What does the 2026 National Defense Authorization Act (NDAA) mean for tech startups? Yesterday, the House of Representatives passed the 2026 NDAA, and the Senate is set to vote later this week.
🎧 Introducing the Techquisition Edition — a new sub-series of the Mission Matters Podcast, where David and I break down major defense acquisition news and explain what it means for technology startups building for the national security mission.
Our very first Techquisition Edition episode just dropped (link in comments). In this inaugural conversation, we dive into the NDAA’s most impactful provisions for companies working with—or hoping to work with—the Department of War. We cover:
👉 How the NDAA codifies SECWAR Pete Hegseth’s acquisition reform agenda
🛰️ New guidance accelerating DoW adoption of commercial space capabilities
🚀 What the NDAA signals about Golden Dome
🚨 Key proposals that did not make it into the bill
⚡ And much more...
You can listen to the podcast on Spotify, Apple, the Shield Capital website, or right here on Substack.
As always, please let us know your thoughts, and please reach out if you or anyone you know is building in the national security domain.
Transcript
Maggie 00:19
Welcome to the first episode of the Techquisition Edition of the Mission Matters Podcast. Techquisition is a new sub-series of the Mission Matters Podcast that David and I are launching where we will break down major acquisition news and discuss how it will affect tech startups.
David 00:54
Well, Maggie, it’s really exciting to be doing Techquisition with you, and I’m sure we’re going to have Mike Brown joining us on several of these editions. I love a good portmanteau. Today we’re going to be discussing the 2026 National Defense Authorization Act, otherwise known as the NDAA, and we’re going to focus on what this means for tech startups. Over the weekend, the House Armed Services Committee released the full text of the conference bill, which means that the House and Senate Armed Services Committees figured out what they wanted to keep in, what needed to get thrown out, and all the things we call compromise. Earlier today, the House took it to the floor and voted to pass the bill. Next will be the Senate, ideally later this week, at which point it will be sent to President Trump to sign into law. And fun fact, Maggie, that I can’t help but bring up: only once in the NDAA’s history has a President vetoed it and then Congress, specifically the Senate, overrode the veto, and that was just a couple days ago during the first Trump administration.
Maggie 02:13
Interesting. What were they fighting over?
David 02:16
Something very political that we don’t need to get into here, because that’s not what our startups signed up for, but something for them to Google on their own time.
Maggie 02:26
Fair enough. I will say the NDAA holds a special place in my heart. Back in 2021, I was working my very first U.S. government job. I was an intern on the Senate Foreign Relations Committee, and my first assignment as a Hill intern was to read through the whole NDAA and figure out all the reports that the department owed to the Senate Foreign Relations Committee, SFRC. This is a 3,000-page document. This was before the days of ChatGPT, so I was manually searching through this document with keyword search to find all the relevant reports. It was very eye-opening to me about how the U.S. government actually works and how the executive branch actually works. I definitely wish I had LLMs back then. They were very helpful preparing for this episode, actually searching through the NDAA to find some of the key pieces that we are interested in or to identify things that maybe did not make it into this rendition of the bill.
David 03:30
Totally. Speaking of LLMs, big news on the military front. I’m currently doing my reserve duty at the Pentagon, and now there are giant posters of Secretary of War Hegseth pointing at you, doing his best impression of Uncle Sam, saying “I want you to use GenAI.mil,” where we now have access to Gemini. So congratulations to Alphabet and Google for getting Gemini onto the unclassified network known as NIPR. Apparently rolling out soon will be Grok, ChatGPT, and Anthropic in the coming months. I think a lot of legislative liaisons or people who would normally be parsing this document looking for little nuggets can now do more than just PDF keyword searches to figure out how their programs are being impacted by the NDAA. Three thousand pages, lots of reports, lots of authorities, lots of funding tables, lots of everything that we’re going to get into for this.
Maggie 04:40
Fun fact: I used an LLM to count this. The NDAA requests, I think, 122 reports from the Department of War that they’re responsible for providing to Congress in the coming months. But LLMs aside, this year’s NDAA is chock full of provisions relevant for startups looking to sell into the Department of War. It includes everything from acquisition reform to encouraging the use of commercial space assets, a little bit on ATO reform, changes to the Defense Innovation Unit, and much more, all of which we are going to break down in this episode. So let’s get started. David, I’m going to start with the most basic, dumbest question, but it’s one I actually asked you yesterday, and I think some of our listeners may have the same question. What exactly is the NDAA, and how does it compare to all these other mechanisms we hear about, like the budget bill, the reconciliation bill, continuing resolutions, executive orders, and more?
David 05:39
Sure. I’ll give you an unvarnished answer. I’m sure there’s a very well-scripted way to talk about it, but for me, having served in the military, the NDAA essentially gives us the authorities by which we can do our job, specifically in Title 10, which is what the military executes. If the department wants to stand up new organizations, spin down old organizations, retire existing platforms or weapon systems, or if they need new policy or new laws to execute their missions, all of that comes through the NDAA. It is the one bill that gets passed every year through Congress, going back decades. What it has also become is a bit of a catch-all. You’ll see in this NDAA the Intelligence Act, which gives the intelligence community some of their authorities. That really should be its own standalone bill. They have their own committees that go through it, but it gets attached to the NDAA because it’s something everyone will vote on, and more often than not, it will pass because national security is so critical to the U.S. people and to our largest government body.
Maggie 07:16
So just to confirm: we have the NDAA, which basically tells the Department of War what they’re allowed to do, what weapon systems they can field, what authorities they have. And it’s separate from the budget bill, which has not been passed yet, and which actually gives the department the money to do the things laid out in the NDAA. Is that the right way to think about it?
David 07:38
Exactly. The appropriations bill, which hopefully we get this year — last year we did not — is what gives the dollars to programs or activities so the department can carry out its missions as outlined in the NDAA. Something that’s confusing is that the NDAA has its own funding tables against various programs. It matters because it provides a gouge that the Appropriations Committee, specifically the defense subcommittees in the House and Senate (HAC-D and SAC-D), will take into account. But if your organization needs money to execute its mission, it is the appropriations bill that tells you what you get. They do anchor around what the NDAA puts in, which is anchored on the President’s Budget, submitted very late this year as the new administration wanted to put their own tentacles into the department’s priorities instead of using the one the previous administration had been putting together up until they left office.
Maggie 09:06
Got it. So at a high-level overview, we have the NDAA. It has $900 billion for the Department of War. One hundred sixty-two billion of this is going to procurement. One hundred forty-six billion is going to research, development, test, and evaluation. The rest is going to operations, maintenance, and then spending on personnel.
David 09:23
And military construction. Don’t forget about MILCON, its own separate—
Maggie 09:27
Thing. Okay, and military construction, but that’s—
David 09:30
Just an authorization. But $900 billion will probably be somewhat aligned to what the appropriators decide, but they truly have the power to determine how much money and to which programs this budget goes.
Maggie 09:47
Got it. So I want to really dig into the key parts of this bill that are going to be relevant for startups building in the national security space. One of the most relevant pieces of this year’s NDAA for startups, from my perspective, is this section on acquisition reform. Just last month you, me, and Mike Brown recorded a podcast discussing the Secretary of War Pete Hegseth’s new memo on acquisition reform, which is really looking to shake up a lot of the ways acquisitions are done today, like the requirements process and program executive offices. So how does this NDAA complement or add to that memo?
David 10:29
The NDAA codifies in law the concept of portfolio acquisition executives. This was highlighted by Senator Wicker when he originally released the FORGE Act. As the Senate Armed Services Committee Chair, he talked a lot about giving what used to be known as program executive officers—very senior acquisition officials—much wider authority. PAEs are now going to have a much broader range of responsibilities than PEOs ever had. All functional elements, whether finance officers or contracting officers, are now going to fall underneath the portfolio acquisition executives. They’ll be able to make more trade-offs with the resources at their disposal to prioritize based on a more fluid requirements dynamic.
They will still get their requirements from the service chiefs. But another big thing the NDAA codifies, which had been hinted at in other department memos, is the dissolution—or maybe that’s too strong a word—of the Joint Requirements Oversight Council. They will no longer provide overarching requirements that program offices then execute. Instead, portfolio acquisition executives are expected to receive requirements directly from their service chiefs. So Air Force PAEs will get them from the Chief of Staff of the Air Force; Army PAEs will get them from the Chief of Staff of the Army; and so on. To me, this is a huge tectonic shift in acquisition, providing significantly more flexibility across a diversity of capabilities and programs and giving more authority to individuals who previously would have seen it fractured across many other personnel.
Maggie 12:43
So the way to think about this is: previously the JROC was this joint group that led the requirements process, which was the multiyear process of collecting all the specific requirements for anything we wanted to procure. But today the change is that this requirements process no longer needs to be as rigid or as time-consuming as it was in the past. And now, instead of having this joint body in charge, you’re going to have the service chiefs themselves—the CNO and others—in charge of their own services’ requirements. Is that right? Correct?
David 13:24
Yeah, and, I mean, you know, it’s not like the JROC did every single requirement, but certainly for a lot of major programs it drove a lot of timelines. We’re just delegating that authority or responsibility back to the services, and then we’re also giving the senior acquisition officials significantly more latitude and accountability to execute the programs over which they have jurisdiction, all with the goal, as the conference report highlights, to reduce bureaucracy and increase decision making.
Maggie 14:00
And what’s the significance of codifying this into the NDAA rather than just relying on this memo from the Secretary to carry out these reforms?
David 14:11
Now it’s law, right? And so the department has to fulfill this, whereas if it’s a memo directive coming from the Secretary, Congress could actually say, Not so fast, and say, Actually, no, we like it the way that it is, and you’re going against the law and we’re going to double down on the law. Maybe a good example of this and how the NDAA oftentimes differs from the wishes of the Department of War: take the retirement of certain aircraft. I think the Air Force has been trying to retire the beloved A-10 Warthog since maybe before I even joined the military in the aughts. Once again, Congress has said, No, you are not going to be able to spend one dollar to retire the A-10. You think you are, or you would like to, and we’re saying, No, you cannot. And so with this PAE construct, Congress is saying, Go do this versus waiting for, you know, Mother, may I.
Maggie 15:17
So reading through this document, I noticed there was a lot of focus on commercial space and changing the way that the department works with commercial space providers. What were some of the provisions you came across that were most relevant for commercial space startups looking to work with the U.S. government?
David 15:37
It seems like Congress is continuing to march down this road of buying commercial space as a service instead of owning the entire system from soup to nuts as a government-owned, government-controlled system. Instead, it’s continuing to explore different commercial offerings and how we can use the data coming off these satellites to fulfill our mission operations instead of having to own it full saddle. You might think of it as here on Earth: I could buy my car and be responsible for the maintenance of my car, or I could just Uber around where I need to go when I need to be there. I think the Space Force in particular has been moving in this direction, and this NDAA continues to reinforce and emphasize those salient points, because there’s a lot of benefit from a cost standpoint to doing it this way.
We’ll see. There’s one program in particular that’s been bandied about for a while: the tactical surveillance, reconnaissance, and tracking program, which gets into this debate between what the intelligence community does with its Title 50 authorities and what the United States Space Force or the combatant commanders would like in terms of more tactical information coming off satellite vehicles that they would use for their own mission sets. This continues to be an area of interesting debate, and Congress once again seems to be reinforcing the idea that the Space Force, or the services in general, can start to provide some of this outside of the intelligence community, which has traditionally provided a lot of the overhead imagery to the combatant commanders.
Maggie 17:30
So basically, instead of the US government having to own the satellites that are collecting imagery and data, now they can just buy that data from a commercial player?
David 17:41
Exactly. And this is really important, because the department is still a very large buyer in this community. A lot of companies that were built ten years ago were thinking they would have massive commercial businesses of people buying their overhead imagery, whether it was electro-optical or thermal or multispectral or hyperspectral. You name it. It hasn’t really played out that way. The United States government and the national security apparatus have very large budgets to do these types of things, but traditionally those budgets have been tied up in building and launching the asset itself, instead of just getting the good data off the bird in the first place. For us, we have a lot of investments in this area, and we think this bodes well for those companies.
Maggie 18:35
While we’re talking about space, it’s impossible to ignore the elephant in the room, which is Golden Dome. This is a major priority for this administration. What does the NDAA have to say about this initiative?
David 18:50
I think it’s really important that you bring this up, because Golden Dome is the big winner in the reconciliation bill that was passed earlier this year. But I think what Congress looked aside—
Maggie 19:04
David, what is the reconciliation bill? How does that fit into this tapestry of bills?
David 19:10
Oh man, yeah. We talked about this on an earlier, not-yet-called-Techquisition edition of the podcast, so I’d definitely encourage our listeners to go back and brush up there. It was essentially a one-time funding bill pursued by the current administration and passed by Congress to provide, what was it, $110 billion around a variety of things. I think what some members of Congress didn’t like was how little definition was provided to that overall funding pot. Very much the opposite of what we’re seeing with this NDAA and what will be the ensuing appropriations bill, where some might say Congress is micromanaging. The reconciliation bill was quite the opposite.
So for this NDAA, they’re trying to set parameters around what they expect to see from Golden Dome going forward. That includes setting US missile defense policy around deploying and maintaining the next-generation missile defense shield, protecting against different foreign attacks, and ordering a description of a system architecture, which I believe General Gutline, who’s the head of the Golden Dome program, has been putting together for quite some time. Congress is essentially articulating: we expect to see this from you.
Maggie 20:37
Moving on from the world of space, I want to talk about some of the organizations responsible for tech innovation in the department, specifically the Defense Innovation Unit—your alma mater. What, if any, changes did the NDAA make to DIU?
David 20:56
Not a lot. There was one initiative that asked them to set up several hubs around the country, and they gave them a little bit of money for it. But if you looked at the funding table, DIU, through the President’s budget, requested $48 million, and it seems like that’s where HASC and SASC landed. So they’re authorized up to $48 million. Of course, as we’ve already talked about, everything depends on what the appropriators do.
If you recall, in the past couple of years the appropriators have plussed up the DIU budget by quite a bit—some order of magnitude of a billion dollars across a couple of different funding efforts. It wasn’t necessarily totally flexible for DIU to use that money as they wished. Some of it was partitioned off to Replicator, which has now transitioned to another organization.
Another thing mentioned in the NDAA relating to DIU is a discussion on the Blue UAS program. There was some reporting that Blue UAS was moved away from DIU, so there was discussion around that not being needed from them anymore, but Congress still expects more information around Group 1 drone requirements. Overall, things were pretty quiet for DIU relative to past NDAAs. It’ll be interesting to see what happens with the appropriators, as Representative Calvert, the chairman of the House Appropriations Committee for defense, has been a big fan of the organization and has plussed them up in previous years.
Maggie 22:36
There was also something in there about the new BOOST program that’s assigned to DIU. Is that something we should be paying attention to?
David 22:43
When I first read the draft, I was intrigued. But after more reflection and talking to some other sources in the building, it seems BOOST is just the NDAA’s way of codifying what is already transitioning from DIU. There was no funding line associated with BOOST and no new reporting requirement. I think it’s really just: how well is DIU transitioning their prototype projects to production?
In past years DIU has put out annual reports, and within them they highlight a lot of their prototype-to-production transitions and how those move on to different services. We haven’t seen an annual report in a little while, so maybe this is part of that. I don’t know—that’s speculative. I’m just spitballing here.
Maggie 23:42
What did the NDAA have to say about how the Department of War is using AI?
David 23:49
Yeah, well, you know, Maggie, this would be good fodder for your Gray Matters blog, which is always writing about AI. And I think the reality is there wasn’t much in here about it, which I think was surprising. I don’t know—you kind of read a little bit about what was going on in the NDAA. How would you interpret it based on all the research and writing you’ve been doing over the last, I don’t know, two years now?
Maggie 24:15
Yeah, I was surprised that there was not more in here. There didn’t seem to be any major changes made to the Chief Digital and AI Office, the CDAO, even though in the news there’s been quite a lot of discussion about potentially changing the organization. They set up an AI Future Steering Committee to understand how AI and AGI will affect the department. They set up a task force to investigate developing potential sandbox environments for AI testing. There was a little bit in there about ATO reform. It was relatively light, but basically they were directing the different services to find some ways to speed up the Authority to Operate process, which is the process by which software vendors are able to get their software authorized to operate on DoD networks. So it’s not explicitly AI-related, but it will certainly affect AI companies.
But then something I actually did find interesting was when I dug into the document that describes the discussion between the House and the Senate during the conference in which they come up with the compromise bill. It looks like the House version of the bill initially included more on generative AI, trying to force the department to conduct a few pilots, but it was not in the Senate version and was ultimately struck from the final version. So it looks like we actually could have had a more aggressive NDAA when it comes to generative AI, but for whatever reasons—unclear from the document—they decided not to do that.
There was a little bit of justification given. It basically said the Department of War has not yet come out with a comprehensive AI strategy on how they’re planning to use these tools in a responsible and safe way. So Congress did not want to force the department to start experimenting with these tools until they had done their own strategic thinking around how this was going to be used and how it was going to be used responsibly. They were basically saying they want to see a DoW AI strategy before they’re going to force their hand. I guess we’ll see how that turns out in the ensuing years. There are certainly a lot of great people in the department working on AI adoption and a lot of companies building tools looking to improve the lives of end users in the Department of War.
David 26:49
Yeah, well, I mean, obviously we’ve now got GenAI.mil, right? So it seems like the department is reading between the tea leaves that this is something that may be important to Congress in the future and is trying to get out in front of this technology trend that has certainly had a massive imprint on the commercial world. I will also say that, just being in the Pentagon the last few days, there’s a lot of talk around artificial intelligence, specifically generative AI and using it for different work streams. So it seems to be top of mind and present, regardless of what is or isn’t in the NDAA.
Maggie 27:31
So David, what are some pieces that did not end up making it into the NDAA that you might have expected to be in there?
David 27:40
Certainly a number of things. I was surprised because it feels like they have bipartisan support. One of them was access to SCIF-accredited spaces. SCIF stands for Sensitive Compartmented Information Facility. This is where classified conversations or classified networks occur. My understanding is that this was a pretty important thing to the Defense Modernization Caucus, and for whatever reason it did not get in, although it was in the House bill. So it was in the SPEED Act but didn’t quite make it during conference.
Another area that we often talk about as being an impediment to access to government is the Authority to Operate. I would have expected stronger language around ATO reciprocity. We’re getting to a point where the tech stacks are leveraging a lot of the same infrastructure. The differences are at the user application layer, but the reality is approving officials across different weapon systems, commands, and services have the power of the pen, and they’re just not incentivized to leverage another person’s work to quickly bring software onto different network systems. I think that’s a huge miss and clearly an impediment to commercial innovation or really just warfighter effectiveness.
Another thing that didn’t make it in or was controversial—and I recommend people read about it because there were a lot of news articles—was the right to repair. This would give the services the ability to actually fix their own equipment and provide them the technical orders to do so. Despite being in both bills, it seems the defense industrial complex was able to keep that one out. So maybe something to follow in the future.
And then maybe near and dear to my heart, though I was not surprised based on what I’ve been hearing from Congress: the Small Business Innovation Research program was not reauthorized through the NDAA. That means it could either be attached to the appropriations bill, some other bill, or done as a standalone bill. Tough sledding there. A lot of small businesses and startups really depend on SBIR. It’ll be interesting to see how the services respond. The SBIR/STTR program is mandated by Congress, but that doesn’t mean federal agencies can’t execute a similar program on their own. They would just have to do it independently.
We’ll see how different organizations respond. I wouldn’t be surprised if the Army, through FUSE, continues to execute SBIR-like programs even if they’re not technically SBIR. But there are going to be ramifications for that, and we should continue to watch it.
To our listeners—because we did this in our last non-tech edition podcast with Mike Brown—if you have not talked to your congressional representatives or senators and you think SBIR should go the way of the Innovate Act, which Senator Ernst is pushing for, you need to do it. It actually matters, and it’s what gets members of Congress energized and motivated to do things that may not seem intuitively obvious to them. Okay, enough about SBIR, because this is not a SBIR podcast, and there are other things to discuss about the NDAA, but SBIR was not in it.
Maggie 31:44
I called my representative right after we wrote that blog post together, David, so I’ve done at least a little bit of my part.
David 31:52
Amazing. I live in DC, so mine can’t vote.
Maggie 31:56
Well, that’s a whole other can of worms we don’t need to go down on this podcast.
David 32:00
So another area that I thought would have made it in but didn’t was the Economic Defense Unit, which was referenced recently in the big transforming acquisition memo put out by the Secretary of War. This seems to continue building on the theme of leveraging third-party capital as a warfighting instrument. We’ve seen the creation of the Office of Strategic Capital, their work on the Small Business Investment Company Critical Technologies Initiative, providing third-party VCs with leveraged capital to deploy into critical technology areas, and now also the loan authority, which we saw with the MP Materials investment from the government. The Economic Defense Unit just continues to build on that. I believe we’ll see it in the next NDAA, and this is probably just a case of not all of Congress being on board, since we saw it in one house in one bill but not the other.
Maggie 33:10
So what were some other notable provisions in this year’s NDAA, rapid fire, that are going to be relevant for tech startups?
David 33:19
Okay, rapid fire. One thing I think was interesting was key reforms to the Test and Evaluation community, putting a lot of those authorities inside the portfolio acquisition executive and creating an accredited test pipeline to speed up software for continuous improvement on already fielded systems, so you don’t go through a super laborious process. I think that will be key to readiness. Another area was the Modular Open Systems Architecture. A lot of pen to paper on that, which I think bodes well for commercial innovation. There are still a lot of discussions around intellectual property and what the government needs to own versus what will be restricted rights based on commercial technology developed with private or non-government funding. The more MOSA is adopted, the easier it will be for commercial vendors to engage with the department without getting tripped up by the IP debate. Those were a couple of the big things that will definitely benefit the overall acquisition system for startups. Great.
Maggie 34:41
And then last question. What advice do you have for startups, given the way this NDAA came out, to best take advantage of the new provisions that are going to help push them forward?
David 34:55
If you had things that didn’t make it in that you would have liked to have seen, that tells you where some of your lobbying efforts have come up a bit short. You need to pay equal attention to both the House and the Senate, because we saw plenty of areas where one chamber put something in and the other did not, and it didn’t automatically make it into the final bill. That would be one area. Also, continue to work with the department to make sure that when Congress calls up the DoD and says, “Hey, is this important to you? We’re thinking about putting it in the bill,” the department is advocating accordingly. It’s a full-court press. Everyone is your stakeholder, and sometimes you have to bring them together to see things through. You can never start too early on government relations and lobbying efforts. In fact, if you’re waiting until the springtime, you might already be too late for what should be released in the fall’s NDAA. So get going. And we’re happy to provide recommendations here at Shield Capital, as several of our portfolio companies work with some great government relations firms, and that has made a huge difference for them.
Maggie 36:27
Great. Well, David, thank you so much for an amazing first episode of the Techquisition Edition of the Mission Matters podcast. Looking forward to many more to come.
David 36:37
Always a pleasure. Thank you, Maggie. Yes, very excited for this new part of the Mission Matters podcast ecosystem.
Maggie 36:46
And excited to see how the Senate votes in the days to come. Definitely.
Akhil 36:50
Hey everyone, thanks for listening to the Mission Matters podcast from Shield Capital. Tune in again next month for another conversation with founders building for a mission that matters. And if you yourself are looking to build in the national security space, please reach out to us.
Keywords: NDAA, Tech Startups, Acquisition Reform, Defense Innovation, Commercial Space, AI, Military Spending, National Security, Golden Dome, Defense Modernization
