Why the Doctrine That Opened the Door to New Entrants Cannot Tell You What Is on the Other Side

The Assumption

The signal has rarely been clearer in three decades. Governments across NATO are spending on defense at a pace not seen since the Cold War. The EU has committed €800 billion to defense readiness under its ReArm Europe plan. Germany doubled its military procurement budget. NATO's own Innovation Fund has begun backing dual-use startups across member states. And in Washington, on January 7, 2026, something happened that would have seemed implausible a decade ago: the President signed an Executive Order that officially accused the large established defense contractors of prioritising financial engineering over industrial reinvestment — and pointed explicitly toward startups and smaller technology companies as the preferred alternative source of military capability.

For a deep tech founder working on autonomous systems, advanced materials, propulsion, or sensors, this reads as an invitation. The assumption it creates is powerful and understandable:

"The doctrine has changed. The door is open. The spending wave is real, and we built exactly what governments are now asking for."

This autopsy does not argue the door is closed. It asks what the door opens onto.

Why the Procurement System Was the Problem — and Still Is

To understand why the January 2026 Executive Order matters, it helps to understand what it was designed to fix. The US defense procurement system was not always this slow. It became slow through the accumulation of oversight requirements, cost-control mechanisms, and contractual protections added over decades in response to real failures — cost overruns, capability gaps, and systems that arrived years late. Each layer of process was individually rational. The aggregate produced a system that takes an average of almost 12 years to deliver the first version of a weapon system.

That timeline is not competitive with the current strategic environment. The defense acquisition process in the United States has long moved at a glacial pace — and China is positioning itself to quickly and effectively adopt and deploy operational military AI, keeping the gap between the US and Chinese militaries narrow. The contrast is structural, not incidental. China's Military-Civil Fusion strategy has created a technological ecosystem where civilian innovation automatically contributes to military modernisation — a level of integration that democratic societies have historically found difficult to achieve. The majority of suppliers for AI-related military capabilities are now civilian companies and universities rather than traditional state-owned defense enterprises. China did not reform a slow procurement system. It built a parallel one from scratch, embedding military requirements into civilian research and development from the point of conception.

The Pentagon's response — the OTA pathway, the Defense Innovation Unit, the NDAA 2026 acquisition reforms — is an attempt to create something analogous within the constraints of democratic oversight, procurement law, and constitutional accountability. It cannot move as fast as a system that has none of those constraints. But it can move faster than it has been moving. The question for founders is whether the reforms have yet closed the gap between political intent and operational reality.

The evidence from the GAO is not encouraging. Despite reforms intended to lead to faster results, slow and linear development approaches persist. Programs starting on the new rapid prototyping pathway plan to spend 5 years for rapid prototyping followed by 5 years or more for further development — and most acquisition strategies do not outline how programs plan to deliver an initial fieldable capability within the 5 years the pathway was designed for. DOD has yet to show it has achieved better acquisition outcomes. The pathway designed to be fast is replicating the timelines of the pathway it was designed to replace.

What the New Doctrine Actually Triggers

The Baker Botts analysis published in January 2026 is the clearest account of what the Executive Order and NDAA 2026 reform package actually means in practice. It documents the arrival point of a years-long effort to redirect Pentagon procurement away from the small group of large, publicly traded contractors — known as the "Primes" — that have dominated defense acquisition for roughly three decades. These are companies like Lockheed Martin, Boeing, Raytheon, Northrop Grumman, and General Dynamics: the principal contractors responsible for delivering major defense systems, whose production delays and cost overruns became the political argument for opening the system to new entrants.

What the doctrine triggers, concretely, is access. The OTA contracting pathway allows the Pentagon to bypass traditional procurement rules and work with companies that have never previously held government contracts. The Defense Innovation Unit — which received a 431% funding increase between 2023 and 2024 — exists specifically to move commercial technology into military use faster than the standard acquisition process allows. The January 2026 Executive Order adds political pressure on program managers to use these pathways rather than default to established relationships.

This access is real and it is new. A deep tech founder in 2026 can engage with the US defense procurement system at a speed and on terms that were not available in 2016. The same is true, with different institutional architectures, in the UK, France, Germany, and across NATO member states. The spending wave is real. The demand is real. And the established contractors genuinely cannot absorb all of it — their cost structures, production commitments, and workforce constraints create space that new entrants can fill.

The gold rush is rational. The question is which part of it converts into sustainable companies.

The Valley That the Doctrine Does Not Cross For You

The new acquisition architecture accelerates entry into the procurement system. It does not change what the procurement system ultimately requires: not a prototype that works, but a system that can be produced at volume, operated reliably under combat conditions, maintained by non-expert personnel in the field, and sustained across a supply chain that does not depend on a single startup's survival.

The distance between entry and delivery is the valley. It has a specific shape in defense tech. Programs that entered the rapid prototyping pathway with low levels of technology maturity resulted in lengthy development instead of the speed for which the pathway was designed. GAO (Government Accountability Office) reviewed seven former rapid prototyping programs with low technology maturity at initiation — none were ready for production or fielding when the effort ended. The pathway designed to shortcut the valley instead extended it, because the entry point was too early.

The portfolio dimension of this problem is the one least discussed in the gold rush narrative. Defense capability cannot be concentrated at any single maturity level. A procurement system that over-invests in prototype demonstration — which is where the political signal, the press coverage, and the VC markups cluster — and under-invests in the operational testing and manufacturing readiness stages that follow will produce a visible pipeline at the front end and a broken one in the middle. Some programs continue to follow lengthy, linear development schedules — 5 years for rapid prototyping followed by another development effort of 5 years or more — falling short of delivering capabilities quickly and at scale. The reform intended to compress this timeline has not yet done so systematically. The founder who enters the system assuming the new pathways solve the valley is making the same assumption about proof of concept that the software world made about prototypes.

The Dual-Use Question: One Sentence

The dual-use label is not cream on the cake and not a poison pill. It is a compliance decision that has to be made before the first government engagement, not after — because the ITAR, export control, and investor alignment questions it generates are structurally easier to manage before a contract exists than after one arrives.

Open Questions

This section does not prescribe. It surfaces the questions the gold rush narrative makes it easy to defer.

On the gap between doctrine and delivery:

• The new rapid prototyping pathway was designed to field capability in 5 years. GAO found that most programs on it are not on track to do so. What makes your path through the system different from the programs that entered it with the same expectation?
• The January 2026 Executive Order creates political pressure toward new entrants. Political pressure and procurement infrastructure are not the same thing. Which one governs your timeline to contract?
• China's Military-Civil Fusion embeds military requirements into civilian R&D from conception. The US reform embeds civilian technology into military procurement after the fact. What does that structural difference mean for the speed at which your technology can reach operational deployment?

On portfolio and maturity:

• Defense procurement requires capability at multiple maturity stages simultaneously. Where does your technology sit in that portfolio — and who is funding the stages between where you are and where the warfighter needs you to be?
• The companies that crossed the valley successfully treated the prototype as the beginning of the manufacturing readiness process, not the end of it. At what TRL does your current capital run out — and what does the stage after it actually cost?
• What follow-on program structure exists for your technology, beyond the initial OTA? Who has agreed to fund what comes next, and under what conditions?

On dual-use and compliance:

• At what point does your technology become ITAR-controlled, and has that question been answered by a lawyer before your first government engagement?
• Do your current or prospective investors have fund-level restrictions on defense or dual-use exposure? The answer varies by fund classification, jurisdiction, and the specific nature of the technology — it is no longer a categorical question with a single answer.
• If you are raising from European institutional investors, have you confirmed whether your technology's military applications affect their ESG fund classification obligations?

On alliances and the crossing itself:

• The companies that made it through the valley did not do so alone. They built teaming agreements with larger contractors, government laboratory partnerships, and operational relationships with end users. What is the equivalent of that infrastructure for your company — and when do you plan to start building it?
• The valley is survivable. It has been survived. The founders who survived it understood, early enough, that entry into the procurement system was not the achievement. Delivery was. What is your definition of delivery — and how far is it from where you are now?

Sources: Baker Botts, "The President Challenges the Primes" (January 2026) · GAO, "Defense Acquisition Reform: Persistent Challenges Require New Iterative Approaches" (GAO-25-108528, 2025) · GAO, "Weapon Systems Annual Assessment" (GAO-25-107569, 2025) · GAO, "Other Transaction Agreements: Improved Contracting Data Would Help DOD Assess Effectiveness" (GAO-25-107546, 2025) · Georgetown CSET, "Pulling Back the Curtain on China's Military-Civil Fusion" (September 2025) · Foreign Affairs, "China's AI Arsenal" (March 2026) · The Diplomat, " (October 2025)

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We perform autopsies on innovation’s failed assumptions.

This newsletter was edited by Manfred Lueth.

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