Navy's tech chief streamlines defense buying

Justin Fanelli, the Department of Navy's chief technology officer, has spent three and a half years transforming how the Navy works with startups. He's shifting from a chaotic "spaghetti chart" of entry points into a cleaner funnel where strong performers become enterprise partners.

Navy publishes tech priorities for investors

Fanelli released an updated list of technology areas the Navy wants to buy over the next several years, vetted by venture investors before release. The goal is to give companies and investors a roadmap so their funding decisions align with Navy needs.

Navy shifts from funding early research

The Navy used to fund seed-through-Series-B research itself but is now handing that job to commercial investors. It mostly buys from Series D through F companies, letting private capital back startups before the Navy purchases mature products.

Co-investment replaces traditional contracting

Rather than writing checks to established prime contractors, the Navy is moving toward co-investment, putting money alongside private capital. Taking equity stakes remains rare, but waiting for companies to mature products before buying is becoming standard.

Recent Navy tech purchases show the shift

The Navy awarded a $562 million contract for the MQ-25A Stingray autonomous refueling drone this month. It's also buying edge compute hardware from Armada, using Gecko Robotics for inspections, and swapped a delayed defense contractor camera system for commercial cameras with Applied Intuition software.

Applied AI tops Navy's tech priorities

The first priority category is applied AI, covering machine learning and agentic software that turns raw data into decisions. This includes sensor fusion, targeting support, autonomous behavior, and cyber operations built on software rather than hardware.

Quantum science and secure communications

Quantum information science is the second priority, focused less on owning quantum hardware and more on applying quantum techniques to navigation, secure communication, and cryptography.

Advanced networking in contested conditions

The third priority is advanced networking, aimed at moving data securely across environments with degraded or intermittent connections. This covers ships at sea and coalition partner networks where reliability cannot be assumed.

Spectrum operations in contested environments

Electromagnetic spectrum operations is the fourth priority, covering technology that senses and manages the spectrum itself. Systems must adapt in contested conditions rather than rely on fixed configurations.

Digital engineering enables system interoperability

The fifth category is digital engineering and interoperability, covering open APIs, model-based systems engineering, and zero-trust architecture. The goal is letting different Navy systems talk to each other without custom integration work each time.

Priorities will shift with emerging needs

The memo notes that none of the five categories represents a funding commitment and none ranks individual programs. The Navy added a reminder that priorities will change based on emergent, near-term, and long-term needs.

“will change based on emergent, near-term, and long-term needs”

Why promising tech fails inside the Navy

The most common reason technologies fail isn't technical but budgetary. The Navy runs on long planning cycles, and new tools only stick around if they replace something the Navy is already paying for, creating a high bar for adoption.

Small committees make buying decisions

Buying decisions run through a source selection committee, a small group rather than a sprawling review process. Fanelli described the goal as keeping the process merit-based rather than adding layers of approval.