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Good Afternoon. The Air Force ordered 150 Collaborative Combat Aircraft in June, split between two vendors. It has told Congress it eventually wants somewhere between 1,000 and 2,000.
Everything in that gap runs through Increment 2, where concept refinement has about 10 months left.
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🎯 THE SIGNAL
On June 17, the Air Force put both aircraft into production, General Atomics' FQ-42A Dark Merlin and Anduril's FQ-44A Fury, for 150 airframes between them by 2030. Five companies had entered Increment 1 in early 2024. The Air Force cut that to two by April of that year and then stopped cutting.
Both aircraft flew in 2025, the Dark Merlin in late August and the Fury on Halloween. One YFQ-42A was lost in April when its autopilot miscalculated the weight and center of gravity, and flight testing resumed in May. Anduril started serial production at Arsenal-1 in Ohio in March, three months ahead of its own schedule, and rolled the first Ohio-built Fury out the door in late July.
Two weeks before that, on July 15, a Fury flew a beyond-line-of-sight strike against a simulated target out of Edwards carrying an inert AIM-120.
One hundred fifty aircraft is a small order for a program the Air Force describes in thousands. Shephard's Defense Insight estimates the Increment 1 procurement at roughly $4.5 billion, with $8.9 billion covering development and production, and puts a further 2,350 aircraft in Increment 2. Those are commercial estimates rather than Air Force figures, so take them with a grain of salt.
Increment 2 is the part still being written. Nine vendors picked up concept refinement contracts last December, eleven more stayed eligible, and the full pool runs past twenty companies. Col. Timothy Helfrich, who runs fighter and advanced aircraft acquisition, told reporters in late July that about 10 months of refinement remain and that he is aiming for roughly 6 closed conceptual designs. Prototyping and production awards follow, on a 2027 timeline.
The Air Force has given a fighter designation to an aircraft it is not paying for. Northrop lost Increment 1, built a replacement on company money, and showed it at Mojave in December. Nineteen days later, the designation came through, YFQ-48A, with a service statement calling the aircraft a strong contender.
Northrop holds none of the nine concept refinement contracts and is building anyway, a thousand pounds lighter than its losing design with half the part count. Helfrich says firms outside that group of nine can still come in at later phases. Northrop is spending as it believes him.
Nobody has settled what the aircraft is supposed to cost. Concept refinement is looking at everything from cheap, attritable designs to exquisite ones, which is why engine makers have been pushing low-end propulsion throughout the program all year.
A supplier who prices against the wrong end of that range wastes a year.
CCA program funnel. Increment 1 opened with five vendors in January 2024, narrowed to two that April, and closed in June 2026 with production contracts for 150 aircraft by 2030. Increment 2 has more than twenty vendors in the pool, nine holding concept refinement contracts, narrowing to about six designs over roughly ten months, with prototyping awards expected in 2027. The Air Force has told Congress it wants 1,000 to 2,000 aircraft.
Development | What It Means for You |
|---|---|
Increment 1 closed at 150 aircraft across two vendors | Airframe seats are taken. Chasing one now is a dead end. |
About ten months left in Increment 2 concept refinement | Requirements are still moving. Engagement now is worth more than a proposal in 2027. |
Later-phase entry is explicitly permitted | Northrop lost Increment 1 and remains eligible, so not holding one of the nine contracts is not disqualifying. |
Attritable versus exquisite is unresolved | Build a price story for both ends. The cost target is the live argument inside the program. |
The 150 aircraft under contract are the pilot batch, and the requirements for everything that follows are being written over the next 10 months.
🤝PARTNERED WITH
Elon's new company is private. These 3 tickers aren't.
The next Apple may already exist. Insider sources say Elon has spent two years building a secret device inside Tesla's facilities — one he claims will be "10x bigger than the largest product in history."
There's just one problem: the company is private, and unless you know Elon personally, you can't buy a single share. That was true until Guardian's research team found three public ticker symbols sitting in the launch supply chain.
Click here to see all 3 tickers, free of charge.
You won't hear these names on CNBC — Wall Street hasn't published a word on the connection. But when the launch hits September 21, that quiet ends.
Some are already calling this the biggest opportunity since AI. For anyone who missed Apple before the iPhone, this may be a second look at that kind of setup.
💰MONEY MOVES
All four from the August 26 to 28 contract announcements.
Heaviside Industries won $99M on a firm-fixed-price IDIQ for the MOTH spectrum analyzer, covering procurement through sustainment, against 99 bids. Army Contracting Command at Aberdeen, W56KGY-26-D-A003, running to 2031. Ninety-nine bidders on one electronic warfare program says something about how crowded that market has gotten.
Dataminr took $317.8M firm-fixed-price for publicly available information alerting, covering situational awareness and indications and warnings, against eight offers. Air Force District of Washington, FA7014-26-C-0026.
Research Innovations Inc., a small business, won $99.5M for Dragonfly payload systems against 95 bids, also out of Aberdeen, W56KGY-26-D-A002.
Brasfield & Gorrie took $658.2M to build four facilities in Anniston for component remanufacturing, missile maintenance, paint, and storage, with a cumulative face value of $986.9M.
📡OPPORTUNITY RADAR
CCA Increment 2 concept refinement — Air Force Life Cycle Management Center
What they want: roughly six closed conceptual designs out of a pool of more than twenty vendors, with about ten months of refinement left before a downselect expected in 2027.
Who should care: propulsion, autonomy, payload and ground control suppliers. Autonomy work on Increment 1 went separately to RTX and Shield AI rather than through the airframe primes, and that split is the model to plan against.
What to do: get in front of the nine concept refinement holders and the program office now, before the six designs close and the requirements harden around them.
Mass Modular Aircraft — Defense Innovation Unit
What they want: a cheaper and more loss-tolerant replacement for the MQ-9A Reaper fleet, launched July 7. The posting describes exquisite drones as those costing $30 million or more, which is the clearest public statement yet of what the Air Force considers too expensive.
Who should care: anyone building between a cheap attritable airframe and a Reaper. The Reaper fleet has taken real losses in the conflict in Iran, so the demand signal here is not hypothetical.
What to do: read the cost framing before you build a proposal around your current price point.
🧭PEOPLE & POSTURE
DRPM-UxS still has no director, 64 days after the office stood up. The FY2027 request allocated $54.6 billion for R&D to the Defense Autonomous Warfare Group that sits within it, though only $1 billion of that is in the base request, and the rest rides on a reconciliation package that has not passed. Every comparable direct-reporting office has a named flag officer running it. Unmanned engagement runs through DIU and JIATF-401 until this one does.
Feinberg's 21-day production memo came due around today. Sixteen critical programs were told to submit plans for significantly faster production, including the Next Generation Interceptor and NASAMS. Nothing about what industry submitted has been made public, and those submissions are the best available read on where capacity money goes next.
📊READER PULSE
This issue's question. One tap, anonymous, results Thursday.
Where does your company sit on CCA?
🔮PREDICTIONS
✅ CALLED IT (Aug 13). We said OFPP would miss the August 28 deadline to propose FAR amendments under Section 3(b). No proposed rule was published and no case opened. The fixed-price preference still runs on class deviation text, which can be rewritten without a Federal Register notice. Record moves to 2–1.
Still open. No lapse in appropriations on October 1, called August 27. Congress comes back to two incompatible stopgaps and eleven Senate working days.
New call, made today. The Air Force will carry more than one design out of Increment 2 concept refinement into prototyping. It has said on the record that multiple awardees may be selected for prototyping; it declined to pick a single winner in Increment 1 when it easily could have, and Helfrich is targeting six closed designs rather than one. A single-design prototyping award grades as a miss.
Resolution comes when the prototyping awards are announced, which the Air Force has put in 2027.
⭐TIP OF THE SPEAR PRO
The FY2027 CR Survival Guide went out Friday. The number I keep coming back to is 388, which is the number of anomaly requests agencies filed government-wide between FY2013 and FY2017. Thirteen of them became law.
I had assumed the rate was low before I went looking. Three percent is low enough that the anomaly package your program office is drafting this month will most likely consume September and go nowhere. Worth knowing before you assign someone to it.
The rest of the report covers option exercises under annualized money, and what happens to a source selection when the fiscal year turns over mid-evaluation.
THE LAST WORD
I spent most of yesterday working on this issue under the impression that the Increment 1 downselect was still pending and would land before the fiscal year closed. It went out in June, and both vendors won.
What I cannot work out is why they kept both lines open. My guess is Ohio. Anduril put a billion dollars into Arsenal-1, took $310 million from JobsOhio, and has promised somewhere near 4,000 jobs by 2035. Killing that line five months before a midterm would mean a phone call from the Ohio delegation that nobody in the building wants to take.
The other thing I keep noticing is that General Atomics had a drone auger into the desert in April, traced to the autopilot getting the weight and balance wrong, and still walked out of June with a production contract. Whatever the bar was for staying in, clean test performance was not it.
If you know which one it is, tell me. Hit reply. Anonymity guaranteed.
Semper Fi,
— Justin