The Army gave Anduril up to $1.8 billion on Oct. 6. That money runs five years. It expands a battlefield data network called NGC2 for soldiers across the Pacific2.
I Corps commands four Army divisions there. Soldiers coordinate with allied forces over networks that drop out. That is a harder problem than the first NGC2 unit faced2.
That single deal sits inside a bigger number. The Pentagon's potential AI contract value hit $90.7 billion in 2026. That is a 1,605 percent jump from 20241. The Defense Department claimed 98.9 percent of the $91.8 billion in total federal AI contract value that year1.
Chart 1
Federal AI contract value jumps from $4.6 billion to $91.8 billion in two years
Potential value of federal AI contracts, 2024 against 2026, in billions of dollars
Each column is one year's potential contract value: the gray column is 2024, and the magenta column is 2026.
Source: Brookings Institution [1]. Chart by The AILately.com Desk.
The numbers behind this chart
| Item | Value |
|---|---|
| 2024 | $4.6B |
| 2026 | $91.8B |
Brookings Institution researchers tracked that jump in a report published in May1. Service-disabled veteran-owned small businesses won twelve of the 1,743 federal AI contracts counted that year1. Women-owned small businesses won one1. That total federal figure grew from $4.6 billion in 20241.
Chart 2
Veteran-owned and women-owned firms split 13 of the 1,743 federal AI contracts
Service-disabled veteran-owned and women-owned small business set-asides, share of all federal AI contracts awarded in 2026
The full circle is every federal AI contract awarded in 2026, the magenta arc is the 12 that went to veteran-owned firms, and the blue arc is the single one that went to a women-owned firm.
Source: Brookings Institution [1]. Chart by The AILately.com Desk.
The numbers behind this chart
| Item | Value |
|---|---|
| Veteran-owned small businesses | 12 |
| Women-owned small businesses | 1 |
| Whole | 1,743 |
The easy read calls that jump progress. A sixteenfold surge in contract value reads as proof that Washington added new small contractors, veterans included. The number says something else.
Twelve veteran-owned contracts and one women-owned contract add up to thirteen. That is under one percent of the 1,743 contracts awarded in 20261. The industrial base keeps narrowing. New winners replace old ones, and the exclusion stays the same shape.
Trae Stephens helped found Anduril and chairs its board. He told Fortune in June that the defense tech boom would thin out fast. "There will be a couple of new credible players. The rest is noise," Stephens said3.
Read that sentence for its noun. Stephens calls the companies that lose a single word: noise. A system filters out noise by design.
Daniel Jaworowski runs Infinity Systems Engineering in Colorado Springs. The 300-person company serves the Air Force and the Space Force. He testified to the House Small Business Committee on June 3 about a ceiling above his company's size4. "Forcing a growing mid-sized business to jump straight into the ring with defense giants is the antithesis of healthy competition," Jaworowski said4.
Angela Dingle leads Women Impacting Public Policy, a group representing women-owned firms. She told the same hearing that prime contractor rolls fell from about 121,000 companies in 2009 to about 63,000 in 20224. Total defense dollars hit a record $183 billion in fiscal year 2024, even as that roll shrank4.
"Record dollars are flowing to fewer and fewer companies. It is the opposite of a strong industrial base," Dingle said4.
Matthew Kasberg runs Odyssey Systems. He wrote in Washington Technology in September that mid-sized firms hit a second ceiling. Too large for small-business set-asides, too small to beat a prime in open competition, he argued5.
The Pentagon learned a version of this lesson once already. It pushed its suppliers to merge after the Cold War ended. The country went from 51 prime defense contractors in 1993 to five by 2000, Representative Maggie Goodlander noted at the same June hearing4. AI arrived decades later and repeats that shape, with software companies standing where the aerospace giants once stood.
Dingle's count, running from 2009 to 2022, shows the pattern already in motion years before the first AI contract ever posted4.
Who pays for today's version of it? Taxpayers fund every contract, large and small, and expect a resilient supply chain in return. Anduril and its investors collect the winnings from the deals Stephens calls credible. The worker at a 300-person shop in Colorado Springs absorbs whatever the structure decides next.
The verdict sits in the math, outside the press release. A 1,605 percent jump in contract value changed who signs the biggest checks. It barely touched who gets invited to bid14.
AI Lately's daily email, The Signal, tracks which contractor wins the next round and who gets left counting a rounding error. It arrives every weekday, with a signup waiting at the bottom of this page.
Sources
- James S. Denford, Gregory S. Dawson, and Kevin C. Desouza, "Where does federal AI spending stand in 2026?," Brookings Institution, May 18, 2026, https://www.brookings.edu/articles/where-does-federal-ai-spending-stand-in-2026/
- Drew F. Lawrence, "Army awards Anduril contract worth up to $1.8B over five years to expand NGC2," DefenseScoop, Oct. 6, 2026, https://defensescoop.com/2026/10/06/army-awards-anduril-1-8b-contract-expand-ngc2
- Lily Mae Lazarus, "Anduril's Trae Stephens says defense tech is headed for a shakeout," Fortune, June 5, 2026, https://fortune.com/2026/06/05/anduril-trae-stephens-founders-fund-defense-tech-ipo-palantir-venture-capital/
- Legis1 Editorial, "Small Business Defense Contracts Plummet," Legis1, June 11, 2026, https://legis1.com/news/small-business-defense-contracts-plummet-despite
- Matthew Kasberg, "The defense industrial base's disappearing middle," Washington Technology, Sept. 25, 2026, https://www.washingtontechnology.com/opinion/2026/09/defense-industrial-bases-disappearing-middle/416233/