Defense technology and national security companies and contractors are trying to ramp up production after a record-setting government shutdown that lasted over 40 days and limited funding mechanisms.
The 43-day shutdown concluded Nov. 12 when enough Senate Democrats crossed the aisle despite their party not reaching a long-term solution for Obamacare-related extensions. President Donald Trump signed a congressional bill keeping the government funded until Jan. 30, 2026, with benefits for Supplemental Nutrition Assistance Program (SNAP), women, infants and children (WIC) benefits, and the Department of Veterans Affairs (VA) being funded until September 2026.
The shutdown impacted millions of Americans in myriad ways, notably affecting federal workers in the national security/defense sector and at airports where air traffic controllers became limited. Military families also visited food pantries at accelerated rates while work-related payments were put on hold.
Business startups like Arlington, Va., based Rune Technologies, which receives private capital but also depend on government funding to accelerate defense and security initiatives, faced their own funding lapse which leaders say will negatively impact projects that have long been in the pipeline.
“We employ people, those people need to be paid at a certain point; we need to keep moving forward,” Rune co-founder and CEO David Tuttle told Military.com on the precipice of the government’s reopening. “There’s actually the human impact aspect of it.
“And then [there’s] the programmatic side, right? When you choke off the RDT&E (Research, Development, Test, and Evaluation) money that needs to happen to do these things, we’re never going to get that time back.”
Rune, owned and operated by individuals with military experience from the U.S. Army and U.S. Marine Corps, to the Joint Special Operations Command and DARPA, as well as experience in the private technology sector, provides logistics technology innovation.
The shutdown led to delays on Rune’s new starts and other opportunities put on the backburner.
Ramifications of Closed Government
The longest shutdown in U.S. history will have an impact in the weeks and months ahead, as funding mechanisms vary and a flurry of businesses and companies rely on contracts to stay viable.
While some with already funded contracts could in certain capacities continue as usual, others awaiting contract modifications, renewals or finalizations, etc., were left in the dark due to the financial lapse. Contracts requiring additional financial capital were also put on hold.
BDO, an international company that provides clients with assurance, tax and financial advisory services, put the onus on the government contractors to “pick up the pieces.”
“Many government contracts may be modified to reduce payments that contractors would have received if there was no shutdown, and some contracts may be terminated,” BDO wrote in the shutdown’s infancy. “Contractors may be forced to furlough or lay off employees due to the shutdown as well.”
A statement and fact sheet published by the Republican-led House Armed Services Committee on Oct. 23, which blamed Democrats for “serious national security consequences,” describes various ill-fated effects of the closure that included weakened nuclear deterrents and military service members working without pay.
“The military cannot enter into new contracts or renew existing contracts during the shutdown, needlessly delaying the acquisition of critical capabilities for our warfighters,” the fact sheet reads.
Another line within states: “Critical exercises have been delayed or cancelled, including activities to deter China through new capabilities testing, validating operational concepts, and informing force posture. Military exercises with the Philippines have been canceled. Planning for large-scale military exercises has been postponed. Ongoing intelligence that informs weapons development and predicts geopolitical conditions has been stopped, hurting our ability to equip our troops and prepare for future threats.”
Tuttle acknowledged benefits his company gets through private capital to keep moving forward on product development, but starting new programs has been a hindrance.
“And last time I checked, our greatest global adversary [China] is not stopping with their development anytime soon,” he said. “So, I think it puts us in a spot where now we’re catching up even further…every day that goes by.”
Companies, Contractors Should Expect ‘Lag’
Staying ahead in the digital age is on the minds of Tuttle and countless others, including those spread out across the U.S. defense and tech sectors.
The days of shooting 100 rounds in a tank-heavy military conflict are long gone, Tuttle said. That transition from long-held strategies and ubiquitous artillery is now a conversation revolving around supply chains, drones, AI, logistics, and achieving a tactical edge over adversaries.
“If you don’t have any kind of digitization or any kind of software platform that can work at those tactical levels, you can never fix this problem,” he said. “You can never have this future vision, which I think everyone has at this point, which is like tactical, connected to operational, connected to strategic, all the way back into the defense industrial base to drive manufacturing production. I think that’s the vision everybody wants.”
What everyone wants and how things shake out over time are different parts of the equation. As Tuttle and his company survey the landscape, they don’t necessarily characterize it as a supply chain problem but more so an operational plan with various maintenance requirements, munitions requirements, and sustainment.
“We feel that we can’t just be a great technology company,” Tuttle said. “We also have to be a deeply doctrinally rooted military logistics company to have those things.”
And even though the shutdown is now done, funding remains a liability rather than a viability at this juncture.
“RDT&E money, and I’m not saying this is a bad thing, but RDT&E money was used to pay salaries over the last 40 days—which was the right ethical call to make,” Tuttle added. “But that money is going to have to flow back down to those accounts to happen.
“So, we’re going to see a lag…before some of these things can happen. And it just slows things down. The clock is ticking on capabilities and the adversaries’ capabilities.”
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