Amid recent DoD budget uncertainty, Vertx Partners examines how modernization efforts are affected – and how reprioritization creates opportunity.
Budget Uncertainty
***DISCLAIMER: This is an ongoing story.***
The Trump Administration’s ongoing restructuring of the federal government has generated countless headlines over the course of its first 100 days – it’s also resulted in a culture of uncertainty and priority-shifting.
This uncertainty, intensified first by a proposed 8% annual reduction in the Department of Defense’s (DoD) budget and recently a proposed 13% increase to next year’s budget, presents challenges for modernizing U.S. Air and Space Force capabilities. The situation poses immediate implications for long-term planning, small business innovation, and the country’s ability to maintain technological and strategic superiority in contested environments.
Additionally, Congress’s recent Continuing Resolution (CR) delays funding for new modernization initiatives, forcing programs originally intended for Fiscal Year 2025 into the FY27 planning window. In practical terms, that means certain efforts may not receive funding until 2028. While adversaries press forward with rapid development and deployment of advanced systems, the U.S. risks stalling its own progress in a high-stakes technological race.
Still, the Trump Administration’s recent actions could open doors for intrepid small businesses, especially as the DoD prioritizes particular objectives. Vertx Partners offers its viewpoint below.
Refocusing Our Modernization Strategy
The Air and Space Forces have responded to this instability by intensifying cross-command integration, which means aligning capability requirements across multiple major commands (MAJCOMs). This effort eliminates redundant spending likely to be cut while still supporting mission-specific needs.
Despite funding headwinds, Vertx Partners believes that core modernization priorities remain consistent. These were outlined in many of the Operational Imperatives (OIs) detailed under the tenure of former Secretary of the Air Force (SECAF) Frank Kendall III. These OIs include:
- Golden Dome Missile Defense
- Long-Range Kill Chains
- Counter-Kill Chain Capabilities
- Operations in GPS-Denied Environments (Alternative Position, Navigation, and Timing (Alt-PNT))
- Force Design (an ongoing plan by the U.S. Marine Corps to reshape its combat power for future near-peer adversary conflicts)
- Collaborative Combat Aircraft (CCA)
- Base Resilience
These efforts reflect a continued push toward modernizing key components of future air and space warfare.
While Vertx believes these OIs will endure, there is additional uncertainty regarding the appointment of a new SECAF in the near future. It’s possible that new leadership could tip prioritization in one direction or another, although Vertx doubts any radical shifts.
Still, shuffling leadership is another variable in the uncertain equation dictating ongoing DoD priorities and budgeting.
The Bigger Picture: DOGE & (Potential) Budget Cuts
Recent proposals from the Department of Government Efficiency (DOGE), the task force commissioned to reduce the size of the federal government, include recommendations for sweeping reductions across the Pentagon.
According to reporting from NPR last February, the DoD was directed to identify roughly $50 billion in annual savings for the next five years. That would have meant reducing the defense budget by nearly $300 billion by 2030. These cuts may have included personnel reductions, restructuring of established programs, and a renewed focus on select capabilities aligned with the administration’s priorities.
Uncertainty remains because the Republican-controlled Congress would still need to approve these historic cuts, but Defense Secretary Pete Hegseth identified 17 areas exempt from these proposed cuts. In fact, these areas may see renewed prioritization and expanded investment.
Among the 17 areas prioritized are:
- Collaborative Combat Aircraft (CCA)
- Missile Defense (including Iron Dome–style systems)
- Autonomous Systems and Counter-UAS Initiatives
- Cybersecurity
- Munitions Stockpiles and Energetics
- Virginia-Class Submarines and Executable Surface Ships
- Support for Geographic Combatant Commands such as INDOPACOM and SPACECOM
Notably, several of these areas align with past OIs that Vertx identified as fruitful priorities for continued funding.
Recent Developments: (Potential) Budget Increases?
However, despite contrary proposals mere months ago, recent reporting suggests President Trump may be eyeing a one trillion dollar defense budget for FY26. Among the priorities of this increased budget is the F-47 Next Generation Air Dominance platform, intended as the successor of the F-35.
Unfortunately, the confusion continues as some allege that President Trump’s proposal wouldn’t actually allocate increased spending to the defense budget. The White House’s Office of Management and Budget “is not requesting a trillion-dollar budget,” Senate Armed Services Committee chairman Senator Roger Wicker said in a statement. “It is requesting a budget of $892.6 billion, which is a cut in real terms.”
The confusion stems from part of the one trillion dollar budget being included in an as-yet approved reconciliation package – if it fails, the number cited by Senator Wicker would technically constitute a budget cut to the DoD due to not keeping pace with the rate of inflation.
Opportunities Amid Constraints
Although the funding environment is turbulent, Vertx Partners believes that opportunities for small businesses – particularly those capable of supporting integrated, cross-cutting technologies – will not only remain robust but may even expand.
As the Air and Space Forces look to do more with less, scalable, modular, and dual-use technologies will be essential to filling capability gaps. Additionally, contractors prioritizing results-driven investment are likely to profit.
Vertx continues to support small Appalachian innovators developing solutions in the areas outlined. These capabilities will play an increasingly important role in a lean defense environment that values interoperability, speed, and flexibility.
Moreover, leadership transitions at the highest levels of the Air Force and DoD will likely delay the rollout of new strategic guidance. That means that agile companies adjusting quickly to shifting priorities will succeed – and with the guidance of Vertx Partners’ team of defense experts, your business stands its best chance.
Conclusion
Budget uncertainty presents clear risks to modernization timelines, but it also provides an opportunity to re-evaluate how the U.S. delivers and deploys capability.
In a climate valuing efficiency and impact, small businesses with emerging technologies and a willingness to collaborate across silos are critical to sustaining national security objectives.
Vertx Partners remains committed to guiding these businesses in a rapidly changing federal budgetary landscape. Although the current situation is fraught with challenges, Vertx also believes that the DoD zeroing in on particular objectives means that the small businesses capable of fulfilling those objectives are all the more likely to succeed.
Reach out to Vertx Partners today to see if your capability can make a difference.