The Department of Defense is one of the largest funders of AI in the country, and — contrary to what many businesses assume — you don’t need to be an established defense contractor to access some of it. But the form the money takes matters. Here’s the honest 2026 picture, cited to official sources. (dgm builds AI; defense proposals are a separate specialty — see the end.)

Two doors: SBIR and DIU

DoD funds commercial AI mainly two ways:

  • DoD SBIR/STTR — non-dilutive R&D funding for small businesses, following the same phased structure and caps as the rest of the government (Phase I up to about $323,090, Phase II up to about $2,153,927).
  • The Defense Innovation Unit (DIU) — a DoD organization that buys and prototypes commercial technology fast, with a dedicated AI/ML portfolio.

What makes DIU different

DIU is unusually open. Any individual or commercial entity can respond to a DIU solicitation — you need no prior DoD contract and no cleared facility. And it’s fast: DIU can move from solicitation to award in roughly 60 to 90 days, using Commercial Solutions Openings under Other Transaction authority, with successful prototypes able to transition to production contracts.

The crucial honest point: DIU awards are contracts and prototype agreements, not grants. The DoD is acting as a customer buying a solution that meets a military need — not handing out money for you to adopt AI internally. That distinction shapes everything about whether DIU is right for you.

Who DoD funding fits

DoD funding fits AI companies that can serve a defense or national-security use case — your technology has to solve a problem the military actually has. If you’re building AI for defense, logistics, cybersecurity, autonomy, or similar, both SBIR and DIU are real, accessible channels. If your AI is for ordinary commercial operations with no defense angle, DoD is the wrong door, and you’ll do better with NSF’s AI SBIR or the R&D tax credit.

How to engage

  • For SBIR/STTR, watch DoD component solicitations and apply to a specific topic.
  • For DIU, respond to open solicitations with a short solution brief; if interested, DIU schedules a pitch.

Both reward a clear, demonstrable capability over a polished pitch — DoD wants to see something that works.

How dgm helps

dgm implements osFoundry and builds AI for US businesses. We help develop the underlying AI capability behind a DoD opportunity — but defense proposal writing, security, and compliance are a specialized field best handled with an experienced defense-focused partner. We’re the team that helps build the solution the DoD would buy.