Terry Gerton I think we need to start with operations in the Middle East. Logistics there are under real strain right now. The Strait of Hormuz is effectively closed. How are contractors and the Department of War working together to keep support flowing when the main corridors are contested?<\/p>\n
Stephanie Kostro Well, I\u2019ll say this for sure. We in the contractor community have been talking with folks at the Pentagon for years now about contested logistics. I know it\u2019s a phrase that popped up a lot in the National Defense Authorization Act over the last few years, but this is a real-world example of exactly what happens when logistics are contested. They can be contested by adversaries like Iran, who controls the Strait of Hormuz and all of the shipments going through there. They can be contested by natural occurrences, rising sea levels, etc., or they can be contested due to other human-made factors. Currently in the Central Command area of responsibility, there\u2019s a lot going on. And so contractors are looking at everything that\u2019s going on, the way they can flow goods and services, the ways they can get in and out of theater, etc. And there are really three main areas where contractors are providing support to the Department of War. As we move forward, contractors are looking at accelerating production of advanced munitions, and we can talk a little bit about some of the deals that have been announced and what that means in terms of contractor support. The second area is providing intelligence support, and we could talk a bit about what drones are doing in ways that hadn\u2019t been deployed in CENTCOM, the Central Command area of responsibility, in the past. And then also supporting logistical needs, and that goes back to what I was talking about, contested logistics. So three main categories, Terry \u2014 production of advanced munitions, intel and then logistics.<\/p>\n
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Terry Gerton Stephanie, as a former logistician, I want to start with logistics.<\/p>\n
Stephanie Kostro I figured you might.<\/p>\n
Terry Gerton You know, we don\u2019t have, as the air quotes might say, boots on the ground in this current operation, but we do have service members deployed to theater at various support bases and contractors are there. What are they experiencing right now?<\/p>\n
Stephanie Kostro So I love, Terry, that I can talk in acronyms with you, but I\u2019m going to try to do my best to sound them all out for your listening audience. You know, if you talk to folks in the Pentagon about flowing forces, and you mentioned boots on the ground, but we\u2019ve got folks at sea, we\u2019ve got folks in air everywhere, and contractors are there alongside them. If you look at the TPFDD \u2014 which is the time-phased force deployment data, which I\u2019m just going to call it TPFDD, but that\u2019s what it stands for \u2014 it really talks about what is being moved, who\u2019s providing it, where it goes, and when. Those are the main logistics pieces, right? And if you look at the TPFDD that the Pentagon puts together, it focuses on military forces. But about half of it, if not more, is actually contractors in theater. And so when we talk about the TPFDD, I want to remind your listening audience that they are talking about service members; we are looking at the other half, the silent half of that flow of forces, and that is contractors. We have folks in theater who are performing repair and sustainment operations for our military. We have folks who are there providing intelligence support, as I mentioned. We are flowing goods and services constantly. And so as contractors, getting into theater, the question is also how to get them out when it\u2019s time to get them out. All of that is happening within our community and it is a very active conversation.<\/p>\n
Terry Gerton Let\u2019s switch over to munitions because you and I talked a couple of weeks ago about the department\u2019s plan to spend all of its One Big, Beautiful Bill money in FY26 and a lot of that on production of munitions. Certainly we\u2019ve seen a massive deployment of those resources and a drawdown in stocks. Where are we on the production?<\/p>\n
Stephanie Kostro This also is a little bit about logistics, right, about the timing of supply chains, etc. When you think about the One Big, Beautiful Bill Act and the massive amount of money that was pushed through in that bill last summer, in July of 2025, that money was a portion of the Department of Defense with a spend plan just a few weeks ago. And so this is a lot of money coming through the system, and Pentagon officials are very actively negotiating with companies like Lockheed Martin, RTX, Boeing, Northrop Grumman, etc., about munitions production. And those companies, in turn, are having deep and detailed conversations with their supply chains. So when you\u2019re looking at munitions productions, we\u2019re looking at exquisite-class weaponry like Tomahawk cruise missiles and THAAD interceptors \u2014 a lot of those are getting depleted, and I believe a lot of other combat commanders are sending supplies to the Central Command area responsibility. When you\u2019re thinking about the global supply or inventory of these exquisite-class weapons, you really have to think about, it\u2019s not just about the Middle East, it is about the entire global inventory and where we need to put our resources. We\u2019ve heard deals announced; Lockheed Martin and RTX had deals announced, there are others out there as well where they are going to ramp up production. Part of the One Big Beautiful Bill Act was to ramp up production. You and I talked a few weeks ago about this \u2014 about, for example, Tomahawk cruise missiles, so both naval-based as well as land-based, and those production numbers are going to be quadrupled going forward. Part of that means that you\u2019ve got to activate your supply chain. You have to get some of these long-lead items into your production model. And you need to retool equipment, you need expand facilities, etc. That\u2019s going to be critical as well.<\/p>\n
Terry Gerton I\u2019m speaking with Stephanie Kostro. She\u2019s president of the Professional Services Council. Stephanie, let\u2019s turn to your third topic, which is intel support, both in theater and at home station.<\/p>\n
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Stephanie Kostro So that is another piece where, you know, we\u2019re talking about defense technology, using AI data analytics, specifically using AI platforms. There\u2019s some movement in that space. So that\u2019s one side of it. And then on the deployed side of it, we are using drones, as I mentioned, in new ways. We\u2019ve learned some lessons from the operations in and around Ukraine and Russia, and so looking at surveillance and intel-gathering systems, different kinds of drones, whether they\u2019re deployed from ships or from bases. And I would like just to mention, Terry, you know, it\u2019s not just what\u2019s happening in Iran, it\u2019s what\u2019s happening throughout the region. And there are major logistics hubs in places like Kuwait, which we\u2019ve used now as U.S. military forces for decades. Those are targets, and so not only are we surveilling what\u2019s going on in and around Iran, but we have to surveil what\u2019s in and around our logistics hubs to make sure that we have the defensive weaponry that is capable of protecting those hubs and making sure they are operational going forward.<\/p>\n
Terry Gerton Stephanie, I want to turn to a resourcing question here. There\u2019s talk of a $50 billion supplemental request from DOD, but that may be months away based on what we hear on the Hill. How are contractors funding this increased optempo themselves?<\/p>\n
Stephanie Kostro When you think about how we\u2019ve set up our industrial base to support military operations, one of the key tenets is that contractors need a contract in order to produce weapons. This makes sense on the face of it; if you think about it, you don\u2019t want a company out there making munitions and then not having a customer for it. So you have to have a contract to make munitions, ammunition, etc. What contractors can do is invest in the research and development, the test and evaluation, the infrastructure \u2014 whether it\u2019s facilities, tooling of the equipment, human infrastructure as well, meaning they\u2019ve got to train folks for production lines, etc. Those are all long-lead items, and so what I see industry doing is really stepping up with investments, billions and billions of dollars of industry\u2019s money, to actually make this system ready to produce the munitions when they\u2019re needed. Again, I go back to\u2026legally you cannot produce a munition without a contract, and so talking with folks at the Pentagon and the White House and others about having contract amendments out there so that they can actually surge when they need to surge.<\/p>\n
Terry Gerton We\u2019re only a couple of weeks into what the White House is saying is at least four to six weeks of operations. What is PSC hearing from the contractors who are most involved right now? Where are they concerned?<\/p>\n
Stephanie Kostro They have some challenges that they face in the region. You know, it is not easy to get to, I would say. We do have some great allies and partners who are supporting us \u2014 as mentioned, Kuwait, but we are also with military support in other areas in the region. And so the contractors themselves are saying, listen, we need to make sure that we have lines of communication, we need to be able to flow supplies in, we need access to airspace, basing, overflight rights, etc., so that we can flow in and out. I go back to this TPFFD that we mentioned earlier, that time-phased force deployment data, and being able to actually get into theater and get back out of theater when they need to. Those are the main questions right now. The munitions production is a very \u2014 that\u2019s the manufacturers, and PSC, as a professional services council, we don\u2019t focus mostly on the production piece. It is about the people. And so we are talking about flowing individuals in and of theater. There are some concerns about safety as there always would be. There are also concerns about making sure we have the protections in place. From a cybersecurity perspective, we\u2019ve got cyber operations set up so that our systems can\u2019t be jammed and that we can have free flow of information in intel fusion and analytics. Those are the big moving pieces that contractors are talking to us about.<\/p>\n
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