Ask what volume of committed US government demand a battery maker can contract against before it commits capital to defense-qualified, non-FEOC cell production, and the public record returns a number: the binding floor is approximately zero. The cost side is not approximately anything. Qualification runs one to three years and consumes hundreds of thousands to several million dollars per configuration, most of it unrecoverable if no program ever places a recurring order.
FEOC, or foreign entity of concern, is the statutory designation covering entities owned by, controlled by, or subject to the jurisdiction of China, Russia, North Korea, and Iran. Section 4865 of Title 10, as amended by NDAA Section 842, requires that batteries procured by the Department of Defense undergo non-FEOC final assembly, that more than 95 percent of functional-cell-component costs (cathode and anode materials, separators, electrode foils, electrolyte salts, solvents, additives, and other functional materials) originate from non-FEOC sources, and that production not use technology licensed from an FEOC. The dates phase in on a staggered schedule:
- October 1, 2027 — named-manufacturer prohibition takes effect
- January 1, 2028 — broader §4865 requirements apply to new acquisition programs
- January 1, 2029 — standard batteries
- January 30, 2031 — existing acquisition programs
Three mechanisms intersect here. The mandate imposes a compliance cost on the supplier. A separate authority, Section 4817, the Industrial Base Fund, lets the Secretary of Defense make purchase commitments of up to ten years for batteries, which would give a supplier a revenue floor to amortize that cost against. And the waiver provision in §4865 lets DoD set the requirement aside when compliant supply is insufficient. The analytical question is what a rational supplier does when all three exist and only the first one is active.
The cost of qualification
The qualification timeline is long and does not compress easily. A 2003 GAO protest decision documented Army battery first-article testing cycles of 10 to 15 months for proven producers, with first production delivery roughly 18 months after order receipt. That record is 23 years old, and no comparably detailed public account of more recent Army first-article cycles was identified. Treat the staleness as a disclosure gap rather than as evidence that cycles have shortened; nothing in the public record supports either direction.
For larger-format lithium systems the elapsed time runs longer. NAVSEA reported that a JLTV lithium-battery safety certification took an estimated three years. An earlier JLTV lithium effort ran from 2012 to 2016 before the contractor abandoned the chemistry for that variant.
The capital exposed during qualification is real and largely irrecoverable. Stryten Energy told the Military Power Sources Committee in 2022 that required test samples represented "hundreds of thousands of dollars" of investment, that adding an assembly robot could trigger $1 million in recertification cost and another year of delay, and that substituting a cell or a minor component could force complete requalification. Those are one company's figures presented to a standards committee, not a government-wide benchmark. No more precise public range was found.
One concrete marker of where qualification actually stands: the qualified products list for MIL-PRF-32565, the lithium-ion 6T standard battery and one of the most frequently discussed defense form factors, names no established qualified product and no qualified source. The specification is active and the list is empty.
What the supplier receives in return
The distinction that governs the supplier's model is between a contract ceiling and a guaranteed minimum. Under the Federal Acquisition Regulation, an indefinite-delivery/indefinite-quantity contract obligates the government to order only the stated minimum; everything above that is ordered as requirements arise, up to the maximum. The ceiling is a permission. The minimum is the obligation.
The largest publicly visible recurring lithium-battery vehicle is the Army's Conformal Wearable Battery contract, awarded in May 2021 to four suppliers with a combined ceiling of $1.254 billion and a projected quantity of up to 944,787 batteries. The binding initial commitment was 200 first-article-test batteries per awardee. Cumulative orders against that ceiling, annual unit purchases, and MWh delivered are not disclosed, which means a supplier cannot compute a realized fill rate for the one program that would tell it most about how ceilings convert into volume.
DLA awarded Bren-Tronics an estimated $9.7 million contract for lithium-ion communications batteries in April 2024; guaranteed minimum, units ordered, and MWh are again undisclosed. Packet Digital received approximately $36.8 million in funded orders during 2026 covering pilot production, raw materials, low-rate initial production, testing, and pack integration. Those are development and low-rate awards, not recurring procurement carrying follow-on minimums.
As covered in issue #8, no recurring contract publicly identified across Army, DLA, and Navy records combines a meaningful guaranteed minimum, a specified cell configuration, disclosed MWh, and a §4865 compliance requirement. A supplier sizing a line against these signals is sizing against a number the government has not agreed to fill.
Ten-year purchase authority, no battery commitment
Section 4817 now expressly lists "power sources" and "batteries" among eligible uses. It authorizes purchase commitments for federal use or resale, for materials and components, for production capability, and for transitioning research into defense applications. Terms can run ten years, subject to appropriations. DPA Title III provides parallel authority on the same horizon, and DoD's own overview describes purchase commitments as a way to create guaranteed demand and lower private investment risk.
The instrument is not dormant across the board. The December 2025 DPA award summary describes the MP Materials rare-earth arrangement as combining loans, price protection, and purchase commitments. For batteries specifically, no purchase commitment under §4817 or DPA Title III was identified in the official investment portal, the DPA award summary, DIBC records, or reviewed SAM.gov solicitations through mid-August 2026. The portal does list battery-related investments — $4.05 million for Inventus Power manufacturing expansion, $10 million for PolyPlus lithium-seawater battery production, $31 million for the UT Dallas energy storage campus — but describes each as development, expansion, or acceleration rather than guaranteed offtake.
This is an absence of public evidence, not proof of absence. The first §4817 annual report to Congress is due October 15, 2026, and may disclose commitments not yet visible. But a purchase commitment the supplier community cannot verify does not reduce the investment risk it exists to reduce.
The buyer's outside option
Section 4865 carries waiver authority. Where the Secretary determines that compliant batteries are unavailable in sufficient quantity or quality, the requirement can be set aside for a specific system or battery for one year. No public record of §4865 waiver invocations was identified in reviewed procurement records through mid-August 2026. Whether any have been granted is simply not observable, which means a supplier evaluating the investment cannot establish whether the mandate is currently binding on the programs it would sell into or has already been suspended for them.
The trigger condition for the waiver is insufficient compliant supply, and insufficient compliant supply is exactly what supplier caution produces. If the supplier invests, the mandate becomes enforceable against a supply base that now exists, and the government buys from it on terms negotiated later. If the supplier does not invest, the waiver keeps the department supplied from the sources it was already using. Batteries arrive either way.
Stated in the terms a trading desk would use: the government holds a call it did not pay for. It has the right, not the obligation, to buy compliant cells if they exist, and the right to abandon the requirement if they do not. The supplier funds the underlying asset — plant, tooling, qualification file — and receives no premium for writing the option. Nothing improper follows from this. It is the risk allocation the statute as drafted produces.
The DIBC solicitation as case study
The Defense Industrial Base Consortium's battery solicitation (RPP-BES-26-01) sought domestic production of military-critical cylindrical cells, targeting 50 MWh per year within two years and 3 GWh by 2030. The contemplated instrument is a research or prototype Other Transaction agreement, a flexible development vehicle that carries no procurement obligation to buy production units.
The solicitation names guaranteed-price offtake, DPA Title III purchase commitments, and loan guarantees as possible "other funding opportunities." Asked directly whether DoD anticipated committed offtake, the Q&A discussed the importance of commercial demand without stating a government quantity. Respondents may propose offtake structures, but such instruments are "typically negotiated after a Phase 2 submission." The solicitation page still listed RPP-BES-26-01 as "Closed" rather than awarded as of mid-August. As covered in issue #9, the qualification timeline by itself can consume much of the runway remaining before the compliance dates arrive.
Korean makers and the upstream problem
Samsung SDI, LG Energy Solution, and SK On are not FEOC entities, operate or are building US cell plants, and hold production scale no US-only battery manufacturer currently matches. On corporate domicile alone they are the most plausible near-term source of compliant defense cells.
The §4865 test is not a domicile test. It is a cost-share computation on the bill of materials, and it asks where more than 95 percent of functional-component cost originates. Korean industry data show China supplying 96.6 percent of Korea's precursor cathode materials, 93.7 percent of its synthetic graphite, and 80.4 percent of its lithium hydroxide. The IEA reports China supplied roughly 85 percent of global cathode active material and over 90 percent of anode active material in 2024. These are national dependence shares and cannot be substituted for a §4865 calculation on a named cell; a specific configuration could sit far from the national average in either direction. No public statement from the three manufacturers indicates that a named cell has completed a §4865 assessment. As examined in issue #7, non-FEOC domicile and US cell assembly do not establish the upstream cost share the statute requires.
A Korean maker contemplating what it would take to re-source cathode precursor, qualify non-Chinese graphite, and document compliance across every functional component arrives at the same question a US entrant does: against what committed volume is that spending recovered? The public record gives it the same answer.
The self-reinforcing loop
The cancelled DLA lithium carbonate solicitation shows the same pattern one tier upstream: up to $300 million over five years, structured as a conventional IDIQ with a reported $1 million guaranteed minimum, and not written under §4817 or DPA Title III. DLA told Inside Defense the requirement remained valid but gave no target date for a replacement.
Each element of the structure is individually defensible. The mandate creates a compliance cost. Qualification creates a time cost. The absence of purchase commitments leaves the supplier without a revenue floor to amortize either against. The waiver keeps the department supplied whether or not compliant capacity appears. Assembled, they make deferral the rational supplier response — wait until a binding commitment materializes, or until a competitor's investment demonstrates that the demand is real.
Suppliers defer investment because volume is not guaranteed; compliant supply stays short because suppliers defer; the waiver remains available because supply is short; and its continued availability confirms to suppliers that the investment carries asymmetric risk.
Whether this is a transitional state or a stable one cannot be distinguished from what is public today. The observation that would change the reading is specific: a named purchase commitment attached to a compliant cell, with a stated quantity and a stated duration, verifiable by the suppliers being asked to build against it. The October §4817 report is the next place such a thing could appear. Absent such a commitment, the government has mandated a supply chain it has not committed to buying from, while holding the authority to waive the mandate it has not funded.
- Drone Dominance cell gates: The program's July supply-chain framework requires §842-compliant non-covered-country cells by August 2027, creating the first program-specific compliance deadline that precedes the statutory §4865 dates.
- §4817 annual report disclosure: The first Industrial Base Fund annual report is due to Congress by October 15, 2026, and may reveal whether battery purchase commitments have been executed outside the public record reviewed here.
- DFARS implementation rule: The rulemaking implementing §4865's contractor certification, cost methodology, and waiver submission process has moved its internal report deadline to October 7 without publishing an NPRM, leaving suppliers without the operative proof standard they would need to price and certify compliance.
- DoD-wide battery strategy: A congressionally mandated strategy covering demand aggregation, standardization, qualification, and supply-chain requirements across all defense battery applications is due to the Armed Services committees by September 30, 2026.