🔷 Wish Lists

The Pentagon’s
Wish List

The Pentagon is requesting $961B in funding for FY2026, which includes $113B of the $150B defense spending reconciliation bill that was signed into law 2 weeks ago.

It’s the highest defense budget in history.

But no matter how much money the US military gets, it always asks for more—and it’s required by law.

What

Originally called Unfunded Requirements Lists (UFRs, pronounced “Yoo-fers”), these lists originated in the mid-1990s as informal requests from Congress during the ‘peace dividend’ era of defense budget cuts.

The intent was to identify ready-to-procure items that could immediately benefit the warfighter, but were not included in the budget, so Congress could consider them as they developed the appropriations bills.

As the UFR name implied, these ‘wish lists’ included items that were approved through the requirements process but unfunded in the byzantine budgeting process (known as PPBE).

They worked for a while, but over time became politicalized. There was a push to get rid of them in 2009, but no luck.

Instead it went in the other direction.

By 2012, UFRs had become “Unfunded Priority Lists” (UPLs) that not only had requirements, but also bloated with R&D, construction projects, operations, and maintenance budget requests.

Peak insanity hit in 2017, when Congress made submitting these bloated UPLs required by law.

So What

These lists add up to big bucks.

The FY2024 wish lists totaled $18B, but grew to $30B in FY2025.

Brace yourself though: The FY2026 wish list totals $50B.

It’s enough money to:

• buy 600 F-35s, or

• fund the US Marine Corps, or

• fund the militaries of Japan, France, or Germany, or

• buy 34,482,758,621 crappy US government spec pens

You get the point.

And this is on top of the largest defense spending year in history (though some of the UPL line items may be offset by the defense reconciliation if its explicitly called out).

What Now

Every few years, momentum builds to revisit the 2017 law and eliminate UPLs, with the rationale that it undermines the entire point of having a budget (priorities, choices, etc.).

We think it will be a high interest item next year, once the $150B sugar high is over and the midterm elections loom.

Until then, we can look to US Transportation Command for inspiration, the lone defense entity that traditionally submits a 1-page UPL with no request. We were going to weave in a nod to ‘Real Men of Genius’ here, but instead cheaped out with a meme:

In That Number

504

The House defense policy bill proposes raising the Air Force’s aerial refueling fleet requirement from the current minimum of 466 tankers to 504 by 2028.

If it passes, this change could trigger several second-order effects—from KC-135 life extensions, more KC-46s, and even pulling retired KC-10s back into service.

TRIVIA

On this day in 1969, Neil Armstrong and Buzz Aldrin became the first humans to walk on the Moon. Which is false about the Apollo 11 space suits they used?

A) They weighed 200 pounds
B) They were designed to withstand a 400°F temperature range
C) They were manufactured by a bra company
D) They had 25 layers of protective material

On the Radar

Marine Corps CCA. The Marine Corps requested $58M in the FY2026 budget to continue its XQ-58 MUX TACAIR aircraft initiative, an increase from previous years but not enough to get beyond experimentation—until now. Part of the $150B reconciliation spending is supercharging MUX TACAIR with a whopping $270M to get into production.

• The Merge’s Take: Overall, thats $328M to get the MUX TACAIR into production—which will be a new version of Kratos’ XQ-58 Valkyrie (which you’d know if you follow us on LinkedIn)—and sets the conditions to beat the Air Force to field the first operational Collaborative Combat Aircraft (CCA). Relatedly, Kratos and Airbus announced they are partnering to field the XQ-58 with the German Air Force by 2029.

 Apple’s $500M magnet bet. Apple announced a $500M investment deal with MP Materials to secure US-made rare earth magnets. This move, which includes a $200M pre-paid order for magnets, mitigates concerns over Apple’s Chinese supply chain.

• The Merge’s Take: You’re reading about it here, not because of Apple, but because of MP Materials—the same company we told you about last week that the Pentagon bought a 15% stake in. Why everyone is clamoring for MP Materials: they operate the only rare earth mine in the US, which they acquired in 2017. Since the acquisition, they’ve been building capability to also refine rare earths and produce magnets themselves, and it sounds like it’s now all coming together.

Joby’s New Drone. Air taxi eVTOL company Joby Aviation made news this week for something that was neither eVTOL nor an air taxi: The company quietly built and flew a large hydrogen-electric drone for almost 9 hours. Joby clearly did not want this public, and had flight records removed (the photo is the result of an astute reporter booking a hotel room with a view of the hangar).

• The Merge’s Take: What are they up to? Maturing the hybrid propulsion is a no-brainer, but the size and shape of the drone look suitable for high-altitude, long-duration ISR. Another key is that they used Xwing’s autonomy control station to operate it (Joby bought Xwing’s autonomy division last year).

They Said It

“We continue to make phone calls every day and talk to program offices, talk to people who are interested that theoretically have money. I don’t have a great answer. We don’t have a partner.”

— Trent Emeneker, Defense Innovation Unit (DIU) autonomy projects lead, on the challenges of finding acquisition partners within the military services to transition promising drone projects from testing to operational use.

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Knowledge Bombs

• Anduril won a $100M Army deal to prototype a Next Generation Command and Control (NGC2) system

• Firestorm closed a $47M Series A funding round to scale its distributed 3D-printed drone products (investors include Lockheed Martin and Booz Allen)

• Epirus won a $43M Army contract for its Leonidas high-power microwave counter-drone system

• Malloy Aeronautics’ TRV-150 drone used an APKWS laser-guided rocket to shoot down other drones (video!)

• Ukraine started a “test in Ukraine” initiative open to foreign defense companies to bring their tech and see if it works

• Harmattan AI announced France has ordered its 150 mph Gobi anti-drone kamikaze UAS (the company is only 14 months old)

• India successfully test-fired a Mach 8 hypersonic missile powered by a scramjet engine

• Lockheed Martin unveiled a second version of its Common Multi-Mission Truck (CMMT) system that’s in development

• Rocket Propulsion Systems won a $3M SBIR to build a space tug around its Centurion engine (their engine is 90% cheaper than current market offerings)

• The Pentagon awarded contracts to Anthropic, Google, OpenAI, and xAI–each with a $200M ceiling–to speed adoption of AI tools (the announcement coincides with xAI’s Grok for Government launch)

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ANSWER
Sorry, but they are all true. Here are specs for the suits, which were created by the International Latex Corporation (ILC), best known for Playtex products and chosen for their experience designing carefully-fitted garments.