Pentagon mobilizes defense giants and startups in $135b weapons push

US troops service a Patriot missile at an undisclosed location in the Middle East last month. [AFP]

With the war against Iran rapidly depleting US missile and air-defense stockpiles, the Pentagon has mobilized both major defense contractors and venture-backed startups in a sweeping push to replenish its arsenal.

According to the Wall Street Journal, the Defense Department signed a $59 billion contract with missile manufacturer Lockheed Martin on Thursday for Patriot missile production — a significant increase from the contract value announced in April.

The Pentagon also committed major funding to expand its submarine fleet, signing a $76.6 billion contract with shipbuilders General Dynamics and Huntington Ingalls Industries' Newport News Shipbuilding for nine Virginia-class nuclear submarines and five Columbia-class nuclear submarines, all to be delivered by 2038.

Beyond the established defense giants, the Pentagon has also reached out to AI-driven startups that claim to offer faster and more flexible production than traditional contractors. The Washington Post, citing multiple officials, reported that Defense Secretary Pete Hegseth convened an emergency meeting last month at the Pentagon with the top executives of more than 10 leading US defense technology companies.

The international community broadly views the flurry of weapons procurement as a sign that the US — which briefly paused hostilities after signing a ceasefire MOU with Iran last month — has resumed airstrikes and is now racing to rebuild its strategic weapons stockpiles.

THAAD interceptors, submarines anchor hundreds of billions in contracts

Separately from the multi-year Patriot and submarine deals, the Pentagon signed a preliminary multi-year contract worth $35 billion with Lockheed Martin for Terminal High Altitude Area Defense (THAAD) interceptor missiles, which can shoot down ballistic missiles. The Wall Street Journal said the contracts were structured as multi-year agreements rather than annual purchases — a deliberate move to secure stable long-term production capacity and strengthen defense supply chains amid surging weapons demand driven by the wars in Ukraine and Iran.

The latest Patriot missiles cost up to $4 million each and take years to produce. Multi-year contracts allow manufacturers to forecast future demand and invest aggressively in new production facilities and supply chains, easing concerns about a missile supply crunch.

For submarines, multi-year agreements similarly allow contractors to place bulk orders for reactors and specialized components such as custom valves and pumps. In multiple respects, long-term contracts offer more favorable conditions for ensuring a stable supply of weapons systems.

The Virginia-class nuclear submarines covered by the deal can strike both land targets and surface vessels. The Columbia-class submarines are a new generation capable of launching ballistic missiles armed with nuclear warheads. The Wall Street Journal said "replenishing ammunition stockpiles and expanding shipbuilding capacity are top priorities for the Trump administration," adding that the massive contracts are designed to guarantee a stable supply of equipment over the long term and stabilize the supplier base.

The government must obtain congressional approval before it can disburse the funds for these contracts. The Trump administration has already asked Congress to approve an annual defense budget of $1.5 trillion.

Pentagon summons defense startup CEOs: 'Prove it with volume'

Last month, the Pentagon also held a meeting focused on deepening cooperation with defense startups, attended by Deputy Defense Secretary Steve Feinberg, Undersecretary for Research and Engineering Emil Michael, and senior acquisition official Michael Duffy.

At the time of the meeting, US missile and air-defense inventories were being rapidly drawn down by combat with Iran. The Washington Post reported that as the Iran war consumed enormous quantities of precision-guided munitions while reducing reliance on ground troops and drones, the Pentagon was looking to venture-backed defense startups to accelerate weapons production.

Among the startups invited were Shield AI, which develops AI-based aircraft software; autonomous weapons maker Anduril; cruise missile startup Coasspire; and low-cost precision munitions firm Castellan. These companies have long positioned themselves as faster, cheaper and more agile alternatives to legacy contractors such as Lockheed Martin, and have expressed confidence in their ability to lead the next generation of the defense industry.

The US Army conducts a live-fire test at White Sands Missile Range in New Mexico. [AFP]

Established defense contractors such as Lockheed Martin and RTX bring deep experience navigating complex government procurement processes, large-scale production facilities and vast capital resources — but some say they are slower to adopt new technologies and shift production lines. Facing weapons shortages from the Iran war, the Trump administration has sharply expanded its collaboration with Silicon Valley, pulling startups into the core of its weapons procurement system.

'Making a product and mass-producing it are entirely different' — startups face key test

Within the industry, the prevailing view is that the critical question is whether these young companies actually have the mass-production capacity to deliver — and whether they can navigate the Pentagon's outdated procurement system and congressional budget approval processes. Whether startups can scale production to the levels the Defense Department requires in a short time frame remains an open question.

Jerry McGinn, director of the Center for Strategic and International Studies (CSIS) defense-industrial initiatives group, said "making a product and mass-producing it are entirely different problems," adding that "ultimately, what matters is whether they can actually deliver."

The most urgent challenge facing the Pentagon is its weapons inventory. CSIS estimated that Patriot interceptor missile stockpiles, which stood at roughly 2,200 before the Iran war, have fallen to 827 or fewer, while THAAD missiles have dropped from 452 to 278 or fewer.

In a May report, CSIS projected that restoring Patriot and THAAD missile inventories to pre-war levels could take more than three years. Precision-strike weapons and Joint Air-to-Surface Standoff Missiles (JASSM) were also assessed as requiring anywhere from several months to more than a year to replenish.

In May, the Pentagon signed long-term contracts with Anduril, Castellan, Coasspire, Leidos and Zone 5 to ramp up production of low-cost cruise missiles, with a goal of procuring 10,000 such missiles over three years starting in 2027.

Doug Denny, CEO of Coasspire, said he has repeatedly heard the same message from senior Pentagon officials: that his company's technology and performance have already been proven, and that it now needs to demonstrate supply chain management and mass-production capability — or it will not be worth investing in.

Brian Hodges, co-founder and CEO of Castellan, said his company's cruise missile, "Blackbeard," is priced at around $500,000 — roughly one-tenth the cost of comparable existing weapons at around $5 million — but that meeting the military's volume requirements remains the biggest challenge. "There is still so much left to build," he said. "Keeping our supply commitments will be an enormous struggle for years to come."

mokiya@heraldcorp.com