How to Get a Defense Contract in the U.S.: Lessons from Ukrainian Startups

Ukrainian defense startups: how to find a path to American contracts while bypassing bureaucracy

Kyiv/Washington. The U.S. defense industry, long reliant on major players and lengthy development cycles, is opening new opportunities for Ukrainian startups. The key to success is not the finished product itself, but innovative technologies and frontline experience. This is precisely what the experience of the Ukrainian-American company Codective shows. The company develops autonomous navigation systems for drones that operate without GPS.

Despite the fact that the American procurement system creates separate programs for small companies, securing a contract remains a difficult process. Anton Gerasymenko, CEO of Codective, who has experience working with government customers in the U.S., notes that even a won tender still requires significant financial reserves from a company.

The path to a contract: from SAM.gov to specialized programs

For companies seeking government funding in the U.S., the main platform is SAM.gov. It is a centralized database where procurement requests are posted and proposals are submitted. However, according to Gerasymenko, for startups entering this market for the first time without prior contacts, the chances of success are low. Often, by the time an announcement is published, potential contractors already know about the upcoming request and are preparing for it, and some announcements may be merely formal if the winner has already been chosen.

“As they say here, if a contract has been posted on SAM.gov, it’s already too late to apply,” explains the CEO of Codective.

More effective for small businesses are specialized government programs such as SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer). They provide staged funding: from initial research to development, which later opens the door to larger contracts.

However, even successfully winning a competition does not guarantee immediate access to funds. Before signing a contract, government agencies often conduct a financial audit to make sure the company has sufficient resources to operate until the first payments arrive and can withstand possible delays. “The nature of government customers is that they always pay, but the delays can be several months,” Gerasymenko adds.

New product or technology? What is valued in the American market

Many Ukrainian companies looking for customers in the U.S. want to sell their products in the same form they are used on the Ukrainian front. However, the American market often has its own specific requirements for components, software, and integration with existing systems.

“If, say, Anduril doesn’t need your drone, but it does need the software you wrote for it, or a mechanical, hardware technology that prevents motors from melting at high speed, then they start negotiations,” Gerasymenko says as an example.

This means that the value of Ukrainian developments for American customers lies not so much in the finished product as in the unique experience of solving complex problems. What matters is not only the final functionality, but also how the team built the system, which technological solutions were used, and what software was created.

“You have to go and sell experience. Ukrainian experience is valued here above all else,” Gerasymenko emphasizes.

This approach makes it possible not only to earn from technology, but also to build a reputation as a team capable of executing complex defense contracts. For startups seeking venture capital, having contracts with major contractors and the government can significantly increase the business valuation, even if sales volumes are not very large.

Partnership for innovation: why corporations work with startups

Large defense corporations such as Lockheed Martin and Boeing have their own interests in working with small businesses. Some tenders have company-size restrictions, making them inaccessible to giants. In such cases, corporations can act as partners to smaller teams, supplying components or involving them in specific work under subcontract.

One example of such cooperation is Codective’s interaction with the Israeli state corporation Israel Aerospace Industries (IAI). The Ukrainian team can provide software, while IAI provides sensors. “For us as a small business, this is beneficial: there is support, certain investment, and a stronger proposal,” Gerasymenko notes.

This model of cooperation allows startups to gain access to the resources and expertise of major players, while corporations can integrate innovative solutions developed by more flexible and faster teams.

Related entities:

• Codective: A Ukrainian-American company developing autonomous navigation systems for drones.
• Anton Gerasymenko: CEO of Codective.
• SAM.gov: The centralized U.S. government procurement platform.
• SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer): U.S. government programs for funding small businesses and startups.
• Lockheed Martin, Boeing: Large American defense corporations.
• Israel Aerospace Industries (IAI): Israel’s state aerospace and defense corporation.
• Anduril Industries: An American defense technology company.