A common theme across defense programs is that scale matters. The conversation is no longer just about what can be built. It's increasingly about how quickly it can be produced and fielded when it matters most.

For years, defense discussions around drones focused on individual capability. Today, the conversation has decisively shifted toward scale.

Driven by lessons from Ukraine and reinforced by the Pentagon’s growing investment in autonomous systems, the Army is accelerating procurement of Groups 1-3 unmanned aerial systems. The FY2027 defense budget continues that momentum, with roughly $54 billion directed toward autonomous capabilities as military leaders focus on fielding capability in meaningful numbers.

That shift is already visible across several key programs.

The Army’s Medium-Range Reconnaissance (MRR) program is moving from experimentation toward scaled fielding, with contracts awarded to companies including Anduril, Performance Drone Works, and AeroVironment. Designed to provide company-level reconnaissance at ranges of roughly 10 kilometers, these systems are intended to give maneuver units greater situational awareness without relying on higher-echelon assets.

At the battalion level, AeroVironment’s P550 continues to strengthen its position within the Long-Range Reconnaissance market. With endurance measured in hours rather than minutes and the ability to support both ISR and strike missions, the platform reflects the Army’s growing demand for flexible systems that can operate across multiple mission sets. Meanwhile, the Joint Tactical Autonomous Aerial Resupply (JTAARS) program highlights increasing interest in autonomous logistics as forces prepare for more distributed operations.

The expansion of the Blue UAS ecosystem may prove just as significant. Now transitioning under DCMA oversight, the program is evolving from a vetted list into a broader marketplace for trusted domestic systems.

That shift creates opportunities not only for drone manufacturers but also for companies building payloads, software, and supporting technologies.

Production capacity is becoming a competitive advantage in its own right. Initiatives such as SkyFoundry are targeting domestic production rates of up to 10,000 small UAS per month as the Department of Defense works to rebuild manufacturing capacity for a new generation of autonomous systems.

Combined with lessons from Ukraine around electronic warfare and battlefield adaptation, the ability to scale production may become just as important as platform performance.

One theme continues to emerge throughout our ongoing Groups 1-3 UAS market analysis. The winners may not be the companies building the most sophisticated drones, but those enabling affordable mass.

The companies gaining traction are not necessarily building the most advanced platforms. They’re building systems that can be upgraded quickly, integrated easily, and produced at scale.

The larger lesson is that drone dominance is shifting from individual platforms to scalable capability. Companies that enable scale may ultimately capture more value than those that build the drones themselves.

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If drone dominance is one side of the equation, production capacity is the other.

One of the most important shifts in the defense industry is the growing recognition that deterrence depends not only on advanced technology but also on the ability to manufacture and sustain it at scale. The combination of munitions replenishment requirements, strategic competition with China, and expanding industrial base investments is creating demand signals that extend well beyond a single budget cycle.

For much of the last two decades, defense acquisition prioritized efficiency.

Today, capacity matters. The ability to produce missiles, drones, solid rocket motors, and other critical components in meaningful numbers is increasingly viewed as a national security requirement.

That shift is already influencing funding decisions. The FY2027 budget includes more than $92 billion for defense industrial base initiatives, while programs under DPA Title III and the Industrial Base Analysis and Sustainment (IBAS) portfolio continue to target long-standing production bottlenecks.

Recent awards include a $27.3 million investment in PacSci EMC to expand domestic solid rocket motor capacity, alongside greater industry-led efforts such as L3Harris’ more than $1 billion expansion strategy focused on propulsion and munitions production.

Multi-year procurement contracts are becoming another important signal. Agreements supporting systems such as Patriot, THAAD, AMRAAM, and Tomahawk are providing the industry with visibility measured in years rather than budget cycles.

That certainty allows companies to invest in new facilities and expand production with greater confidence.

The result is a gradual shift from surge to sustained production planning.

The defense market is entering a multi-year expansion cycle centered on production.

Over the next 24-36 months, we expect investment and procurement priorities to continue to flow toward companies that can help address manufacturing constraints. Areas such as energetics, propulsion, and advanced manufacturing remain particularly important to watch because they continue to limit output across multiple programs.

We also expect demand for munitions, autonomous systems, and supporting supply chains to remain elevated through at least the end of the decade as the Pentagon balances replenishment requirements with long-term deterrence priorities.

The companies best positioned for this environment may not be the largest contractors. They may be the firms enabling the production ecosystem beneath them.

The next several years could be one of the most significant periods of industrial base expansion since the post-9/11 buildup. While specific programs will change, the broader push toward affordable mass and greater industrial capacity appears increasingly durable.

If you’re seeing demand signals in your segment of the defense market, I’d be interested to hear what you’re seeing. Reply and let me know where you’re seeing the biggest opportunities or bottlenecks.

Right now, everyone is talking about drones, autonomy, and AI.

But the main issue behind all of these is having enough equipment.

Tomorrow’s Tip of the Spear Pro report:

Attritable Mass: The Race to Build Affordable Military Scale

explains how the Pentagon’s focus on low-cost missiles, autonomous systems, counter-drone platforms, and scalable production is changing the defense market.

The future might not be decided by who builds the most advanced system.

It could come down to who can build enough of them.

Sign up for Tip of the Spear Pro today to get the report as soon as it’s released tomorrow.