The 2026 National Defense Strategy Signals Increased DIB Contracting and Investment Opportunities

Bottom Line Up Front

On January 23, 2026, Secretary of War Pete Hegseth issued the unclassified 2026 National Defense Strategy (2026 NDS), which sends a very clear signal to defense contractors and defense sector investors that contracting opportunities will increase significantly. The 2026 NDS is focused on revitalizing the defense industrial base (DIB), securing supply chain integrity, and opening contracting opportunities to nontraditional companies. Companies should expect for it to become increasingly easier to do business with the Department of War (DOW) as the federal government reforms its acquisition policies and practices, eliminates long-standing barriers to contractor entry, and creates a buying environment that is friendlier to commercial suppliers and nontraditional vendors.

Background

The NDS is the United States’ primary strategic defense guidance document, issued by the Office of the Secretary of War. It fulfills Congress’ requirement that the secretary publish a strategic framework outlining US defense priorities. Released every four years, the NDS explains how the DOW will implement the White House’s National Security Strategy (NSS). It sets objectives for military planning, including force structure, modernization, business processes, infrastructure, and resource needs. The NDS also identifies the capabilities required to support the NSS and ensure warfighter readiness.

Understanding the relationship between the NDS and the NSS is essential. The NSS — produced annually by the National Security Council and signed by the president — articulates the nation’s grand strategy and overarching security goals. It provides high‑level guidance to the DOW on military planning, strategy, force posture, and modernization. The NDS executes this guidance and, in turn, informs the National Military Strategy (NMS).

The NMS, prepared by the Joint Chiefs of Staff, further refines the NDS and provides more detailed direction to the US military on carrying out both the NDS and NSS. While the NMS is often fully classified, the NSS and NDS are typically released in redacted form to allow the public distribution of unclassified versions.

The 2026 NDS

The 2026 NDS builds upon President Trump’s 2025 NSS, which prioritizes defending the US homeland above all and sets forth the importance of deterring China, enhancing allied contributions, and revitalizing the DIB. The 2026 NDS basically translates President Trump’s NSS objectives into military goals, and it directs the military departments and defense agencies to implement all necessary changes swiftly and fully. The first part of the 2026 NDS provides a comprehensive overview of the security and national defense environment; the second part details the strategy that the DOW should take to achieve the president’s objectives, broken into four specific lines of effort.

The first line of effort is defending the US homeland. The 2026 NDS makes it clear that military resources will be utilized to secure US borders, counter narco-terrorists’ activities, and protect key locations in the Western Hemisphere. The 2026 NDS specifically references the US commitment to implementation of the Golden Dome for America missile defense program, increased counter-drone measures, US nuclear modernization, cyberattack detection and deterrence, and sustainable counterterrorism efforts. According to the 2026 NDS, this line of effort will protect Americans from direct threats and encourage regional cross-border cooperation. This will require significant involvement from the defense contracting and government contracting communities.

The second line of effort is deterring China in the Indo-Pacific through strength, not confrontation. Here, the 2026 NDS is focused on increasing military strength and communication with China with the goal of preventing Chinese dominance in the region. The 2026 NDS makes it clear that the DOW “will build, posture, and sustain a strong denial defense along the [first island chain].”¹ This effort will involve the modernization and development of military forces that will be located throughout the region that spans through Japan, the Philippines, and the Korean Peninsula. According to the 2026 NDS, this line of effort will enable the US to ensure the balance of power in the Indo-Pacific that allows the US, China, and other countries in the region to enjoy peace and the realities of stability and free trade. The modernization of military forces and assets will drive unprecedented business opportunities for defense contractors in the US and abroad.

The third line of effort is increasing burden-sharing with allies and partners. The 2026 NDS is clear that US allies must increase defense spending and contribute to security in their respective regions. To that end, the 2026 NDS is committed to pressuring and enabling US allies and partners to take primary responsibility for defending against threats, while signaling a reduction in direct US support. Accordingly, the DOW will increase “incentives for allies and partners to take primary responsibility for their own defense in Europe, the Middle East, and on the Korean Peninsula.” In alignment with this line of effort, defense contractors that have been serving the US government by providing warfighter support, perhaps via the Foreign Military Sales or Direct Commercial Sales route, may see a significant increase in opportunities to provide allies and partners with similar products and services.

The fourth line of effort is supercharging the US DIB. The Trump administration views the US DIB as foundational “to rebuilding and adapting” the US military and supporting allies and partners with the critical items they need to appropriately grow their defensive capabilities. Accordingly, the 2026 NDS announces that a key focus will be on the revival of the US-based manufacturing industry and significant investment in the growth of the US workforce. The 2026 NDS states that this is the only way the US can ensure that it will “have the weapons, equipment, and transportation and distribution capability needed to implement” the 2026 NDS. This line of effort will also ensure that US industry is involved in arming its “allies and partners as they take on a greater share of the burden of our collective defense.” Specifically, the 2026 NDS provides that the DIB must be expanded if it will be successful in producing, delivering, and sustaining “critical munitions, systems, and platforms.” The 2026 NDS makes a very clear commitment to growing nontraditional vendors and partnering with traditional DIB vendors, Congress, US allies and partners, and private investors to accomplish these goals.

Takeaways

Contractors and those looking to make investments or acquisitions in DIB companies should anticipate the exponential growth of business opportunities based on the objectives set forth in the 2026 NDS. The DOW will prioritize contract awards associated with:

• Homeland defense programs, including the Golden Dome for America missile defense program.
• Capabilities that are designed to monitor and defend US borders and assets, including uncrewed aerial and maritime systems.
• Supplies, services, and technologies that can assist US agencies in countering drug trafficking and illegal immigration into the United States.
• US-based manufacturing that can ensure secure end-to-end supply chain integrity.

Additionally, the 2026 NDS is signaling that acquisitions related to weapons and capabilities suited for deterrence in the Indo-Pacific will be prioritized, such as:

• Long-range crewed and uncrewed aircraft that will augment force buildup in the first island chain.
• Offensive and defensive technologies that effectively operate outside the range of China’s anti-access/area denial systems.
• Maritime platforms (both crewed and uncrewed) that can operate efficiently and successfully in and around China.
• Long-range logistics capabilities (including airlift and sealift) to support US combat forces in that region.

Finally, even though the 2026 NDS foreshadows that the DOW may place less emphasis on acquiring armored fighting vehicles, artillery and munitions, and other land-based systems that are more relevant in European armed conflict, contractors should expect a shift toward acquisitions that support the warfighter and warfighting infrastructure in the Indo-Pacific and Western Hemisphere. The DOW will likely need to invest in military construction projects that will create, reopen, and improve military bases, supply points, and repair facilities in the Western Hemisphere and Indo-Pacific, including in locations in US states and territories and allied and partner countries. This need, and the others discussed in the 2026 NDS, will result in opportunities for investors and contractors alike to partner with the federal government as it seeks to deliver on these strategic, long-term, and ambitious goals.

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Goodwin’s Government Contracts & Grants team has significant experience counseling clients on doing business with the US federal government and navigating changing domestic sourcing laws and regulations as well as advising them on the viability of protests in all forums. Please contact the authors of this alert if you have any questions.

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1. ^[1] The first island chain (FIC) is commonly understood as comprising islands and land from Japan to Southeast Asia, much of which lies adjacent to waters claimed by China. The second island chain consists of islands to the east of the FIC: Japan’s Bonin Islands, Guam, and those located south to Western New Guinea. ↩

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