The Pentagon's own research enterprise is falling apart, according to an internal Defense Department study published in late June 2026, which warns that decades of underfunding have left research, development, test and evaluation (RDT&E) infrastructure deteriorating and weakening the Department's ability to maintain a technically advanced warfighting capability. The review was produced by the Office of the Under Secretary of Defense for Research and Engineering and recommends Congress fence off a dedicated fund of just under $4 billion over five years to reverse the decline. The full Defense Research Enterprise Review lays out a funding ramp that begins at $650 million in the first year and climbs to nearly $952 million by year five.
Background
Defense Secretary Pete Hegseth commissioned the review in January 2026, tasking the Department's science and technology leadership with assessing the condition of the laboratories, ranges and test facilities that underpin American military research. The review was led by the Department's Assistant Secretary for Science and Technology, whose teams conducted what the report describes as "unprecedented data collection." Investigators synthesized more than 200 data submissions from across the research enterprise and drew on an independent panel of experts convened through the Potomac Institute for Policy Studies. Those teams visited 30 sites across the enterprise — roughly one-third of the total inventory — to gather firsthand evidence of the physical state of the infrastructure rather than relying solely on budget documents and self-reported facility data.
The scope of the review was deliberately broad. It covered government-run laboratories operated by the military services, federally funded research and development centers and think tanks, and university research centers that perform defense work. That breadth matters because the modern defense research base is not a single institution but a distributed network, and the report concluded that weaknesses run through all of its layers rather than being concentrated in any one service or program.
Key Details
The review's central finding is stark: the average age of laboratory facilities across the services exceeds 45 years, with most of the buildings dating to the Cold War. Some of those facilities, the report states, now pose "documented safety risks and technical limitations" — conditions that constrain what researchers can actually do and, in some cases, endanger the people working in them. Aging buildings cannot always support the power, cooling, shielding or clean-room requirements of contemporary research in areas such as hypersonics, directed energy, artificial intelligence and quantum information science.
The report frames today's neglect against a longer history. Since the Cold War, it notes, no large-scale laboratory modernization has occurred apart from two exceptions: the Base Realignment and Closure process, which spent several billion dollars consolidating bases and laboratories, and a $2.7 billion congressional investment to rebuild the China Lake laboratories after a series of 2019 California earthquakes — facilities the report now calls the most advanced government laboratory and test enterprise in the world. The contrast underscores the review's argument that sustained, protected funding, not one-off emergency infusions, is what the enterprise lacks.
A recurring structural problem the review identifies is the way modernization money moves through the system. Authorized military construction (MILCON) projects for joint-mission RDT&E infrastructure keep slipping, the report finds, because the services repeatedly reprioritize their scarce MILCON funds toward other needs. Research facilities, which serve long-term and often cross-service missions, lose out to projects with more immediate or service-specific constituencies. The result is a backlog of approved-but-unbuilt modernization that never quite reaches the front of the line.
To break that cycle, the review's primary recommendation is not simply more money but a different kind of money: a dedicated, fenced appropriation insulated from the annual reprioritization that has starved research infrastructure. The proposal calls for just under $4 billion total over five years, beginning at $650 million in year one and ramping to nearly $952 million in year five. By fencing the funds, the Department aims to guarantee that appropriations intended for laboratory and test-facility modernization actually reach those facilities instead of being diverted.
Joseph Jewell, nominated to serve as Assistant Secretary of Defense for Science and Technology, has described that office's broad authority over the kind of research enterprise the review examined. In advance policy questions submitted to the Senate Armed Services Committee, Jewell wrote that the assistant secretary directs the policy, oversight and advocacy for the Department's research enterprise — including its laboratory infrastructure, federally funded research and development centers and university-affiliated research centers — the same components the review assessed.
What It Means for Contractors
For companies that work across the defense research enterprise, the review signals a potential new line of demand — and a competition over how nearly $4 billion gets spent. If Congress adopts the fenced-fund recommendation, military construction and facilities contractors stand to benefit directly from the modernization and replacement of laboratory buildings, ranges and test infrastructure that the report describes as decades past their design life. The year-one figure of $650 million is modest relative to the overall defense budget, but a guaranteed five-year ramp gives firms the planning horizon they need to invest in capacity and teams.
The implications extend beyond construction. Contractors supplying laboratory equipment, instrumentation, power and cooling systems, shielding, and specialized test apparatus would see opportunities as decades-old facilities are brought up to the standards that hypersonics, directed energy and artificial intelligence research demand. Firms that operate federally funded research centers or partner with university research centers — both explicitly within the review's scope — have a stake in how the recommendations are implemented, since the report frames the entire distributed enterprise, not just government labs, as in need of attention.
There is also a procedural reality that vendors should track closely. The review is a recommendation, not an appropriation. Turning nearly $4 billion of proposed spending into contract dollars requires Congress to act, and the report's own diagnosis — that modernization money keeps getting reprioritized away — is precisely the dynamic a fenced fund is meant to defeat. Contractors positioning for this work should follow the authorization and appropriations process rather than treating the recommended figures as committed budget. The fencing mechanism itself, if enacted, would be the strongest signal that the money is durable enough to plan around.
For now, the review puts a number and a timeline on a problem the Department has long acknowledged in general terms. Whether it translates into sustained contracting opportunity depends on what Congress does with a study that calls the foundation of American defense research deteriorating.
