San Diego pulls in about $1.5 billion a year in Pentagon contracts for autonomous and unmanned systems, more than any other region in the country. But local defense leaders gathered Tuesday to deliver a blunter message: that lead is not guaranteed to last, and other cities are now organizing aggressively to take a bigger slice of the drone-dollar pie.
The San Diego Regional Economic Development Corporation announced the effort at a news conference on Tuesday, unveiling a new Defense Innovation Roadmap meant to help local contractors capture more of the Pentagon's expanding spending on emerging weapons technology, according to KPBS. The announcement came as other regions are starting to organize and coordinate their own marketing campaigns to attract defense manufacturers and contracts, intensifying competition for work that has long concentrated in San Diego.
The roadmap itself, released at an event at Firestorm Labs on October 27, was published by the San Diego Regional EDC, which laid out the scale of what's at stake. The region receives an average of $11.6 billion a year in Department of War contracts and grants and is home to more than 6,700 defense-related assets, including military installations, contractors and research institutions, the EDC report states. San Diego's broader defense ecosystem generated an estimated $61.3 billion in economic impact in fiscal year 2025, equal to 22.2% of the region's gross regional product, per the same report.
Why San Diego's Lead Is Narrower Than It Looks
San Diego ranks 10th nationally in overall defense contract spending but first in the country when it comes to autonomous systems specifically, the EDC report found. The Washington, D.C. metro area sits at No. 2, pulling in roughly $700 million in autonomous and unmanned systems contracts compared to San Diego's $1.5 billion. The EDC's figures separately show San Diego ranking first nationally in Department of War contract obligations for autonomous and unmanned systems, reinforcing the region's position in a category the Pentagon is racing to expand.
Despite that top ranking, the report found more than 7,600 regional companies have yet to engage with the Department of War at all, with at least half developing technologies aligned with national defense priorities. The same report found that winning average-sized contracts for even half of the interested firms in three priority technology areas could add roughly $52 million in economic impact. Sixty-two percent of surveyed companies involved with the Department of War reported difficulty moving from pilot-stage projects to full-scale production, the EDC's research found — a gap the roadmap identifies as one of the region's central obstacles.
Lawmakers Warn Against Complacency
Democrats Scott Peters and Sara Jacobs attended Tuesday's announcement in San Diego, according to the station's report. Jacobs said local industry needs to be ready to meet the demands of the modern military, and she warned that San Diego should not assume contracts and companies will keep coming to the region simply because they have historically, per the same account. The defense industry represents about 20% of San Diego's economy, the EDC report noted, and officials say there remains significant room to grow given the region's legacy military assets.
Nikia Clarke, chief strategy officer of the San Diego Regional EDC, said the region is trying to meet companies' needs to grow jobs and build factories as technologies mature, the station's report notes. To carry that work forward, the EDC and the San Diego Military Advisory Council — a nonprofit that promotes military and defense interests in the region — are partnering to advance the roadmap's recommendations and are establishing a new San Diego Defense Council to implement them, according to the EDC's own writeup of the plan. The roadmap also calls for stronger regional coordination around testing access, industry engagement and advocacy, areas industry stakeholders flagged as weak points in interviews conducted for the report.
A Pentagon in a Hurry to Spend
The timing reflects a broader shift in how the Pentagon is buying weapons. The moment is one in which the Pentagon has made it clear to contractors it wants to spend money and bring new systems into service quickly, the KPBS report states. At the San Diego WEST defense conference in February, Defense Department leaders told industry representatives the Pentagon had a fresh appetite for risk in artificial-intelligence investments, and the department has asked contractors for unmanned surface vessels capable of launching missiles as it seeks mature, production-ready systems that can be deployed to conflict areas within 120 days.
That urgency shows up in the federal budget numbers too. Defense Secretary Pete Hegseth said the Pentagon is requesting roughly $50 billion in reconciliation funding to scale up autonomous and robotic systems, according to Defense News. The fiscal 2027 budget request includes $53.6 billion for the Pentagon's Drone Dominance initiative, and the Army announced a separate $1 billion effort in December to fund roughly 340,000 small unmanned aircraft systems for combat units over two years. Hegseth has said the goal is to push the Pentagon's stockpile of autonomous weapons from thousands of units into the millions, using lower-cost systems that new companies can manufacture at scale alongside traditional contractors, per the outlet.
San Diego Companies Already Winning Big Contracts
Some San Diego firms are already capturing pieces of that spending surge. The Pentagon awarded San Diego-based Digital Force Technologies a three-year counter-drone systems contract worth up to $500 million, as reported by the San Diego Union-Tribune. That award came in the same stretch that NATO's innovation fund named counter-drone systems among its top priorities, and just weeks after the Army awarded up to $4.15 billion in counter-drone contracts to 10 companies in late September. The Navy has also been rapidly expanding efforts in San Diego to develop small, fast, unmanned sea drones, with local developers focused on 16-foot boats that can be reconfigured for different missions and acquired for less than $1 million each.
Competition for that momentum is not staying still elsewhere, however. Michigan is attempting to become one of the nation's leading hubs for defense manufacturing again, leveraging its automotive base through a five-year strategy that targets contracts not just in ground vehicles but in drones, space manufacturing and other emerging technology areas, according to Breaking Defense. Michigan companies including Ford, General Motors, Pratt Miller, Roush and startup Salient Motion have already expanded into defense in pursuit of that work, the outlet reports.
For San Diego, the roadmap's authors frame the challenge less as a lack of opportunity than a lack of urgency. With the Army opening its acquisition programs to broader and more sustained competition and developing new pathways to move emerging companies into larger-scale programs, the race for Pentagon drone dollars is only getting more crowded. San Diego's defense leaders are betting that a coordinated regional push — backed by the new San Diego Defense Council — can keep the region's contractors ahead of rivals now organizing to take their place.
