The U.S. Navy is trying to make its technology procurement process more like a commercial market. U.S. Navy Chief Technology Officer Justin Fanelli recently stated that the Navy is once again opening its future technology needs to investors, aiming to help startups and capital providers identify earlier which products have the potential to enter the military procurement system.
Fanelli said that the Navy’s previously released long-term technology priorities had influenced some investors’ perceptions of the military’s procurement plans. Before this update, the Navy also consulted with several venture capitalists to ensure that this list of requirements could more clearly convey its procurement direction.
The navy hopes that capital will bear the early-stage cultivation.
According to Fanelli, most of the Navy’s procurement still occurs through traditional channels, but it is seeking to shift more projects toward a "co-investment" model. Rather than providing direct funding in the early research phase, the Navy prefers that companies first use commercial capital to mature their products, after which the military will purchase them.
He noted that the Navy is now more frequently purchasing products from companies in Series D through F stages, rather than filling the R&D gap between seed and Series B rounds as it did in the past. Because the military no longer assumes as much of the early-stage nurturing role, the Navy needs to send clearer demand signals to the market.
Purchased items cover drones and machine learning.
Fanelli noted that the Navy awarded a $562 million contract this month for the MQ-25 Stingray unmanned refueling aircraft program. Such autonomous drone refuelers can extend the combat range of carrier-based fighter jets.
- Armada provides edge computing hardware that can be deployed on ships or in remote locations.
- Gecko Robotics handles certain inspection tasks, replacing high-risk manual inspections.
- Domino Data Lab is running the Navy's machine learning workflows.
Fanelli also noted that military procurement decisions do not necessarily undergo the extensive approval processes often imagined by outsiders; instead, they are typically made by a smaller selection committee to maintain decision-making based on project performance.
The new round of strategic focus is on applied AI.
This requirements list does not correspond to a specific budget or prioritize individual initiatives, but it outlines several key technology areas the Navy will focus on in the future.
Among these, applied AI is prioritized, encompassing machine learning and more autonomous agent-based software, with the goal of transforming raw data into decision support. Use cases include sensor fusion, target support, autonomous behavior, and cyber operations.
In addition to AI, the Navy also highlighted advanced network technologies, electromagnetic spectrum operations, and digital engineering and interoperability capabilities. The latter primarily involves open APIs, model-based systems engineering, and zero-trust architecture, aiming to make different Navy systems easier to connect without requiring custom integration each time.
Fanelli previously noted that many technologies introduced into the Navy system ultimately failed, not due to the technology itself, but because of budget allocation. New tools, even if their effectiveness has been proven, may lose funding within one or two years if they do not replace existing expenditure items. This is one reason the Navy seeks to communicate its procurement priorities to investors and businesses in advance.