Entering the US Defense Market: what has changed and what foreign innovators need to know when approaching 2026

Understanding the structural shifts in US defense procurement and the new openings for foreign dual-use innovators as we move into 2026.

The United States maintains the largest defense budget in the world. The FY2025 NDAA authorizes about 850 billion dollars across the Department of Defense, nuclear programs and classified activities. The scale matters, but it does not guarantee access. What matters more is understanding how the system is changing and where foreign dual-use firms can realistically contribute.

Below is a clear view of the shifts shaping the market and the concrete entry points for international companies.

1. AUSA 2025 and the move to faster fielding

AUSA 2025 confirmed what has been building for several years. The US Army is pushing for shorter development cycles, faster deployment and more iterative fielding. The Department of Defense has not been officially renamed the Department of War and I cannot confirm such a change. What is confirmed is the emphasis on urgency.

Key themes:

• Capabilities must be deployable within months.

• Iterative improvements are valued over long pursuit of perfection.

• Modular, low-cost systems receive more attention.

• Nontraditional suppliers, including smaller foreign firms, are encouraged to participate through SBIR, OTA consortia and rapid prototyping programs.

Legacy primes still dominate major contracts, but they are expected to integrate technologies from smaller companies. This creates secondary access points for foreign firms that can meet compliance and sourcing conditions.

2. Industrial base reform: why this creates openings

The US has acknowledged that its industrial base is not sized for sustained conflict. This is documented in the Industrial Base Reports and in recent Defense Production Act investments. The challenge creates practical needs that foreign innovators can address.

Distributed manufacturing

Additive and modular production are now central to readiness. Use cases include spare parts and rapid repair near the point of need. Foreign companies with deployable manufacturing tools or advanced materials may find interest from logistics units and integrators, provided they meet export control and cybersecurity rules.

Supply chain resilience

DoD is investing in cybersecure supply chains, predictive maintenance and data integration. CMMC will soon be mandatory. Tools that improve visibility or resilience in contested environments remain a priority.

Affordable precision

The demand for small, intelligent, lower cost effects is rising. Lessons from Ukraine support investment in expendable precision systems. Several European programs in this area are closely followed by US analysts. These observations create conceptual openings but not guaranteed contract pathways.

3. Operational priorities where European firms may fit

Several technology areas remain open to international collaboration because they do not directly involve classified systems.

Command and control interfaces

There is interest in intuitive interfaces, robotics control and explainable AI. Some European firms already work with US integrators through SBIR or OTA routes.

Contested logistics

Solutions that secure, track or predict logistics chains in hybrid environments are relevant for Transportation Command and Army Materiel Command.

Affordable lethality

Lightweight composites, novel energetics and additive production of munitions attract interest. Access here depends on Buy American Act conditions and congressional rules on domestic manufacturing.

Human performance

Wearables, biosensing and readiness monitoring continue to receive attention, especially from special operations communities.

4. What foreign companies must get right

Reforms create opportunity but do not remove structural constraints. Most failures come from misunderstanding how the system operates.

Translate technology into mission language

US defense stakeholders think in terms of missions and effects, not technical features. Companies must map their capability to a clear operational need.

Build visibility with the right actors

Engagement with primes, integrators, labs and OTA consortia is essential. Events like AUSA, Sea Air Space and SOF Week remain key entry points.

Navigate acquisition rules

Registration on SAM.gov, CAGE codes and correct NAICS codes are required. Export controls apply depending on the technology. Some firms will need a US presence or joint venture to meet sourcing rules.

Demonstrate credibility

Operational proof, third-party validation and clear documentation matter more than novelty. Credibility is often the deciding factor.

Develop a defense-ready plan

A realistic roadmap should outline pilot opportunities, regulatory steps, potential partners and a US presence strategy. Without this, companies spread efforts too wide and fail to gain traction.

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Conclusion: Opportunities exist, but only with a realistic strategy

The US is modernizing at a faster pace and actively looking for solutions in logistics, precision effects, industrial resilience and human performance. Foreign innovators can contribute if they understand the rules, translate their value into mission terms and build credible pathways through procurement.

The window is open. It is not wide open. Companies that succeed are those that combine speed, clarity and disciplined execution.

If your company is assessing whether it can enter the US defense ecosystem, we can help evaluate feasibility, identify practical entry points and outline a clear compliance and procurement roadmap. Contact us at contact@thewavemomentum.com