In November 2025, Department of Defense Undersecretary for Research and Engineering Michael unveiled six critical technology areas (CTAs), consolidating and editing the previous list of 14 laid out by the Biden Administration’s then-Undersecretary Heidi Shyu. The six CTAs “reflect the complex environment for technology investment, development, and application in the 21st century”. Defense Research efforts will focus on these six areas because “these are the most crucial areas that our military will achieve dominance in…”
The six areas are: Applied Artificial Intelligence (AAI), Biomanufacturing (BIO), Contested Logistics Technologies (LOG), Quantum and Battlefield Information Dominance (Q-BID), Scaled Directed Energy (SCADE), and Scaled Hypersonics (SHY). This analysis will focus on AAI and Q-BID.
In January, Michael announced the CTA leaders who “will lead the tangible “sprints” under each CTA”, drawing from experience currently within the Department, including DARPA and military services’ research offices. These six seasoned leaders are expected to produce disruptive and innovative technology, transitioning products from research labs to operational use.
REORGANIZATION
Announcements from DOD in the past few months have focused on reorganizations of the department’s research and development portfolio. Activities such as the proposed merger of the Defense innovation Board (DIB) and the Defense Science Board (DSB) into the Science and Technology Innovation Board (STIB), the paring down of the CTAs and establishing an Innovation Ecosystem in which organizations such as the Strategic Capabilities Office (SCO) and the Defense Innovation Unit (DIU) become Defense Field Activities. The Defense Ecosystem rounds up innovation organizations, such as DIU, SCO, and DARPA, to ultimately be led by the Chief Technology Officer (CTO), who is also Undersecretary Michael. This new construct gives Michael control over billions in innovation funding.
ARTIFICIAL INTELLIGENCE
Additionally, the department released an AI Acceleration Strategy on January 9, 2026. Organized through three tenets—warfighting, intelligence, and enterprise operations—and executed through seven Pace-Setting Projects (PSPs), the six-page strategy directs the department to become “an AI-first” warfighting force across all components, from front to back.” The Chief Digital and AI Office (CDAO) plays a major role in implementing the strategy throughout the department.
The newly-appointed CDAO, Cameron Stanley, is also the Senior Official for the Applied Artificial Intelligence (AAI) CTA. Dual-hatted positions in the department is not a new notion; Cyber Command’s four-star General was the National Security Agency Director when CYBERCOM stood up in 2009 and still is today. Artificial Intelligence uses in the department would only benefit from a leader who “sees all” in these early stages of enterprise use.
The AAI CTA states: “Transforming the War Department into an “AI-First” organization, aligned with the White House AI Action Plan, to revolutionize decision-making and operational efficiency”, and “AI is the cornerstone of the DOW’s strategy to achieve decision superiority. By embedding AI into command-and-control systems, the Department will enable intelligent workflows.” The approach is a total enterprise – battlefield to backroom, depot to desktop. In August 2025 at the National Defense Industrial Association (NDIA) Emerging Technologies for Defense Conference, Michael said AI users are “fewer than 50,000 [AI] users per month… out of 3 million,” and described AI as the “biggest opportunity that DOD has to embrace going forward.”
While the consensus may be AI is the primary tech to use for future warfare, do the funding priorities for FY26 and the One Big Beautiful Bill Act (OBBBBA) mandatory funding for national security provide enough funding for the cornerstone of DOD strategy for decision superiority? Total spending on AI is difficult to determine as it is a capability that can be used across the department for administrative tasks as well as aiding decision-making in operations. Moreover, AI is increasingly inserted in/included in weapons systems rather than bought separately. The FY26 Defense Budget roll-out identified $13.4 billion requested for autonomous air land and seas platforms, which could be classified as AI-related spending but of course the platforms themselves would not count. This amount is a total of the many UAS budget lines funded in the FY26 Joint Explanatory Statement for Defense Appropriations.
In FY26 Defense Appropriations Joint Explanatory Statement (JES), DIU received $429.5 million total, of which $381.1 million was above the FY26 requested amount. DIU is offering a $100 million prize challenge for “market-ready solutions to establish a robust, scalable and vehicle-agnostic capability for understanding, tasking and coordinating autonomous systems at the fleet level.” Think Siri for UAVs.
The mandatory funding for defense in OBBBA includes $1.274 billion for AI specific items. There is more within other funding items, such as $2 billion for DIU Scaling of Commercial Tech. There are billions of funding for autonomous efforts, however, AI would be part of the funding, not the main purpose.
Overall, for FY26, the Research, Development Test & Evaluation, Defense-Wide Appropriation Title received $35.2 billion, $1.3 billion above the requested amount.
QUANTUM AND BATTLEFIELD INFORMATION DOMINANCE
The Quantum and Battlefield Information Dominance (Q-BID) CTA is in the early stages of development for application, similar to Applied AI. The Q-BID CTA states:
“Delivering advanced capabilities to maintain communications, precision navigation and timing (PNT), and electromagnetic spectrum maneuverability, even in degraded or denied environments. Quantum is paired with battlefield information systems such as GPS and traditional radio systems because quantum systems, sensors and communication systems are harder to intercept, spoof or jam.”
In other words, Q-BID ensures operational effectiveness in contested electromagnetic environments by modernizing communication and sensing technologies. Dr. Kevin Rudd, a former DARPA and Office of Naval Research employee, has a background in electronic warfare, radar RF systems and advanced sensing.
In the FY26 Defense Appropriations JES, the Quantum Application line was fully funded at $59.5 million. Another $358.1 million of quantum funding resides in the Defense Advanced Research Projects Agency (DARPA) Quantum Technologies Program Element (PE), of which $282 million is the Quantum Benchmarking Initiative (QBI). Additionally, QBI received $250 million in OBBBA funding. DARPA has other quantum funding sprinkled across other PEs. Battlefield Information Systems are constantly evolving with emerging technologies to gain the competitive edge. The latest effort is Joint All-Domain Command and Control (JADC2) to connect sources of data throughout the battlefield, in all domains, with all forces and partners to create an information advantage. The FY26 JES funded JADC2 Development and Experimentation Activities at the requested amount of $297.8 million. OBBBA provides $275 million for the same purpose, totaling $572.8 million.
Also included is $20.6 million for Joint Electronic Advanced Technology. The military services have robust research funding for electronic warfare, such as the Army in the excess of $250 million throughout Research, Development, Test & Evaluation.
WHAT’S AHEAD
Consolidating 14 critical areas to 6, makes it easier for industry to understand where funding is likely to be concentrated in FY27. These areas, along with consolidating the innovation ecosystem, reducing time to enter the department’s acquisition process as well as speeding up payments using Other Transaction Authorities should bring emerging and critical technologies into the inventory faster. Consolidation of the innovation organizations should align efforts and increase focus on what capabilities are needed for future conflicts. Concentrating on emerging technologies combined with reorganization of the research and development enterprise should provide a more ready force with a technological edge.