it will come from new kinds of human-machine teaming that drive accelerated decision-making.
This is the essence of Agentic Warfare: decision advantage at every echelon that enables U.S. forces to outpace and outmaneuver our most capable opponents.
Agentic AI can deliver decision advantage today in different parts of the OODA loop: the Observe/Orient phase, where commanders are blinded by data noise, and the Decide phase, where planning is bottlenecked by manual analysis.
Agentic Alerting (The “Observe/Orient” Solution): In today’s saturated operational environments, the “Observe/Orient” phase is defined by a deluge of sensor data that overwhelms human cognition.
Agentic Planning (The “Decide” Solution): The “Decide” phase is currently constrained by planning cycles that take months to produce binders of static options.
Agentic Alerting can identify anomalies at machine speed, turning a reactive force into a proactive one—prioritizing the alerts that matter and redirecting ISR assets and other sensors before a danger fully materializes.
Agentic Planning systems break linear bottlenecks by providing planners AI agents coupled with automated, physics-based modeling and simulation tools.
Our Take: DoW needs to be exploring agentic AI at scale. It alone can digest and rationalize the enormous streams of data that will be generated by populations of sensors and rapidly provide COAs to human decision makers. PowerPoint charts and whiteboards will no longer cut it as enemy hypersonic missiles are inbound or a stealthy drone force pops above the horizon. Space-based intel is going to abound with the launch of proliferated systems and agentic AI capabilities will be needed to sort through the noise and find the relevant target tracks.
War of Inventory
Future great-power conflict victory will more likely resemble World War I than World War II where inventory on all sides is depleted within the first weeks of fighting.
The war in Ukraine exposed a critical weakness: the U.S. defense industrial base cannot scale production quickly, even when operating in peacetime conditions.
To future-proof American military dominance, the U.S. must focus not only on system performance, but on how those systems are manufactured.
U.S. weapon systems are exquisite, specialized, and produced in low to medium volumes. The optimal manufacturing approach for such products is flexible manufacturing where machining centers can be rapidly reprogrammed.
By contrast, high volume mass manufacturing relies on tool-based methods, which require significant upfront investment but once in place, production rates are far higher and unit costs decline sharply as volume increases.
Defense contractors understand these lead times and respond rationally by limiting capital investment.
China’s industrial base is geared for mass, US is for precision and flexibility.
This leads to notable differences in how products are made – Chinese manufacturers would cast products to get them to wanted shapes, then machining would be performed to gain tolerances.
In the US, product would be machined from the get-go.
At lower volumes, US firms are at a cost advantage, but if production scales, Chinese manufacturers will be at a significant cost and volume advantage.
As things stand today, China would win war of inventory.
Recommendations
Military-specific components should be designed from the outset for tool-based manufacturing, and as part of procurement process DoW should finance tools needed to manufacture products.
While this approach would increase upfront costs, the payoff is resilience: production lines that can scale rapidly and sustain long conflicts at acceptable economic costs.
Tool-based systems also enable deeper integration with commercial industry. The Department of War could pre-position tooling at commercial manufacturers, enabling rapid production scaling in a crisis.
While DoW is changing the way it does business, focusing heavily on procedures and regulations; however, the effort will not deliver optimized results if manufacturing techniques of systems are not taken into account.
GenAI.mil: Evolving a Secure Platform Into a Warfighting Edge
Sean Rugge and Silas Schaeffer
What if the DoW had a tool that could draft a battle plan, analyze intelligence reports, and generate mission briefings in seconds? While that future isn’t here yet, the department has taken a significant first step with the recent launch of GenAI.mil.
We assessed this new, DoW-wide AI platform as a welcome and necessary move.
While GenAI.mil provides a crucial and secure foundation, its current limitations prevent it from being the truly transformative tool it needs to become.
To make it a genuine force multiplier, the department must rapidly iterate on its design, focusing on the features that directly impact operational tempo and decision-making, while remembering that any AI is only as good as the human guiding it.
GenAI.mil is authorized to handle controlled unclassified information.
Initial tests show the platform performs well on a variety of tasks.
The platform, in its current state, feels like an unfinished product. Its workflow creates friction that would be unacceptable in an operational environment.
Most significantly, the absence of an application programming interface (API) means GenAI.mil cannot currently be integrated with other essential digital tools like mission planning software or logistics trackers, keeping its powerful analytical engine siloed from the very ecosystem where it is most needed.
GenAI.mil is a welcome and necessary addition to the DoW’s toolkit, but a secure foundation is not a substitute for strategic utility.
To close the gap with commercial tools and deliver a real advantage to the warfighter, the department must move aggressively.
Epirus’ Leonidas First Ever Defeat of Fiber-Optic Controlled UAS
Epirus released video footage of the company’s Leonidas VehicleKit (VK) high-power microwave (HPM) platform successfully disabling a fiber-optic guided unmanned aerial system (UAS) during a December live-fire technology demonstration.
The event marks the first known instance of electromagnetic interference being weaponized to defeat a fiber-optic guided drone.
Fiber-optic FPV drones have emerged as a game-changing tactic in contested environments, particularly in Ukraine. Unlike conventional UAS that rely on RF links for pilot control, fiber-optic guided FPV drones connect to their pilots via spools of long, thin, fiber-optic cable, rendering them immune to jamming, spoofing and other legacy EW counter-UAS measures.
The Leonidas HPM platform defeats fiber-optic guided drones by delivering precise, software-defined weaponized electromagnetic interference to induce full kill within critical onboard electronics rather than relying on kinetic destruction or RF disruption.
Joint Interagency Task Force Announces First Replicator 2 Purchase to Counter Homeland Drone Threats
Joint Interagency Task Force 401 announced Jan. 11 its first acquisition under the Replicator 2 initiative, awarding a contract for two advanced DroneHunter F700 systems, which are expected to be delivered by April.
“We’re designed to move at the speed of relevance, cutting through red tape, consolidating resources, and engaging venture capitalists, tech startups, and nontraditional defense firms as critical partners. We have just one measure of effectiveness: to deliver state-of-the-art counter-UAS capabilities to our warfighters both at home and abroad. This purchase of the DroneHunter system is a key first step in accomplishing our Replicator 2 mission.” BG Matt Ross, JIATF 401 director.
Registration is open for Creative Disruptors in the Desert Feb 20-21, La Quinta, CA.
New Army Software Directive Will Prioritize Flexible Funding
The Army is set to release a new software directive in the coming weeks to bring more flexibility to acquisition and streamline the application of modern software.
As part of the new directive, Obadal cancelled the rigid existing policy and the Army is pursuing the ability to replace it with a policy dubbed Budget Activity 08, which realigns funding from various appropriations to a new software and digital technology budget activity.
Flexible funding leads to faster software delivery which in turn results in more effective warfighting.
Hardware allows our soldiers to fight battles, but wars will increasingly be won by augmenting our people with data and software, more specifically, the speed that results in lethality and survivability.
The Army also plans to scrap compliance mandates for the Software Acquisition Pathway model and the establishment of a software response team.
the new directive will include “fine-grained tuning” on low-code, no-code tools — ways of building applications that eliminate manual coding, designed to reduce the time it takes to build out such applications.
“For years we’ve been trapped by the color of money. We try to buy modern, agile software with rigid funding authorities, and predictably….it doesn’t work.” Michael Obadal, Army Undersecretary
Army Steps up Firepower: 50mm Cannon for Future Combat Vehicle
As the Army pushes forward with one of its most consequential armored modernization efforts in decades, the service has quietly taken another major step toward redefining future battlefield firepower.
Northrop Grumman confirmed the Army has now placed orders for a total of 16 XM913 50mm Bushmaster Chain Guns to support the next phase of testing under the XM30 Mechanized Infantry Combat Vehicle competition.
The development comes as Army leadership increasingly describes XM30 as a comprehensive reset for lethality and survivability across Armored Brigade Combat Teams.
Central to the XM30 vision is a modular open systems architecture, designed to accommodate an unmanned or remotely operated turret, advanced sensors and fire-control systems, and sufficient space, power, and cooling to integrate future weapons, protection technologies, and battlefield effects as threats evolve.
Like other chain guns, the XM913 uses an external drive system with a controlled firing cycle, which helps ensure consistent feeding, predictable recoil, and dependable operation, something which is especially important for stabilized turrets that must engage targets accurately while on the move.
Driscoll Eyes More Drone Intel-Sharing Deals with Allies
The Army secretary said the end state of such arrangements would make the US and its allies stronger in a future conflict where they would have to fight together.
The Army recently signed an agreement with the United Kingdom establishing ground rules for sharing intelligence on drone and counter-drone operations, the first of several team-ups that Army Secretary Dan Driscoll said he’s seeking with allies and partners.
Driscoll said he and BG Matthew Ross, the director of the Army’s Joint Interagency Task Force 401, traveled to the UK last month where the two allied nations worked together to establish the intelligence-sharing partnership.
We signed a document with them that basically said, Hey, we’re going to work on this together. We’re going to figure out what are the rules for sharing information.
“We have a lot of the same software as our allies around the world. So when you train with them, when you travel, when you are deployed abroad, and when one day, if you have to fight with them hopefully dealing with counter-drone and the threat of drones today has made us a lot stronger for that fight.” Dan Driscoll, Army Secretary
First Army MV-75 Tiltrotor Helo to be Delivered by End of 2026
Army Chief of Staff Gen. Randy George hailed the accelerated timeline for getting the new MV-75 tilt-rotor long-range assault helicopter to soldiers, saying he expects the bird to join flying formations by the end of this year.
The MV-75 was selected by the Army in 2022 to be the service’s pick for its Future Long Range Assault Aircraft (FLRAA) program of record — an aircraft that’s designed to fly twice as far and twice as fast as other assault helos.
Originally planned to be delivered in 2031 and 2032, they will have those flying out in formations by the end of the year - for testing by late 2026/early 2027.
The Army’s Transformation Initiative boosted the FLRAA program to the top of the list of the service’s aviation priorities. It’s estimated to cost around $70B and is slated to potentially take funds away from other aviation programs.
The Army Built an AI Talent Pipeline—But It’s Filled with Career-Killing Roadblocks
The Army is losing exactly the kind of AI talent it insists it needs to win the next war.
Only four of the seven Army AI Scholars recently considered for on-time promotion to major were selected. That sub-60% promotion rate stands in sharp contrast to a population in which more than 80% of captains normally promote on time, with additional officers selected early.
Not one of these scholars, nor any of the thirteen in the year group immediately behind them, was selected early. The three officers the Army declined to promote were not marginal performers: Collectively educated at West Point, Princeton, MIT, and Carnegie Mellon, one was among only three officers selected in 2021 for the program’s most technically rigorous track.
The Army chose not to promote officers—barely three years after finishing graduate school—in whom it had invested more than $350,000 each.
In its first measurable test, the Army’s flagship AI talent pipeline produced worse promotion outcomes than the force at large, despite drawing some of the service’s most academically and technically competitive officers.
Worse, the Army cannot simply find more AI Scholars. Even filling the annual quota has proven difficult. In my cohort, the Army nominated twenty candidates; Carnegie Mellon rejected twelve as academically noncompetitive. The program’s most technical track was designed to accept ten AI Scholars per year. In 2021, it admitted only three. The Army has just failed to promote one of them.
Other Army News:
This was our first SNA and we were blown away with the energy at the event. The panel discussions provided valuable insights and t was so great to finally connect (or reconnect) with so many of you face-to-face. The Naval leadership championed bold transformation of acquisition and requirements systems to the significant attention to integrating unmanned systems into the fleet. With so many innovative vendors offering game-changing capabilities, we’re seeing healthy competition and the interoperability challenges to ensure everything works together seamlessly. Exciting times are ahead for the Navy and industry.
Strategic Direction
Navy Must Take Risks, Act Like the US is at War
Navy Secretary John Phelan extolled the virtues of radical transparency, an end to stupid practices, rolling the dice on calculated risks and maintaining a posture that is ready for war at any time to better the service’s current and future fleets. That results in accountability and moving from a compliance-based organization to a performance-based organization.
He emphasized the importance of the Navy not penalize individuals for raising their hand and pointing out problems, instead welcoming a culture that prioritizes accountability.
Phelan preached the importance of risk-taking by increasing production and ramping up shipbuilding efforts with a decreased fear of failure.
An uptick in output can lead to mistakes and failures, but from those failures, lessons can be learned.
In 2022, China had approximately 1,800 ships under construction, whereas the U.S. had five, Phelan pointed out. China also had roughly 100 million people working in manufacturing, whereas the U.S. had fewer than 13 million.
Phelan visited a defense company that made missiles and was shocked to find only 18 people working that day in a 250,000 square foot facility.
Shipbuilders Need to Hire 250,000 Workers Over the Next Decade for Golden Fleet
To construct the Navy’s planned Golden Fleet, U.S. naval shipbuilders must hire a quarter million people over the next decade, Secretary of the Navy John Phelan.
Developing that workforce is key to the service’s plan to expand shipbuilding in parallel with new manufacturing techniques.
Systems don’t build ships. People do,
A quarter of the shipyard workforce is retirement eligible within five years. Over the next decade, shipbuilders and suppliers will need to hire roughly 250,000 skilled workers to meet demand.
That means apprenticeships, vocational training, accelerated pipelines and partnerships with local communities. It also means paying fair wages … consistent build schedules so shipyard workers can have lifetime careers.
AI and automation do not replace the workforce.
Trinque, who serves as the director of the surface warfare division on the chief of naval operations’ staff (OPNAV N96), said he wants the new surface combatants to have hypersonic weapons.
Trinque said the battleship could provide command and control capability to a surface action group and that the ship would have a larger crew than the Navy’s current destroyers.
Navy Chief Calls for Defense Spending to Hit New Normal of 4% GDP
“We need to make a dent into that. I think the chairman, and I think the secretary of Navy and the secretary of War agree that that the Navy needs a budget commensurate with its mission set.” ADM Daryl Caudle, Chief of Naval Operations
US defense spending needs to be rebaselined to at least 4% of the nation’s GDP to enable the Navy to meet current readiness demands and to expand its fleet of warships to contend with future threats.
We know the deterrent effect of that, and the readiness delivery of that kind of number is healthy for the U.S. Money spent in the defense sector is good money spent. It creates incredible jobs. It creates American security. It lets us prosper. It lets our machine work here in the U.S. to be most effective. Is that expensive? Yeah, it is.
To be able to execute those ship building projects will require a change in the way the Navy and industry do business.
Through improving supply chain, long-lead time, material purchasing, workforce, improvement with recruiting, retention and training — so all the things that we’re working on to just raise the general ability and capacity of our existing yards to do the job they need to do.
There’s going to be some paradigm shifts with things like modularity. The US maritime industrial base is at just the tip of the iceberg on modular shipbuilding, which breaks the construction of a ship into discrete modules that are put together during final assembly.
Foreign shipbuilders could also help add capacity for naval shipbuilding needs.
SWOBOSS Delivers Status of the Force
VADM Brendan McLane, commander of Naval Surface Force, PACFLT.
While naval technology has evolved exponentially over the last 250 years, the grit, ingenuity, and unbreakable commitment to win of the American Sailor remains the Navy's ultimate power. We are the stewards of that legacy—and the architects of what comes next.
People are the Navy’s decisive advantage. Readiness begins with disciplined Sailors, accountable leaders, and cohesive teams built on trust and shared purpose and utilizing deliberate and realistic training.
The Competitive Edge 2.0 strategy serves as the roadmap for the Surface Warfare Enterprise to introduce new capabilities, develop modern operational concepts, and train the warriors needed to operate an evolving fleet.
A major component is the integration of AI and autonomous systems. To drive our competitive edge further, we must process, decide, and adapt faster than any competitor.
Our strategy relies on rapid software development and Sailor-led autonomy to advance our competitive edge.
Navy’s Global Maritime Response Plan Playbooks Need Some Work
he Navy’s Global Maritime Response Plan — which increases fleet readiness by providing a comprehensive plan to transition from peacetime to wartime smoothly — needs some work, a large scale exercise revealed.
Though quite a few challenges remain, the Navy’s focus is still on readiness.
The Navy stress tested the Global Maritime Response Plan during a large-scale exercise in 2025 and learned that its playbooks have some holes to fill. The current playbooks are a good start, but they’re not good enough,
ADM Caudle, then Fleet Forces Commander, introduced the Global Maritime Response Plan as a holistic, full-spectrum, all-hands-on-deck plan that identifies the assumptions, permissions, authorities and waivers that activate stakeholders to meet the increased demand for naval combat power, leveraging a comprehensive decision matrix across all of warfare.
The Navy learned in the exercise that it has too many resource and personnel gaps. In a global crisis, everybody wants more, but nobody can have it all.
The success of the Global Maritime Response Program is going to be driven by the commanding officers and sailors that understand their own readiness.
Unmanned/Autonomous Systems
Navy to Deploy Unmanned Systems With Surface Forces This Year
The Navy is moving swiftly to integrate and deploy USVs, with three USV divisions slated to be created next week and two medium USVs to be operating under fleet control this year.
The long-anticipated Seahawk and Sea Hunter medium USVs will no longer be experimental and will be deployed this year.
The Seahawk will become part of a carrier strike group. The deployments will take place beginning in the next month.
The Seahawk and Sea Hunter are the Navy’s first medium autonomous USVs, and are both nearly 135 feet long. They are primed for surveillance, equipped to send data to manned ships to aid in anti-submarine warfare and to increase reconnaissance capabilities.
They were previously used in fleet exercises in 2022 and 2023.
The Navy will continue to acquire USVs that have containerized payloads, which could deliver a variety of kinetic effects.
Navy Ramping Up Sea Drone Arsenal as Officials Aim for Half of the Surface Fleet to be Unmanned by 2045
Surface Force Vision 2045 explicitly directs the sea service to create and operationalize unmanned surface vessel squadrons in every fleet, as part of a broader push to rapidly enable a hybrid force and equip personnel with emerging maritime drone technologies that can expand the U.S. military’s capacity, flexibility and reach.
Navy officials shed new light on a variety of moves the Navy is making to normalize operations that integrate robotic platforms and autonomous capabilities across the surface force.
Advantages of uncrewed systems in contemporary naval ops have increasingly been demonstrated by their range, endurance and affordability, among other characteristics.
As drone technologies quickly mature, the Navy is increasingly deploying them to support manned ships and aircraft for ISR, logistics, targeting and more.
In 2025, the Navy inventory of small USVs was four. By the end of the year, it was close to 400. Incredible change in FY26. The Navy is investing almost $7B in unmanned systems — and that’s $3.7B that are going to head over to the surface force 2027.
“The Navy’s inventory of medium USVs, also referred to as Modular Attack Surface Craft will be at about 11, with the small USVs numbering somewhere close to 500. And then looking at some projections — moving out over the future — by 2045, we expect about 45% of the surface force to be unmanned systems.” RADM Christopher Alexander
Our Take: 2035. Aim for Half the Surface Fleet should be be Unmanned by 2035 (or sooner). Assuming the small USVs aren’t counted in these projections, is it unrealistic to produce 75-150 medium and large USVs over the next decade? While carriers, Columbias, and new battleships will provide exquisite force projection, the Navy must complement them with many USVs and UUVs as force multipliers. A 2045 goal is too far out.
Related Story: Navy Needs Standardization to Successfully Employ Robotic Boats
Advancing Autonomy at Sea – Saronic Technologies on ASVs, Production and Shipyard Expansion
As autonomous technology increasingly reshapes the maritime domain, shipbuilders and naval forces are intensifying efforts to integrate autonomous platforms alongside conventional vessels. Operational efficiency, safety, and extended mission reach have become paramount imperatives, driving innovation across both design and production pipelines. Responding to these evolving demands, Saronic Technologies has accelerated production of autonomous surface vessels (ASVs) to meet growing operational requirements.
Saronic is investing $300M into its Franklin, Louisiana, shipyard to accelerate production of its larger, next-generation, ASVs and to strengthen America’s shipbuilding capability.
The Franklin facility and Port Alpha – which is slated to be the largest and most advanced shipyard in the US, designed to produce large autonomous ships at speed and scale – together are intended to support new classes of autonomous ships and sustained growth in the ASV fleet.
From Saronic’s perspective, some of the main challenges are about how to integrate autonomy safely, reliably, and at scale into existing maritime operations.
Saronic’s approach – vertically integrating designs, scaled manufacturing approach, rapidly advancing autonomy software, building reliable systems from component to full vessel, and partnering with ABS on classification and autonomy requirements – is aimed squarely at addressing these adoption challenges.
Saildrone, Lockheed to place missile launchers on naval drones
Saildrone will equip its unmanned surface vessels with strike missiles made by Lockheed Martin. The collaboration comes in response to a call by global navies for more armed naval drones.
The 20-meter Saildrone Surveyor vessel will boast the Joint Air-to-Ground Missile (JAGM) launcher manufactured by Lockheed Martin.
Larger Saildrone USVs are also under consideration to carry Lockheed Martin weaponry, such as the Mk 70 Vertical Launching System, a containerized missile launcher.
The new partnership will entail enhanced naval capabilities, including the use of AI, which is part of Lockheed Martin’s $50M investment in Saildrone.
Saildrone has already planned proof-of-concept integrations and a live-fire demonstration to take place next summer.
Our Take: We’re happy to see increased partnerships between traditional and non-traditional defense contractors to leverage each of their strengthens and deliver integrated capabilities.
Seasats Awarded $24M in Department of War APFIT Funding to Accelerate Fielding of its Autonomous Surface Vessels
Seasats, a leading developer of long-endurance ASVs, today announced that it was selected by the DoW to receive an award under the APFIT program. The $24M award, made by recommendation of the Navy and U.S Marine Corps, will accelerate procurement, production, and scaling of Seasats' technologies, delivering advanced maritime capabilities at reduced costs.
Navy Tests Manned, Unmanned Teaming Capabilities for CCA Program
The Navy completed a demonstration of its manned-unmanned teaming capabilities to further the development of its Collaborative Combat Aircraft (CCA) initiative.
The trial, which took place Dec. 11 at California’s Point Mugu Sea Range, saw two BQM-177A subsonic aerial targets flown autonomously using Shield AI’s Hivemind software.
The drones were connected to a Live Virtual Constructive (LVC) environment that included a virtual F/A-18 fighter jet that acted as the mission lead, directing the BQM-177As to defend designated Combat Air Patrol locations against two simulated adversary aircraft.
The demonstration focused on maturing manned-unmanned teaming capabilities for CCA, a concept the Marine Corps and Air Force are also developing.
It also marked the second successful demonstration advancing multi-platform coordination of autonomous systems, an essential step toward developing future CCA.
“This demonstration is an important step toward advancing autonomous capabilities for the fleet. Integrating AI-enabled autonomy across manned and unmanned platforms will be critical as the Navy develops next-generation air wing concepts and prepares for more complex operational environments.” RADM Tony Rossi, PEO (U&W)
Related: Navy demonstrates AI-enabled autonomy for future CCA
HII Demonstrates Shipboard Deployment of REMUS UUV
HII has completed the shipboard deployment and retrieval of a REMUS autonomous underwater vehicle (UUV) using its automated Sea Launcher system.
The exercise demonstrated its integration of established automation and autonomy into ship-compatible technologies, such as the ROMULUS series of USVs currently in production.
During the recent evaluation, HII tested crucial system functions that enabled a fully autonomous sequence for launching and recovering the UUV.
Large Ships
Navy Commits to Fielding New Frigate by 2028
The Navy is confident that it can put its new FF(X) frigate in the water by 2028.
“We are pursuing a design that is producible [and] has been proven. It is operationally in use today, and it will evolve. We are not doing anything fundamentally that is going to change this ship.” – Chris Miller, NAVSEA Executive Director
Navy Frigate: FF(X) Program Specs Revealed
The design is a radical departure from the design philosophy present in the Constellation-class of ships, a reminder that speed is now the primary factor driving the program.
FF(X) hulls will be a derivative of the Legend-class Coast Guard cutters already in service, with both being produced by Huntington Ingalls.
The new Frigate’s armament will consist of a 57mm main cannon, a 30mm auxilary cannon, a Mk-49 launcher with 21 Rolling Airframe Missiles, and a payload space at the stern of the ship capable of carrying 16 Naval Strike Missiles, 48 Hellfires, or other containerized weapons.
EW is handled by two SLQ-32 (V)6 suites, with 2 soft-kill Nulka decoy launchers present.
“The vision here is we (the U.S Navy) will have capability in a box… The idea here is that we use those capabilities on both the frigate and other unmanned platforms to be able to give option-ality and it allows us to bring down risk.” – Chris Miller, NAVSEA Executive Director
A Good Lesson Learned
From the team at BMT.
Our Take: We’re just asking for a friend, but does this mean F-35 concurrency can finally get a break?
Trump’s New Battleship Can Make Logistical Support Ships Great Again
Scheduled to start production in 2030, a year after President Trump leaves the White House, the Trump-class battleship faces an uncertain future. Going forward, the real challenge for the Navy is to get a logistical support ship or something tangible out of this showpiece project before it gets killed.
Speed is critical. In the face of pricey, high-risk projects, the U.S. Navy’s traditional approach to unpopular platforms is to slow-walk them into irrelevance.
These battleship-sized hulls won’t be the battleships Trump envisions, but, if prototype hulls are in production by 2028, serving as a foundation for some much-needed auxiliary ships that the Navy has struggled fund, the battleship design work may not be a total loss.
While the Navy wants some bigger combatants, logistics support is a far more urgent Navy requirement.
America desperately needs to reconstitute a dwindling fleet of battleship-sized fast combat support ships.
Using these unromantic, 50,000-ton auxiliaries to test the new battleship hull-form, mechanical systems or electrical innovations makes sense.
Trump’s battleship design can go a long way towards supporting America’s command and control capabilities at sea. America’s command ships are ancient and need replacement.
Trump Class Battleships Could Get Megawatt Lasers: Navy’s Top Officer
The dream of laser weapons has not materialized nearly as fast as the Pentagon once thought it would, but the Navy's top officer wants to overcome that.
CNO ADM Daryl Caudle discussed the Navy’s directed energy weapon plans. Caudle has long been an outspoken proponent of directed energy capabilities.
Caudle’s thesis research at NPS was on directed energy and nuclear weapons. If it’s in line of sight of a ship, that the first solution that we’re using is directed energy. In particular, point defense needs to shift to directed energy, it has an infinite magazine.
Recent Navy experience during operations in and around the Red Sea has underscored the value of magazine depth and concerns about expenditure rates of traditional munitions.
To date, the plurality of the Navy’s available shipboard directed energy weapon capabilities are split between two systems: the Optical Dazzling Interdictor (ODIN) and the High-Energy Laser with Integrated Optical Dazzler and Surveillance (HELIOS). ODIN and HELIOS systems are currently installed on a number of Arleigh Burke class destroyers.
We’ve got to have different lasers, I think, going forward on the battleship to make them effective. Laser power is not the issue. It’s the form factor. It’s the engineering of the power to get the density of that in a shipboard design. That’s the challenge.
The targeting is always a challenge when you’re in a high-moisture environment, because the optics are critical to lasers. Lasers are sensitive to various environmental factors that can break up a beam and reduce its effectiveness.
The beam’s power also drops as it gets further away from the source, just as a result of propagating through the atmosphere. More power is then required to generate effects at greater distances.
The development of high-powered microwave directed energy weapons is another area where the Navy has been making major investments. The main focus of those projects is again on expanding shipboard defense against incoming cruise missiles, as well as drones.
Canadian Company Inks Deal to Design New Coast Guard Icebreakers
A Canadian engineering firm will provide the designs for the U.S. Coast Guard’s fleet of six new icebreakers under an agreement between the U.S., Finland and Canada.
Contracts were awarded to Rauma Marine Constructions Oy of Rauma, Finland, and Bollinger Shipyards Lockport, L.L.C. of Lockport, Louisiana. Rauma will build two of the vessels in Finland.
This plan is designed to take immediate advantage of our Finnish partners’ icebreaker expertise while coordinating the on-shoring of that expertise in the U.S. in the long run.
Can the US Save Its Construction Timeline for the Columbia-Class Submarine?
The Columbia-class submarine outstrips its predecessor, the Ohio class, in many ways—but falls short in one conspicuous one. America’s naval shipyards are a mess—and have been for many years. US warships are not built in abundance, and the ones that are built often fall far behind schedule and go vastly over budget.
General Dynamics Electric Boat’s (GDEB) recent announcement that a new floating drydock—named Atlas—has arrived at its main shipyard in Groton, CT.
Atlas will support construction, launch, and sustainment operations for the Navy’s much-ballyhooed Columbia-class ballistic missile submarines (SSBNs).
Whereas the old Ohio-class carries 24 missiles, the Columbia-class will carry only 16. This was a decision made out of a desire for a leaner, more cost-effective deterrent force wherein stealth and a better reactor that never needs refueling on the Columbia-class will purportedly give the new SSBN advantages the old Ohio-class lacked.
The new Atlas floating drydock will give a massive enhancement for Electric Boat’s aging infrastructure. With the new infrastructure, the shipyard could have a seriously modern system to support the critical rollout and lifecycle support of the future American submarine fleet.
Shipyards, Strike, and Sensors
U.S. Shipyard Key to Trump’s American Revival Is Already Too Busy
The new South Korean owner of the historic Philly Shipyard has a problem: too much demand. It was just over a year ago that Hanwha Ocean, one of the world’s largest shipbuilders, bought the Philadelphia facility, a storied naval yard that has shriveled under competition from Asian competitors, particularly in China.
Hanwha, which has deep pockets and extensive shipbuilding know-how, has vowed to plow $5B into upgrades and dramatically multiply the workforce.
Hanwha is in active conversations with the Trump administration, and the Pentagon, for potential deals to make surface, subsurface and unmanned vessels.
The company aims to ultimately crank out up to 20 ships a year in Philadelphia, up from annual output of just one or two vessels recently. It plans to bring in modernized manufacturing methods—such as automation and robotics—from the firm’s world-class South Korean operations.
To accommodate more volume, Hanwha is in active discussions with multiple federal, state and local officials about opportunities to expand capacity and property for storage around the Philadelphia region.
New Navy Missile to Support Hypersonic Strike, Air Defense Roles
The Navy’s next-generation of missiles are set to support missions that include hypersonic strike and long-range offensive counter air through a modular propulsion approach.
The Navy is working on a successor to the Standard Missile series. Previously developed to face Cold War-era threats, these surface-to-air missiles have been the mainstay of the fleet’s launchers for decades.
The Navy was receiving SM-6s at a faster rate than was stipulated by contract obligations over the last half year, he noted that the next-generation of missiles would not only have to be better, but also become more efficient with the Navy’s vertical launch cells.
The missile will utilize a common third stage interceptor alongside differing combinations of propulsion stacks to create variants of the missile that can conduct hypersonic strike roles and various air and missile defense missions.
Other Navy News:
What a $1.5T Defense Budget Could Mean for the Air and Space Force
The Pentagon could see its budget topline increase to $1.5T in FY27—a boost of more than $500B above anticipated 2026 spending levels.
The Air Force typically garners about 20% of the military’s budget. If that portion remains consistent, the increase would be about $100B in 2027.
Different Options
Lt. Gen. Dave Deptula: rebuild aircraft inventories with new aircraft purchases to replace aging fleets and increase sustainment and flying-hour accounts to improve the service’s combat readiness.
Todd Harrison: Focus any additional funding to cover cost overruns on programs like Sentinel, the long-delayed replacement to the Minuteman III intercontinental ballistic missile, and to accelerate the F-47 next-generation air dominance fighter and the recapitalization of its aerial refueling fleet.
The Mitchell Institute proposed in a policy paper published at the start of the Trump administration, a $45B budget increase for the Air Force to acquire an extra 32 F-35As, 24 F-15EXs, and 10 B-21s annually, as well as a fleet of at least 26 E-7 early-warning and battle-management jets.
They also called for funding a Next-Generation Aerial Refueling System program to start production in the mid-2030s and fully funding the Sentinel program.
The Space Force garners around 3% of total Pentagon spending, or $26B in FY26. If its portion of a $500B defense increase were proportionate, it would receive an additional $15B in FY27.
Todd Harrison argues the Space Force is flush with cash after reconciliation and needs to be more focused on execution before launching new programs.
For the more challenging developmental elements of Golden Dome—space-based and ground-based interceptors—additional funding could allow the Space Force and other agencies to spread contracts among more companies, increasing competition to reduce risk and accelerate development.
At F-35 Factory, Hegseth Makes Acquisition Reform Case and Says Lockheed Will Step Up
Defense Secretary Pete Hegseth foot-stomped the Pentagon’s push for acquisition speed and contractor accountability in a Jan. 12 speech at Lockheed Martin’s production hub in Fort Worth TX.
The F-35 is perhaps one of the most cited examples of a troubled DOD acquisition program with an estimated lifetime cost of $2 trillion, and Lockheed has drawn criticism for development delays and cost overruns.
Hegseth acknowledged in his speech that he has “had some pretty tough words to say” about defense primes in recent months as he pushes for change in the acquisition system.
But he also struck a conciliatory tone toward Lockheed leadership.
He highlighted the company’s recent successes—a record 191 F-35 deliveries in 2025, and a recent agreement to triple the firm’s delivery of PAC-3 missiles.
He said he believes Lockheed will “step up” to meet DoW’s demands.
“We’re changing the game to incentivize speed, to incentivize efficiency, competition, open architecture at cost—ensuring that big companies like this one, and small ones, can compete. If you create the best and the fastest at cost on behalf of taxpayers and the warfighters, you’re going to win. I hope, based on what Lockheed Martin can do, that you win a lot. Because you make incredible, exquisite platforms.”
F-22 Raptor Fighter Is Getting So Many Big Upgrades It Will Now Fly Until 2060
The Air Force plans to keep the F-22 Raptor flying into the 2060s, extending its life to bridge the gap before sixth-generation fighters arrive.
Despite its age, the Raptor remains the world’s premier air-dominance platform thanks to continuous upgrades in stealth, avionics, and software.
Facing a rapidly expanding Chinese fleet of J-20 and J-35 stealth jets, the Pentagon views the F-22’s Mach 2.25 speed and “first shot, first kill” capability as essential.
Recent enhancements, including two-way data linking with F-35s and advanced radar, ensure the entire Raptor fleet remains viable against modern threats.
The Air Force intends to fly the Raptor well into the 2050s and 2060s which is possible because the Raptor has proven to be continually upgradeable.
Today’s Raptor is an almost entirely different aircraft from that which first took flight nearly 30 years ago; it has received new avionics, sensors, software, coating materials, and weapons.
It may take several years for the F-47 and F/A-XX to be delivered in sufficient numbers, like the F-35 has been, but the potential for great power conflict means the Air Force must be ready to mass fifth- and sixth-generation airpower.
The People’s Liberation Army Air Force (PLAAF) operates roughly 300 J-20 stealth jets and is fast-tracking the J-35, as well as two new sixth-generation aircraft about which little is known.
Our Take: This makes sense. Apart from the F-35 (which was designed for a very different mission set than the F-22) and the F-47 will likely never be produced at high quantities; there will not be opportunities to produce an air-to-air fighter in the near future. The F-22 is proving to be remarkably resilient and has critical capabilities needed to attrit the PLA Air Force in a high-end fight. As long as sustainment costs remain reasonable (and do not impact newer efforts), the Air Force should extend the life as long as possible. The B-52 is a prime example of how legacy aircraft still have a lot to offer in the fight.
GDIT Tapped to Deliver Zero-Trust Security Solution at Nearly 200 Air Force Bases
General Dynamics Information Technology will upgrade the networks at 187 Air Force bases with a zero trust-based capability
Under the service’s Next Generation Gateway program, GDIT received a $120M task order to provide “an integrated, data-centric cybersecurity solution” to support over one million users.
Zero trust is a cybersecurity concept that assumes IT networks and systems have been penetrated by adversaries, thus requiring the Pentagon to continuously monitor and authenticate users and their devices as they move through the network.
Space is Becoming an Industrial Economy
Richard Harrison and Peter Garretson
Shortly after space week in October, investment firm JP Morgan announced a $10B investment plan targeting industries critical for U.S. national security.
In addition to things like nanomaterials, autonomous robotics and solar power, the announcement also focused on funding spacecraft and space launches.
JP Morgan’s emphasis on space-related technologies is significant, because it signals an acknowledgment that space is becoming an investable sector.
It’s increasingly obvious that space has already become a mature arena, with a steady drumbeat of innovations and an economy projected to grow from over $600B to $1.8T annually within a decade.
For the U.S. space market to prosper and grow to that full potential, it needs to have an equally mature capital structure, including the full range of VC, PE, streamlined government contracts, debt capital and structured finance.
Beijing believes that the space economy could reach as high as $10 trillion by 2050 and is acting like it. They are quickly catching up with their own reusable rocket programs, and their current rockets are almost equally reliable.
China has landed on the far side of the Moon (to date, still the only nation to do so), launched an AI “supercomputing” satellite constellation, landed and communicated with a rover on Mars, and launched its own crewed space station.
China also sees space as a resource hub, and for good reason. The Lunar surface contains helium-3, nearly unavailable on Earth, and is often discussed as a potential future input for nuclear fusion and quantum computing.
Some near-Earth asteroids contain commercially significant concentrations of platinum-group metals and rare Earth elements. The Chinese understand this potential and are working toward large scale resource extraction.
The real prize is in-space manufacturing. Accordingly, China is now prototyping inflatable Lunar factories potentially capable of large-scale manufacturing, intending to leverage in-space service assembly and manufacturing capabilities to produce better semiconductors, purer pharmaceuticals, and structures.
Some analysis shows that investing $335-620B over the next decade would be enough to secure U.S. leadership in the emerging space economy.
Achieving that scale, however, will require alignment on a coherent space vision from U.S. capital markets, investors and policymakers.
Space Force Wants Competition. Satellite Makers Want Stability.
The Pentagon says it wants Silicon Valley speed with defense-grade reliability. It also wants lower costs and more competition. It’s learning you can’t flip a procurement model on its head without rattling the industrial base you spent decades shaping.
When SDA was created in 2019, it was designed to solve a problem the Pentagon had been wrestling with for years: how to build space systems that could survive and function in a conflict with a peer adversary.
To procure these satellites, the agency holds competitive down-selects, forcing companies to put skin in the game.
Vendors are asked to deliver hardware on timelines more common in the commercial sector while they bid on contracts in two-year cycles.
Officials say the approach taps commercial investment and gives companies regular shots at winning work.
The Space Force is looking to adopt that model for other satellite procurements, but the facts are that factories don’t like uncertainty. Neither do investors.
Behind the rhetoric about competition and innovation, not everyone is convinced SDA’s approach is a win-win, as companies have to keep production lines warm and preserve specialized labor even when they didn’t win the most recent tranche and won’t get another shot until the next cycle.
Ideally, companies would have a viable commercial market to sell into during the defense gaps. There’s just one problem: Not every military satellite technology has a ready-made commercial market waiting to absorb excess capacity.
Whether the SDA model produces a healthier industrial base may depend less on how innovative the contracts look and more on whether the demand signal stays steady long enough for companies to build something durable underneath it.
Space Force Taps Slingshot to Build AI Adversaries for Orbital Wargames
Slingshot Aerospace today announced a $27M contract to help modernize training of Space Force Guardians, including the use of the company’s TALOS AI to simulate an adversary’s actions during orbital warfare scenarios.
Trained on Slingshot’s library of real-world orbital observations, the AI is meant to respond realistically and dynamically to trainees’ moves in the wargame.
Slingshot and its subcontractors will also provide other software tools to simulate friendly (“Blue”) forces and to act as virtual referees (“White”).
The 18-month contract was awarded through a Space Force Commercial Solutions Opening (CSO).
It builds on a 39-month 2022 Strategic Funding Increase award worth $25M that allowed the Space Training and Readiness Command to test TALOS capabilities.
Slingshot launched TALOS in July 2025 to “imitate” the behavior of satellites on orbit for training and simulations, as well as to “learn and replicate real-world operations and change as the orbital environment changes.”
The secret sauce is that it was able to train TALOS’s AI algorithms on a massive amount of real world-data.
Slingshot tracks roughly 95% of all payload-sized objects across all orbital regimes, from LEO through xGEO, in both day and night, 24/7/365.
Space Operations Will Become More Dynamic This Year
There will be a bow wave of upcoming space activities that will create more dynamic, flexible and responsive space operations.
This transformational shift, enabled by on orbit refuel and repair capabilities will be vital for civil, commercial and national security space activities alike.
Among the keys to this change will be methods to refuel satellites and deliver dynamic effects rapidly to meet urgent needs.
That’s the impetus behind a series of Space Force and DARPA missions in 2026, including Tetra-5, a robotic service and the continuation of Victus missions.
Tetra-5 is a joint venture between SSC and AFRL to demonstrate autonomous rendezvous, proximity operations, docking and refueling technologies, potentially paving the way for an on-orbit refueling architecture.
Victus Haze will perform a rapid response to a threat that will include the launch and operations of a space domain awareness satellite.
Two similar efforts, Victus Surgo and Victus Salo, will launch satellites from Impulse Space to a geosynchronous Earth orbit (GEO) transfer orbit and LEO, respectively, and will demonstrate the benefits of modular approaches and significant thrust and delta-V capability to space domain awareness missions.
DARPA’s Robotic Servicing of Geosynchronous Satellites (RSGS) will demonstrate the ability to adapt spacecraft to new missions and conditions through modularity and servicing or repair via the use of two robotic arms.
The potential to repair and upgrade satellites will normalize space operations with those in every other domain where access to vehicles is commonplace.
Space Force Awards $739M in Launch Orders to SpaceX
Space Force announced it awarded SpaceX nine national security space launch missions worth $739M, issuing task orders under the National Security Space Launch (NSSL) Phase 3 Lane 1 program.
The customers for these nine missions are the Space Development Agency and the National Reconnaissance Office.
Five of the nine launches support SDA satellite deployments tied to the agency’s proliferated missile warning and tracking architecture.
The remaining four launches are for the NRO under an NTO-5 task order.
The awards underscore SpaceX’s growing dominance in the NSSL program. ULA’s Vulcan rocket is the only other vehicle currently certified to compete for these missions.
NRO Taps Capitol Hill Staffer Bill Adkins as Principal Deputy Director
Congrats to Bill Adkins.
UK’s First Uncrewed Submarine Delivered
Officially classified as an extra-large uncrewed underwater vehicle (XLUUV), Excalibur is a 12-meter experimental vessel. At a displacement of 19 tons, it’s the largest uncrewed underwater vessel ever trialed by the Royal Navy.
The culmination of Project Cetus, it has been developed in under three years by the SDA in partnership with MSubs.
Excalibur’s long-distance interoperability was demonstrated in Exercise Talisman Sabre where the Royal Navy successfully controlled it from a remote operating centre in Australia, more than 10,000 miles from the vessel’s home in Plymouth.
This marked the first time the UK and Australia have demonstrated XLUUV interoperability as a single fighting force.
This was followed by a world-first trial, as Excalibur went to sea with a quantum optical atomic Tiqker clock on board developed by Infleqtion.
The SDA’s Autonomy Unit will continue to support the Navy on Excalibur’s test and evaluation program, which aims to learn more about its capability and how we can effectively introduce autonomy to operational use.
A single Ukrainian UGV Held a Frontline Position Alone for Six Weeks
A single Ukrainian UGV held a frontline position alone for six weeks straight. Maintenance every 48 hours. Machine gun fire to repel assaults. No human support.
Ukraine just delivered 15,000 UGVs in 2025. Triple the previous year. Target for 2026? Over 20,000.
90% of frontline logistics near Pokrovsk now handled by unmanned systems.
Three shifts are reshaping warfare.
Manpower becomes optional for static defense. Ukraine faces severe recruitment challenges after three years of war. Robots fill positions humans can’t sustain. One UGV replacing infantry in a death zone is now a doctrine.
Asymmetric innovation beats symmetric force. $500 FPVs hunting $400M submarines. Magura drones ambushing helicopters with surface-to-air missiles. Cost ratios favor the innovator, not the incumbent.
Speed of iteration determines survival. Ukraine’s feedback loop runs directly from the frontline to the factory. When your adversary iterates monthly, decade-long development cycles become extinction events.
Robots can’t replace infantry for everything. Terrain navigation, adaptive decision-making, dynamic combat still require humans. Weather drops UGV effectiveness to 50% in winter mud.
But static defense? Logistics in kill zones? Strikes at 3,000 km range? Unmanned systems already own those missions.
Can the 15th Five-Year Plan Fix the People’s Liberation Army’s Procurement Bottlenecks?
Jessica Liao and Joshua Arostegui
China’s newly released 15th Five-Year Plan (2026–2030) proposal reaffirms General Secretary Xi Jinping’s core priorities: operational efficiency, technological self-reliance, and the Chinese Communist Party’s absolute command.
Xi is dealing with deep contradictions within his party-state system that now incentivizes political patronage at the expense of bureaucratic professionalization.
To understand these tensions and how they might affect future reforms, it is necessary to examine the progress and current state of the two major priorities of the proposed Five-Year Plan: procurement reform and military-civil fusion.
Despite visible achievements in advanced weaponry and org streamlining, reform remains limited by entrenched problems in the party-state system.
Institutional changes (which included reorganizing the different acquisition agencies) were accompanied by a series of reforms in procurement process designed to boost efficiency, strengthen oversight, and deepen civilian participation in the defense sector. Key steps included:
introducing official online procurement platforms to broaden competitive bidding
implementing pricing regulations for civilian contractors to standardize acquisition processes
publishing military equipment catalogs to signal research and development needs and promote dual-use innovations
professionalization of its military representative officer system, the corps responsible for supervising civilian defense research and manufacturing, to improve efficiency and reduce bureaucratic redundancy.
establishing more than 30 industrial demonstration bases, offering tax incentives, subsidies, and infrastructure support to encourage civilian firms to enter the defense supply chain.
These reforms have yielded visible results, particularly in research and development. The integration of civilian universities, private firms, and research institutes has enhanced the continuity of long-term dual-use technology development programs in AI, quantum science, aerospace, and cyberspace.
Yet, these visible gains mask deeper, unresolved challenges.
China’s defense industrial base remains overwhelmingly dominated by 10 state-owned conglomerates who enjoy privileged access to state financing and political backing, effectively crowding out private competitors and stifling the innovation the reforms are supposed to cultivate.
While Beijing tried to foster competition and reduce inefficiencies, its implementation has been piecemeal and China’s defense sector remains firmly anchored to its state-owned giants across every critical domain.
SOE executives hold powerful vice-ministerial ranks within the party-state hierarchy, giving them substantial influence over procurement authorities, often resulting in contracts with limited accountability.
This contributed to persistent delays and underperformance, illustrated by the slow progress in improving turbofan engines for the J-20 stealth fighter.
Despite years of party leadership rhetoric about “fusion,” the civil–military divide remains deeply entrenched as the country still lacks the institutional foundations for transparent, efficient, and mutually beneficial cooperation between the military and the private sector.
Except for a few non-state-owned giants like Huawei and ZTE, private participation remains limited due to entry barriers, including complex licensing, strict secrecy rules, and weak intellectual property protection.
Many so-called private firms that are admitted into the defense space are, in practice, subsidiaries of state-owned conglomerates.
Transparency remains limited across the procurement cycle — especially for major weapons contracts — and almost no information is publicly released on contract implementation.
In short, it is not the absence of rules but the absence of external checks strong enough to enforce them.
Xi’s anti-corruption and loyalty campaigns consolidate political authority but stifle the risk-taking and professional autonomy essential for building a modern, innovative military.
As Cheung notes, the “promise and peril” of China’s military modernization lie in this contradiction, an effort to fuse innovation with obedience that may ultimately achieve neither.
Looking ahead, the new policy planning cycle will test whether Beijing can deliver genuine reform or simply repackage existing hierarchies in new bureaucratic language. Three developments merit close attention.
the evolution of legal frameworks
the scope of private-sector participation
how Beijing navigates intensifying external constraints
China Ready to Move its J-35 Stealth Fighter Jet into Mass Production
New footage suggests that China might be close to mass-producing advanced stealth fighter jets, not just prototyping them.
Developed by China’s Shenyang Aircraft Corporation (SAC), a subsidiary of Aviation Industry Corporation of China (AVIC), the company has also pledged to double its overall warplane production over the next three to five years.
SAC’s factory covers a reported area of 1.62 square miles.
According to reports, the SAC will be part of a much larger “Shenyang Aerospace City” spanning ~79 km² (roughly Hong Kong Island).
Another interesting point is that the J-35 isn’t just an air force jet. It has a naval version designed for carriers and so is likely destined to operate from China’s most advanced aircraft carrier, the Fujian.
China to Enhance J-20 Stealth Fighter with Advanced Radar, Engines, and AI Tech
China is reportedly preparing a new round of upgrades for its J-20 stealth fighter as the aircraft marks a major milestone, with military analysts highlighting improvements to avionics, engines, and artificial intelligence integration.
Often called the Mighty Dragon, the J-20 officially entered service with the PLA in March 2017 and has been a central symbol of China’s military modernization and its primary counter to advanced US stealth fighters such as the F-22 Raptor.
Developed by the Chengdu Aircraft Corporation, the J-20 was designed from the outset to minimize detection with its angular shape, radar-absorbent materials and an internal weapons bay further limit its signature.
Beyond stealth, the jet offers supersonic cruise, high maneuverability, and what analysts describe as advanced avionics.
Future air-to-air missiles carried by the J-20 will also feature extended ranges and stronger resistance to electronic interference.
China has also expanded the J-20’s role through cooperation with uncrewed aircraft with footage showing J-20 fighters operating alongside the GJ-11 stealth attack drone and the J-16D electronic warfare aircraft.
Other International News:
Only 13 more days until the current CR expires Jan 30.
The appropriations committees continue to advance minibuses for groups of federal agencies with the DoW among the last batch. The House passed H.R. 4016 in July and the Senate (SAC) advanced S. 2572 26-3 in July.
What to Watch as Lawmakers Race to Pass 2026 Defense Budget
House and Senate lawmakers say they’re hopeful Congress will pass a defense appropriations bill in the coming weeks to avoid a repeat of last fall’s government shutdown.
Yet legislators still have to release a compromise version of defense spending legislation, which will have to sort through major differences between the House and Senate versions advanced last summer.
House appropriators proposed an $848B defense topline, while the Senate offered a $22B funding increase.
Key differences in those bills include:
Funds for 42 F-35As, House had 18 more than what the Air Force requested. Senate lawmakers, meanwhile, supported the Air Force ask.
$13B for Golden Dome. House added funds, the Senate did not.
$500M for the E-7 Wedgetail, which the Air Force sought to cancel. Senate lawmakers proposed $647M for the program.
$345M for an extra three F-15EX fighters. House added funds, Senate lawmakers stuck to the Air Force’s base budget request.
House Appropriations Committee Chairman Tom Cole told reporters the defense bill would be part of a package that includes funding for Transportation, Labor, Health and Human Services, Education, and possibly Homeland Security.
Defense subcommittee Chair Ken Calvert is hopeful the defense spending package will clear both chambers by the end of this month.
While lawmakers have about two weeks to complete the federal spending bills to avoid another shutdown, the Senate is on recess next week, and the House is out of session the following week.
Lawmakers could pass another continuing resolution in a crunch, but Cole said that discussion isn’t yet on the table.
Podcasts, Books, and Videos
Pete Hegseth Meets With Elon Musk At SpaceX, Discuss Military Technology
AI and Shipbuilding Integration w/Mike Gallagher and Matt Babin, Midrats
Wide Not Deep: Anduril’s Strategy for Modern Defense Manufacturing w/Matthew Steckman, Building the Base
Common Threads in Defense Acquisition Reform w/David Burteau, Emerging Tech Horizons
DoW’s New AI Strategy and Innovation Ecosystems Reform w/ David Rothzeid, Mission Matters
Upcoming Events and Webinars
Capital Hill Defense Outlook Summit, DLF, Jan 20, Washington DC
Space Industry Days, AFCEA, Jan 22-23, Los Angeles, CA
APEX Defense, Jan 27-28, Washington DC
SPACECOM, Jan 28-30, Orlando, FL
Defense R&D Summit, Potomac Officers Club, Jan 29, McLean, VA
Venture in the Capital 2026, Jan 30, Washington DC
Military Additive Manufacturing Summit, Feb 3-5, Tampa, FL
Defense and Intelligence Space Conference 2026, Feb 9-11, Reston, VA
WEST 2026, Feb 10-12, San Diego, CA
Special Operations Symposium, NDIA, Feb 17-18, Washington DC
Joint Fires Summit, DSI, Feb 18-19, Huntsville, AL
Tech Summit, AFCEA, Feb 19, Reston, VA
Creative Disruptors in the Desert , CDF, Feb 20-21, La Quinta, CA
Feat. Pete and Matt
Tactical Wheeled Vehicles Conference, NDIA, Feb 23-25, Pittsburgh, PA
See our Events Page for all the other events over the next year.
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Thanks for linking to my article! Next one coming up this week about bridge building in the US vs China.
This reorg is honestly what the ecosystem has been needing for years. Worked on a few projects that got tangled up in the old DISG mess and it was brutal trying to figure out who had decision authority. Love seeing USW(R&E) finally stepping up as the real CTO with actual teeth. The Mission Engineering piece is gonna be a total gamechanger for getting comercial tech into the field faster.