Welcome back to the #53 edition of The New Defense Post!

In this edition, we'll cover:

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Ukrainian companies Odd Systems and The Fourth Law launched Project Foundation on October 8 to produce thermal sensors in Europe and the United States. The project is based in Eindhoven and will develop uncooled infrared sensors, a part of a thermal camera that detects heat. Production is set to start in 2027. At first, they will use other companies' chip production lines. Later, they want to build their own factories in Europe and the U.S. They haven't announced any financing yet. (Odd Systems)

The two are sister companies, founded in Kyiv in 2023 by Yaroslav Azhnyuk and a team of engineers, operators, and veterans. The Fourth Law builds drone autonomy; Odd Systems makes thermal and daytime cameras for drones, including the Kurbas family. Odd Systems develops the electronics, image processing and firmware itself, but it buys the thermal sensor. Project Foundation is meant to change that. (Odd Systems, PDW)

Four days later, on October 12, the two companies signed a non-binding agreement with American drone maker PDW. The plan is to adapt Odd Systems' Kurbas 640 thermal camera to U.S. requirements. If that works and final contracts follow, PDW would build the camera in the U.S. The partners will also look into producing the thermal sensors there. (PDW)

🗣 Igor Nakonechnyi, Project Foundation CEO: “Sovereign production has to be commercially competitive to achieve widespread adoption.” (Odd Systems)

📰 Our Take: A thermal sensor plant is basically a chip fab: expensive to build and an obvious target. Few investors would put money into one within range of Russian missiles, and Project Foundation plans to raise outside equity, loans and grants. Building outside Ukraine makes it much easier to get that money.

The harder problem is price, and Nakonechnyi knows it. In February, the two companies said Ukraine still depends heavily on Chinese suppliers and that thermal cameras made in the EU cost four to five times more. The U.S. is the easier first market, because U.S. law bars the Pentagon from buying drones with Chinese-made cameras. And PDW already sells drones to the U.S. military. (Project financing plan, February event, NDAA 2020, Sec. 848)

California-based Gallatin AI raised $50 million in Series A funding on October 8, with backing from 8VC, Silent Ventures, and other investors. The round brings its total funding to $70 million. The company was founded in 2024. It will use the money to hire more engineers and develop Navigator, its military logistics software. (Gallatin, Axios)

Navigator combines data on stock, consumption, and readiness, so planners can see what a unit needs and how to get it there. That includes fuel, ammunition, medical supplies, and vehicle readiness. Gallatin says Army and Air Force customers already use the platform, for example, in exercises in Japan, Alaska, and Europe. This summer, it also won a Defense Innovation Unit prototype contract to plan supplies for U.S. Army Europe and Africa, including medical supplies and casualty evacuation. (Gallatin, DIU)

🗣 Woody Glier, Gallatin CEO, on military logistics data: “It's very messy — literally like clipboard and pen and paper.” (Axios)

📰 Our Take: Gallatin's software can only make useful recommendations if it knows what units actually have and need. When supplies are tracked on clipboards, that information first has to be collected and digitized. This helps explain why Gallatin offers sensors and computer vision to count stock, and hires engagement managers who spend at least half their time on the road. The $50 million round looks less surprising when you consider that work: Gallatin has to fund the collection and integration of data from military units alongside the engineers building Navigator. (Gallatin, Engagement Manager ad)

Source: Drone Dominance Program, U.S. Army

In June, the U.S. Drone Dominance Program invited 49 companies to a qualifier. Nineteen made it through. Each then had about five weeks to deliver 120 armed drones before military operators tested them at Fort Carson from August 16 to September 5. On September 15, the program named nine winners, and their orders now total 60,000 drones. This week, two of the nine announced their orders: XTEND $40.5 million for 6,000 systems, and Orqa U.S., which builds Croatian company Orqa's drones in Florida, $38 million for 7,000 drones. (Program timeline, Leaderboard, XTEND, Orqa U.S.)

Source: Drone Dominance Program, Orqa U.S., XTEND

The program moved this quickly because it had specified how many drones it would buy and at what price before the first test. Companies knew what they could win, so building and delivering 120 drones in five weeks was worth it. And since the program buys the drones itself, it could place orders within a few weeks of the results. (Phase II framework)

Source: Drone Dominance Program, European Defence Agency

The EU's closest equivalent is the European Defence Agency's Sentinel Strike Challenge. Its test campaign in Portugal ended on October 14. The five finalists are competing for up to €1.8 million, and EDA will name the winners at a conference in early 2027. The winners get prize money, but no order. As long as no European government commits to an order before the tests, European drone trials won't turn into contracts this fast. (EDA, Defense War Room)

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