Navigating a Disrupted and Dynamic Market

Great power competition is now a reality in procurement and production, with countries like China, Russia, and Iran reshaping deterrence dynamics across three critical theaters. Two currently have wars, and the third hangs by a thread. The Department of Defense is undergoing significant internal changes, focusing on acquisition reform and the development of low-cost, high-density systems such as attritable drones and scalable AI platforms. 

Disruptors are challenging traditional defense primes through agile development and software-driven solutions. Despite economic uncertainties, VC investment in North American and European defense sectors is projected to grow significantly by 2025. While increasing budgets and technological focus lower entry barriers, the real question is whether these new entrants can scale their operations and meet the stringent requirements of defense customers. Concerns are rising that the challenges for both legacy and new entrants create the possibility of a defense “bubble” rupture. Even well-positioned firms are at risk amid unprecedented uncertainty. 

Amidst this turbulence, the Belfer Center’s June 2025 Critical and Emerging Technologies Index provides hard data on why modernizing defense is crucial. While the U.S. still leads, China is rapidly advancing in biotechnology and quantum technology. Technological leadership is no longer static, and shifts in these technologies could quickly change national power dynamics. In their recent testimony, the Secretary of Defense and the Chairman of the Joint Chiefs highlighted the need to partner with firms that can bolster the U.S. position in this competition. 

At BCE, we’re helping clients navigate this terrain, not just by chasing requirements but by understanding what shapes them. Our strategy team works to align market forces, customer demands, and geopolitical and technological realities. We’ve built, customized, and applied strategic frameworks like CRO, MAP, and a DOTMLPF-P competition model to help clients answer the question that matters most: What will it take to win? 

If you’re considering your next strategic move, whether a capture, pivot, or consolidation, we’re here to help.