Dual-Use Business Models & Contracting (DoD ↔ Commercial)

Happy Friday everyone! Welcome to Autonomous Platforms of the Future Newsletter, your weekly deep dive into the cutting-edge advancements, achievements, and strategic developments in autonomous systems across the Aerospace & Defense sectors. As we continue to witness a transformative shift towards autonomy across air, land, sea, and space, this newsletter will serve as a hub for exploring the technologies, strategies, and future trends shaping the industry.

This week I'll be starting month 2 topics from the series entitled "Beyond Platforms: The Strategy, Systems & Signals Behind Autonomous Innovation." Month 2 covers topics on Markets, Regulation and Risk. I’m excited to get these new topics kicked off. Let’s keep the conversation going on all the major systems and technologies that make these autonomous vehicles work. I’m excited to hear what you all think.

Enjoy the read and don’t forget to let me know your thoughts on this newsletter.

Month 2 of the “Beyond Platforms” series examines the strategic forces shaping the commercial and defense markets where autonomous systems will operate—and the regulatory and risk frameworks that will determine their pace of adoption. As autonomy expands into logistics, aviation, defense, infrastructure, and consumer mobility, companies must navigate complex certification pathways, uncertain liability regimes, evolving safety standards, and geopolitical pressure on supply chains. This month’s newsletters dissect how market incentives align or diverge across sectors, how regulators are redefining airworthiness and operational approval for machine-driven decision-making, and how investors and operators can assess risk in a world where autonomy introduces both unprecedented capability and new systemic vulnerabilities. At its core, Month 2 highlights a central truth: the winners in autonomy will not only be the most advanced technically—they will be the ones who master the markets they enter, understand the regulatory terrain, and design systems resilient to technical, economic, and geopolitical shocks.

Topic Introduction

Week 5 of the “Beyond Platforms” series unpacks the shifting landscape of dual-use business models, where commercial autonomy innovation and defense procurement are increasingly interdependent. As DoD contracting evolves with rapid acquisition pathways, model-based systems engineering, and flexible prototyping authorities, commercial startups and established autonomy vendors are finding new entry points into defense markets—while leveraging those same contracts to stabilize revenue, accelerate technical maturity, and scale manufacturing. This edition explores the engineering, economic, and contracting mechanics behind dual-use architectures, highlighting how shared autonomy cores, variant-specific subsystems, and modular integration strategies enable companies to serve both commercial and DoD missions without sacrificing speed or reliability. At the center of this convergence lies a powerful dynamic: defense missions are shaping commercial technology roadmaps, commercial scale is reshaping defense affordability, and together they are forging a new generation of autonomy companies built to thrive across domains.

The modernization of DoD acquisition is driving an unprecedented convergence between defense procurement cycles and commercial autonomy development. Autonomy companies now balance quarterly iteration velocity against mission-critical reliability, while the DoD increasingly leverages COTS technologies and modular open architectures to accelerate fielding.

Key Dynamics Driving Convergence:

• Shortened defense acquisition timelines via MTA rapid prototyping, DIU, and CSOs enable commercial-grade innovation cycles.

• Operational demands—EW-resilient UAVs, distributed sensing layers, and attritable platforms—push the DoD toward commercially scalable systems.

• Hybrid development roadmaps emerge as vendors build common autonomy cores with diverging commercial and defense variants.

• Commercial engineering standards (e.g., OTA update frameworks, model-based development) blend with defense requirements (airworthiness, NSA security hardening, safety cases).

This convergence is redefining competitive advantage: companies that master dual-market engineering, contracting, and certification are becoming the new autonomy primes.

Dual-use startups succeed in the DoD ecosystem by treating contracting as an engineering discipline. Entry often begins with flexible, nontraditional pathways that reduce barriers to entry, but progression into production requires rigorous programmatic and compliance infrastructure.

Critical Contracting Pathways & Their Technical Implications:

• SBIR/STTR Phase I–III: Allows sole-source transition but demands maturing prototypes and meeting formal TPMs, safety artifacts, and configuration control.

• OTA Prototypes (10 U.S.C. 4022): Enable rapid iteration but require demonstrable integration with military communication stacks, cyber baselines, and mission systems.

• Middle Tier Acquisition (MTA): Accelerates fielding but necessitates more advanced test-readiness, documentation, and V&V processes.

• IDIQ & Production Contracts: Require compliance with cost accounting, quality systems (AS9100, CMMC), and recurring sustainment deliverables.

Startups that build disciplined program management—risk registers, digital engineering artifacts, validated cost models—are the ones capable of crossing the “Valley of Death” between prototype and procurement.

Designing a dual-use autonomy system requires a bifurcated architecture that satisfies both commercial economics and defense mission reliability. This entails developing configurable subsystems around a shared technical core that can diverge for compliance-heavy defense variants.

Engineering Requirements That Drive Divergence:

• Commercial demands: low BOM cost, manufacturability, OTA software pipelines, and rapid sensor iteration.

• Defense demands: redundancy architectures, radiation-tolerant compute, encrypted comms, PNT assurance, anti-jam protection.

• Shared core: common middleware, perception stacks, firmware abstraction layers, and scalable compute modules.

• Variant isolation: keeping certification-heavy subsystems (e.g., secure comms, fail-operational flight controllers) modular to avoid slowing commercial release cycles.

Leading vendors treat dual-use design as a multi-objective optimization challenge—minimizing divergence while ensuring mission specificity, operational resilience, and logistics sustainability.

Dual-use business models generate cross-market flywheels that accelerate adoption, reduce cost curves, and enhance technical maturity. Defense buyers benefit from commercial scale, while commercial markets gain from defense-grade robustness and diverse environmental test data.

Spillover Channels Transforming Autonomy Economics:

• Commercial volume → lower unit costs that benefit defense procurements.

• Defense test regimes → richer datasets that improve perception robustness in commercial deployments.

• Multi-year IDIQ contracts → revenue stability enabling investment in automated manufacturing, supply-chain redundancy, and in-house ASIC/FPGA development.

• Interoperability investments → cross-sector integration such as shared autonomy frameworks that operate across air, land, sea, and space.

The most scalable companies are those that structure product lines, data pipelines, and supply chains to continuously cycle value between the two markets.

Over the next decade, defense procurement will increasingly favor companies that blend commercial scalability with mission-grade engineering. Acquisition reform, digital engineering, and rapid prototyping authorities will shorten procurement cycles and shift competitive advantage toward firms capable of delivering modular, rapidly upgradable autonomy stacks. Companies with high-automation manufacturing and model-based systems engineering pipelines will demonstrate both faster iteration and higher reliability.

A new generation of software-defined autonomy primes will emerge—firms that do not manufacture every subsystem but integrate fleets and mission systems across multiple domains via command-and-control frameworks and advanced autonomy cores. These orchestrators will dominate the system-of-systems battlespace by enabling multi-platform interoperability, resilient sensing layers, and distributed autonomy.

Across commercial sectors, user expectations for reliability, safety, and resilience will rise, pushing autonomy developers toward architectures historically associated with defense: redundant compute channels, hardened sensors, assured PNT, and deterministic scheduling frameworks. Commercial vendors that borrow these defense-grade principles early will outperform in demanding markets such as logistics, infrastructure inspection, precision agriculture, and offshore energy operations.

Ultimately, cultural and organizational convergence will define the next era. Defense and commercial engineering groups will merge into unified dual-use teams, operating under hybrid development cycles that balance speed with assurance. These integrated teams—fluent in acquisition pathways, modular architectures, digital test frameworks, and resilient engineering—will shape the future of autonomy across both national security missions and commercial ecosystems.

Latest News Hub: Autonomous Insights Today

Explore industry insights and inspiring stories from leaders in aerospace and defense on my latest podcast series, "Brothers in Aerospace and Defense." Follow us on social media for updates on new episodes and engaging content:

Instagram: @brothersinaandd

Facebook: Brothers in Aerospace and Defense

YouTube: @BrothersInAerospaceandDefense

Thanks for joining me this week. Stay tuned for my next technology talk by subscribing below and sharing with colleagues you think it would benefit.

If you'd like to collaborate with me on future technology opportunities, use my calendly link to book a time. Hope you have a great rest of your week.