21 Aug 2023
Emerging tech-focused firms could reshape the Top 100
For years, Defense Department officials have emphasized the importance of diversifying the industrial base, aiming to create opportunities for companies beyond the dominant top-tier firms. Five years ago, companies like Kratos, according to Fendley, had limited chances, often selling parts for subsystems to top-tier defense firms who then incorporated them into major systems. Fendley believes that smaller firms like Kratos have opportunities to secure contracts for subsystems independently, with the potential for smaller and mid-tier companies to compete at the major system level in the future. Service officials have consistently stressed the need for the military to evolve beyond traditional fighters, bombers, and ships, emphasizing autonomous drones, unmanned maritime vessels, hypersonic weapons, and inexpensive explosive-equipped airborne drones as key elements for future warfare. The momentum for diversification is growing, and there's increasing receptiveness to smaller companies contributing at various levels within the defense sector, potentially even developing entire systems in the next five years.