# Defense Agencies Expand AI Contracting

BigBear.ai has an AI applications contract with Naval Air Systems Command supporting the U.S. Navy and Marine Corps and reported more than 20 contract wins in Q2 2026, with individual awards valued up to $5 million. Separately, C3.ai has a U.S. Air Force predictive-maintenance contract with a $450 million ceiling. The signals point to active demand and competition for defense AI capabilities; the cited more than $70 billion in proposed FY2027 drone and counter-drone spending is a proposal, not confirmed procurement funding. BigBear.ai’s execution record, continuing losses, and negative operating cash flow are relevant considerations for agencies and potential teaming partners assessing delivery risk.

- Defense contractors can evaluate opportunities in secure AI applications, drone coordination, and counter-drone capabilities as potential follow-on requirements emerge; the proposed FY2027 spending figure should not be treated as an awarded or confirmed opportunity.
- The NAVAIR and Air Force examples show distinct areas of demand: mission applications for Navy and Marine Corps users, and predictive maintenance across Air Force aircraft and defense systems.
- Companies pursuing this market should account for competition from established defense AI providers and assess subcontractor or teaming partners’ ability to execute, including the financial risks noted for BigBear.ai.

**Jurisdictions:** federal
**Industries:** Defense & Military, Information Technology
**Topics:** Artificial Intelligence, Cybersecurity
**Published:** October 16, 2026

### Government Entities
- Naval Air Systems Command (NAVAIR)
- United States Navy (U.S. Navy)
- United States Marine Corps (USMC)
- United States Air Force (USAF)

### Vendors
- BigBear.ai Holdings, Inc. (awardee)
- C3.ai, Inc. (awardee)

### Sources
- [Can BigBear.ai Ride the Next Wave of Defense Technology?](https://finance.yahoo.com/technology/ai/articles/bigbear-ai-ride-next-wave-164700685.html) - Yahoo Finance