US defense funding paths for Israeli tech: Navigating the Pentagon’s innovation gateways - opinion

Theodore von Kármán, one of the greatest minds of the 20th century, said, “Scientists discover the world that exists; engineers create the world that never was." Von Kármán was the pioneer of modern aerospace science, and a lifelong champion of turning laboratory breakthroughs into military advantage.

Nowadays, a new generation of innovative Israeli defense tech startups is doing exactly that, and the Pentagon has a set of programs designed to provide the runway.

In mid-October, Washington, DC will host AUSA, the flagship expo of the US Army, which, with an annual budget north of $200 billion, is the single largest buyer of land-warfare technology on Earth. As Israeli defense tech companies with battle-tested technologies and deep domain expertise prepare to participate in the largest defense conference and expo in the US, it would be prudent to become familiar with some of the Pentagon’s programs that could help launch their products in the United States.

Most of the programs are designed to support the growth of the US defense base. However, Israeli defense tech companies planning to establish a US manufacturing or assembly presence may want to make an effort to connect with the relevant program managers while at the expo. Subject to eligibility and regulatory compliance, such programs can provide validation, funding, and access to the right branches for follow-on procurement opportunities.

Army PIT & FUZE

The Army's Pathway for Innovation and Technology (PIT) is a relatively new initiative designed to streamline and centralize the Army's approach to engaging with innovative technology companies. PIT brings together innovation organizations, acquisition leaders, and industry partners tasked with accelerating the delivery of advanced capabilities.

FUZE, operating within PIT, applies approximately $750 million annually through a venture capital-inspired model to Army technology investments, scouting, evaluating, and backing promising technologies with the goal of rapid integration into Army programs of record.

FUZE brings together a suite of innovation programs under a unified portfolio: Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR), Expeditionary Technology Search (xTech), Technology Maturation Initiative (TMI), and Manufacturing Technology (ManTech).

SBIR and STTR programs provide government funding to small businesses and research partners.

The Army, Navy, and Air Force each run their own SBIR/STTR programs with tailored critical priorities, and similar programs are also run by several defense agencies and commands including, for example, the Defense Advanced Research Projects Agency (DARPA), Missile Defense Agency (MDA), and US Special Operations Command (SOCOM). 

Eligibility requires, among other things, that the company be more than 50% owned by US citizens or permanent resident aliens. Army’s SBIR/STTR currently focuses on areas including AI, Contested Logistics and Sustainment, Immersive and Wearables, and sensors.

xTech is the Army’s entry point for announcing and spurring competition within the industry by allocating prizes to companies that can solve known operational and technological gaps. It serves as a key “on-ramp” for innovative companies to enter the Global Tactical Edge Acquisition Directorate (G-TEAD) Marketplace, a platform designed to accelerate delivery of equipment and software to the Army. xTech competitions are generally open to US-based small businesses. Some competitions have allowed international participation at early stages, though eligibility rules varied across different competition types.

TMI and ManTech serve to provide funding for de-risking and operationalizing the successful prototypes from SBIR/STTR and xTech. And JIOP, the Joint Innovation Outpost at Fort Bragg, North Carolina, is PIT's operational arm. It is a collaborative space where companies work directly alongside soldiers to prototype and test solutions.

DEFENSEWERX

DEFENSEWERX is the parent organization that manages a network of regional innovation hubs serving different Pentagon components. The network provides localized engagement points between the defense community and commercial innovators. These hubs, located across the US, include ERDCWERX (Army Corps of Engineers), SOFWERX (US Special Operations Command, SOCOM), CFIC (Army Cyber Command-aligned), Nautilus/NavalX (naval innovation), and Doolittle Institute (Air Force Research Laboratory), among others. 

Each hub facilitates connections to its respective Pentagon component's funding mechanisms, including SBIR/STTR, Other Transaction Authorities (OTAs, flexible contracting agreements that bypass the standard Federal Acquisition Regulation), Cooperative Research and Development Agreements (CRADAs), and prize challenges. Specific funding eligibility will depend on the mechanism being used.

ATEC 

The Army Test and Evaluation Command (ATEC) manages the Army's premier test ranges and evaluation facilities. In a significant shift announced in August 2026, ATEC has opened these world-class testing facilities to private industry, allowing companies to test and validate their technologies in realistic military environments. This addresses a critical gap for startups that lack access to the testing infrastructure needed to demonstrate military relevance.

Through the new industry scheduling portal, companies can submit a request to pay for range time and testing services directly, and in some cases, testing may be funded by an associated Army program or through cooperative agreements. Programs are open to both domestic and international companies, subject to approval. The focus is on technologies that align with Army testing needs and modernization priorities. For companies with mature defense products, demonstrating performance on US ranges can be a powerful differentiator.

FCT

The Foreign Comparative Testing Program (FCT) is specifically designed to identify and evaluate allied and partner nation military technologies for potential adoption by the US military. The program funds the testing and evaluation of foreign defense items in US military operational environments.

This is one of the few Pentagon programs explicitly designed to bring foreign technologies into the US defense ecosystem. FCT provides funding for testing and evaluation of high Technology Readiness Level (TRL). A US military sponsor, a service or combatant command, must nominate the technology for FCT evaluation. Typical project funding ranges from several hundred thousand dollars to several million dollars for comprehensive testing.

Other funding opportunities 

The Pentagon has a robust funding mechanism designed to support the US industrial base development and production of solutions in line with its critical technologies’ priorities. For munition technologies, for example, there is a slew of funding programs from early research through production and industrial base expansion. The Joint Enhanced Munition Technology Program (JEMPT), Joint Hypersonics Transition Office (JHTO) and Joint Energetics Transition Office (JETO) each run award programs with substantial funding opportunities for research and prototyping. For production scaling, there are a number of other programs that can award, on average, up to $50m.

The Pentagon also provides, via The Accelerate the Procurement and Fielding of Innovative Technologies (APFIT) procurement funding for innovative projects that have completed development and are ready to transition into operational use.

The Pentagon’s Office of Strategic Capital (OSC) provides debt financing with direct loans to primarily finance projects in the US, as well as investment fund financing. OSC targets companies that have demonstrated technology viability and need capital for scaling. In fiscal year 2026, OSC committed more than $5b. in debt financing for industrial and defense-related projects, helping mobilize over $11b. in combined public and private capital.

DARPA and DIU

The Defense Advanced Research Projects Agency (DARPA), with an annual budget of approximately $4.3b., focuses on high-risk, high-reward projects to maintain a technological advantage for the US. Funding usually involves a team of industry and academic partners and “hands-on” involvement by the program manager.  The Defense Innovation Unit (DIU) is another funding mechanism soliciting proposals through its Commercial Solutions Opening process, which awards prototype agreements and is, in many cases, open to international entities as well. Vendors that successfully complete a prototype project are awarded a Success Memo, enabling any federal agency to procure the solution without recompeting. 

One more interesting resource is some of the long-standing well-established consortiums across the defense industry verticals, such as for example on munition. Those provide an excellent platform to connect with both the Pentagon, industry and academia.  Among the newly formed consortiums of interest for those wishing to connect with SOCOM and meeting the eligibility requirements, is the Special Operations Forces Rapid Acquisition Consortium for Emerging Requirements (SOF RACER). It is designed to bring innovative commercial technology into the special operations community quickly.

Critical and emerging technologies

In August 2026, the White House National Security Science & Technology Strategy (NSSTS) explicitly directed agencies to "invite, facilitate, and expedite foreign investment from allied and partner sources, especially in advanced technology." NSSTS identified three top priorities for US battlefield dominance: undersea superiority, space, and AI & autonomy, all supported by 12 high-priority enabling technology areas. Among those are Advanced Manufacturing and Materials, AI & Autonomy, Directed Energy, Hypersonics and Advanced Missile technologies, to name a few. These are all areas that Israeli Defense Tech excels in.

The opportunities for Israeli Defense Tech are real and timely. However, those visiting the Pentagon would surely agree that navigating it, literally and figuratively, is not an easy task. Unless seeking funding or a procurement opportunity that is specifically open to Israeli-based entities, a careful review of eligibility would be required.

Both US regulatory compliance and corporate structure would have to be well planned in advance, as well as a strategy determination on whether establishing a US presence is feasible and truly serves the company’s goals. To support a full understanding of the pathway of doing business in the US defense industry, companies may want to consider working with both legal advisors, as well as government affairs advisors, to raise their profile among the key decision makers.

The author is a Partner and Co-Chair of the Israel Practice of Holland & Knight, a leading US-based law firm, and the president of the Women in Defense South Florida Chapter.