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Home»Defense»What the R&D budget proposal says about the future of war
Defense

What the R&D budget proposal says about the future of war

Tim HuntBy Tim HuntJuly 2, 20256 Mins Read
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What the R&D budget proposal says about the future of war

If you want to understand tomorrow’s doctrine and industrial policy, zip past the $879 billion topline of the Defense Department’s 2026 budget proposal and dig into the section that details the $179 billion plan for research, development, test and evaluation. 

Like a predictive index for how the military intends to fight in five to 15 years, shifts in this year’s RDT&E proposal suggest the emergence of software-defined weapons, agile acquisition models, space-based sensing architectures, and a growing emphasis on autonomy and electronic warfare.

The most meaningful indicators are not steady growth areas, but targeted surges that reveal where institutional urgency and emerging threats intersect. Some of the most interesting shifts are taking place in these areas:

●      Hypersonics: The $802 million devoted to the Hypersonic Attack Cruise Missile—without an evident cut to current capabilities—suggests the weapon is moving beyond experiments toward fielding. This aligns with Air Force desires for a China-relevant, air-launched hypersonic standoff option.

●      Space-based ISR: The Space Force’s Ground Moving Target Indicator quadruples from $256 million in FY25 to $1.06 billion in FY26, reflecting a break from aircraft-based JSTARS-style ISR toward orbital alternatives, resilient against anti-access environments.

●      Missile tracking goes low orbit: Resilient Missile Warning and Tracking in LEO sees a $882 million bump, indicating maturation of tracking constellations to detect maneuverable hypersonic threats.

●      Agile electronic warfare and drone development: Two new Army RDT&E lines collectively receive over $500 million, representing a pivot to Ukraine-style improvisational capabilities, particularly for counter-UAS, EW spoofing, and loitering munitions.

●      Kill-chain AI: “AI for Maneuver and Fires,” funded at $88 million, is not basic research. It’s a signal of intent to deploy AI into operational command structures, not as an advisor, but as a co-pilot for battlefield decision-making.

There’s no line in the new budget proposal for software-defined weapons—that is, systems whose targeting, guidance, EW profiles, fuzing, etc., can be updated or adapted by injecting new code rather than physical modification. But there is strong evidence of a shift toward this model, which promises more versatility, faster adaptation, and even lower long-term costs.

For instance, the Army’s new lines for agile EW development (0609277A/78A ) and UAS-launched effects (0609345A/46A) together receive over $500 million in funding and emphasize adaptability, modular payloads, and software-first configuration. Rather than having a fixed function, they earmark a new framework.

Moreover, the funding for “AI for Maneuver and Fires” program (0605055A) indicates a desire to build weapons that respond not only to operator intent but to algorithmic interpretation of changing environments.

This trend reflects a decade of lessons from Ukraine, where both sides have learned to reconfigure their weapons with rapid software adjustments to drone flight patterns, EW countermeasures, and targeting systems. This enables the clashing forces to iterate in days, not months. Drones are re-coded in hours to counter enemy jammers. EW units update techniques weekly, based on live adversary behavior.

Focus on agility

Perhaps the most consequential development in the FY2026 RDT&E budget is the breakout investment in agile, modular electronic warfare, and drone systems. The emergence of agile RDT&E lines—over $500 million worth—demonstrates an intent to build capacity for near-term, on-the-fly innovation.

This is not just an increase in budgetary terms; it’s the creation of a new operational tier, one built on battlefield improvisation, rapid adaptation, and scalable autonomy.

What makes this shift so notable is its doctrinal underpinning. These programs signal a departure from stovepipe systems and embrace an architecture where components are meant to be constantly iterated, mixed, and reassembled based on evolving threats. They aim to replicate the kind of flexibility observed in Ukraine and Russia.

This shift has three broader implications:

●      Tactical agility becomes doctrine: flexibility is no longer a bonus; it’s the metric.

●      Smaller firms can now enter: modular kits create openings for software-native firms.

●      Rolling procurement gets a path: these programs function as field labs, compressing innovation-to-application cycles.

The future of electronic warfare and unmanned operations may not lie in massive programmatic structures, but in flexible, federated toolkits.

The R&D plan also reflects the divergent nature of U.S. competitors. Russia, with its counter-drone technologies, low-cost EW jammers, and field-programmable sensors, compels adaptation. China, meanwhile, requires orchestration. The U.S. is clearly preparing for a conflict with a technological peer: low-Earth-orbit-based ISR and tracking, hypersonic strike, and AI-enhanced targeting are the budget’s answer to a conflict fought across domains at machine speeds.

All this has implications for the companies that serve the Pentagon. Traditional defense firms optimized for hardware lock-in may find themselves outpaced. The RDT&E portfolio hints at a transition to a “defense software stack” model:

●      Agile lines suggest an embrace of continuous delivery pipelines over waterfall procurement.

●      Open systems architecture (visible in multiple autonomy and EW lines) implies competitive refresh, where subcomponents rather than platforms are the battleground.

●      Companies capable of iterative, modular releases with built-in testability and secure update mechanisms will shape future procurement preferences.

This tilt towards modular ecosystems suggests that the DOD will be making a strategic move where capabilities can be developed independently, vendors will compete on more traditional software metrics, and industry winners will be those who can iterate the fastest.

This is a positive signal for American dual-use companies, venture-backed startups, and commercial integrators that have struggled to break into the DOD’s rigid acquisition cycles—although this still does not solve the much-debated procurement cycles that are at the heart of stifling innovation.

This is not a full transition to a software-as-a-service model, it’s a clear directional move that will have effects long beyond this budget, and may reconfigure the DOD.

FY2026 represents a quiet but consequential shift in how the Pentagon thinks about modernization. It’s less about acquiring new things, and more about enabling things to evolve. The budget suggests the Pentagon is no longer trying to match what adversaries are building, it’s trying to out-invent them.

The bet is clear: in tomorrow’s conflicts, it won’t be platforms or materials that win, but configuration speed, modularity, and code. For those building the future of defense, the signal couldn’t be clearer: this is the year the DOD began fighting with software.

Tatjana de Kerros is a dual-use and defense tech expert, with 15+ years experience in venture capital and private equity in the defense and MIC sector across the Middle East and Europe. An economist, she is the Managing Partner of MIR Capital, a technological and economic foresight advisory based in Zurich, Switzerland.



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