Days after his win, US President-elect Donald Trump created a new government agency, called DOGE, with Elon Musk at the helm.
DOGE or Department of Government Efficiency aims to reduce federal spending and bureaucracy, which is also a response to Pentagon priorities and spending concerns that have been a source of anxiety for major defense contractors, such as Boeing and Lockheed Martin.
Musk, an avid critic of traditional defense programs, aims to promote innovative solutions, such as AI drones and autonomous submarines. The plan indicates that the defense industry is on the verge of a shift, and the key players in this modernization are smaller tech firms, per Reuters.
Smaller Defense Tech Firms to Benefit From DOGE
Smaller companies, such as Palantir and Anduril, see Musk's involvement as a chance to break the dominance of large contractors over Pentagon budgets.
Industry leaders who spoke at the Reagan National Defense Forum discussed how Musk's influence could foster partnerships between established defense giants and emerging tech innovators. This could be the first step toward the adoption of many cutting-edge technologies in military applications, including uncrewed systems and advanced AI.
Some said that negotiations with smaller tech firms have already begun to accelerate since Trump's election. While this could give smaller firms more opportunities, there are challenges as well. Only a tiny portion of the Pentagon's $850 billion budget goes to new technology programs, according to Defense News. Scaling production and integrating new platforms require partnerships with legacy contractors, which dominate large-scale manufacturing and deployment capabilities.
industry leaders said that they need to get out of a "zero-sum mindset," where gains for smaller players come at the expense of losses for larger ones, and foster mutual growth. Another ambition of Musk's in DOGE is to remove bureaucracy and bring cost reduction, which may serve as well software companies as well as auto-makers of self-driving vehicles. Projects such as CCA,and drones, showcase smaller companies being able to gain contracts in large sizes. Another sector set to flourish includes space technology, for which the new government will bode very well for SpaceX.
Despite these bright prospects, challenges lie ahead. It is the Congress that oversees defense budgets and thus has the final authority to approve any changes. Lawmakers, most of whom are tied to state-specific defense programs, may resist attempts to cut traditional projects.
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