09/08/2026

Pentagon intervention may not quickly fix supply chain risks

The Pentagon is taking a more aggressive role in shaping and financing the defense industrial base, but industry experts say entrenched supply-chain problems could take years to fix, leaving programs vulnerable to bottlenecks even as Washington pours billions of dollars into expanding production.

The issue was a topic of discussion at an Aerospace Corp. space policy forum last week, where panelists said some of the toughest constraints sit several layers below the big defense contractors, among smaller manufacturers that may lack the capital, equipment or firm orders needed to expand before demand arrives. They said the Golden Dome missile defense initiative could provide an early test of whether a more interventionist approach can work.

David Rader, a Hudson Institute senior fellow who previously worked in the Pentagon’s Economic Defense Unit and at the Defense Innovation Unit, said the government has been looking beyond the companies expected to receive Golden Dome contracts to understand whether their supplier networks can support the anticipated buildup.

“We’ve worked very closely with Gen. [Michael] Guetlein and his team saying, ‘Who are you going to give the money to?’” Rader said. “They say, ‘All these guys.’ We say, ‘Great. I need to figure out your entire vertical below you.’”

Rader described companies telling officials they would ramp production once Golden Dome funding began flowing. His response: “When do you get your [Computer Numerical Control machine] that’s got a three-year delay? ... Okay, guys, like we got to pull this to the left.”

Push to rebuild missile inventories

In recent weeks the Defense Department has signed seven-year agreements intended to triple production of Patriot PAC-3 MSE interceptors and quadruple THAAD output, while striking separate deals with L3Harris and Northrop Grumman to expand production of rocket motors and other critical components.

Those agreements are designed to provide suppliers with the long-term demand signals needed to invest in facilities, equipment and workforce. But Rader argued that even sustained procurement commitments may not solve constraints deeper in the supply chain quickly enough.

“That’s where we’re thinking about government intervention,” he said, pointing to lower-tier suppliers that have not yet seen the “cash pass-through” from larger contractors.

Washington is supplementing traditional procurement contracts with loans, grants, equity investments and programs designed to draw private capital toward companies and production capacity deemed strategically important. “Debt is an amazing tool,” Rader said. “But it doesn’t solve all the problems in industry. Equity is an amazing tool; it doesn’t solve all the problems.”

He said the goal is to combine those mechanisms with grants and contracts depending on the particular bottleneck. “We have the best capital markets in the world. It’s actually our superpower,” he said, but that capital “is not yet making its way to companies” in some parts of the industrial base.

Beyond the Pentagon

Joshua Carter, associate administrator of the Small Business Administration, said SBA is trying to work with smaller suppliers that may need relatively modest investments to substantially increase output.

“We’re looking at these companies that are tier five, tier six, like small suppliers, where we’re going to be able to get in and help them buy a machine that can double their production,” Carter said.

SBA is using its Small Business Investment Company program to encourage private investment in government priorities, Carter said. Under a new partnership with NASA, investment funds can receive low cost SBA-backed leverage if they commit at least 60% of their capital to NASA-identified technology and supply chain priorities, including launch infrastructure, communications systems, specialized components and propulsion.

The model is intended to mobilize private money rather than replace it. Carter said SBA provides financing to investment funds and gives them incentives to put capital into priority industries while leaving individual investment decisions to private managers.

Interventionist industrial policy

“In theory, we are supposed to be the guys who hate government intervention in the marketplace,” Rader said.

But he also argued that the shift transcends administrations, adding that he saw “almost perfect continuity” between the Biden administration’s creation of the Office of Strategic Capital and the Trump administration’s expansion of the government’s industrial-finance toolkit.

“The industrial base, specifically the space industrial base, has a long way to grow and catch up to where we need it to be,” he said. “We’re in a new era of this,” one he predicted would continue across multiple administrations.

William Henagan, a research fellow at the Council on Foreign Relations, similarly described the broader use of government finance for industrial policy as increasingly bipartisan. The Biden administration tended toward sector-wide interventions, he said, while the Trump administration has taken a more company-specific approach.

“This is probably the new reality that we’re living with from a government intervention standpoint,” Henagan said, particularly within the defense industrial base.

Space startups bet on Golden Dome

The Pentagon has yet to settle some of the biggest questions surrounding Golden Dome, including what its final architecture will look like and how it will be funded over the long term. That uncertainty isn’t stopping space startups from designing products aimed at the missile defense program.

Product categories are emerging in commercial space like “orbital magazines” built to carry and release interceptors, and “orbital carriers” that could pre-position spacecraft and sensors. Some of these technologies sit somewhere between conventional satellite infrastructure and weapons systems. Venture-backed companies are spending money and engineering resources on them before the Pentagon has demonstrated that a market will exist at the scale many of their business cases anticipate.

Guetlein, who leads Golden Dome, and his deputy, Lt. Gen. Brian Gibson, have repeatedly told industry that the Pentagon wants companies to move before traditional requirements and production contracts are in place. Gibson has warned that the approach “involves risk to your shareholders” and said companies will have “skin in the game.”

The big uncertainty

The Pentagon is seeking about $17.5 billion for Golden Dome in fiscal 2027, but roughly 97 percent of that request depends on another reconciliation measure rather than the regular defense budget. Guetlein warned last month that if lawmakers don’t find another funding mechanism, “there is no Golden Dome” because “there is no funding.”

There is also disagreement over the eventual price tag and scope. Guetlein has put the cost of the planned architecture at roughly $185 billion over a decade. The Congressional Budget Office estimated that a notional missile defense system meeting the broad requirements of President Donald Trump’s executive order could cost about $1.2 trillion over 20 years. CBO stressed that it cannot estimate the actual Golden Dome system without knowing what and how many systems the Pentagon intends to deploy.

Lawmakers have also pressed the Pentagon for more information about Golden Dome’s architecture, schedule and spending plans.

Industry isn’t waiting

Apex, a Los Angeles satellite manufacturer, has developed what it calls an “Orbital Magazine,” a spacecraft designed to host space-based interceptors, keep them powered and connected in orbit and release them when commanded.

Gravitics, a Seattle-area startup, develops large modules for commercial space stations and is now adapting the technology into Orbital Carriers that could pre-position and deploy spacecraft, sensors or interceptors.

The Space Force, meanwhile, has awarded the California startup Space Kinetic a contract worth up to $50 million to advance Whirlwind, a system that mechanically dispatches multiple small spacecraft from a larger host vehicle. The company has identified missile defense as a potential application.

The pick-and-shovel plays

Golden Dome could also create demand for less conspicuous technologies needed to make a large orbital weapons architecture function.

Tensor, a Los Angeles radio-frequency startup, is developing radios capable of running Link-182, the Space Force waveform intended to let satellites and interceptors securely exchange data in orbit.

At the more speculative end of the spectrum is Wardstone, a young Y Combinator startup formed specifically around missile defense. The company is pitching a system called Hailstorm that would use high-speed clouds of projectiles to kinetically engage hypersonic missiles, eventually as part of an integrated interceptor satellite constellation.

Several startups already have a more direct route into the program. Space Systems Command awarded 20 Other Transaction Authority agreements to 12 companies in late 2025 and early 2026, with a potential combined value of up to $3.2 billion, to prototype the space-based interceptor layer. The group includes Anduril, Booz Allen Hamilton, General Dynamics Mission Systems, GITAI USA, Lockheed Martin, Northrop Grumman, Quindar, Raytheon, SciTec, SpaceX, True Anomaly and Turion Space.

Anduril’s interceptor team includes Impulse Space, Inversion Space and K2 Space, along with Voyager Technologies and Sandia National Laboratories. Northrop Grumman has separately partnered with Apex on space-based interceptor work.

Space Force plans Lane 1 on-ramp as SpaceX keeps grip on launch awards

The U.S. Space Force plans to open another round of its commercial-style national security launch contract to new providers this fall, continuing an effort to broaden the supplier base even as SpaceX has captured nearly all of the missions awarded so far.

Space Systems Command expects to release the fiscal year 2027 on-ramp solicitation for National Security Space Launch Phase 3 Lane 1 around the end of October, with proposals due in mid-December, according to briefing slides from an Aug. 26 industry day that were posted Sept. 2.

The briefing says SSC does not plan to release a draft solicitation beforehand.

One of the slides notes that SpaceX has won 38 of the 39 Lane 1 missions awarded through the first two order years, including 28 of 29 in the second year. Blue Origin received the other mission. United Launch Alliance has received none.

That concentration comes as the Space Force continues to expand Lane 1. The vendor pool now includes seven companies: SpaceX, ULA, Blue Origin, Rocket Lab, Stoke Space, Relativity Space and Impulse Space. Rocket Lab, Stoke, Relativity and Impulse were not eligible for the first two order-year competitions because their proposed systems had not yet met the required flight milestone.

Lane 1 was designed to make it easier for emerging launch companies to enter the national security market. Unlike the more demanding Lane 2 program, it does not require full NSSL certification and allows SSC to add providers through annual on-ramps as their systems mature. Companies that make it onto the contract can compete for individual launch orders once they meet the program’s technical and flight-readiness requirements. Task orders are competed annually, either individually or in blocks.

The individual SpaceX awards had been made public already, but the Industry Day briefing provides an official tally of how concentrated Lane 1 remains as the program grows. The Space Force recently raised the Lane 1 contract ceiling to $17 billion from $5.6 billion, an indication of a projected large increase in national security launch demand.

The October on-ramp will give emerging launch companies another chance to enter Lane 1, but the more consequential question for the market is when those additional providers can begin competing for actual missions rather than simply securing a place on the contract.

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