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In That Number
1,098 and falling
A new report reveals the Air Force fighter jet inventory is 1,098 and falling, which is below the statutory floor of 1,145 fighters directed by Congress.
With a fighter fleet averaging 27 years old and availability down to 54%, all data points to a problem that’s going to get worse before it gets better.
On the Radar
No Savings, No $$$. Red Cell Partners signed one-year $100M OTA with the Pentagon’s Chief Digital and Artificial Intelligence Office (CDAO) to improve efficiency with AI. The twist: they only get paid a cut of the savings they generate. No savings, no payment. The initial targets include audits, bid protests, and authority-to-operate processes.
The Merge’s Take: Two things that jump out. 1) This may be the Pentagon’s first contract that effectively turns a venture portfolio into a performance-based contracting vehicle. Red Cell is the prime on this deal, but it’s not a tech company—it’s an investor/incubator of other companies. This lets it manage overhead, contracting, and workload, while scouting opportunities to pull in portfolio companies for emerging work that gets identified during contract performance. 2) The shared savings business model is nearly unheard of in defense, but there is precedent with healthcare. Keep an eye on the tension: someone must define what the old cost was. In normal Pentagon politics and performance reporting, time and money saved are make-believe metrics with no stakes. Under this contract, that is the entire stake—and the incumbents being disrupted are the ones who set it.
Iran’s New Souvenir. Iran’s Navy recovered a largely intact Anduril Dive-LD near the Strait of Hormuz. The underwater drone was surveying regional waters when it malfunctioned more than a day earlier. U.S. statement: “The defective drone was an older model that neither collected sensitive data nor carried any classified sonar or radar equipment.”
The Merge’s Take: The loss itself is acceptable—that is the point of an attritable system. The harder problem is the complexities after capture. Even without classified payloads or sensitive data, an intact vehicle gives an adversary plenty to exploit, especially the propulsion. Now its acoustic signature can be characterized—one of the most critical sensitivities in submarines—and fed into search and ID systems. Then there’s the reverse-engineering; an Iranian Dive-LD clone could exist sooner than you think. A captured ScanEagle in 2012 led to the Sayed-2 clone within a year, and Iran cloned a captured RQ-170 with the Shahed 171 within 3 years.
$350B football in Congress. The Pentagon’s $1.5T FY27 budget is really 2 budget requests: a $1.15T base plus a $350B reconciliation package. The latter is a political football in Congress right now. Major priorities—including Golden Dome and 98% of the $54B DAWG drone push—sit inside the reconciliation package rather than the base budget. If Congress doesn't approve the full $350B, the Pentagon is open to readjusting the $1.15T baseline budget to make trade-offs.
The Merge’s Take: There is a saying in DC: Show me your budget, and I’ll show you your priorities. The Pentagon knowingly parked baseline priorities inside the $350B reconciliation to garner political support; now it may lead to a ton of rework. If that happens, it will send mixed signals for industry…just when companies are being asked to share more risk. Taking the clearest signal mechanism possible and scrambling the message is not going to end well.
TRIVIA
On this day in 1985, Air Force Maj. Doug Pearson launched an experimental missile from his F-15A. What was he shooting at?
A) a ballistic missile
B) a satellite
C) a target drone flying above 100,000 feet
They Said It
“I think we’ve moved so fast with the development side of the program and energizing our supply base that we kind of caught the bigger Pentagon and Congress funding flat-footed.”
— Michael Atwood, VP of advanced programs at General Atomics, on Collaborative Combat Aircraft production outrunning appropriations.
The Air Force wants more than 150 CCAs by 2030 and roughly 1,000 eventually…
…but Anduril can build 150 FQ-44 per year now, and General Atomics has a Costco-sized warehouse of FQ-42s.
Knowledge Bombs
Antares won a $161M Strategic Breakthrough for orbital nuclear reactors
Nooks won a $146M DIU contract to build classified worksites in 6 cities
Aevum rolled its Ravn X space-launch drone out for autonomous taxi tests
WB Group unveiled a jet-powered drone that looks like an X-47B
Boeing w/ Anduril moved to Phase 2 of the Army IFPC interceptor competition
Lockheed Martin also moved to Phase 2 of the Army IFPC interceptor competition
Honeywell & DIU flew MagNav 4+ hours GPS-free over the ocean
SandboxAQ tested quantum MagNav aboard Northrop's Lumberjack drone
Hermeus unveiled Ramjet-X, an expendable vehicle flown off Quarterhorse
SNC unveiled its Valiant Storm family of affordable mass effectors
General Atomics revealed Wildfire, its lower-cost MQ-9 successor
Petrel’s drone mothership is being evaluated by the Army
SpearUAV has built 1,000 loitering munitions
The Air Force awarded $149M to 4 companies for more GBU-57 warheads
Perceptronics won an Air Force SBIR Phase III for AI for electronic attack
Poseidon Aerospace raised a $60M Series A for uncrewed cargo planes
Elbit America rebranded as Twenty-Six Defense
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ANSWER
B) Pearson accelerated his F-15A to Mach 1.2, pulled into a 65-degree zoom climb, and launched the ASM-135 at 38,100 feet. The missile then raced into space at 15,000 mph and destroyed the Solwind P78-1 satellite roughly 345 miles above Earth.
Pearson became the first—and remains the only—pilot to shoot down a satellite from an aircraft.
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