Overview of:

Defense Industry

Defense Industry Overview

Defense Industry

The traditional defense industry provides products and services to the DoD. Products include aircraft, ships, vehicles, weaponry, and electronic systems, while services can include logistics, technical, training, communications, and engineering support in cooperation with the government.

The DoW seeks to tap tech startups, small businesses, and other non-traditional defense contractors to rapidly exploit leading technologies to shape future defense solutions.

I am committed to ensuring that the United States military possesses the most lethal warfighting capabilities in the world. America's defense industrial base is central to this effort. It is the policy of the United States Government to accelerate defense procurement and revitalize the defense industrial base to restore peace through strength.

Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base Executive Order

Defense Sectors

The Five Major Prime Contractors of the Defense Industry

Defense Industry

Primes 2024 Defense Revenue

Source: Defense News Top 100

The United States has 47 of the world's top 100 defense companies. This table is ranked by defense revenue in 2024.

As you can see the five major primes are in the first tier, with a clear drop off between Boeing at $31.7B and L3 Harris at $16.9B.
There is a wide mix of "pure defense companies" that get most of their revenue from defense like Lockheed Martin (96%), HII (!00%), and SNC (97%) and companies that have a majority of revenue from outside defense like Boeing (48%), GE Aerospace (16%), and Honeywell (18%).
The list includes two companies that manage FFRDCs, MITRE (31) and Aerospace (36).
For the first time, this list includes venture backed, non-traditional defense companies, SpaceX (18), Palantir (30), and Anduril (43).

US Rank	Global Rank	Company	Total revenue for 2024	Total defense revenue for 2024	Revenue From Defense
1	1	Lockheed Martin	$71,043,000,000	$68,390,000,000	96%
2	2	RTX	$80,700,000,000	$43,500,000,000	54%
3	4	Northrop Grumman	$41,000,000,000	$36,600,000,000	89%
4	5	General Dynamics	$47,716,000,000	$36,500,000,000	76%
5	7	Boeing	$66,517,000,000	$31,750,000,000	48%

6	9	L3Harris	$21,325,000,000	$16,982,000,000	80%
7	15	Leidos	$16,662,000,000	$11,558,152,000	69%
8	16	HII	$11,535,000,000	$11,527,000,000	100%
9	17	Amentum	$13,858,000,000	$8,488,000,000	61%
10	19	Booz Allen Hamilton	$11,979,596,000	$7,809,889,000	65%
11	20	CACI International	$8,132,449,000	$7,266,596,000	89%
12	23	GE Aerospace	$38,708,000,000	$6,109,000,000	16%
13	24	Honeywell	$34,498,000,000	$6,091,000,000	18%
14	30	KBR	$7,742,000,000	$4,968,400,000	64%
15	33	ATI	$4,823,111,746	$4,685,356,085	97%
16	34	Peraton	$6,974,300,000	$4,376,600,000	63%
17	39	Parsons	$6,800,000,000	$4,007,100,000	59%
18	40	SpaceX	$13,100,000,000	$4,000,000,000	31%
19	41	V2X	$4,322,155,000	$3,921,271,000	91%
20	42	SAIC	$7,479,000,000	$3,873,000,000	52%
21	45	Textron	$13,702,000,000	$3,370,000,000	25%
22	46	TransDigm	$8,157,000,000	$3,262,800,000	40%
23	48	Bechtel National	$23,000,000,000	$3,080,000,000	13%
24	56	Oshkosh	$10,730,200,000	$2,155,200,000	20%
25	58	BWX Technologies	$2,703,654,000	$2,095,900,000	78%
26	61	Viasat	$4,519,600,000	$2,039,100,000	45%
27	63	Sierra Nevada Corp.	$2,000,000,000	$1,940,000,000	97%
28	65	Parker Hannifin	$19,900,000,000	$1,879,000,000	9%
29	66	Curtiss-Wright	$3,121,000,000	$1,792,000,000	57%
30	70	Palantir	$2,866,000,000	$1,574,000,000	55%
31	73	MITRE	$2,469,000,000	$1,453,000,000	59%
32	74	Moog	$3,609,159,573	$1,394,776,700	39%
33	75	ManTech	$3,100,000,000	$1,300,000,000	42%
34	76	HEICO	$3,858,000,000	$1,298,000,000	34%
35	81	Howmet Aerospace	$7,400,000,000	$1,184,000,000	16%
36	83	Aerospace Corporation	$1,365,022,000	$1,158,938,000	85%
37	85	Keysight Technologies	$5,007,000,000	$1,157,000,000	23%
38	86	TTM Technologies	$2,442,753,000	$1,127,529,000	46%
39	89	Teledyne Technologies	$5,670,000,000	$1,062,700,000	19%
40	90	StandardAero	$5,228,421,053	$993,400,000	19%
41	91	Kratos Defense	$1,136,300,000	$988,700,000	87%
42	92	Spirit AeroSystems	$6,317,000,000	$975,200,000	15%
43	93	Anduril	$1,000,000,000	$950,000,000	95%
44	94	M1 Support Services	$900,000,000	$900,000,000	100%
45	96	Mercury Systems	$833,075,000	$833,075,000	100%
46	99	AM General	$740,000,000	$740,000,000	100%
47	100	Hexcel Corporation	$1,900,000,000	$703,000,000	37%

Source: Defense News Top 100 for 2025

Matthew Bernard - RTX Buybacks and Dividens

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.

Raytheon

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.
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
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.

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.

Source: Industrial Base Alpha

In January 2026, President Trump signed an executive order:

While the U.S. produces the best military equipment in the world, we do not make enough of it quickly enough to meet the needs of our military and our partners.
It is imperative that our defense contractors be held to the highest standards intended to ensure the advancement of core national interests.
Many large contractors - while underperforming on existing contracts - pursue newer, more lucrative contracts, stock buy-backs, and excessive dividends to shareholders at the cost of production capacity, innovation, and on-time delivery.
Effective immediately, they are not permitted to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and budget.
It is the policy of the U.S. Government to accelerate defense procurement and revitalize the defense industrial base to maintain peace through strength.

Buy Backs and Dividends

Major defense contractors will no longer conduct stock buy-backs or issue dividends at the expense of accelerated procurement and increased production capacity.
SECWAR shall identify any defense contractors that engaged in any stock buy-back or corporate distribution while:
- underperforming on their contracts
- not investing their own capital into necessary production capacity
- not sufficiently prioritizing U.S. Government contracts
- having insufficient production speed
When the contractor's remediation plan is insufficient, the SECDEF may initiate immediate actions to secure remedies that will expedite production, prioritize the U.S. military, and return the contractor to sufficient performance, investment, prioritization, and production, to the maximum extent permitted by law.
Within 60 days, DoW shall ensure that any future contract with any new or existing defense contractor, including any renewal, contains a provision prohibiting both any stock buy-back and corporate distributions.

Future Contracts

Future contracts shall stipulate that executive incentive compensation for contractors will not be tied to short-term financial metrics, such as free cash flow or earnings per share driven by stock buy-backs and instead will be linked to on-time delivery, increased production, and facilitation required to rapidly expand our U.S. stockpiles and capabilities.
SECWAR in consultation with State and Commerce shall consider whether it is appropriate to deny advocacy for underperforming contractors to compete in FMS or DCS.

Non-Traditional Defense Contractor

Treatment of certain products and services as commercial products and commercial services

(a) Goods and Services Provided by Nontraditional Defense Contractors.-Notwithstanding section 3451(1) of this title, products and services provided by nontraditional defense contractors (as that term is defined in section 3014 of this title) may be treated by the head of an agency as commercial products and commercial services, respectively, for purposes of this chapter.

(b) Services Provided by Certain Nontraditional Contractors.-Notwithstanding section 3451(1) of this title, services provided by a business unit that is a nontraditional defense contractor (as that term is defined in section 3014 of this title) shall be treated as commercial services for purposes of this chapter, to the extent that such services use the same pool of employees as used for commercial customers and are priced using methodology similar to methodology used for commercial pricing.(c) Commingled Items Purchased by Contractors.-Notwithstanding section 3451(1) of this title, items valued at less than $10,000 that are purchased by a contractor for use in the performance of multiple contracts with the Department of Defense and other parties and are not identifiable to any particular contract shall be treated as a commercial product for purposes of this chapter.

Source: 10 USC 3457

Note: During the FY26 NDAA there was a draft provision and debate to change this language from NDCs "may be treated" as commercial to "shall be treated". That did not make the final bill, so treating NDC products and services as commercial remains subject to the contracting officer and acquiring organization's discretion.

Class Deviation 2026-O0028 - DFARS Part 212

Class Deviation 2026-O0028 - Revolutionary Federal Acquisition Regulation (FAR) Overhaul Part 12, Defense FAR Supplement (DFARS) Part 212 (18 December 2025)

Attachment 1, Class Deviation 2026-O0028 - Revolutionary Federal Acquisition Regulation (FAR) Overhaul Part 12, Defense FAR Supplement (DFARS) Part 212 (18 December 2025)
DFARS Part 212 Line Out (18 December 2025)
Attachment 2, Class Deviation 2026-O0028 - Revolutionary Federal Acquisition Regulation (FAR) Overhaul Part 12, Procedures, Guidance, and Information (PGI) 212 (18 December 2025)

Acquisition of Commercial Products and Commercial Services (Effective February 1, 2026)

This is the primary deviation. It implements two statutory authorities side-by-side under DFARS 212.102(a):

Authority 1 - 10 U.S.C. 3457 (Discretionary): Contracting officers may treat supplies and services provided by nontraditional defense contractors as commercial products or commercial services. This permissive authority is intended to enhance defense innovation and investment, enable DoD to acquire items that otherwise might not have been available, and create incentives for nontraditional defense contractors to do business with DoD. The decision does not require a commercial product or commercial service determination and does not mean the item is actually commercial.

Authority 2 - 10 U.S.C. 3457 (Mandatory): Contracting officers shall treat services provided by a business unit that is a nontraditional defense contractor as commercial services, to the extent that such services use the same pool of employees as used for commercial customers and are priced using methodology similar to methodology used for commercial customers.

Documentation Requirement: Contracting officers shall document the file when treating supplies or services from a nontraditional defense contractor as commercial products or commercial services.

The War Unicorns

Venture Backed Defense Tech Startups Worth over $1B

See Our Substack Piece from Nov 2025

	Company	Category	Funds Raised	Founded
1	SpaceX	Space	SpaceX	2002
2	Databricks	Defense SaaS & AI	Defense SaaS & AI	2013
3	Archer Aviation	Aerospace	Archer Aviation
4	Relativity Space	Space	Space	2015
5	Anduril	Autonomy	Autonomy	2017
6	Sierra Space	Space	Space	2021
7	Automation Anywhere	Defense SaaS & AI	Defense SaaS & AI	2003
8	SambaNova Systems	Defense SaaS & AI	SambaNova Systems	2017
9	Shield AI	Autonomy	Shield AI	2015
10	Rubrik	Defense SaaS & AI	Rubrik	2014
11	DataRobot	Defense SaaS & AI	Defense SaaS & AI	2012
12	Zipline	Unmanned Aircraft Systems (UAS)	Zipline	2016
13	Dataiku	Defense SaaS & AI	Defense SaaS & AI	2013
14	Carebras Systems	Defense SaaS & AI	Defense SaaS & AI	2015
15	Skydio	UAS	UAS	2014
16	Astranis	Space	Space	2015
17	Flock Safety	Public Safety	Public Safety	2017
18	ThoughtSpot	Defense SaaS & AI	ThoughtSpot	2012
19	PsiQuantum	Miscellaneous	PsiQuantum	2016
20	Axiom Space	Space	Space	2016
21	Scale AI	Defense SaaS & AI	Scale AI	2016
22	Grafana Labs	Miscellaneous	Miscellaneous	2014
23	Kymeta	Space	Space	2012
24	ABL Space Systems	Space	Space	2017
25	Blue Origin	Space	Space	2000
26	SandboxAQ	Miscellaneous	SandboxAQ	2022
27	Firefly Aerospace	Space	Space	2017
28	CloudBees	Defense SaaS & AI	Defense SaaS & AI	2010
29	ICON	Manufacturing	Manufacturing	2017
30	Hawkeye 360	Space	Space	2015
31	Momentus	Space	Space	2017
32	Whoop	Miscellaneous	Whoop	2011
33	Dragos	Defense SaaS & AI	Dragos	2016
34	Applied Intuition	Defense SaaS & AI	Defense SaaS & AI	2017
35	Spark Cognition	Defense SaaS & AI	Spark Cognition	2013
36	Velo3D	Manufacturing	Velo3D	2014
37	Versa Networks	Defense SaaS & AI	Versa Networks	2009
38	Blacksky	Space	Space	2013
39	Epirus	Counter-UAS	Epirus	2018
40	Boom Supersonic	Aerospace	Boom Supersonic	2014
41	Ursa Major	Hypersonics	Ursa Major	2015
42	Capella Space	Space	Space	2016
43	Spaceflight Industries	Space	Spaceflight Industries	2009
44	Vast Data	Defense SaaS & AI	Vast Data	2016
45	Interos	Defense SaaS & AI	Interos	2005
46	Astra	Space	Space
47	Mirantis	Defense SaaS & AI	Mirantis	1999
48	Formlabs	Manufacturing	Manufacturing	2011
49	Formlogic	Manufacturing	Manufacturing	2011
50	Primer	Defense SaaS & AI	Primer	2014
51	Forterra (RRAI)	Autonomy	Forterra (RRAI)	2002
52	Rebellion Defense	Defense SaaS & AI	Rebellion Defense	2019
53	Gecko Robotics	Autonomy	Gecko Robotics	2013
54	Hadrian	Manufacturing	Manufacturing
55	6K	Miscellaneous	Miscellaneous	2014
56	Lyten	Miscellaneous	Miscellaneous	2015
57	Federated Wireless	Communication	Federated Wireless	2012
58	Uveye	Manufacturing	Uveye	2016
59	Swift Navigation	Miscellaneous	Swift Navigation	2012
60	BigID	Defense SaaS & AI	Defense SaaS & AI	2016
61	Fictiv	Manufacturing	Manufacturing	2013
62	Ayar Labs	Miscellaneous	Miscellaneous	2015
63	SiMa.ai	Defense SaaS & AI	SiMa.ai	2018
64	Saildrone	Maritime	Saildrone	2012
65	Infleqtion	Defense SaaS & AI	Infleqtion	2007
66	Spinlaunch	Space	Spinlaunch
67	Voyager Space	Aerospace	Voyager Space	2019
68	Varda Space	Space	Varda Space	2020
69	Nozomi Networks	Defense SaaS & AI	Nozomi Networks	2013
70	Umbra	Space	Umbra
71	Rescale	Defense SaaS & AI	Rescale	2011
72	Loft Orbital	Space	Space	2017
73	Kodiak Robotics	Autonomy	$165,000,000
74	Airspace Technologies	Aerospace	Airspace Technologies	2016
75	Snorkel	Defense SaaS & AI	Snorkel	2015
76	Dedrone	Counter-UAS	Dedrone	2014
77	True Anomaly	Space	True Anomaly
78	Leolabs	Space	Space	2016
79	Albedo Space	Space	Space	2020
80	Hermeus	Hypersonics	Hypersonics	2018
81	Red6		Red6	2018
82	Elroy Air	Aerospace	Elroy Air
83	Shift5	Defense SaaS & AI	Shift5	2019
84	Percipient AI	Defense SaaS & AI	Percipient AI
85	Vennevar Labs	Defense SaaS & AI	Vennevar Labs	2019
86	Slingshot Aerospace	Defense SaaS & AI	Slingshot Aerospace	2017
87	Cesium Astro	Communication	Communication	2017
88	Brinc	Public Safety	Public Safety	2017
89	Mach Industries	Munitions	Munitions
90	GoTenna	Communication	GoTenna
91	Second Front Systems	Defense SaaS & AI	Second Front Systems	2014
92	Impulse Space	Space	Space	2021
93	Stoke Space Technologies	Space	Stoke Space Technologies	2019
94	Privateer	Space	Space
95	Saronic	Maritime	Saronic
96	Chaos Industries	Miscellaneous	Miscellaneous
97	Lambda Labs	Defense SaaS & AI	Lambda Labs	2012
98	Eclypsium	Defense SaaS & AI	Eclypsium	2017
99	Stellar Cyber	Defense SaaS & AI	Stellar Cyber	2015
100	Liquid Instruments	Miscellaneous	Miscellaneous	2014

Source: Merging SVDG NATSEC 100 with AEON Analysis

Industry Analysis

Major Findings

Macro forces have led to impacts primarily in the sub-tiers of the defense supply chain
A surprising level of foreign dependence on competitor nations exists;
Workforce challenges face employers across all sectors; and
Many sectors continue to move critical capabilities offshore in pursuit of competitive pricing and access to foreign markets.

Recommendations

The DoD-led Interagency Task Force recognizes ongoing efforts to address the challenges identified in the EO 13806 assessment, including:

Increased near-term DoD budget stability with the passage of the Bipartisan Budget Act of 2018, providing stable funding through Fiscal Year (FY) 2019
Modernization of the Committee on Foreign Investment in the U.S. and investigations under Section 301 of the Trade Act of 1974 into Chinese intellectual property theft, to better combat Chinese industrial policies targeting American intellectual property
Updates to the Conventional Arms Transfer policy and unmanned aerial systems export policy to increase U.S. industrial base competitiveness and strengthen international alliances
Reorganization of the former Office of the Under Secretary of Defense for Acquisition, Technology and Logistics, the work of the “Section 809 panel,” and development of the adaptive acquisition framework all aim to streamline and improve defense acquisition
processes
Restructuring the Defense Acquisition University to create a workforce education and training resource to foster increased agility in acquisition personnel
Response to Section 1071(a) of the National Defense Authorization Act for FY2018 which requires establishing a process for enhancing the ability to analyze, assess, and monitor vulnerabilities of the industrial base
Creation of a National Advanced Manufacturing Strategy by the White House Office of Science and Technology Policy, focused on opportunities in advanced manufacturing
Department of Labor's chairing of a Task Force on Apprenticeship Expansion to identify strategies and proposals to promote apprenticeships, particularly in industries where they are insufficient
DoD's program for Microelectronics Innovation for National Security and Economic Competitiveness to increase domestic capabilities and enhance technology adoption
DoD cross-functional team for maintaining technology advantage Implementation of a risk-based methodology for oversight of contractors in the National Industrial Security Program, founded on risk management framework principles to assess and counter threats to critical technologies and priority assets.

Traditional and Cross Cutting Defense Sectors

Source: Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States, Sep 2018

FY26 NDAA

Sec. 864. United States-Israel Defense Industrial Base Working Group

USD(A&S) in consultation with the Secretary of State, shall convene a working group to study the potential for greater integration of the defense industrial bases of the U.S. and Israel and the feasibility and advisability of including Israel in the National Technology and Industrial Base per 10 USC 4801.

Our Take: The Israeli industrial base has many promising companies that could contribute military solutions to the DoW directly or in partnership with U.S. companies. Including Israel in the NTIB would be a valuable step to reduce the barriers for collaboration and sales.

Sec. 1021. Pilot Program on Use of Automated Shipbuilding Technologies and Capabilities.

Not later than 90 days after the date of the enactment of this Act, the Secretary of the Navy shall establish a pilot program on the use of automated assembly technologies and capabilities in naval shipbuilding to reduce overall construction times and alleviate workforce constraints.

Our Take: Some of this is already underway but need to keep the focus on using the latest tech to bring our shipyards into the 21st century.

Sec. 1844. Collaborative Forum to Address Challenges to and Limitations of the Defense Industrial Base.

Requires SECDEF to identify one or more consortia or other entity to serve as a collaborative forum for government, private sector, academia, and nonprofit entities with expertise in advanced manufacturing to address the challenges to and limitations of the defense industrial base. Establish working groups focused on eliminating barriers, assessing supply chain fragility, and expanding domestic manufacturing and industrial capacity.

Our Take: Collaboration is always positive, this forum would have potential if used and led correctly. Need strong follow-through on actions identified.

Sec. 1845. Facility Clearance Acceleration for Members of Defense Industrial Consortiums.

Requires SECDEF to ensure each entity that is a member of the groups in Sec. 1844 is sponsored for a facility clearance, is provided access to sensitive compartmented information facilities and classified networks and invited to in-person meetings with relevant DoD personnel to discuss classified work.

Our Take: Industry writ large needs access to sensitive data to be effective. The security risk is much lower than the current risk of billions being invested in the wrong tech that doesn't move the needle.

Sec. 1846. Improvements Relating to Advanced Manufacturing.

USD(A&S) and USD(R&E) shall co-chair the Joint Defense Manufacturing Technology Panel, the Joint Additive Manufacturing Working Group, and the Consortium on Additive Manufacturing for Defense Capability Development. The USDs shall review the policies and procedures for qualifying, accepting, and managing supply chain products using advanced manufacturing.

Our Take: A positive step to improve use of advanced manufacturing tools and approaches.

Sec. 1847. Report on Surge Capacity in the Defense Industrial Base.

ASD(Industrial Base Policy) and Director DPCAP shall jointly submit to Congress a report on effects to identify and address regulations or policies that discourage or prevent contractors in the defense industrial base from maintaining or investing in surge capacity. Identify policies to incentivize industry to reduce or eliminate surge capacity, regulatory barriers discouraging or preventing contractors from maintaining or investing in surge capacity.

Our Take: As regular readers of this Substack know well, the U.S. DIB is not at all prepared for a wartime surge and would take years to ramp up if we were in a major war with a peer competitor. This report should be quickly acted upon to address the barriers and incentivize accelerated and novel approaches to scale surge capacity.

FY25 NDAA

Sec. 841. Enhancing Requirements For Information Relating To Supply Chain Risk.

Reduces the level of determination needed to exclude a source from a procurement based on perceived supply chain risk from USD(A&S) and DoD CIO to “procurement or other relevant officials of the covered agency.” It also reduces the information requirement to primarily a summary of the risk assessment.

Our Take: We think this is important discretion for lower level acquisition professionals who have evidence that certain supply chains have been compromised. The highly elevated level that this provision had before limited the ability of acquisition professionals to exercise the authority granted.

Sec. 874. Establish a Pilot Program for Access to Shared Classified Commercial Infrastructure

DoD establish a pilot program on streamlining access for small business and institutions of higher learning to share classified commercial infrastructure. Expand access to SCIFs and SAP facilities to securely perform work under existing classified contracts. Reduce the cost and administrative requirements. Increase opportunities for small businesses to have access to compete for classified contracts, and share infrastructure and prototyping proposed solutions.

Our Take: This is desperately needed for many small businesses that cannot fully understand the operational basis for a requirement or the employment details that are important for a company when developing a proposal. It is unclear if this will result in additional resourcing for “Rent a SCIF” type services or if it will meaningfully change the timelines for DCSA to certify a SCIF (which is currently on the order of years due to the backlog).

Sec. 876. Small Business Bill of Rights

Require SECDEF through the Small Business Integration Working Group, to develop and adopt a Small Business Bill of Rights for the DoD to ensure small business customer service issues and conflicts are resolved expeditiously.

DoD Small Business Strategy

Sec. 849. Supply Chain Illumination Incentives

Requires DoD to develop and implement incentives to encourage DoD contractors to implement and use policies, procedures, and tools to allow assessment and monitoring of supply chains for vulnerabilities, security, and noncompliance risks.

Defense Industry

Source: FY22 Program Acquisition Cost by Weapon System

Defense Industry Videos

32 videos

Additional Reading on Defense Industry

Defense Industry Research

The Slow Destruction of the Defense Industrial Base, Moshe Schwartz, Michelle Johnson, May 2022

Analyzing the Composition of the Department of Defense Small Business Industrial Base, Amanda Bresler, Alex Bresler, May 2022

Why Marketing Matters: Strengthening the Defense Supplier Base Through Better Communication with Industry, Amanda Bresler, Alex Bresler, May 2021

See DoD's Defense Innovation Ecosystem

Industry Trade Associations

National Defense Industrial Association (NDIA)

Aerospace Industries Association (AIA)

Professional Services Council (PSC)

Silicon Valley Defense Group

National Security Space Association (NSSA)

AUSVI

Surface Navy Association

Weapons Category	U.S. Based Prime Contractors
Tactical Missiles	Boeing, Lockheed Martin, Raytheon Technologies
Fixed Wing Aircraft	Boeing, Lockheed Martin, Northrop Grumman
Expendable Launch Vehicles	Boeing, Lockheed Martin
Satellites	Boeing, Hughes, Lockheed Martin, Northrop Grumman
Surface Ships	General Dynamics, Huntington Ingalls
Tactical Wheeled Vehicles	AM General, General Motors, Oshkosh
Tracked Combat Vehicles	General Dynamics
Strategic Missiles	Boeing, Lockheed Martin
Torpedoes	Lockheed Martin, Raytheon Technologies
Rotary Wing Aicraft	Bell Textron, Boeing, Lockheed Martin (Sikorsky)

Capability Area	1990	2024
Aircraft
Fixed Wing	8	4
Rotary Wing	4	3
Ships
Surface	8	4
Submarines	2	2
Ground Vehicles
Wheeled	6	6
Tracked	3	4
Space Systems
Large Satellites	8	4
Launch	2	3
Missiles and Munitions
Strategic	3	3
Tactical	13	3
Torpedo	3	2

Capability Area	1990	2024
Aircraft
Unmanned Aerial Systems (UAS)	1	> 44
Ships
Unmanned Surface	-	8
Unmanned Underwater	-	11
Ground Vehicles
Unmanned Ground	-	6
Space Systems
Small Satellites	-	11

Sole source	Only one supplier is able to provide the required capability
Single source	Only one supplier is qualified to provide the required capability
Fragile supplier	A specific supplier is financially challenged / distressed
Fragile market	Structurally poor industry economics; potentially approaching domestic extinction
Capacity constrained supply market	Capacity is unavailable in required quantities or time due to competing market demands
Foreign dependency	Domestic industry does not produce the product, or does not produce it in sufficient quantities
Diminishing manufacturing sources & material shortages (DMSMS)	Product or material obsolescence resulting from decline in relevant suppliers
Gap in U.S.-based human capital	Industry is unable to hire or retain U.S. workers with the necessary skill sets
Erosion of U.S.-based infrastructure	Loss of specialized capital equipment needed to integrate, manufacture, or maintain capability
Product security	Lack of cyber and physical protection results in eroding integrity, confidence, and competitive advantage

Defense Industry

Defense Industry Overview

Defense Industry

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Defense Sectors

Manned Combat Aircraft

Rotary Wing Aircraft

Large Unmanned Aerial Systems (UAS)

Collaborative Combat Aircraft

Tactical & Attritable UAS - Group 3

Small UAS, Micro UAS & Loitering Munitions - Group 1 and 2

Hypersonic and High-Speed Aircraft

Propulsion & Engines

Missiles, Strike Weapons and Air-Launched Munitions

Autonomy Software and AI

Avionics, Sensors, EW, and Mission Systems

Shipbuilding and Naval Construction

Unmanned Surface Vessels (USVs)

Maritime Autonomy Systems and Software

Submarines

Unmanned Underwater Vehicles (UUVs)

Combat and Weapon Systems

Sonar, Undersea Warfare and C2

Mine Warfare and Undersea Systems

Propulsion, Engineering and Subsystems

Ocean Data, Intelligence and Analytics

Tracked Combat Vehicles

Wheeled Combat Vehicles

Logistics, Engineering, and Support Vehicles

Unmanned Ground Vehicle Hardware

Ground Vehicle Autonomy Software and AI

Counter UAS and Directed Energy

Weapons, Fire Control, and Turret Systems

Vehicle Electronics, Survivability, and Subsystems

Emerging Companies to Watch

Launch Vehicles and Launch Services

Large and Strategic Satellites

Small Satellites and Small Sat Buses

Space Domain Awareness and Space Control

Satellite Communications (SATCOM)

Space Intelligence, Surveillance and Reconnaissance (ISR)

Ground Systems, Command and Control (C2)

Space Propulsion and In-Space Mobility

Missiles and Precision Strike

Loitering Munitions and Kamikaze Drones

Rockets, Mortars and Artillery

Bombs, Warheads and Air-Delivered Munitions

Solid Rocket Motors and Propellants

Torpedoes and Undersea Munitions

Small Caliber Ammunition and Ground Weapons

Directed Energy and Non-Kinetic Weapons

Missile Defense and Interceptors

Munitions Supply Chain, Energetics and Raw Materials

Munitions Autonomy, Guidance and Seekers

Defense-Focused Contract and Advanced Manufacturing

Additive Manufacturing and 3D Printing

Munitions and Energetics Manufacturing

Propulsion and Rocket Motor Manufacturing

Electronics, Semiconductors and Advanced Components

Shipbuilding and Naval Manufacturing

Digital Manufacturing, AI and Production Automation

Maintenance, Repair and Overhaul (MRO)

Critical Minerals and Raw Materials

Advanced Materials and Manufacturing Inputs

Nuclear Energy and Power

Tactical and Expeditionary Power

Energy Storage and Batteries

Fuel, Synthetic Fuels and Alternative Propellants

Space-Based and Beamed Energy

Grid, Infrastructure and Energy Resilience

AI Platforms, Decision Support and Command and Control

Frontier AI and Large Language Models

Autonomous Systems and Robotics AI

Intelligence, Surveillance and Reconnaissance AI

Geospatial AI and Earth Observation Analytics

Mission Planning and Tactical Applications

AI-Enabled Cybersecurity and Threat Detection

AI Infrastructure, Data and MLOps

Simulation, Synthetic Data and AI Training Environments

Business and Enterprise AI Applications