As part of the One Big Beautiful Bill Act (“OBBBA”) signed into law by the President on July 4th, Congress made approximately $150 billion in appropriations to support defense and national security priorities. As detailed further below, OBBBA touches on many different defense industries and sectors—including the maritime industry, missile systems, space and satellite technologies, nuclear technologies, and artificial intelligence and other advanced technologies. Further, the OBBBA appropriates significant funding to support strategic investments in the defense industrial base and provides the Department of Defense (“DoD”) with an extended timeline (until 2029) to execute these investments. Existing government contractors, and advanced technology providers interested in becoming contractors, should closely monitor the implementation of these OBBBA provisions, which will shape DoD opportunities for years to come.
I. Targeted Investments in Defense Industries and Sectors
As noted above, OBBBA makes investments in many sectors of the defense industrial base. In this post, we have focused on 3 key areas: (1) shipbuilding; (2) the U.S. nuclear arsenal; and (3) the golden dome missile defense system. However, the defense title of OBBBA includes additional investments in DoD air superiority, military readiness, low-cost weapons production, replenishment of depleted U.S. missile stockpiles, counter drug programs, and U.S. capabilities in the Indo-Pacific, not detailed here.
Shipbuilding. Revitalizing the shipbuilding industrial base has been a key bipartisan focus over the last few years. As Covington previously detailed, earlier this year President Trump issued a an executive order on “Restoring America’s Maritime Dominance” and a bicameral and bipartisan group of Senators reintroduced the SHIPS Act in an effort to revitalize the productive capacity of the U.S. shipping industry. OBBBA furthers this trend and interest by appropriating over $29 billion to the enhancement of DoD resources for domestic shipbuilding. The largest appropriations in this category are dedicated to specific programs and equipment, including the procurement of two Guided Missile Destroyer (DDG) ships ($5.4B), a second Virginia-class submarine ($4.6B), the procurement of T-AO Oilers ($2.725B) and a Landing Ship Medium ($1.8B). The OBBBA also includes several appropriations that highlight key thematic priorities in the shipbuilding space, including more than $5 billion across four separate appropriations for different types of unmanned vessels, and significant investments in advanced manufacturing techniques (such as additive manufacturing) and maritime supplier and workforce development programs.
Nuclear Initiatives. OBBBA also makes $10.8 billion in investments for recapitalization of the U.S. nuclear arsenal, as well as an additional $3.135 billion to support the National Nuclear Security Administration (NNSA) in the Department of Energy. Under OBBBA, NNSA receives funding for an array of priorities, including addressing deferred maintenance and repair needs and accelerating the construction of NNSA facilities. NNSA also receives funding to develop warheads for the nuclear-armed sea-launched cruise missile, support domestic uranium enrichment centrifuge deployment, evaluate spent fuel reprocessing technology, and promote the utilization of artificial intelligence to accelerate nuclear national security missions. OBBBA’s investments in the U.S. nuclear arsenal will affect the Sentinel intercontinental ballistic missile program, the production of B-21 long-range bomber aircraft, the Minuteman III intercontinental ballistic missile system, D5 Missile Motor, Trident D5LE2 submarine-launched ballistic missiles, Ohio-class submarines, and MH-139 helicopters, among other technologies.
Golden Dome Initiative. The OBBBA appropriates $24.4 billion for integrated air and missile defense systems, which the House and Senate Armed Services Committees described in a joint fact sheet as supporting a “Golden Dome for America.” This funding is critical to the initiative jump-started by President Trump’s January 27 Executive Order—titled the “Iron Dome for America”—which announced a policy of “deploying and maintaining a next-generation missile defense shield” for the common defense of the country. To this end, OBBBA appropriates funding for military space-based sensors ($7.2B), spaced-based and boost phase intercept capabilities ($5.6B), military missile defense capabilities ($2.55B), hypersonic defense systems ($2.2B), air moving target indicator military satellites ($2B), and ground missile defense radars ($1.975B). The remaining ~ $2.8 billion is split between appropriations for intercontinental Ballistic Missile Defense Systems, missile related infrastructure (e.g., space launch infrastructure and test range infrastructure), and testing and research programs.
II. Expansion of Strategic Industrial Base Program
In addition to the specific appropriations for key defense industries detailed above, the OBBBA attempts to bolster the capabilities of DoD components that partner with the private sector to promote the use of commercial and innovative technologies to address strategic defense and national security priorities—including, notably, a significant emphasis on critical minerals. The OBBBA provides $2 billion to the Defense Innovation Unit (“DIU”), which focuses on scaling commercial technologies for military use through prototype agreements that may lead to follow-on production contracts. DIU also received nearly $100 million to support its workforce and other agency programs.
Additionally, OBBBA expands the lending authority of DoD’s Office of Strategic Capital (“OSC”), a nascent DoD component authorized to provide direct loans and loan guarantees for “dual-use” technologies and processes that enable national security and defense priorities but are not supported through direct procurement. OSC has proven incredibly popular in its early stages: OSC’s inaugural Domestic Manufacturing Loan Program in 2024 published plans to loan up to $984 million to support DoD priorities, and received in excess of $8.9 billion in financing requests in response. OBBBA now provides OSC with an additional $1.5 billion to expand its credit program and issue loans, loan guarantees, and technical assistance to eligible projects and investments. The law permit use of these funds to support gross obligations of up to $200 billion in loans or loan guarantees, providing more private sector entities an opportunity to partner with OSC.
Finally, OBBBA also provides $8.2 billion to support investments through the Industrial Base Fund (“IBF”). The IBF has the statutory authority to make investments that address critical issues in the defense industrial base relating to urgent operation needs, industrial base expansion, and supply chain vulnerability mitigation. OBBBA appropriated $3.3 billion in a broad appropriation for “grants and purchase commitments,” which provides IBF with significant discretion to determine and advance industrial base investment priorities. Additionally, IBF received $600 million targeted for investments in solid rocket motors.
Notably, $5 billion of the $8.2 billion appropriated to IBF are specifically for investments in critical mineral supply chains. This $5 billion investment is paired with an additional $2 billion investment for the National Defense Stockpile Transaction Fund to improve the U.S. stockpile of critical minerals. Additionally, $500 million of OSC’s appropriated funds are specifically designated for critical mineral investments. Together, this $7.5 billion investment in critical minerals financing builds on an earlier Executive Order that sought to leverage DoD and other agency authorities to catalyze investments in domestic critical mineral production.
III. Expanded Obligation and Execution Horizon
OBBBA’s entire $150 billion for defense will remain available for obligation through FY 2029—meaning that even typically one-year funding for activities like Operation & Maintenance may, under these special appropriations, be spread over multiple fiscal years without the usual “color of money” or time-limit constraints. Notably, OBBBA initially included recommendations from the House Armed Services Committee (“HASC”) and the Senate Armed Services Committee (“SASC”) that would have required the Secretary of Defense and the Director of the NNSA to provide the armed services committees with a plan detailing how the $150 billion appropriated under the Act would be spent over the forthcoming 4-year period ending with FY 2029. This provision was stripped from the final bill, however, leaving Congress with only less formal and less certain oversight mechanisms.
These other oversight mechanisms may take several forms. SASC Chairman Wicker has repeatedly pressed witnesses at hearings for assurances that DoD will heed congressional intent when deploying these vast new resources. Congress also “plussed up” the DoD Inspector General’s account by an additional $10 million specifically to bolster oversight of reconciliation funds. Finally, we understand that HASC and SASC leadership will collaborate on a joint letter to DoD and NNSA outlining their priorities. It is reasonable to expect that in some cases the committees will simply identify high-level objectives (such as strengthening supply-chain resilience, for example), while in others they will prescribe precise deliverables, to be carried out at precise locations, with specific partners. Although such a letter would not carry the force of law, departmental practice suggests that DoD and NNSA would afford it considerable deference. The timing of that correspondence—and whether its contents will become public—remains uncertain, which in turn makes it difficult for external stakeholders to distinguish between new opportunities and funds already spoken for.