Army Official Says Drone Demand Signal Is ‘Artificially’ Created

WASHINGTON, Oct. 26 — AnAn Army official has said plainly what the Pentagon’s small-drone orders are for. “They’re artificially creating a demand signal to push the American industry to start manufacturing this stuff in the United States,” Jon Strzelec, the advanced manufacturing lead for small drones at Army Materiel Command, said in remarks Breaking Defense published on Monday.

The Drone Dominance Program’s leaderboard, current as of 12:48 p.m. Eastern on Monday, shows that the 11 winners of its first round have shipped all 22,320 drones of their base orders and had every one accepted, but that 5,680 of their 7,680 bonus drones have not shipped. Only Neros has shipped any: 2,000 of its 2,560 bonus drones, 880 of them accepted.The ProgramThe Drone Dominance Program is sponsored by the Office of the Secretary of War and run by the Defense Innovation Unit and the Test Resource Management Center. It is awarding $1.1 billion in prototype orders in phases, each opening with a test event, a Gauntlet, and ending with prototype delivery orders for its winners.

The second round is larger and less settled. The leaderboard lists 60,000 drones ordered from the winners of Gauntlet II, held in August at Fort Carson, Colo., split evenly between deep-strike and close-quarters drones; Neros, on both lists, is down for 14,000, and announced on Sept. 30 that it had received an order for 14,000 drones and explosive payloads through Gauntlet II, valued at more than $100 million. But the page says the quantities “will be finalized upon contract award,” calls the winners “finalists for prototype contracts” and adds: “Awards are not guaranteed.”

The Pentagon has opened competitions and funding avenues for drone makers without necessarily guaranteeing the longer-term orders that would justify expanding production, Breaking Defense reported; industry leaders say the uncertainty could undermine the effort. By this paper’s reading, orders that come in rounds favor makers with the money to keep a line running between them, and press hardest on those that need each order to pay for the next.

Mr. Strzelec acknowledged the reluctance. “We’re trying to force a supply chain to stand up within the country, and so there’s a lot of companies that say, there’s just not enough demand for me to invest in that,” he told Breaking Defense. Andrew Evans, director of the Strategy & Transformation Office under the Army’s deputy chief of staff for intelligence, said in an interview with Breaking Defense: “The challenge that our senior leaders are having to contend with is, how do you incentivize industry to build if your ordering period is so episodic?”

The program’s calendar runs in rounds, which give companies repeated chances to win and the military chances to pick new technology, Breaking Defense noted. Gauntlet I was set for Feb. 17 and Gauntlet II ran in August; a round for bomber drones, Gauntlet 2.5, was put off to early November at Camp Grayling, Mich. The third phase puts $450 million toward about 60,000 more drones, to be ordered after a Gauntlet III estimated for March 2027 and delivered within five months of the order.

“There’s a lot of positive signaling, but we need to see the whites of the eyes: We need to see sustained, normalized demand,” James Slider, chief executive of Performance Drone Works, told Breaking Defense. “If you win an award and then you’re providing 1,000 drones a month for a year, that’s a very healthy demand for us.” His company competed in Gauntlet I but did not rank among the 11 that received orders, the leaderboard shows. A year at that pace is 12,000 drones, by this paper’s arithmetic: the first-place allocation projected for each mission in the third phase’s first tranche, which would be due in five months, not twelve.

“There is no supply without demand,” Chad Chasteen, who leads Army business development at AeroVironment, said on a panel at the Association of the United States Army’s conference on Oct. 13, Breaking Defense reported; there have to be “continuous awards, continuous orders,” he said. Not every maker hears a weak signal. “The demand signals are very strong,” Callan Carpenter, Skydio’s chief revenue officer, told Breaking Defense on Oct. 13, adding that the company sells to the Department of Homeland Security and other civilian agencies as well as the military. Skydio is not among the program’s listed competitors.

The third phase draws on $450 million of funds already available under Public Law 119-21, its request says. Beyond it, much turns on money Congress has not approved. The Pentagon has outlined plans to spend nearly $55 billion in fiscal 2027 on the Defense Autonomous Warfare Group, most of it requested through a reconciliation package whose future is uncertain, Breaking Defense reported.DAWGReplicator, launched under the Biden administration to field thousands of inexpensive, attritable drones, was repackaged as the Defense Autonomous Warfare Group and later absorbed into Task Force Autonomous Warfare, Breaking Defense reports. “Seeing the DAWG money flow down would be very encouraging for us,” Mr. Slider said. “Depending on who you talk to, it’s definitely coming or definitely not coming.”

The next tests of the signal are whether Gauntlet II’s orders are filled and fixed, the bomber round in early November, the third phase’s production-sprint orders, which the program expects to issue by mid-December, and Congress’s decision on the autonomy money.