The business of defense, October 8

The Missile Defense Agency awarded Raytheon a noncompetitive, multiyear contract on Oct. 7 to manufacture and assemble Standard Missile-3 Block IB interceptors, with a total value of $6.3 billion including options.² RTX says the award is part of Raytheon's recent agreements with the Department of War and supports urgent replenishment of an interceptor first used in combat in 2024.³

That link runs back to February. Breaking Defense reported that the department and Raytheon signed a framework agreement in February designed to pave the way for this multiyear deal, and that under the agreements Raytheon would accelerate SM-3 IB production.^4–5 RTX said at the time that the agreements would span up to seven years once contracts were finalized, according to Breaking Defense.⁵ With both option years, this contract's five-plus-two-year span reaches that outer bound.¹

The department's case for the contract runs through the suppliers beneath Raytheon. It says the deal forces capital allocation "directly into assembly lines, solid-rocket motor suppliers, and critical domestic sub-tier vendors." Michael Duffey, the Under Secretary of War for Acquisition and Sustainment, said it "breaks sub-tier manufacturing bottlenecks."¹

As an undefinitized contract action, the award authorizes Raytheon to begin work immediately in Tucson, Ariz., and Huntsville, Ala.¹ Neither the department's announcements nor Raytheon's said how many missiles the contract buys.^1–3

The Army has made initial awards for the warfighting applications in Next Generation Command and Control (NGC2), which it is moving from division-level prototyping to delivery at I Corps.^1–2 The awards, with an initial collective one-year value of approximately $93.6 million, went to General Dynamics Mission Systems, Air Space Intelligence Federal, Immersive Wisdom, LMI, Mente Systems, Stilman Advanced Strategies, Onebrief, Rune Technologies and AIR.¹ AIR was formerly Govini, Breaking Defense reported.³

The awards add to the software that Anduril, Palantir, Raft and Striveworks provide for the NGC2 data layer and core artificial intelligence capabilities.¹ According to Breaking Defense, the Army named Anduril in June to lead the common data layer baseline, with support from Palantir and Raft. On Monday, Anduril announced a $162.8 million initial base period for its early NGC2 work, Breaking Defense reported. The company said options could take the total to $1.8 billion over five years.³

A year of prototyping with I Corps' 4th and 25th Infantry Divisions informed the software capabilities and requirements to scale across the force. The Army says the NGC2 ecosystem will provide tools across six warfighting functions, from fires and intelligence to protection.¹ What the nine companies' applications will do is less clear. According to Breaking Defense, an Army spokesperson declined to describe their specific tasks, citing security concerns. Speaking generally, the spokesperson said they will support planning and course-of-action analysis, airspace management and deconfliction, and sustainment management and decision support.³

General Dynamics' board chose a 25-year company veteran whose two promotions in 2025 took him from running one business group to a companywide brief.^1–4 Novakovic will move from chairman and CEO to executive chairman of the board when Deep takes over a company that generated $52.6 billion in revenue in 2025.^1–2

Deep was president of General Dynamics Land Systems from April 2020 to April 2024, then executive vice president of Combat Systems.² In June 2025, GD made him executive vice president of Global Operations, and Novakovic said he would "focus on improving operating performance across each of the company's business units."³ He became president that December and joined the board on Aug. 5, 2026.^{2, 4}

The company Deep will run has a second leadership change under way, at General Dynamics Information Technology (GDIT). On Oct. 2, GD said Amy Gilliland, GDIT's president since 2017, is no longer with the company. Paul Nedzbala, GDIT's senior vice president and chief business officer, was appointed acting president.⁵

The Navy has executed a $150 million modification to Shield AI's existing Other Transaction agreement for X-BAT, an AI-piloted fighter designed to take off and land vertically, the company said Thursday, Oct. 8. The money comes from the office of the Under Secretary of War for Acquisition and Sustainment, through its Defense Exportability Features program.¹

Shield AI will invest $150 million of its own capital alongside the new tranche, after committing $50 million alongside a Navy funding action in August. That splits the $400 million in announced public and private commitments evenly between the company and the government.¹ Of the government's half, three-quarters is exportability money.

The Navy's Portfolio Acquisition Executive (Aviation) Rapid Capability Cell and the Defense Innovation Unit announced the August money, an earlier modification to the same agreement, under the Runway Independent Maritime Expeditionary Strike effort. Shield AI didn't give the agreement's original value or signing date, or itemize what the $150 million pays for, in its release or in statements reported by Defense One.¹

Shield AI aims to export X-BAT too, Defense One reported. Countries particularly interested include those "looking to augment F-35 and F-16 capabilities," Armor Harris, Shield AI's senior vice president of aircraft, told the outlet.³ The same day in Athens, Shield AI signed a strategic agreement with GEK TERNA, a Greek critical infrastructure investor, to jointly pursue X-BAT parts production, aircraft integration and long-term sustainment in Greece. Roles and workshare await definitive agreements under negotiation.²

Wolfspeed said on Oct. 7 that the Department of War's Office of Strategic Capital gave it a conditional commitment for up to $1.5 billion.¹ The commitment contemplates a senior secured delayed-draw term loan expected to run 30 years. Its first $600 million would refinance in full Wolfspeed's first lien senior secured notes due 2030 and pay transaction fees, replacing those noteholders with the government as a senior secured lender.²

The remaining $900 million, in tranches of $200 million to $400 million, would fund further spending on a project that Wolfspeed, before the first draw, must commit to complete. It covers domestic silicon carbide wafer and power device production, domestic or onshored gallium nitride (GaN) production, GaN-on-SiC radio frequency epitaxial wafer technology and radiation hardening.² The department says the financing would help strengthen domestic access to wide bandgap materials and devices used in radars, electronic warfare and missile defense.³

Those later tranches also need offtake agreements acceptable to the office, and every draw requires compliance with financial covenants, including a loan-to-value covenant. Wolfspeed must meet a $750 million minimum contribution over time from qualifying sources, which include new equity and convertible notes converted or equitized into equity.²

As tranches fund, Wolfspeed would issue the department warrants for up to 7.5% of its fully diluted equity.¹ The terms would also restrict changes of control with parties other than permitted persons and require a U.S.-citizen board majority. Wolfspeed says restrictions on "Fundamental Events" could limit mergers and acquisitions.²

Gallatin AI, an El Segundo, Calif., maker of AI logistics software for the U.S. military, announced a $50 million Series A on Thursday. New and existing investors including 8VC and Silent Ventures backed the round. The company plans to grow its engineering team, speed product development and broaden its AI-enabled sustainment tools.¹

Gallatin says the round brings its total raised to $70 million, counting a 2024 seed.¹ Federal money on record is far smaller: about $2.3 million across five USAspending transactions.⁶ "Venture capital has allowed us to build Navigator to commercial standards before entering the government competition process," chief executive Woody Glier said in March.³

Gallatin's award announcements include two Small Business Innovation Research (SBIR) contracts, an other transaction agreement with the Army's III Armored Corps and a Defense Innovation Unit contract. None of those four announcements disclosed a dollar value.^2–5

The Air Force SBIR, a Phase I announced in September 2025, covers a six-month generative AI effort for humanitarian assistance and disaster relief logistics.² In March, Gallatin announced an Army Applications Laboratory contract under PORTAL, a Direct to Phase II SBIR, to develop Navigator and deliver a functional logistics planning prototype.³

The III Corps agreement, announced in June, is to deploy and refine Navigator in support of the corps' exercises and operational planning. Deliverables include a logistics common operating picture and predictive consumption algorithms across all classes of supply.⁴ In July, Gallatin announced the Defense Innovation Unit contract to bring AI-driven sustainment planning to U.S. Army Europe and Africa, with Scale AI as a named teammate.⁵

The Department of War's FORTRESS America program office has an interim director. Michael Duffey, the Under Secretary of War for Acquisition and Sustainment, designated Matt O'Malley in an Oct. 6 directive, DefenseScoop reported.³ Secretary of War Pete Hegseth's Sept. 30 memo creating the program has the office report directly to Duffey's post.^1–2 The department calls FORTRESS America its "national insurance policy for the American homeland."² The memo organizes it around five pillars: energy independence, supply chains, a strategic defense reserve, installation hardening, and space and spectrum.¹

For now, the office is built to coordinate. The memo calls for "a lean core cell" that reaches full operating capability "within months."¹ Duffey's directive made O'Malley "the principal integrator among all stakeholders," DefenseScoop reported, and gave eight senior officials until Oct. 7 to name liaisons. The comptroller and the assistant secretary for industrial base policy were among them.³ The memo's only resourcing reference calls the program "Future Year Defense Program-aligned," tying it to the department's five-year spending plan.^{1, 6} Neither the memo nor DefenseScoop's account names a budget or acquisition authority for the office.^{1, 3}

President Trump nominated O'Malley earlier this year as Duffey's deputy, and the Senate has not confirmed him, DefenseScoop reported. As interim director, he will oversee strategic milestone tracking, with a two-star military adviser to assist him.³ He told senators in July that he became senior adviser to the acquisition under secretary in March, after supporting Hegseth's Arsenal of Freedom tour as a special assistant.^{2, 4–5}

German lawmakers on Thursday approved buying four more MEKO A-200 DEU frigates from TKMS, bringing the Navy's planned MEKO fleet to eight, Defense News reported.¹ The Bundestag budget committee had cleared the first four on July 8, alongside an option for the rest. The Defense Ministry said exercising that option will give the Navy a single eight-ship class intended chiefly for anti-submarine warfare. TKMS called the envisioned eight-ship run its largest-ever surface vessel contract.¹

Berlin selected the MEKO after withdrawing from Damen Naval's contract for six F126 frigates, the ships initially intended to supply the Navy's future anti-submarine capability, according to Defense News.^1–2 Defense News reported in June that the military had explored handing the F126 general contractor role to Naval Vessels Lürssen, the shipbuilding group Rheinmetall now owns. Negotiations put that continuation at around €15.2 billion for six ships. The same report put all eight MEKO hulls at a combined €11.6 billion, subject to budget committee approval. The ministry said a contractor switch to Lürssen would have required Berlin to waive potential damage claims against Damen, a condition it was unwilling to accept.²

Damen is seeking €4.7 billion in damages, arguing that Berlin's termination was politically motivated and legally unfounded, Der Spiegel reported, according to Defense News. The ministry has attributed the withdrawal to "considerable performance problems" by Damen.¹