NAWCAD Lakehurst opened a production-stage UAS battery cell contract to competition on April 6, 2026. One offer came back. The $26,999,999 firm-fixed-price order went to Packet Digital LLC for pilot production and low-rate initial production of pouch-cell lithium-ion batteries at its Badland Batteries facility in Fargo, North Dakota.
The competition status is the finding. The U.S. Navy solicited bids for domestic production-stage defense UAS cells and the market returned a single respondent. With Section 842 of the FY 2026 NDAA set to restrict foreign-entity-of-concern battery content in new DoD contracts from January 1, 2028, that competition outcome is a direct measurement of qualified domestic supplier depth. The measurement reads: one.
The contract sequence
Three contracts, awarded across seven months, constitute the most fully traceable domestic defense cell production program in public procurement records. Each is sourced below to its DoD announcement or, where no government source was located, to company disclosure. Where a detail cannot be confirmed from public records, I say so.
| Date | Order | Value | Instrument | Funding | Completion | Competition |
|---|---|---|---|---|---|---|
| Nov 2025 | N6833522G0020 | Up to $50M (ceiling) | APFIT BOA | — | — | Unconfirmed |
| Apr 6, 2026 | N6833526F1047 | $27.0M | SBIR Phase III | FY25 Procurement (Defense Wide) | Apr 2028 | Competed, 1 offer |
| May 4, 2026 | N6833526F1090 | $9.8M | Phase 3 (program phase, not SBIR designation) | RDT&E (FY25 $2.47M, FY26 $7.33M) | Nov 2027 | Competed, offers not stated |
November 2025: Packet Digital disclosed an APFIT award with a stated ceiling of up to $50 million, structured as a basic ordering agreement (N6833522G0020) to support domestic production of lithium-based battery cells and packs for UAS across Navy, Army, Air Force, and SOCOM. The $50 million figure and November 2025 date derive from the company's own announcement, corroborated by AUVSI trade coverage. No DoD contract announcement for the ceiling instrument was located in this research sweep. The competition status of the underlying BOA is unconfirmed from public records.
April 6, 2026: The $27M SBIR Phase III order (N6833526F1047), awarded against the BOA, funds pilot prototype development, raw-material procurement, pilot production, LRIP-1, and LRIP-2 manufacturing of pouch-cell lithium-ion batteries. Work is 100% Fargo. Expected completion: April 2028. The Phase III designation traces to SBIR Topic N07-160, "Power Suite for Distributed Operations." Funded entirely with FY25 procurement (Defense Wide) appropriations. Competed, one offer received. Contracting activity: NAWCAD Lakehurst.
May 4, 2026: A $9.8M order (N6833526F1090) for what the DoD announcement describes as the third phase of the Logistics UAS Family of Advanced Batteries program, covering production volume scaling, supply chain validation, equipment qualification, and manufacturing throughput ramp. Work is 98% Fargo, with small allocations to Minneapolis and Gainesville, Georgia. Expected completion: November 2027. Competed; number of offers not stated in the DoD announcement. Worth noting: the DoD announcement does not designate this order as SBIR Phase III. It describes a program phase, a distinction from the SBIR procurement category. The April 6 contract carries the explicit SBIR Phase III designation; this one does not, per the available record.
The funding color across these two contracts carries analytical weight. The April order draws procurement appropriations. The May order draws entirely from RDT&E ($2.47M FY25, $7.33M FY26). Procurement funds signal production commitment. RDT&E funds signal transition activity. Read together, the two contracts describe a program simultaneously executing LRIP (April, procurement-funded) and still qualifying its manufacturing line at volume (May, RDT&E-funded). Consistent with a facility that has been built and is commissioning but has not yet reached validated production throughput.
Public procurement records do not confirm facility capacity figures, specific cell chemistry beyond "pouch-cell lithium-ion," or production volume targets. Company marketing materials cite details that cannot be traced to contract documents; I have not relied on them here.
The procurement signal
The analytical weight of "one offer received" depends on understanding what NAWCAD Lakehurst chose to do and what it was not required to do.
Under SBIR Phase III procurement rules, competition is not required. The Phase I and Phase II competitions satisfy statutory competition requirements under the Armed Services Procurement Act and the Competition in Contracting Act. Lakehurst could have sole-sourced this contract to Packet Digital without further justification.
It opened the solicitation instead. The domestic market for production-stage defense UAS battery cells returned exactly one bidder. The award was competed. Lakehurst asked who could do this work at production maturity. One company answered.
Competitive context
To calibrate that signal: no other domestic cell manufacturer holds a comparable production-stage government contract for defense UAS cells in public procurement records through May 2026.
Amprius Technologies (NYSE: AMPX) holds a DIU contract totaling $18.1 million (per SEC 8-K, Q1 2026), originally awarded July 2025 and subsequently amended, funding pilot line expansion and NDAA-compliant drone battery development at its Fremont, California facility. The company's November 2025 shareholder letter describes the pilot line target as 10 MWh capacity; this figure is corroborated in the company's 10-Q but originates from company disclosure, not the contract instrument. The DIU contract is structured as a grant-type mechanism with milestone-based recognition. It funds pilot line expansion and compliance research. No SBIR Phase III, APFIT production order, or OTA production agreement for defense UAS cells at Amprius appears in public records through this sweep. A DIU pilot-line expansion grant and a NAWCAD LRIP procurement order are instruments at fundamentally different stages of production maturity.
CRG Defense has positioned itself publicly as a domestic alternative for Section 842-compliant battery cells and propulsion systems. No production-stage government contract for defense UAS cells at CRG Defense was located in DoD contract announcements or SBIR.gov records through May 2026. Its most recent documented government award is a $2M Army contract for a lightweight electric motor/generator prototype for hybrid-electric military vehicles. That is a motor/generator award.
Phase I and Phase II SBIR awards exist across the battery space. Those signal research activity. Phase III is where government money meets factory floor.
Timeline convergence
Section 842 (P.L. 119-60, signed December 18, 2025) phases in across three deadlines:
| Deadline | Applies to |
|---|---|
| January 1, 2028 | New contracts |
| January 1, 2029 | Standard batteries |
| January 30, 2031 | Existing acquisition programs |
The January 30 date is unusual for NDAA phase-ins but consistent across multiple Grade A legal analyses (Baker McKenzie, Pillsbury). The first deadline applies to new contracts only.
The April 2026 LRIP contract targets completion in April 2028, three months after that first compliance window opens. The May 2026 production-ramp contract targets November 2027, just before the deadline. Whether this convergence is structurally linked to the legislative schedule or coincidental cannot be determined from procurement records alone. One data point bears on the question: the APFIT BOA was disclosed in November 2025, before the NDAA was signed on December 18, 2025. The program's origins predate Section 842, even if subsequent contract timelines may have been shaped by the legislative calendar. I note this as inference, not sourced finding.
What the records do establish: LRIP-1 and LRIP-2 production will be underway but not complete when the first compliance window opens on new contracts.
As of May 2026, no DFARS proposed or final rule implementing Section 842's battery FEOC restrictions has been published. The statutory deadline exists. The contract-level enforcement mechanism does not.
The DFARS open cases list (updated May 15, 2026) references FY 2026 NDAA provisions in process, including work touching 10 U.S.C. § 4872. But the DFARS Publication Notices page (last updated May 7, 2026) contains no Section 842 battery rule. No proposed rule has appeared in the Federal Register. Contracting officers writing new solicitations in early 2028 will need DFARS clause language to flow Section 842 restrictions into contracts. That language does not exist today, twenty months before the deadline.
Open solicitations
A search of SAM.gov did not surface any active or forecast solicitations specifically for domestic defense battery cell manufacturing from NAWCAD Lakehurst or other NAVAIR activities as of this research sweep. SAM.gov cannot be comprehensively searched via standard tools, so this is a negative finding with that caveat, not a definitive absence.
What the record shows
The Packet Digital/Badland Batteries contract trail is unusually complete for a defense manufacturing program at this stage. Three contracts, two funding colors, named order numbers, stated competition outcomes, all running through NAWCAD Lakehurst. This traceability is itself notable in a domain where much activity occurs under OTAs and classified programs that leave no public record.
Classified programs may be developing additional domestic cell suppliers. Amprius, CRG Defense, or others may reach production maturity before January 2028. Facility capacity, production volume, and DFARS rulemaking timelines remain outside the public record.
Here is what the record does establish. When the Navy opened a production-stage UAS cell contract to competition in April 2026, one domestic manufacturer bid. The most advanced publicly documented domestic defense cell program completes LRIP three months after the mandate it may be meant to serve. And the regulatory mechanism required to enforce that mandate at the contract level has not yet been proposed.
One data point is sourced. The rest is inference. I have marked which is which.
Things to follow up on...
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DFARS rulemaking on Section 842: The DFARS open cases list references FY 2026 NDAA provisions touching 10 U.S.C. § 4872, but the available record is truncated and no proposed rule has appeared — worth monitoring monthly for a proposed rule that would give contracting officers the clause language they need before January 2028.
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Amprius NDAA-compliant production pathway: Amprius stated it expects to offer customers an NDAA-compliant battery production pathway beginning Spring 2026, using its Korea Battery Alliance and new Nanotech Energy partnership in Chico, California — whether that pathway produces deliverable cells under government contract, rather than compliance documentation, will determine whether the competitive field widens beyond one.
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Section 836 compliance repository: The FY 2026 NDAA requires DoD to establish by January 1, 2027 a public repository where offerors can attest their products meet FEOC sourcing requirements, which will be the first visible registry of how many suppliers believe they can meet the 95% non-FEOC cost threshold.
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6K Energy cathode capacity timeline: 6K Energy's seven-year NMC811 cathode supply deal with CRG Defense depends on its PlusCAM facility in Jackson, Tennessee reaching operation in early 2028, a timeline that would need to hold for CRG Defense to have a domestic cathode source when the Section 842 new-contracts deadline arrives.