Congress didn’t give the White House all the munitions funding it asked for, but defense executives say it’s enough—along with the administration’s goading and global instability—to persuade them to pour more of their own funds into boosting production.
In a last-minute request, the Trump administration asked lawmakers to bump munitions spending spread out over multiple years by more than $28.8 billion. Congress, which last summer allocated an extra $25 billion for munitions and related supply-chain support via the reconciliation bill, added just under $2 billion over the president’s request for a select set of critical munitions in the compromise spending bill that still needs to be approved by Congress and the president.
But that is “in sync with what we were expecting,” said Rylan Harris, who leads business development for Northrop Grumman’s armament systems business unit. “We’ve been getting the demand signals from the customer set long before now, whether that’s the amount of munitions that have been expended around the world, or just the stock of ammunition. We’ve been seeing those demand signals already, which has helped us focus a lot of our investments in increasing capacity.”
And the administration could try to get more munitions funding through supplemental funding or another budget reconciliation bill to produce the quantities it needs, said Tom Karako, the director of the Center for Strategic and Internationals Studies’ missile defense project.
“The short answer is, something else has to happen…And so that’s either going to need to be a supplemental [funding bill], or need to be a reconciliation 2.0, or it would need to be a reprogramming, or moving things around within the reconciliation money, for instance,” Karako said. “Those are basically the options, and the latter two are less desirable because somebody’s ox is going to get gored. And so what the right thing to do is to probably do a [munitions] supplemental. But, you know, that’s going to require some legislative activity, and that’s a challenge.”
More is more
The administration’s affinity for non-traditional budgeting hasn’t gone unnoticed.
“Traditionally, there’s been annual appropriations. The administration is striving to modify that. They’ve already got authorization for a range of effectors or missiles through Congress—part of the process, not the complete process. But it’s already been introduced, and it’s advancing on a seven-year basis for, I think, it’s four or five specific missile systems, including THAAD and PAC-3,” Lockheed Martin CEO James Taiclet said during the company’s earnings call last week.
Thursday, Lockheed Martin said it would quadruple its THAAD missile interceptor production—and share profits with the government if certain metrics are met. That move comes after the company announced it would triple its production of Patriot missiles ahead of a White House executive order seemingly designed to push defense companies to produce weapons faster and fund development themselves.
“There’s incentives in both the Patriot and the THAAD framework agreements for us to outperform the objectives. And so what we have agreed upon is a profit sharing above a certain robust level, I’ll call it, where we start to share some of the increased profits with the U.S. government by plowing some of those increased profits back into something like I just talked about, which is additional spare parts or it’s additional equipment or tooling in the factory,” Taiclet said. “And so there’s a sort of reinvestment mechanism in a profit-sharing vehicle, if you will, for us to even better support these programs going forward on behalf of and with the government.”
The 2026 spending bill includes multiyear procurement authority, or money to buy weapons through fiscal year 2032 at a lower cost, for the Advanced Medium-Range Air-to-Air Missile, Joint Air-to-Surface Standoff Missile, Long Range Anti-Ship Missile, Patriot Advanced Capability-3, Standard Missile-3 Block 1B, Standard Missile-6, THAAD, and Tomahawk, according to a summary of the bill.
There’s also $6.3 billion for critical munitions, which includes $1.9 billion more than requested for increased production over multiple years, and $500 million for solid rocket motor industrial base expansion, workforce development, and supplier qualification.
“Funding included in this Act is in addition to nearly $2.1 billion of mandatory funds currently apportioned from [budget reconciliation]. The agreement also makes significant investments toward solid rocket motor production, a key component of critical munitions,” appropriators wrote in a joint explanatory statement for the compromise spending bill.
Treading lightly
These changes come at a time when defense industry leaders feel like they must walk a thin line to keep the U.S. government and shareholders happy.
President Donald Trump singled out RTX in critical social media posts earlier this year that were focused on how the company plans to bolster its production and manufacturing while also increasing revenue. CEO Christopher Calio said the company expects to do up to $93 billion in sales for 2026.
“We understand that our products are critical to national security and security of our partners and allies. And I can tell you, across the organization, we absolutely feel the responsibility and urgency to deliver more and to deliver it faster. And, candidly, we understand the frustration,” Calio said during the company’s earnings call.
RTX increased munitions output 20 percent for key programs last year, including GEM-T, AMRAAM and Coyote. And Calio wants to “significantly increase output again” in 2026 for those programs and others, such as SM-6 and Tomahawk.
The government pays us “to manage our suppliers and deliver,” he said. “Because to take production to the levels that the department needs, you’re just going to need to continue to invest in that industrial base and bring new suppliers into the fold.”
Get ready, stay ready
A persistent challenge for munitions production has been maintaining a steady need.
“Munitons have have typically been sort of a swing space, a bill payer, frankly. The year-over-year demand can swing up to 50 percent,” said Jerry McGinn, who leads CSIS’ industrial base policy center.
But atypical funding arrangements pushed by the second Trump administration and fashioned by a Republican-led Congress could help.
“One of the commitments coming out of Ukraine, and with the current administration too, was to really kind of fix munitions demand,” McGinn said. “So there’s a clear commitment to invest. It is not as clean as it was, because you’ve got this ‘One Big, Beautiful Bill’ and, potentially, another one.”
And new agreements, such as the one Lockheed inked with the Pentagon, can guide the internal company investments the administration is demanding.
“We like to see these kinds of defense budgets, because we know where we can sort of guide our investments,” Jim Leary, executive director of business development at Boeing, told Defense One. “A lot of the investments that we’re putting in are to continue to increase capability and capacity in existing munitions and missiles.”
That means putting more money into manufacturing—facilities and the workforce.
For example, in 2025, Boeing opened a factory extension for its PAC-3 missile seeker facility in Huntsville, Ala., to increase production by nearly a third.
And L3Harris Technologies recently reached a $1 billion deal with the U.S. government to increase solid rocket motor production—which it began working on last year.
“Construction began last year to expand capacity on large solid rocket motors and certain tactical rocket motor programs,”L3Harris Technologies CEO Christopher Kubasik said during Thursday’s earnings call. “The government invests now, allowing us to further increase capacity for critical interceptor programs such as THAAD, PAC-3 and standard missile. There is no waiting for contracts or acquisition funding. The investment gives us the confidence to build today while the long-term contracts are being negotiated and finalized. Capacity is now the most important capability.”
Higher budgets could also translate into quicker deliveries, said L3Harris CFO Kenneth Bedingfield.
“If we do see a significantly increased defense budget in FY ’27, our expectation certainly is that as we look at upside to growth, we would expect L3Harris to be able to deliver on that quicker, given our kind of agile nature and our ability to crank up production, given some of the investments that we’ve made in the business, whether that’s in space satellites related to missile defense for America, whether that’s in communications or even as we scale the solid rocket motors,” he said.
A $1.5 trillion defense budget would be “unlike any we’ve seen before,” Northrop Grumman CEO Kathy Warden said during the company’s earnings call. “So it does have us thinking very differently…But at the same time, there is more for us to do, and we are focused on our engineering and operations talent, helping to design the right solutions so that we can be competitive.”
Still, amid the talk of big defense budgets and ramping up production, there’s something unsaid: “concern that a big war is coming,” CSIS’ Karako suspects.
“This effort began before the 12-day war and the expenditure of a scary amount of THAADs and other munitions,” Karako said. “The reality is sinking in … I would say the Chinese may be planning a big war, and we are going to need a heck of a lot more than we have, even ignoring the fact we just expended a ton in defense of Israel. It’s kind of scary, the discrepancy between what we have and what we need. And so that’s why I think you’re seeing this urgency, and I think it’s entirely appropriate.”
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