Our Impact

The Software in Defense Coalition is committed to creating space for technology start-ups and small businesses to affect the future of the defense ecosystem by providing thought leadership opportunities, driving policy outcomes and funding, and enabling focused engagements across the executive and legislative branches of government to educate and inform a diverse set of perspectives on the role of software for the future fight.

SPOTLIGHT

Unique Challenges Software Companies Face within the National Security Space

Startups and small and medium-sized software companies aiming to serve U.S. defense and intelligence face unique legislative and regulatory challenges. A coalition of these companies is essential to engage Congress and the executive branch with a unified agenda to enhance the U.S. Government's access and use of cutting-edge technology.

There is no unified voice for new entrants in the national security market. Lowering entry barriers are predicated on the national security industry’s active engagement in the political and policymaking processes. Disparate single vendor voices simply cannot overcome the entrenched cultural, bureaucratic, and budgetary obstacles that have calcified over half a century within national security acquisition.

Clear warning signs point to the declining health of the defense innovation ecosystem. The Reagan Institute’s 2025 National Security Innovation Base Report Card* rated the Department of Defense a D on its defense modernization, noting that defense modernization has ongoing major vulnerabilities that significantly undermine the health of the national security innovation base.

This is due, in part, to its inability to act on innovation priorities and integrate emergent technologies at scale, which negatively impact America’s overall readiness and posture. Despite the Department’s efforts to strengthen innovation, small business participation in the defense industrial base has declined by 40% in the last decade. The U.S. Government continues to encourage companies to forward invest and support Department initiatives, but fails to consistently adopt the products of those investments. For new entrants, procurement uncertainty and delays mean wasted resources and stalled progress. Despite significant investment of capital, resources, and talent, many startups and small to medium-sized businesses remain stuck in the prototype stage, unable to transition to production. This not only hinders innovation but also deprives the government of critical new capabilities.

*Ronald Reagan Presidential Foundation and Institute, National Security Innovation Base Report, March 2025, https://www.reaganfoundation.org/cms/assets/1741105896-nsib-2025-feb26-web-1.pdf