Federal IT solutions vendors should see expanded opportunities in FY2027 in defense-related AI, cybersecurity and autonomous systems, particularly as they relate to air and missile defense. The Department of War (DoW) is set to receive the largest budget increase of any federal agency.

The White House has requested $1.01 trillion, a 44 percent increase from FY2026, in discretionary defense funding for FY2027, along with $350 billion in mandatory spending to expand munition stocks and the defense industrial base. The Congressional Budget Office estimates DoW will outlay an additional $42 billion in FY2027 from the One Big Beautiful Bill Act (OBBBA), which authorizes $143.3 billion in defense spending across 10 priorities from FY2025 through FY2034.

Of that number, some $45.6 billion is dedicated to IT-related spending. FY2026 and FY2027 together account for an estimated $82.3 billion, or about 30 percent of the 10-year total funding allocated for IT, with $42 billion in spending estimated for FY2027 alone. The single largest spending category under the bill is air and missile defense, driven largely by the Administration’s Golden Dome initiative.

Here are the technology categories poised to see the most growth.

Autonomous systems and Golden Dome draw the biggest investments

The largest IT-related line item for FY2027 is autonomous and unmanned systems at $63 billion. The Office of the Secretary of War (OSW) accounts for $54.6 billion of that through the Defense Autonomous Warfare Group. The scale of this program suggests that autonomous warfare is now one of the Pentagon’s top modernization priorities.

Golden Dome, the administration’s proposed missile defense architecture, accounts for $17.5 billion in direct budget references, all routed through OSW. The Missile Defense Agency is the primary recipient at $7.2 billion, with the Golden Dome for America–Space Programs line item alone totaling $4.5 billion.

Command, Control, Communications, Computers and Intelligence (C4I) programs account for $29.5 billion. In projected spending during FY2027. The Army holds the largest service-branch share here at $5.4 billion. Key C4I funding areas include:

• $10B for communications and electronics equipment
• $9.4B for emerging capabilities
• $5.4B for technology development
• $3.1B for base communications
• $800M for ground support
• $500M for air support

The single largest program in this category is the Joint All-Domain Command and Control Development and Experimentation Activities (JADC2), managed by OSW at $2.1 billion. JADC2 is the Pentagon’s initiative to link sensors and shooters across all military branches on a unified network. Its continued investment underscores how central joint connectivity remains to the department’s modernization vision.

Networks, cyber and AI remain top tech concerns

Network and communications programs are set to receive $15.5 billion during FY2027, with the Air Force holding the largest share at $6.6 billion. The main program in this category is the Air Force Physical Security System at $1.7 billion.

Cyberspace activities overall account for $20.5 billion. That level of investment tracks with the administration’s recently released Cyber Strategy for America and the DoW’s November 2025 directive laying the groundwork for migration to post-quantum cryptography. Cybersecurity is clearly top of mind across the federal government, and the DoW in particular. Key funding areas include:

• $12.1B for cybersecurity
• $7.7B for cyberspace operations with $4.1B to USCYBERCOM
• $633M for cyber R&D

U.S. Cyber Command holds the largest cybersecurity request at $3.9 billion overall, with $1.8 billion in its primary program. The bulk of cyber funding sits in the DoW’s Operations and Maintenance account, which covers both cyberspace operations and broader cyberspace activities.

AI programs account for $58.5 billion in the budget request, including multi-year funding. Key areas include:

• $46B for a multi-year mandatory investment in a “sovereign AI arsenal”
• $6.8B to integrate commercial and DoW-developed AI technologies
• $2.2B for AI R&D

It’s worth noting that direct AI references in the budget are fewer than in previous years, and funding for several Chief Digital and Artificial Intelligence Office programs are lower than prior cycles. Even so, the headline figure likely understates total AI investment, because many programs embed AI capabilities without flagging them explicitly in budget documents.

The FY2027 DoW budget still faces a long road ahead before it gains congressional approval. Nonetheless, federal contractors are advised to track the progress of the programs laid out here and to present their capabilities in that context.

This article was adapted from a commentary that originally ran in Washington Technology. For the full original commentary click here.

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