Midterm elections are around the corner and more than $150 billion in reconciliation funds are burning a hole in the Pentagon’s pocket.
The department wants to allocate as much of the money in the One Big Beautiful Bill as possible by Sept. 30, even though the funds are authorized to be used through Sept. 30, 2029. The plan is detailed in an 85-document submitted to Congress and obtained by Defense One.
Why the rush? “The administration is pushing organizations to allocate the money to specific programs and obligate it through signed contracts as quickly as possible” in part because “getting the money obligated protects it politically. Otherwise, a future Democratic Congress could try to rescind the money by arguing that DOD can’t spend it,” said Mark Cancian, senior adviser with the Center for Strategic and International Studies.
The document says the Pentagon “is working to accelerate execution into FY 2026 if that can be done without sacrificing effectiveness” and “has developed an allocation plan” for $1 billion in Defense Production Act appropriations, “which brings the total mandatory allocation plan total to $153.3 billion across 261 individual subsections which are described herein.”
The funding plan includes $5 billion for critical minerals supply chain investments—$3 billion in 2026 and $2 billion in 2027 to the industrial base fund. There’s also $688 million allocated for the development and production of long-range cruise missiles across the services, with funds expected to award as early as Q2. About $198 million of that will be for 73 Maritime Strike Tomahawk kits: “Funds will award Q4 of FY 2026,” the document states.
The plan, if fulfilled, could mean more contracts in the near-term with focus on production-heavy sectors.
“We’re still reviewing the plan in full, but at first glance we’re encouraged by the emphasis on key priorities like industrial base modernization, shipbuilding, and munitions,” said Margaret Boatner, the Aerospace Industries Association’s vice president of national security policy.
But there’s still the underlying problem of erratic government funding.
“One thing that the president and industry representatives often complain about is the unpredictability of demand for defense purchases,” said Greg Williams, who leads the Center for Defense Information at the Project On Government Oversight. “They say that makes things more expensive, and it provides a disincentive to invest in production capacity. In this case, we are exacerbating that problem by not having a predictable schedule for these expenditures.”
Analysts agree that large influxes in defense funding could prove tricky, especially in areas where production capacity has lagged, such as munitions and shipbuilding. Plus, the Pentagon has failed to pass financial audits and has struggled with a laggard acquisitions system that it is in the midst of an overhaul.
“Increasing their annual budget by $150 billion further strained that system that obviously wasn’t working well. And if the president succeeds in getting an additional $500 billion this year, that will only accelerate that strain,” Williams said.
Welcome
You’ve reached the Defense Business Brief, where we dig into what the Pentagon buys, who they’re buying from, and why. Send along your tips, feedback, and rooftop recommendations to [email protected]. Check out the Defense Business Brief archive here, and tell your friends and foes to subscribe!
Making room for the cUAS boom. Austin, Texas-based Allen Control Systems, which builds robotic turrets to shoot down drones, plans to triple its manufacturing capacity for its keystone Bullfrog system, Defense One has learned. The company’s systems were recently tested by the Army and the expansion to 57,000 square feet is expected to help increase production and testing and accelerate deliveries. The company also plans to triple its workforce, hiring in engineering and technical roles to speed up systems development, testing, and delivery.
Background: There’s a high demand for counterdrone tech in both the military and homeland defense sectors, such as for the 2026 FIFA World Cup. And expanding manufacturing of the tech in the U.S. dovetails with the Trump administration’s domestic manufacturing push, asking defense companies to invest more in infrastructure to make weapons faster.
- An aside: The topic came up in Defense Secretary Pete Hegseth’s “Arsenal of Freedom” speeches at True Anomaly and Sierra Space this week.
- “I hear it from President Trump almost every time we talk. He’s like, ‘Are you getting those guys to go faster? Faster, Pete!’ I mean, I hear it in my sleep,” he said jokingly, impersonating Trump’s voice and cadence. “He believes in American manufacturing and America first and American strength. And we’re going to do that with these—we’re going to do that with interceptors. We’re going to do that with Golden Dome. We’re going to do that with the way we invest from subsea to space.”
CCA updates. Northrop Grumman officially named its collaborative combat aircraft offering for the Air Force—YFQ-48A—Talon Blue. The autonomous wingman is part of the company’s Project Talon aircraft portfolio, which focuses on modular, low-cost aircraft and software, the company said in a statement.
- Other contenders for the Air Force’s CCA program also released new names: General Atomics’ YFQ-42 CCA is called “Dark Merlin”, a nod to the King Arthur legend and character; while Anduril’s YFQ-44 CCA, Fury, reclaims the aircraft’s original name under Blue Force Technologies before it was acquired.
- The Air Force also awarded Honeywell and Kratos-GE Aerospace prototype design contracts to make low-cost engines for the robot aircraft.
A little more: The Air Force has started test flying Anduril’s CCA with weapons. “We are following the same detailed approach used in every other aircraft developmental test program to validate structural performance, flight characteristics, and safe separation,” Gen. Kenneth Wilsbach, the Air Force chief of staff, said in a statement. “This ensures the CCA can safely integrate inert weapons before future employment.”
BONUS: Payloads > launchers. The Space Force doesn’t need another rocket company in the mix, Maj. Gen. Stephen Purdy, who recently led the service’s acquisitions, told a group of investors and space company executives at a conference in Dallas last week that Ars Technica reported.
“We’re on path for mass-produced launch,” said Purdy, who is now a senior advisor to the Air Force Secretary on space acquisitions. “We have got our ranges situated so we can do mass-produced launch. We’ve got our data centers and our data structure for mass production. We’ve got AI pieces that are mass-produced, satellite buses are nearly there, and our payloads are the last element. Payloads at mass-produced affordability, at scale, is the key element.”
Read the full article here