Race To the Finish Line – Catalysts into Year End

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ROBERT WALL: If the DoD has basically carte blanche to spend money however it wants, that makes it a very hard sell, I think, for a CFO to say, yep, go spend $1 billion on a facility because we think, three years from now, that money will be there. That's a pretty big bet.
ROMAN SCHWEIZER: From DoD to Congress and from the White House to Wall Street, the NatSec Need to Know podcast, an unrehearsed podcast presenting insightful discussion and forecasts of major national security and defense issues of the day.
Welcome to the NatSec Need to Know. We've got a reporters' roundtable to discuss the top national security issues in Washington and to preview what we should expect over the next several weeks as Congress gets back to town and we've got a sprint to the year end.
Joining me is a murderer's row of experienced Washington editors and reporters-- Tony Bertuca from Inside Defense, Joe Gould from Politico, Aaron Mehta from Breaking Defense, and Robert Wall from Aviation Week. They've each covered Washington and the Pentagon for decades and are as well-sourced as anyone in town. Thank you all for joining us. Let's get after it.
Gentlemen, thanks so much for joining us for our August installment of the Need to Know podcast. I will say, I had initially thought of this as a sort of year-end preview of Washington events. But there's been a fair bit of news on a number of fronts that I'm sure we're going to talk about.
We are not going to talk about the Cracker Barrel rebrand, and we are not going to talk about Taylor Swift. I apologize to any listeners who were expecting the latest hot takes from some of Washington's finest aerospace and defense analysts. But we're going to pass on that, and I'm sure you can find plenty of coverage elsewhere. But we are going to talk about Washington shenanigans and outlook, and of which there are many.
I guess, to just start off, every year-- it's the beginning of a new year. New Year's Day, October 1, the government needs to be funded. It needs to be up and operating.
I don't know. Maybe one of you can tell me how many legislative days Congress has in the September window. It's probably something ridiculous, like 14 or something like that, to drag a CR hopefully across the goal line. Appropriations bills won't be done. So I guess we'll maybe start with that. What is the outlook for a CR or shutdown starting on October 1? And maybe, Joe, you want to take us away?
JOE GOULD: I would say, what's the outlook for CR? The outlook is always that there's going to be a CR on-- I mean, I don't remember the-- I don't think it's ever happened, in the time that I've covered Congress, that we haven't had a CR to start off the fiscal year.
I guess the new dynamics right now is that the OMB budget chief, Russ Vought, floated a maneuver that would let the White House cancel federal spending without congressional approval. And it's called a pocket rescission.
Normally, the White House would send Congress a request to claw back money. Lawmakers would have a certain period of time, like 45 days, to say yes or no. And if they don't act, the money still has to be spent. But what's happening here is that if the White House makes the request, the funds can be treated as expired, no matter what Congress does.
The problem here is that Democrats see it as an effort to sabotage the bipartisan negotiations to avoid a shutdown. They're steamed. Some Republicans are queasy about it. And I would say, overall, it's kind of soured the process by which Republicans and Democrats would typically hash out appropriations bills. It's kind of spoiled those negotiations. And that's raising the risk of a government shutdown.
ROMAN SCHWEIZER: Aaron or Robert, you want to pile in on that?
AARON MEHTA: I mean, as usual, I defer to Joe on the insane machinations going on in Congress at any given time. I'll just say to echo a little bit, what are the chances of a CR 100%? What are the chances, I think, of a CR through December? I think probably 95%. It seems like the plan is always, you come back from Thanksgiving, and then you actually hash out whether a CR goes in the new year or there's some sort of shutdown.
I can't imagine the Trump administration wants a government shutdown in its first full year in office, or roughly first full year. But also with Russ Vought's going on with OMB and the interesting dynamics on the Hill, where Republicans make a lot of noise but then eventually do go along with whatever the White House says, it sure seems like it's at least on the table.
And again, when you control all the chambers of Congress, usually you avoid a government shutdown. But these are unusual times, and I don't think it can be ruled out. Because this time last year, if somebody had said, would there be a full-year CR, the answer is, well, of course not. They always figure it out. Well, we had a full-year CR. I think you just have to assume anything is possible at this point.
ROMAN SCHWEIZER: Yeah. I'm going to quibble a little bit with you because I'm not so sure about that shutdown. I mean, I think Russ Vought goes to bed at night dreaming of a shutdown and never really opening the government up again. And you would still have essential defense and government services operating. And they would get to pick what's nonessential. And they've essentially done that.
I think the really interesting thing is how this plays out with Chuck Schumer because he took a ton of heat last time for not shutting down the government, letting the Republicans get their way. For some reason, everybody might believe a shutdown is good politics for them.
I feel like there will be a shutdown. But I also think that's the question, is-- let's be clear. If they just decided on a full-year CR on October 1 and jammed all the bills across, that would probably be a good scenario. But if you get into intermittent CRs that take us all the way through March, at least from a defense perspective, that's terrible for uncertainty.
The sooner you have certainty, even if it's middling uncertainty, it's still better than the uncertainty. So I think for Republicans, the idea of continued rescissions-- they're not going to promise that away in any way that satisfies Democrats. And the idea of a second reconciliation bill, to at least try and jam through some of the stuff that was taken out by the Senate parliamentarian, this is their time.
If they don't do it-- use it or lose it. They're going to try to get as much through before the midterms, I think, as they can. So, Robert, I know you had a thought on this, maybe?
ROBERT WALL: Sometimes I wonder about this in the current environment. There are certain things that we talk about with the CR, why it's really difficult-- makes it difficult to predict and the new start issues and stuff like that. And I just wonder, to some extent, are we living in old-world thinking?
We'll have a CR, and does it really matter? They're going to do whatever they want anyway, to some extent, because no one is saying no. I mean, I think a lot of us a couple months ago were saying, well, just wait till we get to this time, and cuts will come to programs that matter to people also in red states. And suddenly, we will see Congress reasserting its role and its power of the purse to some extent. We still haven't seen it, and I'm not sure we will see it.
ROMAN SCHWEIZER: It's a very valid point. This is a very atypical appropriations process. I think the appropriators have given up a lot of power, typical power that they would have. And we've seen that with reconciliation.
In very defense-specific land, we've got an NDAA, National Defense Authorization bill, run by the Armed Services Committees. The House has its bill. The Senate needs to push its across the finish line and then get to conference. And then the annual tradition would be to get this done before the end of the year. I guess we'll let maybe Joe lead out on his thoughts on that, and then we'll all piggyback.
JOE GOULD: Yeah. I would just say we're going to be coming back from recess pretty soon, and then it's going to be amendment time. We'll see hundreds of amendments pour in over the coming days. In the House, the Rules Committee set a deadline of October 28.
We'll see just how testy some of the-- are we going to see the culture war issues pop up? In the HASC NDAA-- I don't know if anybody else caught the markup. But to me, it was striking how much they sidestepped a lot of controversial issues. As NDAA markups go, it was fairly drama-free.
But the floor process is a different story. There's this dynamic now with the House Freedom Caucus and other hardliners, where they've got to load the bill up with partisan amendments in order to get it passed these uber conservatives. And then that creates drag when they're trying to negotiate the bills between the House and the Senate.
And we'll see a similar process play out in the Senate, at least as far as tons of amendments are going to come in. I mean, it's less likely that you're going to see those kind of radioactive-to-Democrats amendments on the Senate side, although we might see a few.
ROMAN SCHWEIZER: Tony Bertuca, you got any hot takes on NDAA and what the outlook is?
TONY BERTUCA: Yeah, sure. I think something I'd point out that I know defense acquisition geeks are paying attention to is this is a time when we've got two different but related acquisition reform measures attached to the bills. We've got the Speed Act over at the House side, which was very bipartisan, had a lot of support. And you got the Forged Act over on the Senate side, which has bipartisan support.
So what we're seeing is there's a lot of-- Admiral Grady, the vice chairman of the Joint Chiefs, used the word yesterday, "momentum," for acquisition reform in the building because the Hill wants it. You've got people in high places over at the Pentagon who are trying to make moves. We've got the new memo that killed the JCIDS process that came out of Feinberg's office, the deputy secretary of defense.
So I think the NDAA this year has got a lot to say about acquisition reform and then how you marry those two bills, Speed and Forged.
ROMAN SCHWEIZER: A valid point. And it'll be interesting to see. I know there's a lot of interest certainly in industry about how that system changes and how it affects traditional primes and then how it affects new entrants or defense tech or non-traditionals, et cetera.
And I think there is a concern, or at least one of the concerns that I've heard is that it almost creates two different acquisition systems or two different rules of the road for the big boys. The large-cap primes, the usual suspects, are treated one way, and then the privately-held or new entrant, VC-funded tech companies are treated another way. So we'll have to see how both the Congress and DoD treat that reform.
TONY BERTUCA: Well, and there's a lot of concerns about that, not to maybe open up a new line of discussion here. But the post-Lutnick CNBC comments world's hearing a lot about, well, what happens if the government takes a stake in this company and not that company? Will some companies be treated differently? How will the tech companies be treated? What's going on here?
These are concerns that industry, I think, always had at some level. But maybe it's not time for everybody to panic. But there have been some very, I would say, animated meetings and phone calls about just that.
ROMAN SCHWEIZER: Well, you did front-run my question a little bit because that's certainly something we definitely wanted to delve into, privatization of the defense industry and what that means.
I would say, I mean, the interesting thing to me is, I think if you look at what the administration has been doing-- and I sort of couched this in a note this week-- is you had the administration reach in on the US Steel acquisition, the idea of a golden share. And it was sort of involved with that.
Then you had the investment in MP Materials, which kind of makes sense. It's in a sort of strategic sector, and it needed some price support and guarantees to, I guess, have a viable business model. But then you had the NVIDIA 15% of the H20 semiconductor sales to China and that whole issue. And then, obviously, the Intel investment, which I think people are still debating. And so now that will stretch.
And to be clear, Lutnick talked about Boeing, Palantir, and Lockheed. And I'm sure investors in those companies aren't particularly excited about that, although I've heard differing views on that. It raises a whole host of questions.
Two things I've heard, though, is that, one, at least at some level, DoD seems serious about this and that this idea has been bouncing around for a couple of weeks. So I'm just wondering, have you guys had any fresh reporting on this? To my knowledge, DoD hasn't said anything yet.
I will say, I did happen to catch Congressman Chip Roy of Texas on CNBC this morning, and he said it was sort of a bad idea. And so it would be interesting to see, when Congress gets back, what the pushback is. Rand Paul has been very outspoken about the Intel. But anything you guys would like to add on that?
TONY BERTUCA: Yeah. Just before I yield to my colleagues, what I'd say is I don't have anybody at the department on the record confirming, yes, we are absolutely having these discussions. But what I have heard is lots of people-- so I've got people on the Hill and some of the building telling me, you know, if you read Commerce Secretary Lutnick's comments, they come off a certain way.
But then if you watch how he delivered that message and you watch the clip, how big of a deal is this really? How serious did he really sound? He reminds a lot of people of the president in this respect. Sometimes maybe he riffs a little. Maybe it's off the cuff.
Could it have been conversations that were-- he described them as "monstrous," I guess. I don't know what that means. But there's an awful lot of skepticism. I'll just put it that way. So I haven't gotten any high-level people confirming on background, oh, yeah, this is a go here. So I don't know.
JOE GOULD: I agree with Tony, I mean, in that I haven't heard anybody confirm it. And watching it myself-- and I sat through all of Lutnick's comments. I really wanted to understand, what was the context here?
It's really tough in this administration to decide what's real and what's not. And sometimes both things can be true at once, that we have a very improvisational president, who has created policy by riffing live and seeing what the reaction is. And it's possible that somebody like Howard Lutnick is floating an idea-- or folks will float themselves or an idea on TV when they know Trump is watching.
And just the interesting throughline there, I think, on Lutnick's part was the American people are getting a bad deal. This is money for nothing. The Biden administration was dumb because they gave a free grant to Intel. All the money that we're-- the taxpayer money that's going into Lockheed, what are the American people getting back for that?
Well, as longtime observers, we know what the American people are getting back. They're buying weapons. They're buying security. It's a transaction. How do you exert control over Lockheed? You pay it money to do things. And it's a-- use a big word here-- monopsony, where government is the main client.
So I think for a defense-savvy audience or a Wall Street audience, this doesn't really add up. It's not like Lockheed is struggling like Intel, where it's hurting for capital. They're doing share buybacks. If they were hurting for money, that's not something necessarily you'd see them do.
There's a certain populist logic, at least within the Trump administration, that suggests to me, for all the examples that you cited, Roman, they could-- why not this next?
AARON MEHTA: Yeah. I never want to rule anything out, to Joe's point. As we discussed earlier, anything is on the table, and we've seen things that get floated on TV end up becoming policy when they reach this president.
That said, part of me wonders-- and this is pure speculation. I haven't heard anybody saying this to me. Joe and I worked together when Trump first won. And there's that period-- and Joe remembers it well-- between the election in November and January, back in 2016, 2017, where all of a sudden, you had all the defense CEOs coming to Mar-a-Lago and meeting with Trump and him trying to work them over deals.
Remember, "Marillyn Lockheed--" our great friend, "Marillyn Lockheed." It's possible entirely this is-- whether intentionally or not, maybe it ends up this way-- a tactic to drive the companies to start making better deals with the government to say, basically, hey, either you guys accept you're getting less money and giving us more, or we're going to threaten to take you over or take some stake in you and take a greater hand.
Again, I don't know if that's the case here, but it has echoes to me of Trump getting involved directly and tinkering with down to contract language on some of these big programs, and frankly, putting a lot of fear into these companies that the Pentagon at the time was able to use to get better deals going forward.
ROMAN SCHWEIZER: But to be clear, I mean, the government can and does traditionally play a role if it's sort of co-investing with CapEx or some of the contracting. They're split investment. If there's a long-term, multiyear contract, there's actually stipulations in terms of there's need to be 10% of contract savings and stuff like that.
So, I mean, I think there is definitely an idea, and there should be, if the government gives any company stability and long-term projections in revenue. You struggle when you start thinking about equity stakes and playing a large role, perhaps having a seat on the board, or corporate governance, or preferential treatment.
I mean, could you imagine if the government owned a stake in Lockheed and then did not in Boeing and they're both competing on a contract? I mean, there's a whole slew of questions. So unfortunately, we're not going to do this entire podcast on this subject.
And again, for right now, I was going to say, it might be Greenland. But there's been some recent assertions by the Danes about US influence on Greenland. So maybe we'll just chalk it up as Canada as the 51st state, something that has been talked about but may not happen in the near future.
I do want to change gears. One thing I was highly expecting, waiting for, anticipating-- the budget nerd in me was really looking forward to it-- is DoD had a homework assignment from Congress in reconciliation. It was supposed to deliver a spend plan based on the OBBA funds.
One thing I'm going to-- moderator prerogative. I'm going to seize the mic here for a second. I detest the term "OBBB," One Big Beautiful Bill, because now it is an act. And so it is law. It is an act. So the acronym should be OBBA. I recommend you tell your friends, your family, your neighbors, only refer to it as OBBA. I really think that that's just the OCD in me, I guess.
But spend plan, it is late, but it is supposed to be a line item description of where all of that $150 and change billion is going to go. It's late. Tony, I know you've published on this. What do we think?
TONY BERTUCA: I would characterize it as, if you go to the Hill, the majority, Republicans say, oh, well, it's OK that it's late. We just want to see what it says. And we look forward to working with the administration.
And then if you talk to Democrats and the minority, there's more of a fear, because they've heard this from OMB, that there is going to be a disregard for the intent of Congress, that the department is going to say, thanks, but no thanks, if not in so many words, that maybe that you're not going to get a spend plan even.
You'll get a response that says, we sure do promise to take care of national security with this $150 billion. And maybe there'll be some high-level detail about Golden Dome but nothing to the specificity that you saw when the HASC and SASC sent over those guidance tables to, quote unquote, "inform" the development of this spend plan.
So you've got Senator Roger Wicker, who was not kidding around about this. When he had people appear before his committee, he had them all say, do you promise unequivocally to follow congressional intent? And they all were like, yeah, we sure do.
Russ Vought, I will note, did not appear. The OMB director did not appear before Roger Wicker. [CHUCKLES] And he and Roger Wicker have had some differences of opinion in public and in private.
So I am interested to see how DoD plays this because they got to take their cue from OMB on this. And I just don't know if OMB is going to send back a spend plan that-- it certainly won't mirror what lawmakers say. I don't think anybody expected that. But I don't know if they're going to send a plan that is detailed enough for people on the Hill.
So I've got to wait and see on this. The fact that they said we need a little more time was interesting because it means they're working on something. So if it was going to be nothing, you could have just fired off a letter going, nah, forget this. Thanks, but no thanks. So I think still TBD here.
ROMAN SCHWEIZER: From my perspective, two interesting things. One, the Armed Services Committees wrote the defense portion of the reconciliation bill, which is crazy in some respects. Obviously, DoD has never gotten mandatory spending before. But also appropriators, this is not what normally happens to-- appropriators are usually in charge of funds, those 12 annual appropriations bills. So this was actually put in the hands of the authorizers.
And then second thing, and I've heard sort of grumblings of this, but the DoD budget, for those who celebrate, is down to the program element line of specificity, to the decimal point. We could be getting to a point in which DoD is given just large chunks of money and free hand to spend it as it sees fit.
And that is certainly going to drive some members of Congress nuts. And I think it would certainly drive Republicans nuts if and when, maybe, someday Democrats get control of the Congress again. That's a whole other separate discussion. But it may not be so enjoyable when this shoe is on the other hand. Robert.
ROBERT WALL: Yeah, I think there's also-- you were talking about people it would drive nuts. I mean, it would drive a CFO of any defense company probably nuts. I mean, if you're being asked to-- everyone's talking about scaling up. Scaling up basically means spending CapEx to add people and plants. Adding people and plants is something I do when I see a FYDP, throughout the five-year spending plan, and I have some certainty on return on investment.
If DoD has basically carte blanche to spend money however it wants, that makes it a very hard sell, I think, for a CFO to say, yep, go spend $1 billion on a facility because we think, three years from now, that money will be there. That's a pretty big bet.
ROMAN SCHWEIZER: No, absolutely. I think there's a debate about the utility of the FYDP. And obviously, we all know it never really comes true, but it is certainly an indicator of intent, both up and down.
A little bit of activity on what I call the "Golden Dome rush," the gold rush as it would be. Every company has got their pickaxe and mining pans ready. This is going to be the big windfall over the next several decades perhaps, although there's some debate about that.
General Guetlein is now the direct reporting program manager, which we understand. Dep SecDef Feinberg likes that structure. There could be other DRPMs in the works. My position on this-- and I think there's been some directives on this as well.
There was an Industry Day. I think people were disappointed with the outcome. But really, the two things that I'm looking for is I think Guetlein needs to produce a reference architecture or concept. And that will lay out the big chunks of it, where the focus is going to be. And then also has to submit an implementation plan in a few months.
And that's really, to me, where the rubber hits the road in terms of acquisition strategy, types of systems, and those kinds of things. Things have seemingly gone quiet for a bit. Maybe there's going to be something in the spend plan. But any thoughts you have there?
AARON MEHTA: Look, Golden Dome is-- it could be anything to everyone. It's no surprise companies, as you mentioned, are trying to get their pickaxes out and cash in because it's a big pot of money. And right now, it's in that magical period where anything can be Golden Dome.
So you know what's an interesting aspect of missile defense is missile defeat. It's left of launch. So does that mean that an F-15 is now a vital part of Golden Dome? Well, if you're trying to get F-15s into your budget and you're having a fight about it, then it makes a lot of sense. Same for an F-35. Same for an A9 Sidewinder that maybe could be used to take out something coming in.
Are those Golden Dome proper as maybe initially envisioned? Probably not. But if you're a Pentagon planner, you're sure as heck hoping it is. And if you're industry, you're sure as heck hoping it is.
Now, we have heard, again, some companies specifically on these space-based interceptors saying, essentially, yeah, we're in. Lockheed expressly at Farnborough told reporters, we want in on that. RTX danced around it only slightly. And Northrop has said that they're even doing ground tests already on systems.
There's supposed to be some sort of SBI test or proof of concept by 2028. Again, we don't know exactly what that looks like or what that will entail. So right now, it really feels like everyone's trying to rush to claim being part of Golden Dome, almost to force Guetlein's hand a little bit, while this terms of reference are not out.
Because once those are out, there'll be much clearer lines, hopefully, in theory, about what is and isn't Golden Dome. So right now, you can say and make the case in the public, oh, this is vital to Golden Dome. Maybe you can steal that money you wouldn't get otherwise.
It's absolutely a gold rush. And what's really going to be interesting to watch is the individual members of Congress who are representing these various companies' districts and how they start getting involved as well.
ROBERT WALL: Yeah. And I'd just like to add, I mean, I completely agree, and especially with Aaron's analogy here. There's some pre-war shaping of the battlefield going on. What is the narrative? And what exactly is in play and what isn't?
And I think we're also seeing that in terms of contractual terms, some sparring about, exactly how does the financial risk the companies have to take on to play out here? There's been some ideas that the government is expecting industry to basically foot a lot of the bill for some of the upfront early work and then show up with something-- space-based interceptor the government either buys or doesn't buy.
Again, that's not something that's going to sit well with a lot of companies, especially companies that have spent a good part of the year telling their investors, we're not taking on contracts that have huge risk. And there's obviously a lot of technical risk in this.
So I do think it's going to be-- the next few weeks are very much about what Aaron was describing, trying to shape what this Golden Dome will look in terms of scope, contractual vehicles, contractual terms. But clearly, I mean, we have seen RFIs coming out. There clearly is a sense of, we want to do this with pace.
I mean, Guetlein is not going to-- he's not going to get to the end of 2026, basically, and people say, well, he's not going to have something in time for the final months of the Trump administration and get fired. So, I mean, this guy clearly has-- I mean, it seems to me at least, there's a feeling, we need to act.
ROMAN SCHWEIZER: Yeah. I would just make two quick points. I mean, I think the sense is that the space-based interceptor part of this is the holy grail. It has been expressed to me, though, that is incredibly hard for a whole host of reasons.
But I would say I think the focus will be on space and maybe some of the development, even from a detection, tracking, awareness, surveillance kind of capability. So, I mean, I think there's certainly a spinoff to some of the LEO, MEO, and GEO sat opportunities from that.
The other thing I would say, I mean, I don't know if this is true, but Trump quite famously tweeted about denuclearization with China and Russia and that he could cut the defense budget by 50%. And, I mean, some of this does hearken back to SDI and Star Wars and maybe the idea that this sort of somehow gets the Russians and Chinese into some sort of significant trilateral arms control agreement, that they have been remiss in doing that.
I'm not suggesting that's ever going to happen because I think there's valid reasons why maybe that won't. But it's certainly one idea that if we could demonstrate the technology that that might maybe put a damper on some of that.
And the other thing I think that hasn't really been clearly expressed, and that's why I'm interested to see what the architecture is, there has been some press and some public revelations about fractional orbital bombardment systems and nukes in space kind of thing and things that take different trajectories.
I mean, I could see this being as a very targeted solution or to try to defend against this more unique target set, which is, quite simply, the more you hear about it, terrifying. So we'll have to see how that kind of plays out.
OK. We are going to talk about some stuff, some programmatics, but also some actual events. The Air Force announced that-- and with video-- the Air Force chief of staff released a video that the first collaborative combat aircraft, this one produced by General Atomics, has flown.
There is a second company, Anduril, that is in the works and has not flown yet, but according to press accounting, "will fly soon," quotes. What do we think? I mean, obviously, the pressure is on Anduril to perform. General Atomics, I mean, I've got some of my own sort of views on the designs. All these aircraft look very similar or are designed very similar. Where do we think we're at at this? And maybe I'll let Robert lead as the Av Week bubba.
ROBERT WALL: Well, I mean, I think it's maybe not-- it shouldn't be a huge surprise that General Atomics got there first. They had a vehicle, essentially, that they're modifying. So they kind of were in a better position. And Anduril will fly something, almost certainly.
I mean, I think for me, the real thing-- a question around, this is still the scaling-up bit, especially for Anduril. We know companies can build a prototype and demonstrate something. But once you start to have to produce things and produce them in large quantities, I think that's where this is going to be really interesting, especially on the startup front.
So they've flown a CCA. Whoop-de-doo. So let's really see what comes here. I mean, it's a baby-- it's a step. I wouldn't say it's a baby step. It's a step, but it's a long way to go.
ROMAN SCHWEIZER: Aaron.
AARON MEHTA: Yeah. Just actually just want to note. You said the Air Force chief of staff announced this. That's the outgoing Air Force chief of staff because, of course, another piece of news is that General Allvin is "stepping down." You can hear the air quotes around that pretty strongly. There's been a lot of reporting that he was told either he can step down with grace or be given the boot. Pick your poison, really, is the takeaway here.
So allegedly, that changes in November. We'll have to see who comes in. There's a couple of names that have been floated out there. But I think when it comes to things like CCA, the Air Force has been all in, and Allvin was all in on this.
If you come in, get a new chief of staff, who's maybe more focused on near-term versus future-term requirements, does that change the CCA program at all? This has got a lot of backing across the Air Force, across Congress. So probably not the first tranche that we're talking about here. But CCA is supposed to be an iterative program. So potentially, things could change depending on who comes in and what those priorities look like.
ROMAN SCHWEIZER: So I am going to express some frustration and opine on your assertion that the Air Force is all in. I do not believe they are all in. We, the United States of America, could have had 500 of these things over the Strait of Taiwan by, like, last year.
And maybe, I hope in some ways that that is true in the classified realm that we don't know. I believe Robert used the phraseology "whoop-de-doo," and I am in that camp.
I mean, these companies build and fly these things all the time in the classified space, in unclassified, built with their own money, built with the government's money, built with foreign money. To me, the Air Force should have awarded a contract for 100 air vehicles, not one air vehicle, to a couple of privately-held, nonpublicly-traded companies.
There is no reason to crawl, walk, run with this. And don't even get me started about the Army or Navy, which, obviously I used to work in Navy shipbuilding. And their feet-dragging and indecision has been quite significant over the last few years as they've tacked back and forth, to use a Naval terminology.
But the one thing that I would say, and maybe this is a throwback to Will Roper, former Air Force acquisition official, take a look-- I would ask anyone out there to just take a look at any of the aircraft of this flavor, the Kratos Valkyrie, Boeing Ghost Bat or MQ-25. Any variety of the Northrop or Lockheed aircraft that have been produced, or even some of the European aircraft, they all look the same.
This would have been a great opportunity for the Air Force to compete a design, take that design, and take a technical data package, and bid it to three to five builders and say, all you guys are going to build the same thing, and I want to see who can build it the cheapest. And then we're going to build a whole ton of them.
And then separately, there's all these smart companies out there-- Anduril, Shield AI, the primes that have flight control software and all that stuff, and they're doing great things. And you build that, the brains piece of it, and have a separate acquisition path for that. And then slap a program together and go.
So I really just think that there are still some-- in DoD and across the services, some institutional paralysis and parochialism. Let me step down off this soapbox before I get shoved, and I'll let Aaron talk.
AARON MEHTA: To clarify, because I agree with you, broadly. When I say the Air Force is all in, I mean, the Air Force is all in on the concept. There's not a lot of leadership saying, we don't need drone wingmen. Certainly, they could go faster, at least in theory. I think the Pentagon has its own gravity that holds everything from moving too quickly, good or for ill.
It also brings to mind the fact that we are, I think, maybe even as we record this, at the official two-year mark for Replicator, which was supposed to have thousands and thousands of drones ready at the two-year mark, when it was announced by then Defense Secretary-- or Deputy Defense Secretary Kath Hicks. Again, that's something that looked like it should be simple. But here we are.
ROMAN SCHWEIZER: Right now is the conference where, two years ago, Kath Hicks, former deputy defense secretary, announced Replicator-- the NDIA Emerging Tech Conference. She said, by August 2026, we'd have multiple thousands of these fielded in multiple domains. These are autonomous attritable drones.
We haven't heard a lot about it. Some of that might just be the change of administration that happened and a change in messaging. But some of it is also, to your point earlier, there was kind of a faction in the Pentagon under Bill LaPlante, the former acquisition chief, saying production, production, production. Let's just start bending metal on this stuff. Why are we not just giving out a bunch of contracts for lots of these and see who can do what?
The more slow-go, traditional approach, it continues to exist at DoD right now. It obviously continues to exist. And the fact that we haven't had a big Replicator announcement of, here's what's going on, I don't know if that's just because the administration maybe just has to do some paperwork here and pick up on the messaging and figure out what's out there and what happened.
But it also just might be maybe they don't have multiple thousands and thousands the way that was envisioned two years ago. And the fact that they aren't willing to, with all these senior officials at NDIA, go tout some success here, that means something.
Senior Air Force official said a second B-21 is due to fly by the end of the year. Obviously, we would expect the Air Force to exercise the contract on the third LRIP lot before the end of the year. And then also, there were some news this week-- not news, but foreshadowing and hoping about a F/A-XX award.
So obviously, two big programs that people care about. Any thoughts on those guys? Robert, I think you've got something.
ROBERT WALL: Earlier this year, we thought we were days, maybe even hours away from another White House announcement on a sixth-gen fighter. This was after the White House made the announcement on the Air Force's Boeing F-47. Everything was about ready to go, and then suddenly, it wasn't.
And then the budget came out, and there was-- F/A-XX, the Navy's sixth-generation fighter program, was effectively killed or certainly delayed by a lot because the money was basically gone.
What's been interesting in the last two weeks is the wording, and it seems like more than just a hope in the Navy. But there's comments out of the Navy that really seem to suggest this program is back on. I mean, Congress wanted it to continue anyway, proposing to add money back into the budget. But it is interesting. It does sound like now we may be back to a down select in the not-too-distant future between Boeing and Northrop Grumman.
ROMAN SCHWEIZER: DoD has current proposal information that they could make an award, should they decide to do so. The nagging thing in my mind, I would just say, is that I wonder if this is maybe something bigger about aircraft carriers. Does maybe someone not like aircraft carriers or think they're useful in the future?
Is that someone maybe at the OMB level or the OSD level that thinks maybe we're not going to build carriers for another 100 years, and so why do we need to spend a lot of money to put things on aircraft carriers? I don't know. But I think that might be something worth paying attention to in the future.
OK. Two last points. We're going to speed-round this. 10th try is the charm. Starship, pretty amazing, no matter what you think of Elon Musk. I will give a shout-out to Todd Harrison of AEI, who is the guy who made this point to me-- is that LEO is an expanding market-- satellites, radar, all that kind of stuff. But that's because where the launch can get to. That's where the cost curve has been broken on Falcon.
And that once Starship works, and works and can carry heavy payloads into higher orbits and do stuff like that and break the economics of that-- and again, to be fair, you've got New Vulcan-- excuse me, New Glenn and Vulcan and some other heavier lift, that there is a big change going, or potential big change coming-- market shift and stuff like that. And, of course, who doesn't want to go to Mars? So, Robert, do you have a thought on that maybe?
ROBERT WALL: Just two separate thoughts. One on the LEO thing. I mean, you have to remember, though, that payload potential also translates into LEO. He can deploy 60 Starlink satellites with 1 Starship rather than 24. So it really does further make the LEO-- it brings down the cost for LEO a lot. And there are, obviously, also physics advantages of being on LEO in terms of distance and latency.
To me, almost more interesting than the success of the 10th flight, as amazing as it was, it's actually the fact that how many failures just this year they've had on this program and just kept on going. I mean, you think about this. New Glenn flew in January largely successfully. And they have not flown again yet, and they probably won't. They might fly by the end of September.
He's blown up three Starships, and he still kept going. And this kind of "damn the torpedoes" approach, again, it's something that a publicly-traded company probably couldn't get away with to have that many vehicles in build-- inventory basically.
But that is really, in a way, the Silicon Valley embodiment of this fail, fail, fail, until we get it right. And for all their talk about embracing that kind of approach, most of the other startups aren't there. And certainly the primes are nowhere near there, or the traditional primes.
ROMAN SCHWEIZER: That is a great point. And I will reference the previous discussion on CCAs. How about build a bunch and crash a bunch and make some stuff happen, right?
ROBERT WALL: Right.
ROMAN SCHWEIZER: OK, gentlemen, I'm going to throw one curveball at you. Again, we're coming up on time, but we are on the cusp of football season. Robert, in deference to you and your location, I would say that football season, I believe, Premier League started last weekend. My son is very excited about that.
ROBERT WALL: I will have you know, we will have two NFL games here in London.
ROMAN SCHWEIZER: OK. Fair enough. Does anyone care to hazard a guess on Super Bowl champion that we can hold you to later? And by the way, I will just expressly state, one, I am a Dallas Cowboys fan. Please don't slay me in the comments. I've been long suffering.
But I did just, last night, finish the Netflix documentary, like, seven-episode series on the Cowboys-- on the '90s Cowboys. It's phenomenal. I encourage you all to watch, even if you're a Dallas hater. It's incredibly well done. And there's some pretty juicy stuff.
But anybody want to pick their hometown team as a Super Bowl winner and/or-- what are you, a Chelsea guy, Robert? Or Man U.? Or what do you got? Arsenal? I don't know. Pick it.
ROBERT WALL: Well, I won't pick anything in here because both my teams in the UK are not in the Premier League, I will have to admit. So long suffering in that respect. And I'm a Raiders fan for reasons that make no sense. And the only thing I'll say is they will not win the Super Bowl.
ROMAN SCHWEIZER: You're an Al Davis kind of guy. I love it. All right.
ROBERT WALL: Commitment to excellence.
ROMAN SCHWEIZER: There you go.
TONY BERTUCA: Da Bears.
ROMAN SCHWEIZER: Oh, boy.
[LAUGHTER]
TONY BERTUCA: You heard it here.
ROMAN SCHWEIZER: Mehta, go ahead.
AARON MEHTA: I'm just tripping on the idea of there's photos somewhere of Robert all dressed up, with skulls on his shoulders and everything.
ROMAN SCHWEIZER: Exactly.
AARON MEHTA: Yeah. I mean, my Patriots aren't going anywhere. We're just hoping for something that's less embarrassing than the last few years, not that I expect any sympathy on that front.
ROMAN SCHWEIZER: Zero.
AARON MEHTA: But I will say, Taylor Swift is absolutely the halftime show. That's happening. Lock it in.
ROMAN SCHWEIZER: Yeah. Gould, you're auspiciously silent. You're going Redskins?
JOE GOULD: No. Everybody who knows me knows that I pay no attention to any sports whatsoever, and I'm completely ignorant. The answer I googled is that the Bills are the early favorites across a bunch of different sports books. They have about plus-.625 to .700 odds to win the Super Bowl.
TONY BERTUCA: Well, they've never disappointed anybody. So that's a pretty good bet, Joe.
[LAUGHTER]

ROMAN SCHWEIZER: Gentlemen, a great way to end it. And to speak of Washington defense policy and disappointment, I think, brings it all full circle. We get what we deserve. It is great to see you all, and we will do again soon.
Thanks, everyone. And to everyone who's been tuning in, thanks so much for joining us. We look forward to catching you next time.
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