US Navy Tech Chief Justin Fanelli on Streamlining Defense Procurement

The Navy’s procurement philosophy is undergoing a fundamental shift toward co-investment. Rather than funding early research, the department is increasingly focusing on mature products from Series D through F companies. This approach aims to leverage private capital for early-stage development while the Navy acts as a customer for proven capabilities. Fanelli emphasized that the service’s $150 billion annual purchasing power is being directed to replace legacy systems, noting that new tools must effectively displace existing, redundant costs to secure long-term funding.

Recent successes underscore this strategy, including the $562 million MQ-25 Stingray drone contract and the integration of Applied Intuition software, which bypassed years of traditional development delays. To guide future investment, Fanelli released an updated priority list targeting five core areas: applied AI, quantum information science, advanced networking, electromagnetic spectrum operations, and digital engineering. These categories serve as a roadmap for investors to align their capital with the Navy’s future requirements, ensuring that innovations have a clear path to deployment within the fleet.